By Alister Bull
RENO, Nevada (Reuters) - President Barack Obama challenged Republicans on Monday to stop "playing politics" with the U.S. military in a fight over end-of-year budget cuts that would strike the defense industry if Congress does not agree on a new deficit-cutting deal.
Republicans and Obama's Democrats are at odds over how to avoid triggering billions of dollars in across-the-board federal budget cuts resulting from a "sequestration" mechanism put in place by Congress in 2011 as part of its solution to break an impasse over the U.S. government's borrowing limit.
In a speech to veterans that included a robust defense of his foreign policy achievements, Obama painted himself as being on the side of military men and women and said Republicans were putting them in jeopardy by insisting on extending Bush-era tax cuts that Democrats oppose.
"Let's stop playing politics with our military," Obama told a convention of the Veterans of Foreign Wars in Nevada, a battleground state the president hopes to win in the November 6 election against Republican Mitt Romney.
"If the choice is between tax cuts that the wealthiest Americans don't need and funding our troops that they definitely need to keep our country strong, I will stand with our troops every single time."
Lawmakers must act before the end of the year to avoid the "fiscal cliff" of major tax hikes and spending cuts. Without a deal, many domestic and military programs face about $100 billion in across-the-board cuts next year.
"There's no reason that should happen because people in Congress ought to be able to come together and agree on a plan, a balanced approach that reduces the deficit and keeps our military strong," Obama said. "It should be done."
Obama wants to end tax cuts passed under President George W. Bush for very wealthy Americans to help reduce the U.S. deficit, although he favors extending tax cuts for middle-class families making less than $250,000 a year. Republicans argue that all tax cuts should be extended to avoid an adverse affect on the tepid economy.
Barring an early agreement, lawmakers will need to reach a consensus in the "lame-duck" session of Congress - the period between the November election and the start of the new congressional year in January.
The Treasury Department estimates that ending the tax cuts for the wealthy would gain about $50 billion in revenues in 2013 - nearly matching the size of the Pentagon spending cuts that are scheduled to be triggered on January 2.
Romney, who favors extension of the tax cuts, would like to delay the "fiscal cliff" debate until next year, when he hopes to be in office.
CAMPAIGN ISSUE, FOREIGN POLICY DEFENSE
The issue is likely to loom large on the campaign trail. Virginia, an important battleground state, has major military bases and defense operations in Newport News, Virginia Beach, and Richmond, which could be affected by the cuts.
If all new revenues from ending the Bush tax cuts for the wealthy were devoted to canceling the military spending cuts, there would still be the politically sensitive problem of cuts in domestic programs including education, nutrition assistance for the poor and medical research grants.
The Obama administration and Democrats in Congress have said repeatedly that spending cuts must be borne equally by military and domestic programs.
Teachers, scientists, labor unions and other organizations have joined together to warn that their programs are also in jeopardy from the fiscal cliff debate.
Obama used his speech to veterans to highlight his foreign policy record of ending the war in Iraq, setting a timeline for ending the war in Afghanistan, and presiding over the killing of al Qaeda leader Osama bin Laden.
Obama said his leadership had changed perceptions of the United States abroad.
Romney, the former governor of Massachusetts, leaves on Wednesday for a weeklong trip to Britain, Israel and Poland, a trip meant to highlight his foreign policy credentials.
His campaign disputed Obama's claim of foreign policy success.
"In no region of the world is our country's influence any stronger than it was four years ago," Romney spokesman Ryan Williams said in a statement.
"President Obama has failed to restore our economy, is weakening our military with devastating defense cuts, and has diminished our moral authority."
The Republican chairman of the House Armed Services Committee, Buck McKeon, criticized the president for making "ultimatums from the campaign trail."
McKeon said Obama "has an obligation to the men and women under his command. He owes them the resources and certainty they need to complete the missions he has ordered them to do."
Also on Monday, Defense Secretary Leon Panetta met with representatives of the defense industry, agreeing with them that "sequestration will do tremendous harm to domestic and national security programs across the board," a Pentagon statement said.
In his speech, Obama also lamented the high suicide rate among U.S. veterans.
"According to some estimates, about 18 veterans are taking their lives each day - more every year than all the troops killed in Iraq and Afghanistan combined," Obama said. "That's a tragedy. It's heartbreaking. It should not be happening in the United States of America."
(Additional reporting by Richard Cowan and Margaret Chadbourn; Writing by Jeff Mason; Editing by Fred Barbash and Peter Cooney)
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