By Phil Stewart
ABOARD A U.S. MILITARY AIRCRAFT (Reuters) - Defense Secretary Leon Panetta refused to speculate on Monday about how soon he might step down and even joked that he couldn't rule out spending another term in the job, saying: "Who the hell knows?"
There is intense speculation at the Pentagon that Panetta might retire within months following President Barack Obama's re-election, spurring a guessing game about a successor.
Possible candidates include Panetta's deputy, Ashton Carter, and Michele Flournoy, who was his policy chief before stepping down earlier this year, and who would become the first woman to serve as America's defense chief.
"It's no secret that at some point I'd like to get back to California. It's my home," Panetta, 74, told reporters flying with him to Australia.
But he also hinted the timing of his departure could be tied to questions including the defense budget. Automatic budget cuts are due to kick in next year that would pummel defense spending, and which Obama and Congress are trying to prevent.
Panetta also pointed to the drawdown in Afghanistan, saying that the Pentagon and the White House hoped to reach a decision in the coming weeks about how many U.S. troops would stay in the country after 2014 - when the NATO mission ends and most U.S. combat forces are due home.
"There are a lot of challenges right now with regards to defense issues in Washington," Panetta said. "And I think the president and I are working very closely to make sure that we meet those defense challenges."
Panetta called Congress to strike a deal on the budget, noting that he believed the Defense Department had already done its share to reduce the deficit through cuts of nearly half a trillion dollars to projected spending over the next decade.
But he cautioned against any deal by Congress as it wraps up its session to simply strike an agreement to delay the hard decisions until later, saying it would cast a cloud of uncertainty over the Defense Department and future spending.
Such uncertainty is certain to be a topic on Panetta's trip to Australia, Thailand and Cambodia, where Asia-Pacific allies will renew questions about U.S. commitments to the region, given the coming fiscal crunch.
"That's the last damn thing I need right now is to have more uncertainty," said Panetta, whose salty language has become a trademark of his tenure at the Pentagon.
It's not always easy to leave the Pentagon. Panetta's predecessor, Robert Gates, had hoped to step down at the end of President George W. Bush's tenure, but instead stayed on for the first two-and-a-half years of Obama's first term.
Asked whether he might stay in the job for Obama's second term, Panetta, said: "Who the hell knows?"
"My experience in Washington is you better do this day to day," he said.
(Editing By Warren Strobel and Christopher Wilson)
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