By David Alexander and Andrea Shalal-Esa
WASHINGTON (Reuters) - The Pentagon will unveil a five-year budget proposal this week that begins to implement $487 billion in spending cuts over the next decade by trimming the size of the military and canceling or scaling back some weapons programs.
Defense Secretary Leon Panetta will preview a budget request for the 2013 fiscal year on Thursday that will cut $260 billion in spending through 2017, taking the Pentagon more than halfway to its target for the decade.
Details about the 2013 spending plans have begun to emerge from sources familiar with the budget proposal, despite the Pentagon's efforts to keep its funding discussions secret until they are formally announced.
The budget proposal is expected to eliminate thousands of military and civilian jobs over the next five years at a time when President Barack Obama is running for re-election against a field of Republicans who accuse him of being weak on national security.
In his State of the Union address on Tuesday, Obama underscored his commitment to maintaining the "finest military in the world," even as the Pentagon cut nearly half a trillion dollars from its budget.
The proposed budget will terminate or scale back spending on dozens of weapons programs, including the Air Force's high-altitude Global Hawk unmanned surveillance plane built by Northrop Grumman Corp and the Pentagon's biggest weapons program, the F-35 Joint Strike Fighter, built by Lockheed Martin Corp.
But it will not tackle some $600 billion in additional spending cuts due to take effect in January 2013 after lawmakers failed to agree on $1.2 trillion in deficit-cutting measures.
Officials say they will revisit the issue and address those cuts later if Congress does not take action this year.
Panetta is expected to seek a Pentagon base budget of about $523 billion, some $5 billion more than approved in December for the 2012 fiscal year but $30 billion less than initially planned. He will ask for about $82.5 billion for the war in Afghanistan, about $33 billion less than 2012 largely due to a drawdown in troops.
The budget plan will begin to put into place a new strategy released this month that calls for the Pentagon to shift its focus to the Asia Pacific region and Middle East even as it shrinks the size of the military to create a more agile force.
That is likely to mean more funding for the Air Force and Navy and less for the Army and Marines, a trend that already was projected in last year's five-year budget, analysts say.
"If they actually accelerate that shift ... this really is a shift in strategy," said Todd Harrison, an analyst at the Center for Strategic and Budgetary Assessments think tank.
VARIOUS PROGRAMS FACING CUTBACKS, OTHERS TO CONTINUE
Under the Pentagon's new spending plans:
- Lockheed's F-35 jet fighter program, the Pentagon's largest at $382 billion, will face its third restructuring in three years, with officials slashing 179 jets from the five-year budget and pushing their purchase to later years at a savings of more than $20 billion.
- The Navy will maintain a fleet of 11 aircraft carriers, but has not clarified if it will award a contract to Huntington Ingalls Industries for the next carrier on schedule.
- The number of combat brigades stationed in Europe would be cut in half, from four to two, Panetta said recently.
- The overall size of the Army, which was already scheduled to fall to 520,000 by 2016, could be further reduced to 490,000, a drop of another 30,000 soldiers, analysts say.
- The Navy will retire seven aging cruisers and several amphibious warships, saving money on increasingly expensive maintenance and upgrades.
- It will also propose multiyear procurements of more DDG-51 destroyers and Virginia-class submarines, both built by General Dynamics Corp and Huntington Ingalls, moves that could save about $4 billion by allowing bulk purchases of materials.
- The Navy will also propose a multiyear procurement for more V-22 Ospreys, a tiltrotor aircraft built by Boeing Co and Textron Inc's Bell Helicopter unit that flies like a plane but takes off and like a helicopter.
- The Air Force will lose several programs, including upgrades to its C-130 cargo planes being done by Boeing Co, a troubled weather satellite being built by Northrop, and a new helicopter to replace the Bell UH-1N, which provides security to U.S. nuclear ballistic missile fields.
- The Air Force will continue design work on a new bomber and get two additional orders for a Lockheed communications satellite, and one more Lockheed missile warning satellite.
- The Army would rebalance its mix of active duty troops and the National Guard and Reserve, which cost less to fund but can be called up more rapidly than reconstituting a force from scratch.
- The Army's new software-based radio being developed for use in ground vehicles is expected to be canceled, although the handheld version of the Joint Tactical Radio System (JTRS) will survive.
NO MAJOR PROGRAMS CANCELLED
Despite the expected cutbacks in personnel and programs, analysts said the Pentagon had been able to achieve the spending reductions without sacrificing its most cherished programs.
"Achieving the $487 billion in cuts was sufficiently doable that it didn't require really hard decisions ... Unless you force them into it, those hard decisions just don't get made. Everybody buys everything they want," said retired General James Cartwright, former vice chairman of the Joint Chiefs of Staff.
That could change if the Pentagon is forced to implement a new round of across-the-board budget cuts, which could lob another $50 billion annually off defense spending accounts.
If Congress fails to avert those cuts, the Pentagon could be forced to further cut its active force, reduce the U.S. nuclear arsenal, halt development of a new bomber and trim the total purchase of F-35s, said Cartwright, an analyst at the Center for Strategic and International Studies.
The Pentagon says it is not preparing for further budget cuts and has not received instructions from the White House Office of Management and Budget to do so. But the threat of further reductions is real and lack of attention to it is a mistake, analysts warn.
"The failure to plan for deeper budget cuts is really a glaring oversight in the new defense strategy," Harrison said.
(Reporting By Andrea Shalal-Esa; Editing by Gary Hill)