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Senate budget chair says more Pentagon cuts likely

By David Alexander

WASHINGTON (Reuters) - The head of the Senate Budget Committee delivered a sobering message to top U.S. defense officials on Tuesday, saying the Pentagon will have to reduce spending beyond the $487 billion already proposed if the United States is going to deal with its $15 trillion debt.

The warning from Democratic Senator Kent Conrad prompted an emotional exchange with Defense Secretary Leon Panetta, a fellow Democrat and former budget official, who said the panel would damage the country's security if it tried to solve the U.S. debt crisis by reducing only discretionary spending like defense.

"We're going to have to have additional savings if we're really going to deal with the debt threat facing the country," Conrad told Panetta, who appeared before the committee to present President Barack Obama's defense spending plan for the 2013 fiscal year that starts October 1.

Panetta, a former head of the White House budget office and the House of Representatives budget committee, told Conrad the panel needed to consider raising revenues or reducing mandatory spending on entitlement programs, which include the Medicare health insurance program for the elderly and disabled and the Social Security pension program.

"If you're not dealing with the two-thirds (of the budget) that is entitlement spending, if you're not dealing with revenues and you keep going back to the same place, frankly you're not going to make it," Panetta said.

"And you're going to hurt this country, you're going to hurt this country's security, not only by cutting defense, but very frankly by cutting discretionary spending that deals with the quality of life in this country," he said.

Obama's spending plan for the 2013 fiscal year beginning in October includes a base defense budget of $525.4 billion, about $5.1 billion less than approved for 2012.

The budget for wars abroad is $88.5 billion, a 23 percent drop from 2012, primarily due to the U.S. withdrawal from Iraq and a drawdown in Afghanistan. The Pentagon's top budget official told lawmakers it cost about $850,000 a year to maintain a soldier in Afghanistan.

CUTS 100,000 TROOPS

The proposed defense budget also begins to implement the $487 billion in cuts to projected spending over the next decade as required by an August deal between the White House and Congress. It calls for the military to cut more than 100,000 troops over five years and also slows many weapons purchases.

The budget does not include an additional $500 billion in cuts over 10 years that will be required beginning in January 2013 unless Congress takes action to avert them. The second round of cuts is required because lawmakers failed to reach a deal by the end of 2011 on an extra $1.2 trillion in federal spending reductions.

Panetta has repeatedly warned that the second round of cuts would be devastating to the military and has sought to draw a line at the defense reductions already proposed, which were built around a new U.S. military strategy.

General Martin Dempsey, the chairman of the Joint Chiefs of Staff, told the budget panel on Tuesday that additional cuts would force the Pentagon to reformulate its strategy and the United States "would not any longer be a global power."

While acknowledging the need to look at boosting revenue and reducing mandatory spending, Conrad told Panetta and Dempsey the Pentagon could not expect to escape any further budget cuts.

"As I've listened here this morning I hope the conclusion is not that there's no additional savings that can be derived from defense, not another nickel, because I don't believe it," he said.

"I don't think we're going to, at the end of the day, have an alternative here," Conrad said. "In fact if we don't find a way to come together around a comprehensive plan to have additional savings, what's ultimately going to happen here is it's going to be forced on us."

(Editing by Vicki Allen)

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