By David Alexander and Andrea Shalal
WASHINGTON (Reuters) - The Pentagon unveiled a $496 billion base budget on Tuesday that looks beyond Afghanistan to future U.S. security challenges after a dozen years of war, cutting the military to afford more training and new weapons as it adapts to an era of tighter spending.
The budget set the Obama administration on a collision course with Congress by trying to eliminate popular older weapons systems and curb military compensation while seeking $26.4 billion in additional defense spending to be paid for by closing tax loopholes and cutting mandatory spending.
The spending plan released on Tuesday means the Pentagon's base budget for the 2015 fiscal year essentially would remain flat for a third consecutive year as the department responds to directions to cut nearly $1 trillion in spending over a decade.
Defense Secretary Chuck Hagel said the budget "supports - and is informed by - our updated defense strategy" as outlined in the Quadrennial Defense Review, an examination of strategy and priorities that was released alongside the budget.
"Today's world requires a strategy that is neither budget driven nor budget blind," he said in a statement. "We need a strategy that can be implemented with a realistic level of resources, and that is what this QDR provides."
The two documents drew an immediate negative reaction on Capitol Hill. Representative Buck McKeon, the Republican chairman of the House Armed Services Committee, expressed dismay at the shrinking security spending and flatly rejected the strategy review, vowing to make the Pentagon rewrite it.
"The product the process produced this time has more to do with politics than policy and is of little value to decision-makers," McKeon said in a statement.
Army General Martin Dempsey, the military's top uniformed officer, signed off on the strategic review as "appropriate to the resources available" but made no bones about the fact that it meant a "smaller and less capable military" that would make it more difficult to meet U.S. security obligations.
The White House said the Pentagon's funding levels would enable the military to protect U.S. interests and execute the country's updated defense strategy, albeit with "somewhat increased levels of risk."
The risks "would grow significantly" if higher budget cuts go into force in 2016 and beyond as planned, it said.
TOTAL DEFENSE SPENDING UNKNOWN
The Pentagon's five-year budget plan released on Tuesday ignores the spending caps set by Congress for the 2016 to 2019 fiscal years, seeking $115 billion more than the limits set in the 2011 Budget Control Act.
Analysts said the true level of defense spending would not be known for several months until the Pentagon releases its war-funding request for 2015.
The department increasingly has relied on that segment of the budget for funding operations and modernization related to the Afghanistan conflict because it is not subject to congressional budget caps.
Todd Harrison, a defense analyst with the Center for Strategic and Budgetary Assessments, said money included in the war-funding budget in 2014 largely offset the more than $30 billion in across-the-board cuts imposed on the base budget.
He said Pentagon reliance on the war-funding budget was a "pretty dangerous situation" because once most U.S. forces withdraw from Afghanistan in December it will become more difficult to justify funding military operations through that supplemental measure.
Christine Wormuth, the deputy undersecretary of defense for strategy and plans, said the review and budget represented a transition from "the wars of the last decade in Iraq and Afghanistan to looking at future threats and ... what our joint force needs to be able to do in the next 10 to 20 years."
The budget calls for the Army to shrink to between 440,000 and 450,000 soldiers, down from a war-time high of 570,000, a reduction of 40,000 to 50,000 compared to last year's proposal.
It would eliminate the entire fleet of popular A-10 "Warthog" tank-killer aircraft, as well as the venerable U-2 reconnaissance planes. The budget also cancels several other key weapons programs.
The Army's new ground combat vehicle would be eliminated, saving $3.4 billion over the next five years, and the Army communications network being built by General Dynamics Corp would be scaled back, saving another $3.4 billion.
The budget also scraps plans to build two additional Lockheed Martin Corp Advanced Extremely High Frequency satellites, for $2.1 billion in savings, and defers two Global Positioning System III satellites to be built by Lockheed.
The Pentagon would use some of the savings to invest in new research, development and procurement. The budget includes $153.9 billion for weapons, including $40 billion for aircraft, $22 billion for ships and $8.2 billion for missile defense.
(Additional reporting by Phil Stewart; Editing by Susan Heavey and Jim Loney)