China Threats Merit Shifting of U.S. Defense Dollars, House's McKeon Says

The House Armed Services Committee’s top Republican said he favors shifting defense dollars to boost U.S. missile defense and to counter China’s ability to limit U.S. operations in the western Pacific.

“While China today may not intend to attack our carriers, neutralize our bases in Japan and Guam, or push back our naval presence out of the South China Sea, they are without question making the investments and developing capabilities to do just that,” California Representative Howard McKeon told a meeting sponsored by the Washington-based Foreign Policy Initiative research group today.

“The question is whether we will be ready and capable to respond,” said McKeon, who is line to lead the armed services panel when Republicans take control of the House next year. “I view it as the responsibility of the Armed Services Committee to shift funds to higher national-security priorities and promising technologies such as missile defense” and efforts to counter China’s “anti-access” threat.

McKeon’s speech represents the most detailed outline of the Republican defense agenda since the party won enough seats in Nov. 2 midterm elections for a House majority in the next Congress. He signaled a desire to raise defense spending more than planned annual increases of 1 percent after inflation.

Military Investment

“One percent real growth over the next five years is a net cut for investment and procurement accounts,” he said. “A defense-budget decline portends an America in decline.”

McKeon also said he would like the committee to hear testimony from the top U.S. commander in Afghanistan, General David Petraeus, to evaluate President Barack Obama’s plan to begin transferring forces out of that country.

In his speech, McKeon said that to protect the continental U.S. and American forces “we can’t just talk about missile defenses -- we need to invest in missile defense,” including the Aegis air-defense network. Lockheed Martin Corp. and Raytheon Co. are the Pentagon’s primary contractors for the Aegis network on Navy destroyers and cruisers and the Standard- missile family of interceptors designed to stop anti-ship missiles.

Chinese Capabilities

Increased missile defense and “anti-access” military spending could benefit companies that make sea-based missile defense and electronic warfare systems, such as Bethesda, Maryland-based Lockheed, Waltham, Massachusetts-based Raytheon, and Los Angeles-based Northrop Grumman Corp., said Loren Thompson, a defense analyst with the Lexington Institute in Arlington, Virginia.

Also standing to gain are ship and submarine makers Northrop Grumman and General Dynamics Corp., based in Falls Church, Virginia, said James McAleese, a consultant to defense companies.

McKeon’s remarks about Chinese capabilities come two days before the U.S.-China Economic and Security Review Commission is scheduled on Nov. 17 to release its 2010 annual report that says China’s non-nuclear missiles have “the capability to attack” and close down five of six major U.S. Air Force bases in South Korea and Japan.

China’s improved inventory of short- and medium-range missiles provides a “dramatic increase” in its ability to inhibit’’ U.S. military operations in the western Pacific, a draft of the report says.

McKeon said Republicans also plan oversight of Obama’s policy on release of detainees from Guantanamo Bay and his intent to close the facility.

Engine, F-35 Support

McKeon told reporters after his speech that he supports General Electric Co.’s F-136 back-up engine for the F-35 fighter, including continued funding for it in fiscal 2012.

The House in its defense bill this year, which McKeon supported, added $485 million for continued development.

The Bush administration, starting in fiscal 2007, and the Obama administration have opposed continued funding, calling the program wasteful. Rolls-Royce Group Plc, based in London, is a partner of Fairfield, Connecticut-based GE on the project.

Separately, McKeon said he doesn’t favor additional cuts to Lockheed’s F-35 stealth fighter -- the No. 1 weapons program at $382 billion. He said he’s been involved in this program since “Day One,” more than 10 years ago, when prototypes were built in his district.

“My concern is that I’ve seen us cut back one program after another,” including the B-2 bomber built by Northrop Grumman in his district that went from a planned 130 to the current 21 aircraft, and Lockheed’s F-22, which was stopped at 188 planes from a planned 450.

“I just think the F-35 will be the next one. My concern is we end up back with a ‘bow and arrow’ -- I’m hoping not,” McKeon said.

McKeon criticized the frequency of changes required by the military during the F-35 program’s development.

“There’s been so many changes on it, and then they blame the manufacturer,” he said. “We need to change how we buy.”

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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