Hagel’s Budget Seeks Smallest U.S. Army Since Before 2001 Attack

Defense Secretary Chuck Hagel today outlined a five-year Pentagon budget that would shrink Army forces to fewer than before the attacks of Sept. 11, 2001, while retiring older weapons including the U-2 spy plane and the A-10 attack aircraft.

“Our recommendations favor a smaller and more capable force –- putting a premium on rapidly deployable, self-sustaining platforms that can defeat more technologically advanced adversaries,” Hagel said in remarks at the Pentagon as he proposed a budget for fiscal year 2015 of $496 billion, in line with congressionally approved limits.

Hagel’s plan, to be sent to Congress next month as part of President Barack Obama’s proposed budget for the fiscal year that begins in October, will be reshaped by lawmakers who routinely reject Defense Department initiatives to cut back. The proposal for a smaller Army met immediate resistance today.

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“It’s going to be Congress’s job to step in and move those numbers up,” Republican Representative Michael Turner of Ohio, a member of the House Armed Services Committee, said on Bloomberg TV’s “In the Loop” program. “The world is not getting to be a safer place. This is not the time for us to begin to retreat, and certainly not the time to cut our military.”

Hagel’s plan would reduce the Army by 6 percent to about 490,000 personnel by 2015 from about 522,000 today, accelerating by two years the Army’s plan to reach that total by 2017. Hagel’s proposal also calls for reductions to about 450,000 by 2019 -- 30,000 fewer than the active-duty force in September 2001 before the terrorist attacks on the U.S.

Five-Year Budget

For the five-years ending in 2019, the Defense Department’s budget forecast includes $115 billion more in spending than currently authorized in congressionally mandated levels under the budget cuts called sequestration.

The plan calls for requesting $535 billion in 2016, or $35 billion more than the sequestration level; $544 billion for 2017, or $31 billion over the cap; $551 billion in 2018, or $27 billion over the cap and $559 billion in 2019 or $22 billion over the cap.

In addition to the $496 billion budget, Hagel urged Congress to approve $26 billion for the Pentagon as part of a $58 billion package that Obama is preparing. Hagel said the money would go toward training and facilities repairs. The added funds would come from spending cuts and revenue increases through taxes, which Congress would have to approve amid Republican opposition.

Weapon’s Request

Hagel’s preview echoes similar practice by his predecessors Robert Gates and Leon Panetta, who highlighted parts of their budgets before formal release. The deepest cuts since 2001 were announced by Gates in April 2009 with the termination or truncation of numerous programs, including the manned vehicle portion of Boeing Co.’s then $159 billion Future Combat System for the Army.

The Defense Department’s weapons buying request for 2015 will be about $91 billion, or $15.2 billion less than the $106.2 billion estimated last year, and $64 billion for research and development, or $8.8 billion less than forecast, according to internal budget figures provided by a defense official.

Hagel today said he accepted the Army’s proposal to terminate its Ground Combat Vehicle program and instead direct program funds toward “a next-generation platform.” General Dynamics Corp. (GD) and BAE Systems Plc (BA/) are developing competing versions of the combat vehicle.

Jet-Engine Technology

The Air Force will get to continue developing a new bomber and a refueling tanker aircraft as well as the F-35 Joint Strike Fighter, Hagel said. The service will seek $1 billion to design a new jet-engine technology that will produce “sizable cost-savings,” Hagel said.

If automatic budget cuts resume in 2016 the Air Force would have to retire its entire fleet of KC-10 tankers, buy fewer F-35 jets and sustain 10 fewer Predator and Reaper drone patrols, Hagel said.

To pay for the programs and the new engine, the Air Force will shrink the size of its tactical air squadrons and completely eliminate its A-10 attack airplane fleet, to save $3.5 billion over five years, Hagel said. The move would let the Air Force concentrate its resources on the F-35 made by Lockheed Martin Corp. (LMT)

The A-10, known as the Warthog, was built by Fairchild Republic and has been upgraded by Chicago-based Boeing Co., Falls Church, Virginia-based Northrop Grumman Co. (NOC) and Bethesda, Maryland-based Lockheed.

Global Hawk

The Air Force also will retire its fleet of 50-year-old U-2 spy planes in favor of Global Hawk surveillance drones made by Northrop Grumman, Hagel said.

The decision to depend on drones reverses a previous attempt by the Pentagon to keep the U-2s instead and comes as the Defense Department “has been able to reduce the Global Hawk’s operating costs,” Hagel said.

The Pentagon won’t conduct any negotiations to buy more than 32 Littoral Combat Ships, compared with the 52 originally proposed, Hagel said. Versions of the ship are made by Lockheed and Henderson, Australia-based Austal Ltd. (ASB)

“I am concerned that the Navy is relying too heavily on the LCS to achieve its long-term goals for ship numbers,” Hagel said. The ship is intended to operate in a “relatively permissive environment,” and the Pentagon must “closely examine” whether the vessel “has the protection and firepower to survive against a more advanced military adversary and emerging new technologies, especially in the Asia-Pacific,” Hagel said.

Frigate Capabilities

Hagel said he has asked the Navy to design a “capable and lethal small surface combatant, consistent with the capabilities of a frigate.” The Navy must consider new designs as well as modifications to the current LCS design, Hagel said.

Current spending plans foresee the Navy keeping 11 aircraft carrier groups, Hagel said. “However, we will have to make a final decision on the future of the George Washington aircraft carrier in the 2016 budget,” he said.

If Congress doesn’t reverse the automatic budget cuts by 2016, the George Washington would be retired before a scheduled overhaul, leaving the Navy with 10 carriers, Hagel said.

Some Risk

While reducing the size of the Army “entails some added risk if we execute extended or simultaneous ground operations, our analysis showed that this force would be capable of decisively defeating aggression in one major combat theater” in addition to defending the U.S. homeland and supporting air and naval forces, Hagel said.

If Congress doesn’t reverse automatic budget cuts by 2016, active-duty Army “would have to draw down to an end-strength of 420,000 soldiers,” Hagel said.

Army Chief of Staff General Ray Odierno said as recently as this month that he’d be comfortable with a force of 450,000. A level of 420,000 would be too low, he said.

Hagel said U.S. Special Operations forces will grow to 69,700 personnel from 66,000 today because they’re “uniquely suited to the most likely missions of the future.”

The Pentagon will propose a 1 percent pay raise for all military personnel except general and flag officers whose compensation for 2015 will be frozen at current levels, Hagel said.

Reducing Benefits

The Defense Department also will seek to cut back growth in tax-free housing allowances, reduce by $1 billion the annual subsidy to military commissaries and make adjustments to the military health insurance program, Hagel said. Military retirees and some active-duty personnel will be asked to pay “a little more in their deductibles and co-pay,” he said.

The political resistance to any cuts in pay for the active-duty military or benefits for veterans was demonstrated this month: Congress partially reversed its own decision in December’s budget agreement to restrain cost-of-living adjustments for working-age military retirees.

Hagel faces a tighter budget environment than either Panetta or Gates because his plan was required under the Bipartisan Budget Act to cut as much as $43 billion from the year-ago level envisioned for fiscal 2015.

Hagel said the Pentagon will ask Congress to approve another round of base closings in the U.S. in 2017, although lawmakers have denied similar requests in the last two years. “But if Congress continues to block these requests even as they slash the overall budget, we will have to consider every tool at our disposal to reduce infrastructure,” Hagel said.

The Pentagon already has cut base infrastructure in Europe by 30 percent since 2000 and plans to pursue more closures on the continent this year. The Defense Department doesn’t need congressional approval to shut bases outside the U.S.

To contact the reporters on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net; Gopal Ratnam in Washington at gratnam1@bloomberg.net

To contact the editor responsible for this story: John Walcott at jwalcott9@bloomberg.net

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