By David Alexander
WASHINGTON (Reuters) - Cuts in defense spending as part of President Barack Obama's bid to trim the $1.4 trillion U.S. budget deficit could hurt the economy or imperil security unless undertaken as part of a careful review of military needs, an industry representative and a key lawmaker said.
Marion Blakey, head of the Aerospace Industries Association, warned House Speaker John Boehner in a letter released on Friday that precipitously cutting the defense budget could make the U.S. "fiscal and broader economic situation even worse."
Any cuts to defense should be done in a "careful and thoughtful manner guided by our military leaders" and carried out only after the Pentagon completes its review of military force structure and capabilities, said Blakey, whose group represents hundreds of defense and aerospace companies.
Lockheed Martin, the Pentagon's largest defense contractor and developer of the troubled F-35 Joint Strike Fighter, announced on Thursday that it planned to cut 1,500 aerospace jobs in response to flattening defense spending.
Senator Daniel Inouye, head of the Appropriations Committee that approves military funding, voiced his own concerns about defense cuts in a statement released on Thursday. He said defense spending had grown 74 percent since 2001 in real terms but cautioned against a rush to trim the Pentagon base budget.
"We need an honest debate on how much is needed to preserve our security, but let me say this -- we can only substantially cut these programs at our nation's peril," Inouye said.
Newly installed Defense Secretary Leon Panetta, who took the oath of office on Friday, acknowledged in a statement to Pentagon employees that cuts would be coming but said he was determined to avoid eroding the quality of the force.
"We must preserve the excellence and superiority of our military while looking for ways to identify savings. While tough budget choices will need to be made, I do not believe in the false choice between fiscal discipline and a strong national defense. We will all work together to achieve both," he said.
$400 BILLION IN CUTS
Obama asked former Defense Secretary Robert Gates in April to cut $400 billion in defense spending over 12 years. That followed an efficiency drive by Gates over the previous two years that eliminated $400 billion in planned spending.
Gates warned that the new cuts would require a reduction in force structure and launched a review to present Obama with options and the strategic risks they pose.
Critics say cutting $400 billion from the bloated defense budget would not be too hard and could largely be achieved by allowing spending to grow at the rate of inflation. Some have called for $1 trillion in cuts over a decade.
The Obama administration has sought nearly $690 billion in military spending for the 2012 fiscal year beginning October 1, including a $553 billion Pentagon base budget and $118 billion for the wars in Afghanistan and Iraq. The remaining funds are for the nuclear stockpile handled by the Department of Energy.
The Republican-controlled House of Representatives and Democratic-led Senate are working on funding bills that look to cut the president's request by some $6 billion to $8 billion, but a final agreement is still weeks away.
The concerns expressed by Blakey and Inouye come amid growing momentum for bigger cuts in defense spending as part of a broader deal aimed at slashing the nation's $1.4 trillion budget deficit and $14.3 trillion in debt.
Congress is facing an August 2 deadline to raise the limit on federal borrowing and or risk triggering a default that could damage an already fragile banking system. Republicans are reluctant to agree to a new limit without first achieving a deal to cut spending.
The White House and Congress are struggling to come up with a budget deal that would produce some $4 trillion in cuts over a decade, but so far have only achieved about half that amount.
(Editing by Eric Walsh)