By Phil Stewart
WASHINGTON (Reuters) - Six months into his tenure as U.S. defense secretary, Leon Panetta has simultaneously been branded an unreasonable defender of Pentagon spending and an ax-man who is forging ahead with dangerous cuts to the American military.
In Washington's power corridors, there are plenty of people who make one charge or the other about Panetta - and maybe even both at the same time.
But this much is clear: the 73-year-old defense chief is about to leave an indelible mark on America's military, reshaping it after a decade of war in Iraq and Afghanistan. He and President Barack Obama offered a glimpse of that leaner future at a press conference on Thursday.
And if Panetta plays his political cards right, he may be able to confound predictions of a second, major wave of defense cuts that he says would turn the Pentagon into a "paper tiger."
Whether he will succeed in holding the line on the defense budget is unclear but analysts say 2012 will likely decide Panetta's legacy as the 23rd secretary of defense.
"My bet would be that we'll have a lot of nervous Nellies biting their fingernails from now until December" about whether more cuts are coming, said Brookings Institution analyst Michael O'Hanlon, author of the book "The Wounded Giant: America's Armed Forces in an Age of Austerity."
FRICTION WITH WHITE HOUSE
Panetta, a former White House budget chief once known as something of a deficit hawk, has stunned some Democrats and even created friction with President Barack Obama's White House last summer as he attempted to limit the fallout on the Pentagon from America's budget woes.
One U.S. official said Obama had to press Panetta at one point to be more accepting of cuts.
"They're on the same page now and have been for a long time," said a second U.S. official, speaking to Reuters on condition of anonymity. "But yes, last summer, there was a disconnect."
Panetta has a long history in Washington, much of it high-profile work dealing with tough choices on budgets that put him at odds with many Republicans in the past. He was White House budget director under President Bill Clinton before becoming his chief of staff.
Back in 1990 as chairman of the House Budget Committee, Panetta was one of the Democratic House members who negotiated with President George H.W. Bush's White House chief of staff, John Sununu, to reach a budget agreement to cut the deficit.
The agreement led Bush to violate his "read my lips, no new taxes" pledge, which disappointed Republicans and helped Clinton win the presidency in 1992.
Fast-forward two decades. His fiery rhetoric in support of limiting cuts to projected defense spending has surprised and impressed some of Obama's toughest Republican critics.
Senator John McCain told Reuters he admired Panetta and was "glad that he is where he is." These comments are in contrast to his withering criticism about the U.S. withdrawal from Iraq and a faster drawdown in Afghanistan than military commanders recommended.
"When he was head of the budget committee, he had a very different view about spending on defense," said McCain, who ran against Obama in the 2008 presidential election.
"But we all live and learn, let's say. It's not where you stand, it's where you sit."
IS THE BUDGET GROWING?
The narrative about the Pentagon budget varies depending on who's talking. Obama, preparing for the 2012 election, was quick to point out on Thursday that the Pentagon's base budget will keep rising, even though the military is drastically scaling back its projected spending.
Obama, with military chiefs behind him, noted the defense budget "continues to be larger than roughly the next 10 countries combined."
In Congress, Republican defense hawks slammed the downsizing effort.
"This is a lead from behind strategy for a left-behind America. The President has packaged our retreat from the world in the guise of a new strategy," said Rep. Howard McKeon, the chairman of the House Armed Services Committee.
In the middle was Panetta, who acknowledged some tough choices ahead. He said the defense budget involved accepting some "additional but acceptable risk."
"There are going to be members (of Congress) that will clearly not support some of those decisions ... That's the nature of making hard choices," he said. "I am confident that ultimately Congress will support what we're trying to do."
Panetta and top brass hope that Congress - once it has seen the extent of the cuts, which are expected to be fully detailed later this month - will look for further reductions elsewhere.
But analysts say there is a very real possibility that America's bitterly divided lawmakers will fail to avert another $600 billion in automatic Pentagon cuts from starting to kick in next year, a process known as sequestration.
"I don't think there's a clear path ahead (in 2012) that eliminates sequestration," O'Hanlon said, adding the most likely window for Congress to actually cooperate wasn't until after the presidential election in November.
Panetta warned in a letter to lawmakers last year that sequestration would leave the United States with its smallest ground force since 1940, the smallest number of ships since 1915 and the smallest air force in its history.
Born to Italian immigrants in Monterrey, California, Panetta began public life as a moderate Republican, working for a time in the Nixon administration, but concluded in the 1970s there was no place in the party for him and became a Democrat.
He has acknowledged that the move from his job as CIA director, where he helped oversee the operation to kill Osama bin Laden, has been challenging.
"The Pentagon is a big damn bureaucracy," he told a conference last year, using some of his trademark rough language. "I feel like going from the CIA to the Pentagon is like going from the corner hardware store to Home Depot."
Even though he is expected to trim weapons programs, Panetta seems intent on preserving America's defense industrial base and the high-tech advantage it provides to the American military.
"Look, I know I'm going from three to two cops in a very rough neighborhood; that's what I've been asked to do," Panetta told workers at a submarine plant in Connecticut last November.
"But if I can give those two cops the best technology in the world, the best weaponry in the world, the best submarines in the world, then we can protect that neighborhood."
His tact so far has kept the military chiefs behind him even as they prepare to absorb larger cuts than they wanted.
As the budget ax falls, Panetta may see sniping erupt among the services, whose chiefs looked characteristically stern as Obama made his appearance.
"The acrimony between the chiefs is about to break out. The competition for resources is going to get ugly," said a former senior Pentagon official.
(Additional reporting by Laura McInnis, David Alexander and Andrea Shalal-Esa; Editing by Eric Walsh)