By Christopher Hinton
NEW YORK (Dow Jones) -- U.S. Defense Secretary Robert Gates is
expected Monday to present Congressional leaders with additional
details to the Pentagon's $534 billion budget request for fiscal
2010, which is likely to include procurement cuts to some large
weapon systems.
The request is a 4% climb from last year's budget, making it
virtually flat after adjusting for inflation. Supplemental funding,
which includes money for overseas fighting in Iraq and Afghanistan,
was $130 billion, down from about $136 billion in 2009.
Defense spending has nearly doubled since the terrorist attacks
on Sept. 11, 2001. In total, the total U.S. federal budget has
grown nearly 90% since 2001 to President Barack Obama's 2010
request of $3.55 trillion.
Analysts have noted a large number of large procurement programs
that could see the ax as the Pentagon rebalances, including the
airborne laser, TSAT, the joint light tactical vehicle, future
combat systems, the Zumwalt-class destroyer, and some
missile-defense related programs.
"We expect the greatest impact to Boeing (BA) with the
likelihood of material changes to airborne laser, future combat
systems," and ground-based midcourse missile defense, said
Bernstein Research analyst Douglas Harned, in a note to
investors.
Also up for cutbacks are Lockheed Martins Corp.'s (LMT) F-22
Raptor jet fighter and aircraft carriers built by Northrop Grumman
Corp. (NOC), though Congress is expected to fight such attempts
with the argument the programs create jobs.
Indeed, Inside Defense reports Gates may actually request 67
more Raptors, extending the program by another three years and
bringing the final fleet number to 250. Such a move could smooth
the way for other budget cuts that Congressional members might
otherwise object to.
Gates may also seek to cut the Navy's carrier groups to nine
from 11, the newsletter said.
The latest budget request places more focus on increasing
military personnel and benefits. Plans include growing the Army by
547,400 soldiers and the Marines by 202,000. .
Investors have been anticipating a reduction in Pentagon
spending for large weapon systems sine last summer, with the Spade
Defense Index (DXS) falling nearly 30% since September to
1382.47.