US defence buildup comes amid fiscal pinch

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WASHINGTON, Oct 4 (Reuters) The price of the world's most expensive security blanket -- the US defence budget -- is growing robustly just as Washington can least afford it, with an aging population soon demanding their promised retirement and health benefits, lawmakers and independent analysts said.

The US Senate yesterday was poised to approve nearly 460 billion dollars to allow the the Pentagon to pay soldiers, buy weapons and conduct research over the next 12 months.

That's up from about 335 billion dollars when President George W Bush took office in 2001, before the September 11 attacks that year, which helped spark a surge in defense spending.

Similar legislation already has passed the US House of Representatives.

While 460 billion dollars may seem like a staggering amount, it is just a portion of the total US defense budget for this fiscal year that started on Monday.

The price tag actually could top 700 billion dollars when including nearly 200 billion dollars sought for the wars in Iraq and Afghanistan, and funds for building military bases, taking care of a growing number of wounded and sick veterans and nuclear weapons activities.

With no end in sight to the Iraq war now in its fifth year, members of Congress and Pentagon officials looking beyond this year worry about a fraying military that will need even more money to fix.

''While we continue to spend at this colossal rate in Iraq...our military chiefs advise that as a nation we must be concerned about the eroding strength of our military,'' said Rep. John Murtha, a Pennsylvania Democrat.

Murtha, who chairs a House panel that oversees military spending, said the Pentagon estimates ''it will take hundreds of billions of dollars to rebuild our capability to deter and prevail in future conflicts.'' All signs are that Congress will be receptive to the Pentagon's request for bigger budgets.

BABY BOOMERS But this will come as the US government enters a fiscal choke-point -- the start of the retirement of the baby boom generation, the slew of people born roughly from 1946 to 1964.

As they age, the already growing costs of the Social Security, Medicare and Medicaid retirement and health care programs will spin out of control unless changes are made.

''We need to be prepared to pay for the long-term...health care and retirement and this (growing defense spending) is adding to it,'' said Robert Bixby, executive director of the Concord Coalition, a nonpartisan group advocating ''responsible'' fiscal policy.

Defence hawks note that US military spending, as a percentage of the overall economy, is smaller than it was during the Cold War, even with the Pentagon's growing budget.

But given the pressing need to deal with baby boomers, some specialists think military spending must be examined as part of a broader budget solution that focuses on massive government benefit programs and potential new taxes.

''Certainly there are areas of savings in defence,'' said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. On the Pentagon, she said, ''In anything that large, the way we do procurement, inefficient weapons systems, outdated weapons systems'' should all be examined.

For now, there's no evidence Congress will take on these tough budget issues, especially with national elections little more than a year away.

On Tuesday, Washington's skittishness about taking bold steps were displayed when House Appropriations Committee Chairman David Obey roiled the waters by proposing a war tax to cover the cost of future combat in Iraq.

Obey, a Wisconsin Democrat, may as well have dropped a soiled diaper amid his fellow House Democrats, they distanced themselves so quickly from the idea.

At the White House, spokeswoman Dana Perino said of the proposal: ''I just think it's completely fiscally irresponsible and the president won't go along with it.'' Bixby countered, ''I can't imagine how it could be described as fiscally irresponsible to pay for a war. That's totally inconsistent with anything we've ever done in our history before.'' REUTERS SBA AS0722

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