(Reuters) - The Pentagon offered up a $526.6 billion budget on Wednesday that calls for closing bases, slashing the civilian workforce and scrapping weapons programs, holding out hope the Congress might still opt for an alternative to even more draconian cuts already on their way.
President Barack Obama's proposed Pentagon budget for the 2014 fiscal year asks Congress to take a series of politically difficult steps, including starting a new round of U.S. base closure proceedings, increasing healthcare fees for military retirees and slowing military pay increases.
Defense officials said the department also planned to reduce its civilian workforce by 40,000 to 50,000 over five years and take new steps to reduce the cost of healthcare, including overhauling military treatment facilities.
"The costs of infrastructure, overhead, acquisitions and personnel compensation must be addressed in order to put the Department of Defense's budget on a sustainable path - particularly given the pressures on our top-line budget," Defense Secretary Chuck Hagel said at a budget briefing.
The budget is part of Obama's spending plan sent to Congress. It stands little chance of being enacted into law and is meant to serve largely as a negotiating tool with Republicans, who have outlined budget proposals of their own.
The budget proposal included $88.5 billion for the war in Afghanistan and other overseas operations, the same amount as requested last year. Comptroller Robert Hale said the figure was a placeholder and would ultimately be somewhat lower, but still high because of the cost of removing equipment from Afghanistan.
The Defense Department is in the midst of a long-term budget drawdown after a decade of increases. It began implementing $487 billion in cuts to proposed spending in 2012 and was hit by an additional $500 billion over a decade starting on March 1.
Obama's proposed Pentagon budget is still $52 billion higher than spending caps set by law, which is likely to mean another year of financial uncertainty for the department.
While looking for ways to cut back in the current tight fiscal environment, the 2014 Pentagon budget would continue to fund high-priority programs and initiatives, including the strategic "pivot" to the Asia-Pacific announced last year.
$8.4 BILLION FOR JOINT STRIKE FIGHTER
The budget includes $8.4 billion for continued development of the three variants of Lockheed Martin's F-35 Joint Strike Fighter, the Pentagon's most expensive procurement program.
It also includes $10.9 billion for new ship construction, $9.2 billion for missile defenses, $379 million for development of a new long-range bomber, $4.7 billion for cyberspace operations and $10.1 billion for space technologies. It aims to save $9.9 billion by restructuring and canceling arms programs.
"This budget made important investments in the president's new strategic guidance - including rebalancing to the Asia-Pacific region and increasing funding for critical capabilities such as cyber, special operations and global mobility," Hagel said in a statement.
Obama's overall federal budget plan seeks new taxes and spending cuts that aim to replace the automatic, across-the-board reductions known as sequestration that went into effect on March 1. The Pentagon's share of the March 1 cuts is about $500 billion over 10 years, or about $50 billion a year.
The president's budget proposal unveiled on Wednesday would replace the $500 billion sequestration cut with a $150 billion reduction, most of it spread over a five-year period beginning several years from now. Some $34 billion in cuts would be implemented over the next five years.
The proposal depends on Congress agreeing to eliminate the sequestration budget cuts. The White House and Republicans have been trying for two years to reach a deal to eliminate sequestration, without success.
The Pentagon budget asks Congress to begin a new round of U.S. Base Realignment and Closure proceedings, a politically unpopular request that was rejected by lawmakers last year and has already produced hearings this year, even before the decision was announced.
The budget request includes $2.4 billion over the next five years to pay for the process. Base closures disrupt local economies and cost a huge amount upfront, saving money only over the long run.
Based on estimates from the last round of base closures that started in 2005, the Pentagon is believed to have more than 20 percent surplus of infrastructure.
The 2014 budget renews a request to Congress for increased fees for pharmacy co-pays and healthcare enrollment for retired military personnel. The Pentagon also proposed a 1 percent pay increase for military employees, lower than the 1.8 percent increase in the Employment Cost Index ordinarily used to determine pay increases.
Congress has been resistant in the past to increasing healthcare fees for military retirees and has often approved pay increases above those recommended by the department, a factor analysts say has led to military pay rising at an unsustainable pace over the past decade.
(Editing by Warren Strobel and Mohammad Zargham)