Trade group urges U.S. defense modernization

By Jim Wolf

WASHINGTON (Reuters) - The next president must launch a multibillion-dollar, decade-long military modernization drive to head off a loss of U.S. ability to protect its interests worldwide, the trade group that represents major defense contractors said in a report on Wednesday.

"America is at a crossroads," the Aerospace Industries Association said in the survey prepared for the winner of the November 4 election, whether it be Democrat Barack Obama or Republican John McCain.

Modernization, especially involving warplanes and other aerospace systems, has been "chronically deferred" despite recent defense spending increases, the group said.

"If we want to be able to influence events and protect our interests overseas, we must revitalize the 'arsenal of democracy' through consistent defense investment," the group said.

For the coming budget year, President Bush has sought $518.3 billion for the Defense Department's base budget, a smaller percentage of the total value of U.S. goods and services than the nation spends on dining out or clothes, the report said.

"We view the decade of 2010-2019 as critical because many of our currently deployed and mainline defense and aerospace systems will be reaching the end of their useful service lives during this period," it said in the survey titled Defense Modernization: Today's Choices for Tomorrow's Readiness."

"The bill is now due," the report said. "Either we commit to a decade-long defense recapitalization and modernization, or we resign ourselves to a diminutive role on the world stage."

Marion Blakey, the association's president and chief executive officer, said Russia's clobbering of Georgia, a U.S. ally, this month supported the report's underlying premise.

"We can't predict where future conflicts will arise but our national security strategy should be based on full-spectrum dominance," she said in a statement accompanying the report.

Without sufficient investment, "America will eventually lose its technological superiority as potential adversaries pursue new means to defeat our forces, weapons and tactics," the report said.

Defense-modernization funding has been squeezed in the Defense Department's baseline budget -- which does not include war outlays -- as operations and maintenance costs, along with personnel expenses, consume a growing share.

By 2013, the operations and support accounts will have more than doubled over a 25-year period, rising faster than the defense budget itself, the report said.

By contrast, investment -- including weapons purchases and research and development -- will have risen by slightly more than 50 percent, "well below the growth path of the general budget," it said.

Investment thus will decline to 35 percent of the defense budget by 2013, down from 40 percent in fiscal 1989, the association said.

As a result, tens of billions of dollars are "migrating" to cover operating costs, it said.