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Hint Dropped Of Health Care, Pay Cuts

Ash Carter, the Pentagon's head of acquisition has dropped a hint that there may be cuts to health care and other military personnel costs in the Pentagon budget due to be released next week.

"We are looking at health care. We are looking at personnel costs," Carter told a group of New York investors and defense industry leaders yesterday. He didn't say much more, other than to note that we would see what the budget contains when it is unveiled. Defense Secretary Robert Gates has, of course, told the world that "health care costs are eating the Defense Department alive" and he has hinted that military pay raises can't keep going on and up forever after years of substantial increases. But Gates will be taking on powerful veterans groups, the National Guard's supporters and, probably, the leadership of the House Armed Services Committee if he really does try to clip Tricare and put a cap on pay raises. It could well be the biggest fight of his tenure as defense secretary.

Meanwhile, the budget leaks have become an Australian flood. The Pentagon is likely to ask for roughly $113 billion worth of weapons, about $7 billion less than they expected to ask for last year. That is the word from the king of budget leaks, my colleague Tony Cappaccio at Bloomberg.

Here's Tony's breakdown of the request:

"In the budget, due for release Feb. 14, will be 32 Lockheed Martin Corp. F-35 jets for the Air Force and Navy, software upgrades for its F-22 fighter and additional MC-130 transports for special operations, said the officials, who spoke on condition of anonymity because they weren’t authorized to discuss budget figures before the request is published.

"The budget also includes for two Virginia-class nuclear submarines made jointly by Northrop Grumman Corp. and General Dynamics Corp., four Littoral Combat Ships made by Lockheed and General Dynamics-led teams, and $1 billion in advance funding for the Northrop-built CVN-78 aircraft carrier, the officials said.

"The budget adds about $1.4 billion to buy more Boeing Co. Army AH-64 Apache helicopters, drones from other companies and more Family of Medium Tactical Vehicles made by Oshkosh Corp."

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