Texas will see winners and losers in Pentagon budget cuts But president's plan trimming defense tab by $1 trillion worries some lawmakers

WASHINGTON — Texas' ready-to-go soldiers at Fort Bliss and Fort Hood and combat-tested backup forces in the Texas National Guard are positioned to benefit from President Barack Obama's shift in defense strategy to focus on quick, small footprint expeditions overseas.

But ongoing tinkering with the nation's defense blueprint means many Texans could feel the pinch from a planned reduction of at least 100,000 ground combat troops. And projected Pentagon spending cuts of at least $489 billion over the next decade could force layoffs at major defense contractors in Texas, such as Lockheed Martin, Raytheon, BAE Systems and Boeing Co.

With the nation's $15 trillion debt rivaling annual U.S. economic output, "this country is facing a crisis that it has to address," Defense Secretary Leon Panetta told roughly 500 soldiers in a visit to Fort Bliss on Thursday. "We have got to put everything on the table."

Fort Bliss remains "important" to the emerging defense blueprint, Panetta added, because the sprawling West Texas installation "fits the strategy that we want for the future."

Despite those reassurances, area lawmakers say there's still an air of uncertainty.

"There's repositioning going on that could be good or bad for Texas," cautioned U.S. Rep. Gene Green, D-Houston, a veteran of 19 years on Capitol Hill. "The jury's still out."

There is a lot at stake. The Defense Department funneled at least $65 billion into the Texas economy in 2008 and a further $42 billion in 2009, making the Lone Star State the top recipient of Pentagon expenditures both years. Fort Hood alone pumped $10.9 billion into the state economy.

Currently, the state has more than 225,000 active duty military personnel, reservists, Texas National Guard troops and civilian Pentagon employees, as well as roughly 12,000 civilians holding defense-related jobs.

More Information ADDING IT ALL UP Cash flow: The Defense Department poured at least $65 billion into the Texas economy in 2008 and $42 billion in 2009, making the Lone Star State the top recipient of Pentagon expenditures both years. Fort Hood alone pumped $10.9 billion into the state economy. Personnel: Texas has more than 225,000 active-duty military personnel, reservists, Texas National Guard troops and civilian Pentagon employees.

Total cuts of $1 trillion

Stephen Fuller, an economic modeling expert at George Mason University, estimated that Obama's planned defense reductions of $1 trillion could claim as many as 1 million jobs nationwide - with 91,600 of those losses coming in Texas.

"Our analysis reveals bleak outcomes for both the defense industry and the economy as a whole if $1 trillion is cut from defense," Fuller said.

Nevertheless, the Texas National Guard - which has seen extensive action in Iraq and Afghanistan - could benefit from Pentagon plans to shift combat functions from active duty forces. Troops from the Texas National Guard's 36th Infantry Division, based in Austin, took the lead during recent operations in southern Iraq, for instance.

Texans on Capitol Hill say steadily modernized installations such as Fort Hood and Fort Bliss should retain their prominent roles because they offer space to maneuver, firing ranges, combined arms training opportunities, and rapid deployment capabilities.

"It is in the best interests of the Army and our national security that we continue to make the best use of these important domestic installations and never signal to our enemies that we can fight only one major regional conflict at a time," said U.S. Sen. Kay Bailey Hutchison, R-Dallas.

Obama's shift in focus from Europe and the Middle East to East Asia to deal with potential challenges from China and North Korea still could affect the two Army bases in Texas, as the Navy and Air Force move to take the leading edge of force projection across the Pacific.

The focus on Asia also could stir additional political resistance to the costly F-35 Lightning II, a stealthy multi-role fighter being built by Lockheed Martin in Fort Worth that might have a limited role across East Asia. With initial plans to build more than 2,400 of the state-of-the-art warplanes at a cost of more than $300 billion, the project remains vulnerable to cutbacks.

Boeing not speculating

Details of the looming budget reductions won't be made public until the president's budget submission to Congress in February for the fiscal year that begins Oct. 1.

So for now, defense firms are buying time.

"At this point, it is too early for us to speculate on what deep defense budget cuts might mean for individual programs or the facilities that support them, in Texas or across the country," said Dan Beck, a spokesman for Boeing, which employs 5,565 workers in Texas and has 1,285 suppliers that employ - directly or indirectly - 70,000 people.

'Kind of mystifying'

For its part, Lockheed Martin said the firm welcomed development of "new strategic guidance for the (Pentagon)," but spokesman Chris Williams added that it's "premature to speculate on the impact of the DoD's new strategic guidance on our business." The firm employes 20,000 in Texas.

With challenges ahead for both bases and contractors in Texas, defense experts are at odds over the way the sweeping changes are being carried out.

The shift in strategy and accompanying defense cuts will inflict "quite an economic impact" on Texas, warns Max Boot, a Council of Foreign Relations expert who wrote Overspending the Peace Dividend

"It's kind of mystifying to me that Congress and the White House - after spending trillions on an economic stimulus - are now willing to throw out of work skilled production workers and skilled military veterans," Boot said.

But Richard Betts, director of the Institute of War and Peace Studies at Columbia University, says states like Texas have little choice but to shoulder the economic impact.

"I don't think military expenditures should be a welfare program," says Betts, author of American Force, Dangers, Delusions and Dilemmas in National Security

"We need to decide what's necessary strategically, and then let the chips fall where they may," he said.

stewart.powell@chron.com