Military Spending Cuts by U.S. May Not Be as Deep as Forecast

Posted on: Nov. 24th, 2005 || Source: bloomberg.com | E-mail Article | Print Article

Military Spending Cuts by U.S. May Not Be as Deep as Forecast

Nov. 24 (Bloomberg) -- Cuts in U.S. defense spending may not be as severe as some investors anticipate because lawmakers will seek to preserve most large weapons programs under development by contractors including Lockheed Martin Corp. and Boeing Co.

``Nothing radical is going to happen,'' said David Scruggs, a defense analyst with the Center for Strategic and International Studies, a Washington-based research group. ``As long as we're still fighting in Afghanistan and Iraq, I don't see major cuts. You will see some shaving around the edge.''

The Pentagon may have to cut at least $32 billion from its planned spending through 2011, a top defense official said last month. Lawmakers would rather spread those reductions among various programs than jeopardize any single project, Scruggs said. Investor concern about the future of programs such as Lockheed's $256 billion Joint Strike Fighter has driven down the shares of military contractors in the past month.

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