By Donna Smith
WASHINGTON (Reuters) - Top Senate Republicans wanting to spare the military from further deep spending cuts on Thursday unveiled a money-saving proposal to slash the federal workforce by 5 percent instead.
Some $1.2 trillion in automatic spending cuts across domestic and military programs are due to kick in from 2013 as part of a 10-year deficit reduction deal agreed to by lawmakers last year. Half of the cuts, or $600 billion, would fall on the military.
Many Republican lawmakers do not like the blunt approach to deficit reduction. The bill unveiled by John McCain, the top Republican on the Senate Armed Services Committee, John Kyl, the No. 2 Republican in the Senate, and four fellow senators would scrap the first installment of the cuts.
Under the measure, about $127 billion would be saved by scaling back the 2 million-strong federal civilian workforce through attrition and freezing its pay.
A 5 percent cut in personnel would translate to about 100,000 jobs. Agencies would only be able to hire two people for every three who retire or leave government employment.
"I believe that the cuts ... aimed at the Department of Defense are a threat to our nation's security and we are opposed to that draconian action," McCain said at a news conference.
But his bill faces an uphill battle in the Senate. Democrats insist on a "balanced" approach to deficit reduction that includes both spending cuts and tax increases on the wealthy.
Many also oppose a provision in the bill that would continue a pay freeze for federal workers through mid-2014. The current freeze expires at the end of this year and President Barack Obama has proposed a 0.5 percent pay increase next year.
The White House has expressed opposition to efforts that would circumvent the across-the-board spending cuts, which were triggered after a special congressional committee failed last year to reach agreement on a deficit reduction package.
A number of Republicans and Democrats have already said they are open to negotiations on other ways of achieving the $1.2 trillion in cuts. But Democratic Senator Benjamin Cardin signaled his party would not go along with the proposed federal pay freeze and work force reductions.
"This is an attack on government," Cardin told reporters. "People want clean air, people want border security, people want
safe food, people want technology advancements, they want to make sure that government carries out its responsibilities."
DEFENSE INDUSTRY WORRIES
Defense Secretary Leon Panetta has warned of dire effects from the scheduled $600 billion in defense cuts on top of some $487 billion already being sliced from projected spending over the next decade.
The Pentagon has initiated a round of reductions after a review to align spending with U.S. strategic interests. Panetta has said the Pentagon would have to start over to design a new strategy if Congress does not act to stop the automatic cuts.
Many analysts believe Congress could step in and block some or all of the spending cuts at the last minute in a post-election session. But McCain stressed the importance of providing certainty to the Pentagon.
Defense industry executives are bracing for the worst, telling investors that uncertainty and pressure on the defense budget will depress sales and earnings this year after a decade of strong growth.
Kyl called the bill a "bite size" piece of deficit reduction that could help lawmakers succeed where other attempts at reducing government red ink have failed.
"If we start with those things that have strong support from the American people ... I think we can get several years down the road with pretty good bipartisan agreement," Kyl said.
In the Republican-led House of Representatives, Armed Services Committee Chairman Howard McKeon has introduced a measure that would slash the federal workforce by 10 percent.
Republican leaders have not openly supported the bill but have said they want to replace the automatic cuts with other spending reductions.
(Additional reporting by Andrea Shalal-Esa; Editing by Vicki Allen and Ross Colvin)