* New $500 billion cut begins in January
* Spending reductions seen hitting jobs, industrial base
Republican lawmakers worried about a looming $500 billion cut in the Pentagon budget accused President Barack Obama of a failure of leadership on Wednesday for doing little to avoid reductions his own defense secretary has said would devastate the military.
They urged Obama to bring the two political parties together to find alternatives to the defense cuts, offering the prospect of some revenue increases in addition to budget cuts, but still resisting the kinds of tax increases sought by Democrats.
"There is no substitute for presidential leadership," Republican Senator Lindsey Graham, a member of the Senate Armed Services Committee, told a Capitol Hill event organized by two conservative think tanks to draw public attention to the issue.
Graham suggested Congress look for more revenue to offset a year of the defense cuts by closing some tax breaks that benefit few taxpayers, sell some government property and adjusting some fees that have not been increased for a while.
"It will be uncomfortable for some of us in the political arena to defy certain strict ideological principles. ... But here is my response: the hard thing was to go to Afghanistan or Iraq multiple times," Graham said.
Most Republicans have taken a pledge against raising tax rates but in the past year some have brought up increasing fees or closing tax loopholes to ease fiscal pressure.
"How could a commander-in-chief listen to the secretary of defense describe what was going to happen to finest military in the history of the world and basically be indifferent about it," he said. Defense Secretary Leon Panetta and other senior military officials have said the cuts would be devastating.
The Pentagon is implementing $487 billion in cuts to projected spending over the next decade as called for last year in the Budget Control Act, a law aimed at curbing the government's trillion-dollar budget deficits and growing debt.
The act also established a special congressional panel to cut another $1.2 trillion in federal spending. To try to force the group to reach a deal, the measure included across-the-board spending cuts that would go take effect if it failed, including $500 billion to defense.
The group was unable to agree and the Pentagon now faces another $500 billion in cuts over 10 years. The reductions go into effect Jan. 2 and would slash nearly all programs proportionally without regard to their strategic importance.
CONCERN FOR DEFENSE SUPPLIERS
Representative Buck McKeon, chairman of the Armed Services Committee in the House of Representatives, said Obama should have stepped to provide leadership when the committee stalemated "but he's basically been AWOL."
Senator Kelly Ayotte, citing congressional testimony, said the additional $500 billion reduction would force the services to cut another 18,000 Marines and 100,000 soldiers. The size of the Navy fleet would drop from 285 down to around 230, she said.
"The threats to our nation have not diminished ... and here we are putting our Department of Defense in a situation where, as (Panetta) has said, we'd be shooting ourselves in the head," Ayotte said.
Some budget analysts have noted that even with the additional reductions, the defense budget would fall to 2006 levels, a much smaller drop than during previous drawdowns after a period of war.
Industry analysts have projected the cuts to defense could cost more than a million jobs. Ayotte said the impact on defense industries that support the military could jeopardize critical small business manufacturers.
"These sole suppliers cannot carry what's coming in January," she said, using as an example Huntington Ingalls, which designs and builds U.S. warships and relies on sole suppliers for many of its components. If they go out of business, she said, "they don't just come back, and we lose capacity for our nation."