US political deadlock threatens economy

Chronic deadlock in the US Congress threatens to derail the US economy, damage national security and undermine public trust in its leaders, outgoing US Defence Secretary Leon Panetta says.

In his last major policy address before he retires, the Pentagon chief on Wednesday blasted politicians for what he described as a lack of leadership leading to escalating budget crises.

The most urgent task facing the US is to overcome "partisan dysfunction in Congress that poses a threat to our quality of life, to our national security, to our economy, to our ability to address the problems that confront this country," said Panetta, who served as a lawmaker from California before holding senior posts under two Democratic presidents.

"Today, crisis drives policy," he told students at Georgetown University in the US capital.

"It has become too politically convenient to simply allow a crisis to develop and get worse and then react to the crisis."

But inaction is costly, he warned.

"The price to be paid is that you lose the trust of the American people.

"You create an aura of constant uncertainty that pervades every issue and gradually undermines the very credibility of this nation to be able to govern itself."

Panetta's tough speech comes as Congress faces a March 1 deadline to broker a budget deal to avert multi-billion dollar budget cuts, with military funding due to take a major hit.

The Pentagon chief, who served as CIA director before taking over as defence secretary in 2011, renewed his warning that if Congress fails to break the impasse, automatic budget cuts will jeopardise the military's readiness and force cuts in training, maintenance and weapons programs.

Panetta's frustration with the current bitter political climate was evident as he frequently strayed from his prepared text to drive home his point, lamenting that politicians apparently no longer know how to compromise.

"I've seen that attitude before," he said, recalling his days in Bill Clinton's White House, when Republican politicians helped force a government shutdown in 1995 which "badly hurt the American people."

"The same damn thing is going to happen again if they allow this to occur," Panetta said.

The looming threat of automatic defence cuts of about $US50 billion ($A48.7 billion) this fiscal year, along with the failure of Congress to adopt a proposed Pentagon budget for 2013, has forced the defence department to start laying off thousands of temporary workers and cancel some maintenance.

The automatic cuts were designed to be so dramatic that the prospect of so much pain would force politicians to make a deal.

But instead, Panetta said, there are some members of Congress who have a "callous attitude" and are using the automatic cuts for tactical gain.

Republicans in the US House and Senate unveiled a plan on Wednesday designed to avoid the crisis by offsetting the costs of the cuts with federal workforce reductions.

"Frankly, our defence should not be used as a bargaining chip because of other policy aspirations that people want to accomplish," said Senator Kelly Ayotte, a sponsor of the legislation.

But Democrats quickly rejected the Republican plan as an "ongoing attack on federal employees."

At the White House, top aides to President Barack Obama met executives from the defence contracting industry, including the heads of Northrop Grumman Corp, Pratt & Whitney, BAE Systems Inc and the Aerospace Industries Association.

The Pentagon already has scaled back projected defence spending over the next decade by about $US487 billion under the Budget Control Act adopted in 2011.

But the US military's budget is still the largest in the world, with proposed spending for fiscal year 2013 of about $US614 billion.

The West Australian

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