WASHINGTON (Reuters) – With as much as $1.5 trillion in federal funds hanging in the balance, the mammoth healthcare and defense industries are scrambling to lobby a special congressional committee tasked with slashing the deficit — but in markedly different ways.

The 12-member bipartisan joint “super committee” is expected to focus heavily on both pricey government health insurance programs such as Medicare and Medicaid, and the Pentagon budget, which accounts for about half of non-mandated federal spending.

But the similarities end there.

The Pentagon is warning of Doomsday if the committee fails to act through a combination of spending reductions and revenue increases, triggering automatic cuts of about $600 billion each in defense and non-defense accounts.

Some health care groups, by contrast, might even prefer the committee to fail, reasoning that spending cutbacks are a fact of life and known reductions are preferable to unknown ones. They’ll seek instead to ensure key interests are protected.

The differing approaches by two major sectors of the U.S. economy reflect their divergent circumstances and histories. Health care groups are used to being on the firing line; the Defense Department has seen a decade of handsome budget increases since the 9/11 attacks.

The ultimate winners and losers may owe the outcome partly to the persuasive power of public relations experts, campaign-style coalition-building and lobbyists, some of the most formidable forces on Capitol Hill.

WASHINGTON, Aug 3 (Reuters) – The U.S. Defense Department suspended fleetwide ground and flight test operations on Wednesday of Lockheed Martin Corp’s (LMT.N: Quote, Profile, Research, Stock Buzz) F-35 Joint Strike Fighter aircraft, its costliest arms purchase and largest international cooperative program. .

The department acted after the failure on Tuesday of one aircraft’s “integrated power package”, a turbo-machine that starts the engine and cools the plane, the Pentagon’s F-35 Joint Program Office said.

The office said in a statement that the suspension was a precautionary measure until experts understand the root causes of the failure aboard an F-35 conventional takeoff and landing variant at Edwards Air Force Base, California.

There are three F-35 models, or variants: A conventional takeoff-and-landing type for the Air Force; a short takeoff-vertical landing model for the Marine Corps and a carrier takeoff-and-landing variant for the Navy.

“Once the facts are understood, a determination will be made when to lift the suspension and begin ground and flight operations of the 20 F-35s currently in flying status,” the statement said.

These aircraft are part of the system development and demonstration and low-rate initial production fleet.

The United States is developing the family of radar-evading F-35s with eight international partners — Britain, Italy, the Netherlands, Turkey, Canada, Australia, Denmark and Norway.

WASHINGTON, Aug 3 (Reuters) – U.S. Defense Secretary Leon Panetta warned on Wednesday that any across-the-board cuts to defense spending as part of the next stage of deficit reduction efforts could do “real damage” to national security.

Such sweeping cuts would require furloughing thousands of Defense Department personnel, disrupt arms programs and probably slice $50 billion to $60 billion, roughly 10 percent, from the Pentagon’s budget per year, a senior official told reporters.

This would be on top of about $350 billion in security spending savings in the first phase of a deficit-cutting package signed into law on Tuesday by President Barack Obama in a deal to lift country’s $14.3 trillion debt ceiling.

The hard-fought legislative deal calls for the $350 billion in savings over the coming decade against a Congressional Budget Office “baseline” projection, most of it likely to be borne by the Defense Department as part of at least $2.1 trillion in budget savings overall.

Panetta said a potential second round of cuts in security spending estimated at about $600 billion from fiscal 2012 to 2021 would be “completely unacceptable.”

“If that happens, it could trigger a round of dangerous across-the-board defense cuts that would do real damage to our security, our troops and their families, and our ability to protect the nation,” he said in a message to Defense Department personnel.

This was unacceptable “because we live in a world where terrorist networks threaten us daily, rogue nations seek to develop dangerous weapons, and rising powers watch to see if America will lose its edge,” Panetta said.

WASHINGTON, July 12 (Reuters) – Lockheed Martin Corp’s (LMT.N: Quote, Profile, Research, Stock Buzz) F-35 Joint Strike Fighter early-production models overshot their cost targets by a combined total of $771 million, U.S. Senator John McCain said on Tuesday.

“Outrageous!” the top Republican on the Senate Armed Services Committee said in a tweet. The Pentagon is seeking $264 million in reprogrammed funding as a kind of downpayment on the overrun, he wrote, adding: “Disgraceful.”

Lockheed is developing three F-35 versions for the United States and eight international partners at a projected cost of more than $382 billion for 2,443 aircraft over the next two decades. It is the most expensive U.S. arms purchase.

The Pentagon’s F-35 Joint Program Office previously had said total costs on the first three production batches overshot their contractual targets by 11 to 15 percent. These “cost-plus” deals required the government to pay most of an overrun.

The tweet from McCain, who has spearheaded opposition to what he regards as wasteful arms programs, was the first public disclosure of the overrun’s dollar figure. The program office reported the sum to the Senate Armed Services Committee staff on Monday, a McCain aide said. He said it applied to the first 28 jets.

Lockheed Martin, the Pentagon’s No. 1 supplier by sales, and the program office had no immediate comment on McCain’s tweet.

McCain has argued that the radar-evading F-35 cannot be allowed to drain resources from other Pentagon modernization over the next 25 years. He failed last month in a push to put the program on “probation” at the end of this year if the aircraft being built in the fourth, low-rate production lot tops target costs by 10 percent or more.

WASHINGTON (Reuters) – Boeing Co’s winning bid for the U.S. Air Force’s fiercely contested tanker development deal means it likely will show no profit in the program’s first phase and shift $600 million in development costs to taxpayers, new government figures showed.

Boeing could be on the hook for $700 million in development costs of its own, according to a compilation of figures provided by the government and a congressional source.

Boeing’s below-cost bid for the contract was part of a carefully crafted strategy to deny the deal to Europe’s EADS, parent of rival commercial jet builder Airbus SA.

EADS was to have opened an assembly plant in Mobile, Alabama, to produce the tankers used to refuel other planes in flight.

The competition between Boeing and EADS resulted in significant savings to taxpayers, Air Force spokesman Lieutenant Colonel Wesley Miller said last month.

Chicago-based Boeing knew it had to be “aggressive and responsible” to beat EADS for the so-called KC-46 tanker contract “and that’s the decision we made,” William Barksdale, a company spokesman, said last week.

“We will make money on the KC-46 program,” he added in response to a question. At issue for now is only the contract that covers engineering, manufacturing and development, or

WASHINGTON (Reuters) – The United States remains firm that Libyan leader Muammar Gaddafi must give up his 41-year rule, the State Department said on Sunday, after France’s defense minister advocated a compromise with Libyan rebels.

“The Libyan people will be the ones to decide how this transition takes place, but we stand firm in our belief that Gaddafi cannot remain in power,” the department said in a written reply to a query.

French Defense Minister Gerard Longuet said in Paris earlier on Sunday it was time for Gaddafi loyalists and Libyan rebels to sit around a table to reach a political compromise because, he said, there was “no solution with force.”

The rebels have demanded that Gaddafi step down before any negotiations can begin for a political transition, a notion his entourage has dismissed.

The United States will continue efforts as part of a North Atlantic Treaty Organization (NATO) coalition to enforce a U.N. Security Council-authorized no-fly zone in Libya designed to protect civilians under threat of attack, the State Department said.

“Our efforts in Libya will take time, but let there be no mistake that the political, military, and economic pressure on Gaddafi continues to grow,” it said.

The allies will continue to increase pressure “until the Libyan people are safe, their humanitarian needs met, and a transition of power is fully under way,” the department added.

WASHINGTON (Reuters) – The United States accused Syria of having organized an angry 31-hour protest outside the U.S. Embassy in Damascus over the weekend while the U.S. ambassador told the foreign minister that such anti-American “incitement” must stop.

Syria earlier on Sunday said it had summoned the envoys of the United States and France in Damascus to protest their visit to the restive city of Hama last week without clearance from the authorities.

The Hama visit by U.S. Ambassador Robert Ford and French Ambassador Eric Chevallier was a “clear evidence of the American and French intervention in Syria’s internal affairs,” Syria’s news agency SANA quoted the foreign ministry as saying.

In Washington, the State Department said the Syrian government chose to protest Ford’s trip to Hama by organizing a protest outside the embassy that lasted 31 hours on Friday and Saturday with protesters hurling tomatoes, eggs, glass and rocks.

Two embassy employees were struck by food, the department said in a written reply to queries.

The department said Ford registered U.S. displeasure with these events in an already-scheduled Sunday meeting with Syrian Foreign Minister Walid al-Moualem.

It said the meeting had been requested by the U.S. Embassy and scheduled since Thursday.

WASHINGTON (Reuters) – The United States is withholding some $800 million in military assistance to Pakistan in a show of displeasure over its cutback on U.S. trainers, limits on visas for U.S. personnel and other bilateral irritants, the Obama administration said on Sunday.

Pakistani authorities have “taken some steps that have given us reason to pause on some of the aid which we’re giving to the military,” White House Chief of Staff William Daley said on ABC television’s “This Week with Christiane Amanpour.”

As a result, “We’ll hold back some of the money that the American taxpayers have committed to give,” he said, adding this amounted to about $800 million, or more than a third of the $2 billion given to Pakistan for security assistance.

The U.S. Defense Department said Pakistan’s army had requested a “significant cutback” of U.S. military trainers and limited the ability of U.S. personnel to obtain visas.

“While the Pakistani military leadership tells us this is a temporary step, the reduced presence of our trainers and other personnel means we can’t deliver the assistance that requires training and support to be effective,” the department said in a written response to questions.

Bilateral ties have been under mounting strain as the United States has pushed one of its key counterterrorism partners to boost efforts against Taliban and other militants fighting western forces in neighboring Afghanistan.

Pakistan also is smarting from the surprise U.S. raid that killed al Qaeda leader Osama bin Laden on May 2 in a Pakistani garrison town, as well as U.S. drone attacks and night raids that have killed civilians as well as militants.

WASHINGTON, July 7 (Reuters) – The share of world military spending by the United States and its closest allies is likely to plunge by 2015, but still account for nearly two-thirds of the total, a new study by a prominent research group said.

The Council on Foreign Relations’ survey, distributed on Thursday, took into account outlays by the United States, NATO allies, Japan, South Korea, Israel and Saudi Arabia.

This group’s combined share of global military spending fell from 77 percent in 2005 to 72 percent in 2010 and appeared set to drop to 66 percent by 2015, the researchers found.

“The U.S. and its allies retain a dominant share but it declines dramatically,” Paul Swartz, the report’s co-author who monitors links between international economics and military spending at the council, said in a telephone interview.

The study uses International Monetary Fund growth estimates for all countries surveyed.

Washington’s share of global military spending is set to decline to about 39 percent by 2015 from 41 percent in 2010 with U.S. economic growth projected to lag that of powers such as Russia, China and India, the study showed.

Even if the United States were to keep military spending at a constant share of its own GDP, its shrinking weight in the world economy would cut its share of the global total.

WASHINGTON (Reuters) – Three years after what the Pentagon called the most significant breach of U.S. military networks ever, new versions of the malware blamed for the attack are still roiling U.S. networks, Reuters has learned.

The malware at issue, known as “agent.btz,” infiltrated the computer systems of the U.S. Central Command in 2008, at a time when it was running wars in Iraq and Afghanistan.

The attack establishing what Deputy Defense Secretary William Lynn called “a digital beachhead” for a foreign intelligence agency to attempt to steal data.

The Pentagon last year disclosed its operation to counter that attack, known as Buckshot Yankee.

But new, more potent variations of agent.btz are still appearing.

“We can definitely say that it’s not limited to government computers, it never has been, and that it hasn’t gone away,” said an official of the Department of Homeland Security, which leads U.S. efforts to secure federal nonmilitary computer networks, often described as the Internet’s “dot.gov” domain.

“It’s very persistent and it keeps evolving,” the official said. “You’re constantly seeing new, better versions of it. So it’s a challenge to keep ahead of it.”