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The plan limits pay raises, boosts health insurance fees for retirees and closes U.S. bases.

New York Times

WASHINGTON - The Pentagon took a major step toward shrinking as it announced Thursday it wants to limit pay raises for troops, increase health insurance fees for military retirees and close U.S. bases.

Although the pay-raise limits are modest and would not start until 2015, the proposed cuts are certain to ignite a political fight in Congress, which since the Sept. 11, 2001, attacks has raised military salaries beyond what the Pentagon has recommended.

Increasing health insurance fees for former service members and closing bases are also fraught with political risk.

Next year's Pentagon budget is to be $525 billion, down from $531 billion this fiscal year. As the Pentagon is called on to find $259 billion in cuts in the next five years - and $487 billion in the decade - the department's base budget (not counting the costs of Afghanistan or other wars) will rise to $567 billion by 2017.

Although troops left Iraq and the Obama administration has announced plans to draw down in Afghanistan, the new budget proposal will request $88.4 billion to pay for overseas combat operations next year. The current combat account is $115 billion.

Other savings are to come from reducing the size of the military and canceling or stretching out weapons purchases.

Presenting an equal political challenge was Defense Secretary Leon Panetta's announcement that President Barack Obama will ask for another round of base closings and realignments. Pentagon officials said savings from any future base closings were not factored into the five-year budget.