"The grim reality is that the midterm elections are going to have a significant impact in terms of accelerating the contraction in defense funding," said Jim McAleese, a Virginia-based defense consultant.

 

Deputy Defense Secretary William Lynn tried to reassure Wall Street analysts at a closed-door meeting this month that the Pentagon could keep buying new arms and meet personnel costs by trimming $100 billion over five years from overhead and low-priority programs.

 

Lynn said the Pentagon could even buy more weapons if contractors can find a way to cut unit costs.

 

But he acknowledged growing pressure on defense spending from a presidential deficit-reduction panel, the Tea Party movement, and the upcoming elections, said McAleese, who attended the meeting.