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U.S. Defense budget will build-down with Leon Panetta as new Secretary of Defense.

President Barack Obama plans this week to name CIA Director Leon Panetta to replace Defense Secretary Robert Gates. Credit to J. Scott Applewhite / AP

President Barack Obama’s named  expert budget-cutter Leon Panetta to lead the Defense Department.

Panetta´s nomination is a clear signal that the White House perceives the nation’s deficit crisis as its toughest challenge.

Panetta will replace Robert Gates, asked by Obama in 2008 to remain defense secretary and lead U.S.  two wars in Afganistan and Irak.

The Obama administration wrestles with an estimated deficit of $1.6 trillion and a military budget that has doubled since the Sept. 11, 2001.

Leon Panetta is an eight-term congressman, former chairman of the House Budget Committee, one-time head of the Office of Management and Budget, White House chief of staff for President Bill Clinton and current CIA director.

If confirmed by the Senate, the 72-year-old Panetta will face a chocked-block agenda — Pentagon spending, two wars and the ongoing U.S. military operation in Libya, among other issues.

The budget is a near-term issue as the congressional committees overseeing the Pentagon begin crafting a blueprint in May. In his last budget request, Gates sought $553 billion for the budget year that begins Oct. 1, plus $118 billion in war costs. The Pentagon is certain to face congressional efforts to cut spending.