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The Aerospace Industry Association warned Tuesday that the growing financial cost and equipment degradation from sustained operations in the war on terrorism, and the expense of increasing ground personnel are preventing the modernization the military needs to maintain its technological superiority.

Looking ahead to a change in administrations and a possible reduction in U.S. forces in Iraq, AIA also cautioned against making defense modernization accounts "a bill payer" for discretionary, meaning domestic, programs.

"It is our view that the next administration must be much more aggressive in bolstering out-year defense funding projections, which have been constrained to meet tax policy and deficit reduction objections at the expense of defense modernization requirements," AIA said in a report prepared by its national security and defense policy panels.

"Now is the time to stabilize defense spending and the investment portfolio and focus on modernization and recapitalization for the future," the trade group said.

The report noted that operations and maintenance costs will have doubled over the 25-year period ending in 2013, while modernization spending has declined, in constant dollar value, since a peak in 1985, during then-President Ronald Reagan's defense build-up.

Many of the military's key weapons systems, particularly combat aircraft, were bought during that period. The subsequent "procurement holiday" has resulted in the oldest fleet of military aircraft in history.

Not surprisingly, AIA focused on that fact, warning that the "enduring national asset" of air power "is now in serious danger ... All of our military services are in need of modernization and recapitalization ... But the need is particularly acute for the air arms of our military services," the report stated.

AIA urged the next administration to provide steady funding for military procurement at $120 billion-$150 billion a year. CBO used the same numbers in its estimate of the additional funding needed to modernize the force. The president's FY09 defense budget requests $104 billion for procurement.

Although AIA's members obviously would benefit from increased procurement funding, the group's warnings about the impact on military readiness from aging aircraft and the excessive wear on equipment echoes concerns voiced by all the service leaders and the bipartisan leaders of the House and Senate Armed Services committees.

AIA clearly aimed this report, called "U.S. Defense Modernization, Readiness Now and for the Future," at the presidential candidates.

"We are issuing the report now to let the candidates know of an important challenge that awaits the eventual president," AIA President and CEO Marion Blakey said. "Modernizing our defense equipment is vital to making sure our troops are as well-prepared as humanly possible for the challenges they face on the battlefield."

Although defense spending has gone up rapidly since the Sept. 11, 2001, terrorist attacks, the report noted that most of that has been consumed by operational and reconstruction expenses in Iraq and Afghanistan and, to a lesser extent, replacing and repairing equipment destroyed or damage in the conflicts.

Much of the increase also has gone to the higher pay and benefits needed to recruit and retain the all-volunteer force. And that will grow even more with the current effort to enlarge the active-duty military force by 92,000 soldiers and Marines, it said.

In addition to increasing procurement funding, AIA urged the next administration to focus on reducing operational expenses by more efficient management, "competitive sourcing" and "performance-based" logistics and contracting.