"It is time to draw the line on doing defense business as usual," Gates said in a speech, adding that President Barack Obama would make good on a threat to veto any defense budget that includes money for new F-22 Raptors.

"The president has drawn that line. And that red line with regard to a veto is real."

Speaking to the Economic Club of Chicago, Gates portrayed the issue as a crucial test of whether military spending could be reformed and the defense establishment weaned away from habits formed during the Cold War.

"If we can't get this right, what on earth can we get right?"

The Obama administration has proposed capping production of the F-22 at 187 jets, meaning only four more would be built, but the Senate Armed Services Committee has drafted legislation funding seven more F-22s at a cost of 1.75 billion dollars.

The F-22 Raptors, equipped with radar-evading technology and built by Lockheed Martin and Boeing, cost about 350 million dollars each and have been in development since the Cold War.

The US Air Force had proposed building nearly 400 F-22s, which were designed to fight other sophisticated enemy fighter jets, but Gates vetoed further expansion as wasteful and unnecessary, especially given the slow development of rival fighter jets by potential adversaries such as China.

Gates argued that the US jet of the future was the F-35 Joint Strike Fighter, which he said was more versatile and better at knocking out enemy air defenses.

The administration's proposed 663.8-billion-dollar defense budget for fiscal 2010 scales back some major weapons programs while bolstering funding for unmanned aircraft, helicopters and other resources for counter-insurgency campaigns like the ones in Iraq and Afghanistan.

The budget represented a modest increase over defense spending under former president George W. Bush, despite critics' claims that the administration has slashed military spending, Gates said.

The military budget "adds up to about what the entire rest of the world combined -- friend and foe alike -- spends on defense," he said.

"Only in the parallel universe that is Washington DC would that be considered 'gutting' defense."

Gates acknowledged that previous administrations have struggled to rein in Pentagon spending and encountered stiff opposition from lawmakers and their sponsors in the defense industry.

But he said "the stakes today are very high" with the country at war in an increasingly volatile world.

The defense secretary, a Republican holdover from the Bush administration, said he had always been known as a hawk on national security during his long career at the Central Intelligence Agency.

"Well, I haven't changed. I did not molt from a hawk into a dove on January 20, 2009" when Obama took office, he said.

"But, the nature of the threats to us has changed. And so too should the way our military is organized and equipped to meet them," he said.

Gates blasted what he called "requirements creep" in defense spending, where weapons programs were overloaded with unnecessary features "to the point of absurdity."

The defense secretary gave as an example a proposed new presidential helicopter, which the administration has scrapped.

"Once the analysis and requirements were done, we ended up with choppers that cost nearly half a billion dollars each and enabled the president to, among other things, cook dinner while in flight under nuclear attack," he said.

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