"We save money by eliminating unnecessary defense programs that do nothing to keep us safe," Obama said. "One example is the $2.5 billion that we're spending to build C-17 transport aircraft. Four years ago, the Defense Department decided to cease production because it had acquired the number requested - 180. Yet every year since, Congress had provided unrequested money for more C-17s that the Pentagon doesn't want or need. It's waste, pure and simple."
Boeing officials reacted to the statement diplomatically, saying they believe there is future need for the aircraft both domestically and internationally.
"While we do not comment on our lobbying activities, we can say that Boeing is focusing our efforts on the demand for affordable, reliable and capable airlift globally," said Boeing spokesman Jerry Drelling. "We intend to aggressively seek international sales of the C-17."
The C-17 supports some 5,000 jobs at Boeing's production, sales and research plant in Long Beach.
The president had also suggested in 2009 that Congress not support additional dollars for the heavy airlift cargo plane. Despite his request, Congress funded 10 jets for the U.S. Air Force at a cost of $2.5 billion.
The president's suggested budget is only a proposal, as Congress holds ultimate authority on spending, so his call to end C-17 production will need approval by both the House and Senate. Obama can veto spending projects approved by Congress, but federal law allows a presidential veto to be overridden by a two-thirds majority of both houses.
Area Congress members could not be reached Monday for reaction to the President's latest call to end C-17 funding, but California Sen. Barbara Boxer said in a statement that she strongly disagreed with Obama's assessment.
"While I agree with President Obama's focus on job creation in his new budget, this is one area where we don't agree," Boxer said. "I will work to restore funding for this program that is important for so many of our military and humanitarian missions."
The plane has traditionally enjoyed strong support from lawmakers in California and the 44 states where suppliers are based.
The C-17 has seen extensive use in Iraq, Afghanistan, and more recently, ferrying relief aid to earthquake-stricken Haiti. Along with the United States, C-17s are owned by Australia, Canada, the United Kingdom, Qatar, United Arab Emirates and a NATO-led consortium based in Hungary.
The Indian Air Force is also considering purchasing 10 of the jets.
But while Boeing looks for international orders, company officials believe domestic production is vital to keep the plant and its suppliers across the country operating. Boeing estimates it needs 12 to 15 orders annually to justify high production costs.
"U.S. orders will ultimately be needed in the future to keep the line open," Drelling said. "It is important to preserve this vital airlift program that is the only military wide-body manufacturing capability in the United States."
Currently, C-17 production is expected to end in mid- to late 2012, though Boeing has entered into formal negotiations with India for 10 planes, which could push production into 2013.
Other recent orders have come from the United Arab Emirates, which purchased six C-17s in early January and the United Kingdom, which added one to its existing fleet of six a few days later.
Increasingly, the C-17 has been used for humanitarian efforts.
The plane has been used to haul tons of medical aid, food, water and personnel in the wake of such disasters as Hurricane Katrina, the 2004 Indian Ocean Tsunami, the earthquake and tsunami that struck American Samoa and Tonga in September and most recently, the earthquake in Haiti.
The plane can carry up to 170,000 pounds of equipment and land on remote, unpaved runways as short as 3,000 feet, making it unique among the world's heavy-lift aircraft.
The U.S. Air Force has a C-17 fleet of about 194 with roughly a dozen more on order. It was first introduced in the early 1990s as a more-efficient alternative to Lockheed's C-5 aircraft.
Last year, Sen. John McCain, R-Ariz., led a spirited attempt to strip funding for more C-17s in the federal defense budget, but his amendment was eventually voted down in a bipartisan 68-30 vote.
And in October, over strong objections from the White House, the Senate and House jointly agreed to purchase 10 more C-17s.
The federal government estimates restarting the plant after closure would cost in excess of $1 billion.
"Preserving this program provides an affordable option to the U.S. Air Force and Congress if they need to fill what we believe is a growing demand for airlift," Drelling said.