WASHINGTON -- The Pentagon and Congress all but dared each other Thursday to a showdown over funding for fighter jets in a multimillion-dollar squabble that each side said they were fighting in the interests of U.S. security.

The chairman of a key House Appropriations panel said he's confident that plans to add $369 million to the Pentagon's budget for a dozen more F-22 jets will survive a White House veto threat.

"We'll work it out," said Rep. John Murtha of Pennsylvania, head of the House Appropriations defense subcommittee. "In the end, the bill won't be vetoed."

In Chicago, Defense Secretary Robert Gates accused lawmakers of overspending on military toys instead of focusing on how to defend the U.S. against strategic threats like weapons of mass destruction and cyber attacks.

"If the Department of Defense can't figure out a way to defend the United States on a budget of more than half a trillion dollars a year, then our problems are much bigger than anything that can be cured by a few more ships and planes," Gates said in a wry and sometimes stinging address to the Economic Club of Chicago.

Murtha's panel added the multimillion-dollar down payment for 12 more F-22 fighter jets to the Pentagon's $534 billion spending plan for 2010. Lawmakers also agreed to spend $560 million for an alternate engine for the Joint Strike Fighter.

The White House has said it will veto both actions.

The Senate also is debating whether to spend $1.75 billion to add seven more F-22s to the 187 the Pentagon is seeking to build next year. The Senate is expected to vote next week on the spending plan, and Gates said Thursday it is too close right now to predict the outcome.

In his strongest words on the squabble so far, Gates urged Congress anew to move out of what he described as a Cold War mentality of big Pentagon budgets.

"If we can't get this right, what on Earth can we get right?" Gates said. "It is time to draw the line on doing defense business as usual. The president has drawn that line. And that red line with regard to a veto is real."

The one Cabinet secretary holdover from the Republican administration of George W. Bush, Gates said he has been criticized in the past, while director of the CIA, as overestimating threats to the United States. Despite the change in political parties at the White House, Gates said, "I did not molt from a hawk into a dove."

Murtha's optimism sends a signal to the administration that Democrats want to engage in a compromise negotiation on the fighter jet issue, industry analysts say.

Any concession won't mean buying 20 more planes but perhaps ordering fewer jets over several years to gradually close the production line, said defense consultant Jim McAleese. The outcome must be perceived as in line with Gates' goal of shifting resources to the Joint Strike Fighter.

Murtha believes lawmakers will be able to persuade the White House to add money to buy spare parts for the F-22 and complete an initial batch of presidential helicopters that President Barack Obama has said are not needed.

Obama has repeatedly threatened to veto a defense spending bill that includes money for the F-22, built by Lockheed Martin Corp., if lawmakers succeed in their effort to buy more planes beyond the 187 requested.

Republicans and Democrats representing districts with jobs tied to the program are fighting to keep the F-22.

Instead of F-22s, the Pentagon wants to buy more unmanned spy drones and the F-35 stealth fighter jets that Gates said are more sophisticated in some ways than their earlier-generation cousins.

He said the F-22 is really only needed in one or two types of missions -- namely, to defeat a fleet of highly advanced enemy fighter jets.

In his half-hour speech, Gates paid homage to Obama's hometown at the vaunted economic club, where presidents, candidates and other major policy-makers have for years spelled out their fiscal goals.

He spoke, however, as a Washington veteran, at times swiping at the capital's politics and the decisions that they drive.

"In total, by one estimate, our budget adds up to about what the entire rest of the world combined, friend and foe alike, spends on defense," Gates said. "Only in Washington, D.C., would that be considered gutting defense."