* U.S. intelligence budget classified except overall figure
* Cutbacks would include informants, electronic surveillance
By Mark Hosenball
WASHINGTON Feb 14 (Reuters) - U.S. spy agencies are making preparations for potentially sweeping budget cuts that could drastically limit their ability to respond to crises, the top U.S. intelligence official said on Thursday.
In an interview, Director of National Intelligence James Clapper told Reuters that cuts required under a budget sequestration plan which Congress approved in 2011 would be the "budgetary equivalent of emergency amputations."
"It's an accurate statement to say this profoundly limits our flexibility and our ability to respond to crises," Clapper said.
Clapper is the latest in a growing roster of top Obama administration officials to declare publicly that implementation of the current sequestration legislation, which requires across-the-board budget cuts, would lead to dire consequences.
The cuts are scheduled to take effect March 1 unless Congress comes up with alternative deficit reduction measures.
It is rare for a senior intelligence official to complain publicly about threats to the intelligence budget, which is classified except for an overall figure of $72 billion.
Among intelligence activities that might have to be cut back, Clapper said, are "human intelligence" which covers recruiting and handling of undercover informants and "overhead collection" which includes electronic eavesdropping and image-producing satellites - among the most critical U.S. intelligence collection systems.
Sequestration could also result in fewer counter-intelligence and security personnel - meaning fewer resources to identify, track down and neutralize efforts by foreign spy services, "bad actors" and disgruntled insiders to compromise U.S. intelligence activities, he said.
Intelligence analysis - evaluation and translation of information collected by both human spies and technical systems - also would have to be cut "dramatically" under sequester plans, Clapper said in the telephone interview.
While the "sheer size of the cuts are going to create for me a crisis situation," Clapper said he would try to mitigate and work around the cuts.
HOPE TO AVOID FURLOUGHING STAFF
These mitigation efforts would include trying to minimize, if not avoid altogether, the need to furlough employees, a step that was considered and planned for during a budget crisis in 2011, Clapper said.
Other current and former officials said spy agencies may have to cut personnel, travel and contractors and would lose flexibility to adapt to new missions.
"The intelligence community has seldom had more different things to do and the steep cuts that could come in sequestration will make it harder across the board," John McLaughlin, a former acting director of the CIA, said.
Mark Lowenthal, a former senior U.S. intelligence official who now heads a national security consulting firm, said the cuts could cause significant damage to U.S. intelligence efforts.
Under the sequestration plan, the U.S. intelligence budget is divided into "hundreds" of distinct programs, each of which would have to make equal cuts in their budgets, Clapper said.
Intelligence agency chiefs would apparently have little discretion to negotiate among themselves to make larger cuts in programs they deem less essential in return for smaller cuts in more critical programs, officials said.
Lowenthal described that as a "meat-axe approach" to the U.S. intelligence budget, which would likely produce cuts which are "devastating across the board."
"Its just a disaster. It doesn't work," he said. (Editing by Warren Strobel and Cynthia Osterman)