The loss of Sen. Daniel Inouye (D-Hawaii), the chairman of the Senate Appropriations Committee (SAC), will undoubtedly impact Congress’ oversight of the Pentagon’s budget, observers said.

Inouye, a World War II hero and the second-longest-serving senator in U.S. history, died yesterday at Walter Reed Medical Center following respiratory complications. He was 88.

Inouye, who also chaired the SAC’s Defense subcommittee (SAC-D), was an unabashed backer of the Pentagon. He frequently supported providing and increasing funding for weapons programs he believed the military needed, showing a particular keenness for Navy ships. He warned at a June SAC-D hearing that potential sequestration budget cuts, of $500 billion to defense spending over a decade, “would have a serious impact not only on the men and women in uniform but on personnel and the contractors who serve the defense establishment.”

Senate Majority Leader Harry Reid (D-Nev.) said Inouye’s time in the Senate was “remarkable” because of his work on “the defense aspects of our country, security aspects of this country.” Reid announced Inouye’s death on the Senate floor shortly after 5 p.m. last night. 

The next senator in line for both the SAC and SAC-D gavels is Sen. Patrick Leahy (D-Vt.). The co-chairman of the Senate National Guard Caucus, Leahy has fought against the Pentagon’s proposed cuts to Air National Guard and Air Force Reserve aircraft and personnel.

For Leahy to assume the appropriations chairmanship he would have to relinquish his leadership of the high-profile Senate Judiciary Committee. His departure from the top Judiciary position could trigger other Senate committee chairmanship changes. Following Leahy in terms of seniority on the SAC are Sens. Tom Harkin (D-Iowa) and Barbara Mikulski (D-Md.).

“I suspect that all those folks would take a little tougher stance in reviewing the (administration’s) defense budget submission and could challenge the request a little more strongly than Inouye has in the recent past,” a defense lobbyist said.

There have been some recent rumblings on Capitol Hill about whether Inouye was providing enough critical oversight of President Barack Obama’s budget proposals.

Inouye worked very closely with former SAC Ranking Member Ted Stevens, the former Republican senator and his close friend who passed away two years ago. Inouye also worked well with current Ranking Member Thad Cochran (R-Miss.). Cochran is term-limited out of that spot, though, and Sen. Richard Shelby (R-Ala.) is poised to become ranking member in January. Cochran is expected to remain ranking member of the SAC-D.

A key issue for the defense community will be how well the new SAC chairman and ranking member work together, the defense lobbyist said. In addition, Inouye’s loss could lead to “substantial staff changes” on the SAC.

“The chairman hires the staff and depending on which senator takes over, he/she is very likely to want some of their own staff at the full-committee level and also at the defense subcommittee level,” the lobbyist said. “This could have just as big an impact as the change in the committee leadership.”

Obama and multitudes of lawmakers praised Inouye last night for his bipartisanship, hard work, and patriotism. 

Defense Secretary Leon Panetta hailed the Hawaii Democrat as “one of the most stalwart and effective advocates of the Department of Defense.”

Inouye, a Japanese-American, was a Medal of Honor recipient who lost an arm while fighting for the United States during World War II in Italy. He was elected to be Hawaii’s first congressman when it became a state in 1959.