Sec. of Defense William Cohen and Joint Chiefs of Staff chairman Gen. John Shalikashvili discuss plans to modernize the U.S. military. Key to their strategy: axe bases to afford new technology. A background report on the Congressionally mandated Quadrennial Defense Review is followed by the Newsmaker panel.

JIM LEHRER: The Pentagon's new defense plan is first tonight. It's a package that covers American military strategy, force cuts, and arms modernization into the 21st century. We'll talk to Secretary of Defense Cohen and Chairman of the Joint Chiefs General John Shalikashvili about it right after this background report by Charles Krause.

CHARLES KRAUSE: The United States fought its last major war--the Gulf War in 1991--with a military trained and equipped to fight the Soviet Union. In the years since, the world's only other superpower has disappeared, as have almost a third of the men and women in the U.S. Army, Navy, Air Force, and Marines. Yet, despite the cutbacks, those same U.S. forces have been asked to take on new peacekeeping and humanitarian missions almost unimaginable even a decade ago. Last year, Congress ordered the Pentagon to conduct a major review of the potential threats the United States faces now and in the future.

The Defense Department was also charged with reviewing the assumptions, the strategies, the weapons, and the number of soldiers necessary to meet those threats. The Pentagon's last major review took place four years ago at the beginning of the Clinton administration. Its major premise was that the United States had to be prepared to fight two major regional wars--like the war in the gulf--at the same time. The defense budget and the force structure of the Army, Navy, Air Force, and Marines were supposedly then calibrated to match the strategic goals set out in the report.

But the General Accounting Office found the Pentagon's budget estimates were overly optimistic with regard to spending. Had the five-year plan originally contained in the bottom-up review been implemented, the GAO estimates the Pentagon would have spent $150 billion more than was budgeted. In addition to underestimating costs, the Pentagon has also had to deal with steadily shrinking defense allocations over the last five years. Now $258 billion, the defense budget is expected to remain static into the early years of the next century, increasing only to cover inflation. As a result, competition for scarce dollars has been especially severe between two major budget priorities--procurement and readiness.

SPOKESMAN: You're in the vehicle, and Rubiel, you're on the ground with ‘em.

CHARLES KRAUSE: The services want to maintain the present level of troops and equipment at high state of readiness. They also want to buy all the latest high-tech equipment, costly weaponry, aircraft, and ships--that's now available. The Pentagon had hoped to use savings from military base closings and more efficient procurement practices to help pay for the new weapons.

But so far those savings have not materialized. Meanwhile, the military's missions have been multiplying--straining resources. For example, some 30,000 U.S. troops were sent to Bosnia as part of the International Peacekeeping Force that resulted from the Dayton Peace Accords. Eighty-six hundred GI's are still there. U.S. troops and aircraft have twice been rushed to the Persian Gulf in response to unexpected provocations from Iraq.

There've also been humanitarian and peacekeeping missions to Somalia and Haiti, where the U.S. helped install a new civilian government in 1994. These are just some of the issues today's Quadrennial Defense Review was supposed to consider. Defense Secretary William Cohen presented the QDR's finding.

WILLIAM COHEN, Secretary of Defense: The first task of the QDR was to develop a defense strategy to meet these threats and opportunities, and as I've indicated to many of you before, to be summed up in three words: shape, respond, and prepare.

CHARLES KRAUSE: Among the recommendations, cuts in personnel numbering 90,000 on active duty, 55,000 reservists, 160,000 civilians, 12 aircraft carriers currently in the Navy would be maintained, but surface ships and submarines would be reduced by 35. Three new types of combat aircraft would be purchased in fewer quantities and at a slower rate to save money.

The number of strategic nuclear weapons in the U.S. arsenal would be maintained until the Russian duma ratified the START II Treaty. Finally, there would be two more rounds of base closings to reflect a downsized military. For weeks, the Pentagon has been busy briefing Congressmen, influential defense analysts, and journalists in an effort to stave off criticism of today's recommendations, but the effort has been only partially successful.

Among other things, some critics have called the review a wish list that's stuck in the past, accusing the Pentagon of failing to make hard choices. Other critics contend the Pentagon's budget has already been cut too much and question whether the U.S. will have enough forces to accomplish the stated mission of fighting two regional wars at the same time.