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RACHEL MARTIN, HOST:

This is WEEKEND EDITION from NPR News. I'm Rachel Martin. Secretary of Defense Leon Panetta is no stranger to budget battles. He was head of the Office of Management and Budget and White House chief of staff under President Bill Clinton, but now the former congressman faces what could be some of the toughest budget decisions of his career: how to cut more than $480 billion from the Pentagon's bottom line. Last week, he and President Barack Obama unveiled the country's new national defense strategy. The Pentagon's new slimmer budget is due next month. We sat down with Secretary Panetta to talk about what stays, what goes and where troops may feel it most - salaries, health care.

SECRETARY LEON PANETTA: Pensions, retirement. What's going to happen to those people that come back to this country from the battle zones? How are we going to deal with them? What kind of jobs are we going to be able to provide them? How are we going to care for them? So, it's both the weaponization-modernization side of it but it's also the human side of it that make these decisions tough.

MARTIN: And these are not the only cuts. I mean, there are potentially another $600 billion in cuts in the so-called sequester cuts Congress has mandated that are still kind of looming out there. Do you have a plan to make those cuts?

PANETTA: No, not at all. Because if we had to face another five or six hundred billion dollars and have to do over a trillion dollars in cuts in this department, I have to tell you the strategy that we developed, which we thought was very responsible and actually puts in place the kind of defense system we need for the future, we'd probably have to throw that out the window and start over.

MARTIN: You have said even with the strategy that you've just unveiled that there are risks associated with this strategy. What are the risks?

PANETTA: The risks you have are when you have a smaller and leaner military, you're not going to have the large presence that we have today. So...

MARTIN: There are going to be fewer troops.

PANETTA: There are going to be fewer troops and a lot of this is dependent on the ability to mobilize forces and bring them to bear quickly. How fast can we do that?

MARTIN: Even now in the last 10 years, the Guard and reserves have been stretched rather thin. In this new strategy, where you're reducing the force structure, there are going to be fewer troops. Are you going to have to call on the Guard and reserve more?

PANETTA: I think, you know, part of our approach here is to make sure that we maintain a strong National Guard and a strong reserve. They have been fully operational. We have brought them into battle zones. They have gained as much experience as the active force. But answer to your question is if we are dealing with a leaner and meaner force, if we have to mobilize, there's only one place to go, and that's to the National Guard and to our reserve units.

MARTIN: For more than the past couple of decades the U.S. has maintained the ability to fight two conflicts at the same time. That's changing. Can you articulate what's different now?

PANETTA: Well, you know, I guess my approach to this issue is to say the fundamental question for our national defense is: do we have the capability of confronting an enemy on several fronts? And the answer to that is yes. For example, if we have to confront a land war in Korea, we can do that. If we have to at the same time confront a threat where Iran decides to close the Strait of Hormuz, we can confront that. That's the most important message the American people have to know is that this force is going to be able to fight any enemy, any aggressor that tries to take us on.

MARTIN: Then what's different when you unveil the strategy and you say, you know, we're about to make these hundreds of billions of dollars in cuts, we still have the ability to address multiple threats at the same time?

PANETTA: I think what's different is that what we are dealing with is a force that is going to be smaller but that at the same time has to be more agile, more adaptable, able to move quickly and has a technological edge to it.

MARTIN: A more agile, a more technologically advanced military - this is something that one of your predecessors, Donald Rumsfeld, was pushing for. And September 11th happens; that strategy goes out the window. Is there a risk that the same could be true now?

PANETTA: Well, you know, any defense force worth its salt has to be able to deal with events that we may not have planned for. You know, if we faced another 9/11, clearly what we would have to do is to mobilize the force in order to be able to confront that kind of event, if it took place.

MARTIN: You're talking about more advanced technology - drone strikes come to mind. An air campaign like we've seen in Pakistan, which hasn't necessarily been all that successful. Pakistan's not too pleased with the United States right now.

PANETTA: No. But the fact is that whether it's Pakistan, whether it's Yemen, whether it's any other country that we're engaged in right now, any defense system that is going to be important to deal with the threats in the future is going to have to have those kinds of unmanned systems, predators, etc., drones, as an important part of our military asset.

MARTIN: I'd like to address China. The administration has been talking for a while, you've been talking for a while about this new pivot, this new focus on the Asia-Pacific region for the U.S. military, building U.S. troop presence in Australia, perhaps moving more troops to the Korean Peninsula. How does China not see this as a threat?

PANETTA: China's a major power in the Pacific. And I think they're sophisticated to understand that the United States is also a major power in the Pacific and that we are dealing with some common threats in that region. The whole issue of Korea and the stability of Korea, the whole issue of nuclear proliferation, the whole issue of providing free access to our ships that are operating in that area. There are some common issues here that concern us. And my view of this is we have to work together with China and with other countries in the Pacific to make sure that we secure that area for the future.

MARTIN: And so building up a U.S. military presence isn't meant to say...

PANETTA: No.

MARTIN: ...the U.S. is building up its military (unintelligible)...

PANETTA: Any more, you know, any more frankly than China building up their military assets. It has to be viewed as a direct threat to the United States. The fact is they're going to do that, and what we have to ensure is that it's used for the right reasons.

MARTIN: We'll leave it there. Secretary of Defense Leon Panetta, thanks so much for speaking with us.

PANETTA: Thanks very much.

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