NARRATOR: The U.S. military today: 286,000 troops based overseas in more than 20 countries. 1.5 million active troops. 1.8 million reserves. 15,000 heavy tanks. 14,000 airplanes. 9,000 helicopters. 250 major warships. A military of awesome size and overwhelming firepower.

What justifies the need for military forces this large? Is it because powerful military rivals and rogue leaders threaten the U.S. and our interests? Is it because the world is more chaotic today than it once was? Or, is it because the U.S. lacks military allies capable of sharing the burdens of the world's last remaining military superpower? "AMERICA'S DEFENSE MONITOR" looks at the arguments over the size, shape and cost of the U.S. military and asks if the sacrifices we're making to maintain this military might are justified by the real world challenges we face.

Admiral JOHN SHANAHAN (USN, Ret.): The purpose of the U.S. military is to ensure the survival of the United States as a free and independent nation with its institutions intact and its people secure. Our program today looks for a connection between that purpose and our current strategy which calls for fighting two major regional wars at the same time.

NARRATOR: Since 1990, the Pentagon, under the direction of two administrations, one Republican and one Democrat, has struggled to find the answer to this question: What do you do when the enemy you've been preparing to fight for 40 years disappears?

With the end of the Cold War, American and Russian military leaders turned their weapons away from each other and reassessed the threats in the world at large. For Russian military officials, post-Cold War realities meant the withdrawal of hundreds of thousands of their troops from foreign countries, disbanding the Warsaw Pact, and ending economic and military aid to allies, such as Iraq, North Korea, Ethiopia and Cuba. Russia also cut its military budget dramatically to invest in its long-starved domestic economy.

The American military made adjustments also. U.S. bases were closed, some troops returned home, and our military budget declined moderately. However, much of the U.S. Cold War infrastructure remains in place. There still exists an extensive worldwide network of U.S. military bases in places like Okinawa, Korea, Panama, Italy and Germany. American military policy continues to place an emphasis on a forward presence of troops around the world, large numbers of active forces and the maintenance of a reduced, though still substantial nuclear arsenal. Even weapons that were specifically designed to fight the Soviet Union continue to be developed and manufactured.

With its strategic rival gone, the Pentagon acknowledged that the end of the Cold War would allow it to reduce the size of the U.S. military. The Bush administration reduced the size of U.S. forces by 25 percent and the Clinton administration sought a further drawdown.

In September of 1993, the Department of Defense released its assumptions of what U.S. military needs would be in the post-Cold War era. The Bottom-Up Review was billed as a comprehensive and broad review of U.S. military strategy for a new era. [from the Bottom-Up Review press conference 1 Sept. '93]

LES ASPIN, Secretary of Defense:

"This danger, as you will see as we lay it out -- This danger, the regional dangers is the main thing that drove the size of the defense establishment that we're going to present to you today."

General COLIN POWELL, Chairman, Joint Chiefs of Staff:

"It seems to us that it is essential that the United States armed forces in the name of the American people be prepared to fight and win a major regional conflict in this part of the world, Southwest Asia. Why? Because we have alliances there, we have vital interests there, the oil of the Western world is located there.

"Similarly, we think we should be able to do the same thing in Northeast Asia. That one's clear. North Korea has not changed..."

NARRATOR: The Pentagon shifted away from a strategy that focussed on a U.S.-Soviet conflict in Europe to a policy focussed on fighting two major regional contingencies, or MRCs, nearly simultaneously. This meant that the Pentagon was preparing to fight two Desert Storm-sized wars.

But critics questioned whether the U.S. needed to maintain forces large enough to fight a large scale war on the Korean Peninsula and another war in the Middle East at the same time.

Dr. Edward Warner was one of the principal authors of the Pentagon's Bottom-Up Review. He is currently the assistant secretary of defense for strategy and requirements.

Dr. EDWARD WARNER: The reason that we committed ourselves to the two nearly simultaneous is basically because we find that we have a troubled world where there are independent developments that could lead to war in various regions at relatively the same time.

GEN MERRILL McPEAK (USAF, Ret.): It may well be that two wars is the right strategy, but you should start with an analysis of what the world is like out there, what our national objectives are, what we can afford to do, and then determine what your strategy's going to be.

NARRATOR: Recently retired four-star General Merrill McPeak worked on the Bottom-Up Review as the Air Force chief of staff. For General McPeak, history offers little evidence that the U.S. will be confronted with two major wars simultaneously.

GEN McPEAK: I mean, if you look at the question of major regional contingencies, there have been three since the end of World War II -- Korea, Vietnam and Desert Storm. We never had two at the same time. You could say that a major regional contingency has come along every 15 years or so.

NARRATOR: But the Pentagon asserts that having the capability to fight two large scale wars at the same time is an effective deterrent to stop a military aggressor who might try to take advantage of a U.S. military tied up elsewhere.

Dr. WARNER: We do not want to be in a position that if we were to have to respond in a full scale manner to the outbreak of war in one area that we would be unable to honor our commitments in the other. We believe that that would open a window of vulnerability that could tempt actually coercion and aggression in the other area.

GEN McPEAK: That's the establishment answer to why you have to have enough forces for two wars. But the fact is that it defies history -- we've never had two MRCs in the post-World War II period ever. The last time we fought two wars was World War II really because we fought a war in Europe and a war in the Pacific, and we didn't call those two major regional contingencies. That was global war and that was exactly what we had in the Cold War, was our containment policy was a policy for global containment of the Soviet Union.

So, I think it's literally true to say we have never fought two wars at the same time, and so there is no historic justification that says that someone would take advantage of us.

NARRATOR: For Dr. Warner, the Pentagon's two-war strategy was tested and proved effective during the fall of 1994. At nearly the same time, U.S. forces were used to oust military dictators in Haiti, sent to Kuwait to stop Iraq's military from conducting military exercises near the Kuwait border, and used as a threat to force the North Korean government into complying with international nuclear weapons inspections.

Dr. WARNER: We had the capability to sustain our operation in Haiti and to respond with such vigor and effectiveness with regard to the operations in the Gulf. At the same time we sustained our standing forces and their potential reinforcement for substantial engagement on the Korean Peninsula had that been necessary.

NARRATOR: Some defense experts have noted, however, that in those cases, U.S. troops were not used to respond to military actions, but employed to sustain political objectives.

The world has become a hotbed for conflicts markedly different from the major wars we used to anticipate. In situations like Bosnia, Somalia, Haiti, or Rwanda the utility of high-tech weapons and conventional military tactics is being questioned. The unpredictable ethnic, cultural and religious-based conflicts that are erupting around the globe offer a different kind of challenge.

GEN McPEAK: We're not managing the defense dollars very well and at its heart, this is a question about what is the new set of tasks. We're still configured very much like the Cold War armed forces. We're still very much configured to fight a big tank battle on the north German plain.

NARRATOR: In 1996, most of the military's $265 billion budget will be spent in support of the two-war strategy. In addition, billions of dollars are going for high-tech weapons, like the B-2 bomber and Seawolf submarine, which were specifically designed for fighting a war against the old Soviet Union and have questionable utility in the new kinds of conflict situations like Bosnia.

But just who is the United States preparing to fight?

The Pentagon has labeled Iran, Iraq, Libya, North Korea, Syria and Cuba as "rogue" states and "potential" threats to the stability of the modern world.

Dr. WARNER: In general, we believe that it remains a turbulent and dangerous world. It's a different world. It's a world not marked by a colossus or what we thought was a colossus in the Soviet Union and a set of other tributary states that might at least take in part their direction from Moscow. But it is still a world with lots of problems and lots of militarily related problems, and the United States has important responsibilities.

NARRATOR: Yet critics of the Bottom-Up Review point out that the militaries of these so-called "rogue" states are no match for the U.S. military, which has technologically advanced weapons and troops that are well-trained and highly skilled.

Even if you combine the military budgets of Iran, Iraq, Libya, North Korea, Syria and Cuba, the total only amounts to $15 billion, or about 6 percent of what the U.S. spends on its military.

Michael O'Hanlon is a defense analyst at the Brookings Institution in Washington, D.C. and a former staff member in the national security division of the Congressional Budget Office. He is the author of the recent book, Defense Planning for the Late 1990s.

MICHAEL O'HANLON: Today's military planning focusses on countries that, in one sense, are important, in another sense, are kind of the geopolitical midgets of the world, if you will. And at the risk of offending North Koreans, and Iraqis and Iranians, who have every bit as much right as any other individual in the world to have their own country and their own way of life, these are small countries. They have regimes we don't like much right now and for some very good reasons. However, the stakes involved are small.

RANDY FORSBERG: The Pentagon has tried to make the case that we need to be able to fight in two wars and both of them would involve opponents much more powerful than Iraq was during the Gulf War. Not only are there no such threats today, but we can tell by the rate at which arms are being acquired and built up that it's going to be more than a decade before any such threats could arise.

NARRATOR: Defense analyst Randy Forsberg is the director of the Institute for Defense and Disarmament Studies, and a member of the Military Spending Working Group, a broad coalition of organizations promoting alternatives to the Bottom-Up Review.

Ms. FORSBERG: I think what most people don't realize is that Iran, which is usually portrayed as the biggest threat in the Middle East for the near future, Iran has military forces only about one-tenth as strong as Iraq's were during the Gulf War. And the Gulf War wasn't even really a war, it was a rout in which Iraq was defeated with almost no casualties whatsoever on the U.S. side in a matter of a couple of weeks. So, when you think about that, Iran has only one-tenth the military capability that Iraq did, there really isn't a capability for a major war in the Middle East.

NARRATOR: It's also been pointed out that "potentially hostile" countries are kept in check by other regional military powers. Syria, for example, is militarily inferior to Israel and faces Turkey and Iraq on its borders. Libya is far weaker than Egypt. Iran remains counterbalanced by Iraq and has less advanced weapons than Saudi Arabia and other Gulf States.

And, on the Korean Peninsula, one of the two illustrative war scenarios of the Bottom-Up Review, an economically powerful South Korea fields a well-armed, well-trained, modern military numbering over 630,000 troops.

Pentagon planners, however, continue to insist that the militaries of North Korea and Iraq do pose significant threats to their neighbors.

Dr. WARNER: Because two-thirds of North Korea's million-man army is positioned, is deployed within 50 to 60 miles of the 38th Parallel dividing North and South Korea, we still could find ourselves with a major war that could be thrust upon us with only hours or at most a few days warning. Similarly, even in Iraq, even with the restrictions on the movements, within only a few days, at most a couple of weeks, the Iraqis could mount certainly an assault that could try to retake Kuwait and endanger the critical oil facilities and other key ports in northern Saudi Arabia.

Mr. O'HANLON: The simplest way to think of the militaries of Iraq, Iran or North Korea are these are militaries that today are weaker than Iraq's was in 1990 and essentially large, yet far, far reduced or much reduced forms of a Warsaw Pact kind of threat. A lot of money put into raw size, into metal, as opposed to high technology, as opposed to good training, as opposed to precision strike capability. These are really kind of dwarfs of a Warsaw Pact-type threat.

NARRATOR: Measured in 1996 dollars, U.S. military spending remains at near-Cold War levels. The Cold War average for military spending was $304 billion a year. The post-Cold War average of $280 billion is lower, but today taxpayers are still spending 92 cents on the military for every Cold War dollar.

Even as plans go forward to cut vital domestic programs such as Medicare, college loans, and drug abuse programs in an attempt to balance the budget, Congress recently gave the Pentagon $7 billion more than it had requested, providing $265 billion for the military in 1996.

Indeed, it's the budget battles at home that could have the biggest impact on the future size and structure of the U.S. military.

Mr. O'HANLON: Defense is going to come increasingly under the gun, in my opinion, as we see the difficulty of making these cuts in Medicare, and Medicaid, and other places. With the Republicans, I think, as courageous as they were to try, perhaps overestimated their own ability to sell the American public on the depth of the cuts that they want. And, in my opinion, the cuts are just too deep on substantive grounds anyway. But as this becomes more politically felt throughout the republic, I believe that defense will be back on the table in budgetary terms.

NARRATOR: When it comes to reconfiguring today's military for the real world, other experts call for the U.S. military to become a leaner, more mobile force, ready to fight anywhere at anytime.

GEN McPEAK: I think more money should be spent now on modernizing our forces, buying them new equipment, and on keeping them ready to fight. And if that is true, it perforce follows logically that they simply must be smaller, because we have to take money out of the pay accounts and put them into readiness and modernization.

NARRATOR: Because we face no enemy that poses a direct threat to the United States some analysts call for the U.S. to streamline its military into a smaller force that would provide support to other nations in resolving conflicts.

Ms. FORSBERG: What would happen if the United States made a commitment to participating in multilateral peacekeeping operations, relying on reserve forces until we see real near-term threats that might require some active response, suspending the production of advanced technology systems that have no counterpart or opponent anywhere else in the world? What would happen is that we could probably over a period of about a decade cut the military budget in half.

NARRATOR: With the end of the Cold War virtually every country is reducing their military forces and budgets. For example, even though the Pentagon believes the Asia-Pacific region remains "unpredictable," Japan just announced plans to reduce its army's troop strength by 20 percent.

In comparison to other countries, U.S. military budgets remains high.

GEN McPEAK: We spend a lot of money on defense in this country, on the order of $250 billion a year. Now that's well down from what we spent at the height of the Cold War, but it is still on the order of 40 percent of all the budget dollars spent on defense in the entire world. So, here we have maybe 5 percent of the world's population, less than that perhaps, spending 40 percent of the money being spent on defense.

We spend as much as the next eight or nine countries spend all added together. And if you look at those eight or nine countries, they're countries like Germany, and the United Kingdom, and France, and Israel, which should -- their defense expenditures ought to be added to ours. I mean, they are our allies.

NARRATOR: Critics of current U.S. military policy question why the American taxpayer should provide a military umbrella for our wealthy allies.

Although some changes have taken place, currently U.S. forces are structured and equipped primarily for offensive operations and unilateral military actions. One alternative to that would be to structure U.S. forces to help our allies defend themselves, not fight their battles for them.

Ms. FORSBERG: When it comes to oil in the Middle East, for example, Europe and Japan are even more dependent on this resource than we are, and yet it's U.S. troops and U.S. lives today that are protecting the oil lines and the supply. In terms of the protection of democratic countries from aggression from abroad, again the United States makes a more than proportionate contribution when you look at populations, income, resources available elsewhere. For some reason, we seem to have taken it upon ourselves that we should provide all the military capability -- or we should provide more of the military capability than the people who are being defended.

NARRATOR: One alternative to the two-war scenario suggests that the U.S. military plan to fight one war, plus keep a small intervention force to respond to smaller conflicts. The U.S. would still have the most powerful military in the world and there would be significant savings for taxpayers.

In this scenario, today's forces could be restructured from primary reliance on 1.5 million active troops and 906,000 reserves to a different balance of 940,000 active troops and one million reserves.

Ms. FORSBERG: Since the threats of major regional war have dropped so enormously as well as the threat of a war in Europe and since we know that it's going to take many years before new threats could emerge, this is an ideal time to rely on the reserves. That gives you the infrastructure, the foundation for re-expanding if you need to in future, but it saves that huge waste of money that you would otherwise have supporting active duty troops on a scale that we clearly are not going to need them in the near future.

NARRATOR: Instead of deploying U.S. forces globally during peacetime and maintaining a large military force in Europe and the Western Pacific, forces could be based in the United States and its territories, ready for deployment when allies require U.S. support to stop an aggressor.

Less emphasis could be put on buying expensive weapons designed to fight the former Soviet Union and more emphasis put on reliable, affordable weapons that would be appropriate for conflicts initiated by militarily marginal nations.

Ms. FORSBERG: The Seawolf submarine, the F-22, the B-2 bomber, all of these are very high technology systems that were originally conceived as being needed to overcome developments in Russia which are not going to happen now for economic reasons. And yet we are going ahead and building these weapons anyway at a cost of billions of dollars.

NARRATOR: The U.S. could work to strengthen the UN and support multinational efforts to deter or control regional conflicts. But for every dollar the U.S. now spends supporting UN peacekeeping efforts, we're spending $649 on our own unilateral force.

Currently, the United States is the only country that prepositions large stockpiles of weapons globally during peacetime. Instead, the U.S. could supply and support its forces from U.S. bases.

Analysts maintain that if these alternatives were implemented, the United States could conceivably realize a savings of $185 billion by 1999 and still have the most powerful, best equipped military on the planet.

Those proposing alternatives to the current U.S. military strategy face a Congress and administration bent on spending $1 trillion on the military over the next four years to maintain a two-war capability. Because the Pentagon has too much at stake to dramatically reinvent itself for the post-Cold War world, independent analysts hope to create a debate that will lead to a new force structure for the U.S. military, one that better reflects the real world.

Ms. FORSBERG: This is what a genuine Bottom-Up Review could do. It would ask the question: How can we seize this opportunity, unprecedented in history, when there are no major military powers which are opponents or see each other as likely to go to war at anytime in the near future. So, seizing this opportunity of relative peace and good relations to demilitarize our own economy, our foreign policy, and U.S. leadership in the international system.

ADM SHANAHAN: From my own long experience working in the Pentagon, I know how difficult it is to break the mold and come up with something new. But that is exactly what needs to be done now. Our current war-fighting strategy needs to be changed to reflect the realities of the current world.

For "AMERICA'S DEFENSE MONITOR," I am Jack Shanahan.