"Most importantly, we have the opportunity to strengthen our presence in the Pacific — and we will," he said.
The administration is not anticipating military conflict in Asia but Panetta believes the U.S. got so bogged down in Iraq and Afghanistan after 9/11 that it missed chances to improve its position in other regions.
China is a particular worry because of its economic dynamism and rapid defense buildup. A more immediate concern is Iran, not only for its threats to disrupt the flow of international oil but also for its nuclear ambitions.
Looming large over the defense budget debate is the prospect of reducing spending on nuclear weapons.
Thomas Collina, research director at the Arms Control Association, believes the U.S. nuclear program can cut $45 billion over the coming decade without weakening the force. He estimates that reducing the U.S. strategic nuclear submarine force from 12 subs to eight could save $27 billion over 10 years. Another $18 billion could be saved by delaying the building of a new fleet of nuclear-capable bomber aircraft, he says.
Panetta has not publicly endorsed eliminating any of the three legs of the nuclear "triad" — bombers, subs and land-based missiles — but in a letter to Congress last fall he wrote that if the Pentagon faced an additional $500 billion in spending cuts starting in 2013 it might eliminate the land-based missile leg, saving $8 billion.
Collina in an interview said he doubts Panetta's strategy review will make more than incremental cuts in nuclear weapons spending.
"My guess is it wouldn't reduce or eliminate any leg of the triad," he said.