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GAO discussed the Department of Defense's (DOD) major defense budget, focusing on budget shortcomings Congress identified related to threat, money, strategy, force structure, and programs. GAO noted that: (1) DOD believed that the threat of massive conventional war in Europe had substantially declined, and that well-armed adversaries were the most immediate threat to U.S. interests; (2) the President and DOD believed that, to protect U.S. interests in the new security environment, they would have to preserve strong defensive and offensive capabilities, maintain a forward presence, and retain response capabilities to crisis and force rebuilding; (3) DOD planned to reduce its number of organizational units, such as Army divisions and Air Force tactical air wings, but it was unclear whether DOD based its force structure reductions on budgetary conditions or on other factors; (4) DOD needed to examine the feasibility of continuing both the Army and Marine Corps' light forces and the Army and Air Force's provision of close air support; (5) although the DOD program was consistent with its budget proposal, it still heavily depended on achieving about $172 billion in savings through future legislative action, management initiatives, and program terminations; and (6) to the extent that DOD does not achieve its savings, it will have to find alternative ways of staying within its budget.

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