The Pentagon brass, civilian suits, contractors, and lobbyists are jockeying for position in the fight for the status quo in anticipation of Mr. Panetta’s arrival in the Office of Secretary of Defense. Yet, senior leaders do so at their own peril. This is not Leon Panetta’s first Washington rodeo. He has seen this Potomac movie before; national security camouflaged as political patronage and money shoveling.

The truth is America’s investment in defense must be aligned with strategic reality, not short-term political wants, wishes, and desires. The nation’s vital interests are only secured against enemies, actual, potential or presumed when the nation’s scientific-industrial base is productive, kept in bounds, and society is prosperous. While there are always threats to U.S. national security there are no existential military threats; though it’s easier than many Americans think to manufacture one. Enemy armed forces are not assembling on America’s strategic periphery poised to drive a dagger into our allies or American’s heartland. Like most things in life, this condition is not permanent, but Americans cannot justify defense spending at current levels.

Instead of devising strategies to preserve the status quo, the nation’s military leaders should adopt President Eisenhower’s prescription for national defense: “The purpose is clear. It is safety with solvency. The country is entitled to both.” The deficit America’s military leaders should worry most about is intellectual, not fiscal. The key strategic challenge now is at home, not overseas. It’s to restore our economic productivity and prosperity while nourishing a core group of military professionals who are competent to cope with the unexpected when it arises.

Mr. Panetta’s age and long experience in Washington, DC constitute a distinct advantage in dealing with the strategic dilemma confronting the nation. He has served in the Army, on the Hill, and in the White House. Panetta is no unreconstructed Cold War Neanderthal. Panetta is not a handwringer inclined to put political winning and whining ahead of the United States’ long-term economic and defense interests. He knows too well how often decisions in American national military strategy are made in ignorance for unabashed political wants independent of strategic necessity.

Mr. Panetta remembers the battle cry of 1975, “No more Vietnams.” And he is well aware of the new contemporary battle cry, “No more Iraqs!” Do not expect him to be enamored with the Neocons mantra of counterinsurgency (COIN), a readymade justification for more spending.

Panetta knows Iraq’s bloody and expensive occupation instilled in Washington’s politicians an aversion to open-ended missions involving masses of ground troops inside backward, hostile societies. The Army and Marine generals’ predilection for counterinsurgency (COIN) demands too much money, time and manpower, as plainly seen in Iraq and Afghanistan. Frankly, the use of general-purpose ground forces as occupation forces in parts of Iraq and Afghanistan continue to impose severe human and economic costs on the United States, its allies, and even our friends inside the Islamic World.

Most important, the probability for a strategic outcome that favors U.S. interests is low and the probability for increased defense spending is high as the gravy train chugs along. The approach is economically ruinous and politically unsustainable. Gates reinforced this policy. Mr. Panetta must now deal with the consequences.

Panetta is no stranger to the importance of extracting savings from current operations. He knows it’s impossible to separate America’s fragile economic condition from new developments in the international system; developments that will not support the expensive forward basing of significant U.S. Ground Forces on foreign soil. Clearly we’ve forgotten we are a maritime nation and the relevancy of sea basing divorced of gigantic logistic cities and hoards of contractors.

Panetta has lived through many wars. He understands the United States is of necessity a global aerospace and naval power. But he knows the United States is not, nor does it need to be a global land power. Panetta is well aware the Europeans, Japanese and Koreans enjoy security at no real cost to their economies and that’s a huge problem given our paramount need to rebuild American prosperity. In truth, our military presence in these countries is mortgaged to our vanity. It is time for our allies to take on the job of defending themselves.

How Mr. Panetta will proceed is unclear, but his track record in the White House and on the Hill provides a glimpse. Before Mr. Panetta cuts force structure and personnel, he will identify the problem to be solved, ask questions, and, then, take action! Throughout the process of examining ways to reduce defense spending he will also keep in mind that re-paving old roads instead of blazing new trails means going down the same path with fewer and fewer resources.

· Streamline: Eliminate wasteful and redundant overhead, and support structures. Withdraw forces from overseas locations where they are no longer needed. Meanwhile, maximize ready, available combat power for the unforeseen crisis or conflict.

· Simplify: Organize around functions and missions. Because the simplest tasks in war are difficult, complex command arrangements involving fragmented authority should be avoided at all cost. Strategically reorient the armed forces’ approach to both forward presence missions and the way the armed forces are employed around the world.

· Unify: Integrate capabilities across service lines. Wherever possible, eliminate redundant single-service warfighting structures, thinking, culture and modernization. If Americans in uniform are to master the development, integration and employment of new capabilities in the form of unmanned platforms, integrated missile defense systems and directed energy weapons we must find savings through new ways to develop and field capabilities across bureaucratic and service lines.

When it comes to big-ticket programs like the Future Combat System, Expeditionary Fighting Vehicle, Littoral Combat Ship or Joint Strike Fighter, Mr. Panetta will want to avoid investments in the past. He knows from experience that poorly thought out solutions to the past will only cause us to relive it. In effect, Mr. Panetta will resist attempts to “build a better carburetor” in favor of fuel injection.

In the foreseeable future, Mr. Panetta will be compelled to emphasize “economy of force” in the conduct of military operations at home and overseas; an approach informed by his White House experience. Fiscal constraints make any other approach unacceptable to him. As a result, he’ll focus on new technology and a different mix of forces that enable a lighter, less intrusive American military footprint.

Damage control, not direct military intervention through occupation or societal transformation will be his goal as Mr. Panetta tackles the challenge of attempts reshaping U.S. military engagement in Africa, the Middle East, Central Asia and Latin America. If and when the United States is compelled to fight, Mr. Panetta’s determination to economize will translate into operations that are expeditionary and/or punitive; operations involving air, naval and ground forces, designed to convince enemies, real or potential, that the price they will pay is too high to risk attacking U.S. and allied interests.

In sum, Mr. Panetta’s arrival in the Pentagon should come as a relief to many in the senior ranks who’ve always questioned our policies in Afghanistan and Iraq. On the other hand, fiscal necessity and strategic reality points towards smaller, but more lethal forces. Mr. Panetta gets it, so should the senior leaders commanding America’s armed forces.

Col (ret) Douglas Macgregor is a decorated combat veteran and the author of ground-breaking books on military reform and strategy including, Breaking the Phalanx (Praeger, 1997), and Transformation under Fire (Praeger, 2003). He is executive vice president at Burke-Macgregor Group, LLC, in Reston, Va.