The Pentagon has unveiled plans to cut troop numbers by nearly 100,000 over the next decade.
The budget plan for 2013 would cut $487bn in spending, mothballing ships and trimming air squadrons in a bid to create a smaller, more agile force with a new strategic focus.
The funding request comes as the US military winds down ten years of war in Afghanistan and Iraq and shifts its focus to the Asia-Pacific region and the Middle East.
The budget plan has been criticised by some lawmakers, setting the stage for a struggle between President Barack Obama's administration and Congress over national security spending as the country tries to curb its trillion-dollar budget deficits.
Defence Secretary Leon Pannetta said the savings "will impact all 50 states and many districts, congressional districts across America."
He added: "This will be a test of whether reducing the deficit is about talk or action."
Republican lawmakers who oversee military affairs on Capitol Hill have been quick to criticise the plan.
Senator John McCain said it "ignored the lessons of history" by imposing massive cuts on the military, and Representative Buck McKeon said it reflected "Obama's vision of an America that is weakened, not strengthened, by our men and women in uniform."
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