U.S. MILITARY REMAINS STRONG

This rebalancing doesn't mean the United States is giving up its military supremacy.

"Our military will be leaner, but ... agile, flexible and ready for the full range of contingencies and threats," Obama said.

The U.S. military should be able to ensure national security with smaller conventional ground forces, the U.S. president said. He vowed to get rid of "outdated Cold War-era systems" while investing in the capabilities needed for the future, including intelligence, surveillance and reconnaissance, as well as counterterrorism, among others.

Despite fiscal challenges, defense spending will continue to grow albeit at a slower rate, the president said, noting the country still ranks number one in defense spending. Its defense budget "continues to be larger than roughly the next 10 countries combined," Obama said.

The new strategy is likely to shift the emphasis from the Army to the Navy and Air Force as the wars in Afghanistan and Iraq wind down. While the former military focus was fighting and winning two wars simultaneously, experts say that the military will now be focused on winning one war, while spoiling the military aspirations of another adversary in a different region of the world.

Yet speaking at a press conference Thursday, Defense Secretary Panetta said that the United States could still conduct two military operations at the same time.

"The nature of warfare today is ... as you engage, you have to look at how you do it, what forces do you use to be able to confront that enemy, what exactly is involved," Panetta said. "You could face a land war in Korea, and at the same time face threats in the Straits of Hormuz. We have the capability, with this Joint Force, to deal with those kinds of threats, to be able to confront them, and to be able to win. That's what counts."