Defence Secretary Chuck Hagel has unveiled plans to shrink the US Army to its smallest size since before the US entered World War Two.
Outlining his budget plan, the Pentagon chief proposed trimming the active-duty Army to 440,000-450,000 personnel, down from 520,000 currently.
Cold War-era Air Force fleets - the U-2 spy plane and the A-10 attack jet - will also be retired.
The US defence budget remains higher than during most of the Cold War.
'Difficult decisions ahead'
On Monday, Mr Hagel noted the US military had come under pressure to downsize after two costly foreign wars.
"This is a time for reality," he said.
"This is a budget that recognises the reality of the magnitude of our fiscal challenges."
The number of active-duty US Army members was already expected to be pared down to 490,000, as the US prepares to end its combat role in Afghanistan later this year.
Mr Hagel added: "Since we are no longer sizing the force for prolonged stability operations, an Army of this size is larger than required to meet the demands of our defence strategy."
He said the administration would also recommend closing some domestic military bases in 2017, though such proposals have been rejected by Congress in recent years.
The Pentagon chief went on to unveil plans for changes to pay and benefits, including curbing housing allowances and limiting pay raises.
However, Winslow Wheeler, a defence budget analyst with the Project on Government Oversight in Washington DC, criticised the proposal as "hype".
He said that even after the cuts in troop levels and the elimination of the A-10 and U-2 aeroplanes, overall military spending including for the war in Afghanistan and on the US nuclear weapons programme will remain near 2005 levels.
"That level is scores of billions above what we spent during the Cold War when the threats were real and huge," he told the BBC.
"We're making all the wrong decisions in terms of the bang for the buck that we're getting for the budget. We will be spending multiples of what China and Russia spend combined."
And even the relative modest cost-cutting drive could well cause ructions on Capitol Hill, which is gearing up for November's midterm elections.
Reaction to the proposal was swift, with Republican members warning such cuts could hurt military readiness.
"This is not the time for us to begin to retreat, and certainly not the time to cut our military," Republican Representative Michael Turner told Bloomberg News.
The proposed Army staffing levels would be the lowest since 1940, when the US employed 267,767 active-duty soldiers. The US entered that conflict in 1941 following the Japanese attack on Pearl Harbor.
By the end of World War Two, there were 8.2 million active-duty US Army members, according to figures provided on Monday by the Pentagon.
The number was 482,000 in 2000, a year before the attacks of 11 September 2001. After those attacks, the force peaked at 566,000 in 2010.