Over the past five years, the U.S. Army has been racing faster and faster in service to the nation. The campaign in Iraq lies at the core of the major challenges the Army confronts today, although force levels are reaching an all-time high in Afghanistan as well. The Army is not “broken” by a long shot; remarkably high retention rates, continuing high morale in tactical units, and sustained tactical effectiveness all testify to that. But it is certainly “stretched thin,” as senior Army leaders have stated repeatedly in recent months, and the current surge of forces to Iraq will stretch it thinner still. There is little slack here to take on other challenges should they arise, and high retention rates cannot fully mask growing strain on soldiers and their families. Whatever the press of current demands, however, Army leaders cannot ignore the future, nor have they. They have worked hard and successfully, so far, to defend major acquisition programs while reshaping tactical formations into “modular” brigade combat teams in a significant transformation of Army forces. But challenges remain: What is the best structure and training regime for an Army that faces so many different challenges? How can it best develop leaders able to handle these challenges, often simultaneously? What kind of communications network does it need to tackle the full array of future operational challenges? How can it recruit to the newly announced higher end-strength? This annual report summarizes some of the work that RAND Arroyo Center’s analysts have done in fiscal year 2006 to help the Army meet today’s demands while making tomorrow’s choices.