With the end of the Cold War, U.S. defense planning has shifted from a focus on a major war against the Soviet Union and her allies to preparations for Major Regional Contingencies in the Persian Gulf and Far East. These preparations are severely constrained by major budget reductions and associated force drawdowns, weapons program cancellations and limitations on training and readiness accounts. At the same time U.S. forces continue to operate at an unprecedented tempo for peacetime, enforcing no-fly zones in Iraq and Bosnia, flying humanitarian relief missions globally and supporting peacekeeping operations in multiple locations. Meanwhile the threat continues to evolve as potential adversaries absorb the lessons of Desert Storm and try to identify new means to wage war. This paper discusses these challenges with particular emphasis on the evolving threat.