Faced with a new array of threats, including a thorny deficit problem, the United States needs to make immediate but significant cuts to its military budget, U.S. Deputy Secretary of Defense William J. Lynn III said Wednesday.

"The central challenge we face today in defense planning is how to manage a defense slow-down without endangering our national security," Lynn said during a speech at the Center for American Progress.

Spending decisions, he said, have to put everything on the table. Cuts to defense spending alone cannot solve the U.S. deficit problem but it has to be part of the solution, Lynn said.

"It would be impossible to justify excluding 20 percent of federal spending that goes toward defense as we wrestle with this deficit problem," Lynn said.

Lynn suggested four ways the government should make cuts in defense spending in the federal budget -- a budget that needs to be cut by $450 billion over the next 10 years.

The first two are bringing force levels down as troops draw back from Afghanistan while prioritizing key missions and knowing where the government can take risks.

"It is better to have a smaller, but ready, force and fewer, but more helpful, programs," he said. "Keeping programs alive in the hope that there will be more funds for them in the future is reckless and intemperate behavior."

An area that isn't likely to see reduction is counter-terrorism, Lynn said. He said that mission is a critical one, which will continue to remain important in the future.

Lynn also suggested leveraging technology to make those smaller forces more effective and agile. This would in turn reduce the U.S. presence in some areas of the world while expanding it in others.

Lynn said the deficit truly is an overall imbalance of revenues and expenditures in a decade dictated by war.

"Security begins with a strong economy," he said. "The economy is truly the wellspring of our military might."

If the congressional supercommittee charged with finding ways to cut spending doesn't propose ways to reduce deficits by Nov. 23, the U.S. government will be forced to make mandatory cuts, half of which are aimed at the Pentagon.

Across-the-board cuts would go into effect Jan. 1, 2013. The automatic cuts -- known as sequestration -- could be catastrophic for U.S armed forces, Lynn said.

"A sequester would more than double our reductions to over $1 trillion over the next decade and will allow cuts to be made without regard for importance or priority," he said. "We must avoid it at all costs."