We are neutering our defense. If I have learned anything from DoD policy makers, they are mostly backward looking, which is incredibly dangerous. Gates' new approach may be fantastic for an enemy that makes bombs out of trash heaps, but horrible for Chinese, Russian, Turk, etc. efforts to militarize space and develop weapons that can surpass all US efforts up to our current "stopping point." Don't get me wrong, the research and development will continue, just as stem cell research continued under the ban, but it is hindered by policy.
What should be most concerning is that the DoD budget is being cut to pay for other programs. An area of governance specifically proscribed in the Constitution is being cut in favor of a slew of government muck that leaks like molasses from the General Welfare and Commerce Clauses.
Our next threat will be one that we have not planned for. The "unknown unknowns" (those unknowns that we don't know we don't know) are going to fall in the balance here...and it will probably be "Bush's fault."