WASHINGTON, FEB., 2008-The U.S. military will face unprecedented challenges in the years ahead. Yet according to a new study by The Heritage Foundation, with the proper leadership, America's armed forces will be well positioned to keep the country safe.

Military analysts James Carafano, Baker Spring and Mackenzie Eaglen say that it's difficult to predict how many people the United States will need to have under arms ten years from now, or what equipment those forces will deploy with. But, they say, if policymakers focus on getting the big things right, the details should fall into place.

Perhaps the biggest challenge will be paying the troops. The United States needs more people in uniform, but must find better ways to compensate them, too.

"A successful future force will adopt policies that cap the spiraling increases in manpower costs," the Heritage experts say. Troops should continue to receive regular pay raises, but deserve a more efficient benefits package that delivers better health care and a dependable retirement plan.

Policymakers must also encourage better cooperation between the military and the private sector. "In many areas business, not the armed forces, has mastered the most effective practices and developed the greatest capacity to deliver the best service at the lowest cost," the analysts note.

To take advantage of the private market, lawmakers should deregulate the military's acquisition system and encourage the Defense Department and contractors to take risks and explore new technologies.

One technology that will be critical, the experts say, is missile defense. "By 2018 American missile defense forces should be more balanced than they are today," they write. To protect the country, the U.S. needs a layer of defenses, including ground-based, ship-based and space-based interceptors. But today's defenses rely almost exclusively on ground-based missiles.

"Over the next 10 years, the U.S. should concentrate on fielding additional interceptors at sea, in the air and in space," The Heritage Foundation experts write.

All these changes will cost money, which is why the experts urge policymakers to improve the budget process. They can do that, they say, by restraining non-defense spending, bringing entitlement spending under control, and devoting at least 4 percent of Gross Domestic Product to defense over the next decade.