Defense spending cuts are inevitable in the US. However, Washington must be extremely careful in managing its relationship with its allies in the Asia-Pacific region, while it debates spending cuts at home.  If managed poorly, the debate over US defense-spending reductions will be perceived as signs of US isolationism, disengagement in Asia, and a reduced commitment to the US-Japan alliance.  Utilizing the analyses on how US defense spending cuts impact US capabilities relevant to the US-Japan alliance, this report aims to encourage the two allies to engage in constructive strategic dialogue in an era of austerity.