The signs and the warnings are everywhere.

From policymakers: “Our technological superiority is slipping,” warns Deputy Secretary of Defense Robert Work. Undersecretary of Defense Frank Kendall says that in terms of “technological superiority, the Department of Defense is being challenged in ways that I have not seen for decades.”

From the military: Gen. Mark Welsh, Air Force Chief of Staff, reports that China will soon field a modern air fleet “at least as big—if not bigger—than our air forces.” And China is matching quantity with next-generation quality. “We are not keeping up with that kind of technology development,” Welsh concedes.

From the media: “The large lead that America enjoyed,” The Economist concludes, “has dwindled…Colossal computational power, rapid data processing, sophisticated sensors and bandwidth…are all now widely available.”

From the think-tank world: AEI’s Mackenzie Eaglen reportsthat military commanders express concerns about “the accelerating erosion of the American military’s technological superiority.” She notes that “Almost none of the new military equipment coming online is revolutionary in design or technology; most is merely an upgraded version of something from the Cold War.” The Lexington Institute’s Loren Thompson warns, “The Army is likely to face enemies far better equipped than it is to seize control of the electromagnetic spectrum…To say the Army isn’t ready for what lies ahead is an understatement: if it got in a fight with Russian troops in Ukraine, Poland or the Baltic states, the Army could quickly see all of its key targeting and communications systems shut down by enemy jammers.”

And from the frontlines: Russia is leaping ahead in electronic warfare (EW); China is flexing its muscles in cyberwarfare. Both are catching up with the United States in stealth capabilities, networked warfare, power projection and precision missilery. Russia’s EW capabilities can jam, scramble and blind American assets. China’s cyber-siege of the United States is decimating industry, holding hostage the U.S. government and weakening U.S. defenses.

The Lexington Institute notes that “When the Cold War ended, the Defense Department terminated production of the B-2 and ceased development of new bombers for the first time since the 1920s…As a result, the U.S. has not developed a new heavy bomber in three decades.” And as a result of this bomber-building holiday, America’s bomber force comprises just 76 B-52s (brought into service in 1955), 63 B-1s (brought into service in 1986) and 20 B-2s (the first rolled off assembly lines in 1988). Initial operational capability of the yet-to-be-built B-21 Long Range Strike Bomber will not come until 2025. (Let’s hope the B-21 project goes smoother than the star-crossed F-35 program.)

As Air Force Magazine reports, the Air Force plans to fly the F-15 (first delivered in 1974) until 2030, and the F-16 (delivered in 1978) deep into the 2020s. The plane that could have taken over for those airframes—the F-22—was phased out in 2009, less than halfway through its planned production run.

The Navy has been ordered to stretch the “build time” of new aircraft carriers from five to seven years, and had to seek a special congressionalwaiverto deploy just 10 carriers (rather than the legally-mandated 11) while the USS Gerald Ford is built and other flattops are retired or refurbished.

Good and Bad

Why and how is this happening? It’s not because the U.S. suddenly became less technologically capable than China and Russia.

The reason the military-technology gap is closing is twofold.

First, China and Russia have been increasing defense spending, while the U.S. has been decreasing defense spending. Between 2011 and 2015, Beijing increased military spending 55.7 percent (and 167 percent between 2005 and 2014). Moscow increased military spending 108 percent between 2004 and 2013; Moscow’s 2015 military outlays were 26 percent larger than in 2014.

All the while, U.S. defense spending has been falling. The U.S defense budget—in a time of war and growing international instability—has fallen 15 percent since 2010. The U.S. defense budget has shrunk from 4.7 percent of GDP in 2009, to 3.1 percent of GDP today, headed for 2.8 percent of GDP by 2018. Looked at another way, “National security spending made up 20.1 percent of the federal budget in 2010, but in 2015 it was 15.9 percent. Over the same period, spending fell from 4.6 percent of gross domestic product to 3.3 percent,” as the Pulitzer Prize-winning website Politifact details.

Not surprisingly, defense R&D spending has plummeted 15.6 percentsince 2006. Since 1988, defense R&D spending has fallen from nearly 0.9 percent of GDP to barely 0.4 percent of GDP.

Second, since September 11, 2001, Washington has been preoccupied with dismantling terrorist networks, fighting insurgencies and stabilizing broken nation-states—and understandably so. But this has expended resources that otherwise would have been allocated toward new technologies and new weapons systems.

China and Russia have not been standing still during America’s 15-year war on terror. Instead, they “have gone to school on us,” in Work’s words, and invested their resources into fielding 21st-century militaries.

All of this is an argument against the bipartisan gamble known as sequestration—and an argument for a return to the peace-through-strength model that guided America for much of the 19th and 20th centuries.

Even so, all the news on the mil-tech front is not bad.

The Navy is fine-tuning an electromagnetic rail gun that can hit targets 100 miles downrange at speeds exceeding 5,000 mph.

Air Force leaders predict laser weapons will be grafted onto existing airframes by 2020, Military Times reports. Specifically, the Air Force and its industry partners are exploring the use of laser weapons on AC-130s, MQ-1 drones, F-22s and F-35s. “This is a reality,” Gen. Hawk Carlisle, commander of Air Combat Command, reports. The technology is coming “very soon,” according to Carlisle, who predicts the addition of laser weapons will “change the game.”

The Air Force also plans to turn old B-52s into unmanned “arsenal planes” that, when networked with F-22s, F-35s and B-21s, will serve as “airborne magazines,” thus greatly expanding the striking power of smaller airframes.

The Pentagon is testing “micro-drones that can be launched from the flare dispensers of moving F-16s and F/A-18 fighter jets,” The Washington Post reports. Once dispersed, the micro-drones can attack independent targets, swarm a target or even lie in wait for a target.

The Pentagon is developing a “Prompt Global Strike” missile system, which will deploy a hypersonic kill vehicle through space to deliver a conventional weapon “anywhere on Earth in as little as an hour,” as the Congressional Research Service reports. Related, the Pentagon has tested hypersonic missiles like the X-51 Waverider that can fly at speeds approaching 3,500 mph.

Finally, America’s unmanned systems, missile defenses and cyberwar capabilities are on the cutting edge. For instance, Ralph Langner, an expert in industrial computer systems, has likened the Stuxnet computer worm, which the U.S. developed and deployed to target Iran’s nuclear program, to “the arrival of an F-35 into a World War I battlefield.”

The Power of Freedom

It’s important to remember that America's secret weapon is not any particular weapons system, but rather the men and women entrusted with those weapons.

After listening to a group of veterans who had survived the prisons of Hanoi, Reagan asked, “Where did we find such men?” Of course, he knew the answer before he finished the question: “We found them where we’ve always found them—on Main Street, on our farms, in shops and stores, in offices, oil stations and factories. They are simply the product of the freest society man has ever known.”

Reagan understood freedom’s double-sided power: the power to inspire incredible acts of bravery and sacrifice, such as those in Vietnam and Normandy, as well as the power to encourage incredible feats of innovation, such as those that spawned the B-2 and the Internet.

Reagan liked to recount a story from his days as governor, when a college kid argued that Reagan’s generation “could not understand” young people because “when we were young we did not have jets, nuclear power, instant electronic communications and computers.” Reagan’s response was vintage Reagan, and it tells us a lot about his belief in the power of American innovation: “I agreed,” he cheerfully replied. “We did not have those things when we were young. We invented them!”

Reagan knew that when the shackles are removed, America’s free-enterprise system can deliver and innovate and create new products, new solutions and new technologies—for the American people and for the American military.