Panetta, who announced his retirement recently, said he was confident that the Defense Department had a defense strategy for the 21st century that ensures the military is the strongest in the world.
"We face, as you know, a number of adversaries around the world," he said following talks with visiting Afghan President Hamid Karzai. "But the most immediate threat to our ability to achieve our mission is fiscal uncertainty, not knowing what our budget will be, not knowing if our budget will be drastically cut and not knowing whether the strategy that we've put in place can survive."
Congress in a New Year's Day vote postponed a series of automatic budget cuts known as sequestration until the end of March. The deal delayed more than $54 billion in military spending reductions.
Panetta said lawmakers avoided the worst possible outcome, though a cloud hangs over defense spending cuts.
If budget matters are left unresolved by March 1, he said, U.S. lawmakers will have seriously harmed the nation's military readiness.
"We have no idea what the hell's going to happen," he said.
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