The United States is not ruling anything out when it comes to dealing with Iran, including military options, according to Defense Secretary Leon Panetta.

When asked on CBS's "Face the Nation" whether a military response is an option in combating Iran's nuclear ambitions, Panetta said, "You don't take any options off the table."


He emphasized that current multinational diplomatic efforts and economic sanctions are the responsible response right now, but added Iran's efforts to develop a nuclear capability represent a "red line" for the United States.

"They need to know that if they take that step, that they're going to be stopped," he said.

Panetta said the United States does not believe Iran is trying to develop a nuclear weapon, but rather trying to develop a nuclear capability "and that's what concerns us."

He also defended a new initiative from the Obama administration to streamline the military that reorients its focus while trimming its budget. GOP presidential candidates have been quick to criticize the president's move, but Panetta said a smaller military budget is inevitable.

"The question isn't whether we're going to do this. The question is how," he said.

While leaner, Panetta sought to paint the new path for the military as one building for the years ahead.

"It is going to be leaner, it is going to be smaller, but it has to be agile, it has to be adaptable, it has to be flexible, quickly deployable and it has to be technologically advanced," he said. "That’s the kind of force we need for the future."