(FORTUNE Magazine) – Defense Secretary Richard Cheney is paid to be suspicious -- and he earns his pay. So it was a turning point when even this professional skeptic acknowledged that the Warsaw Pact's menace seemed to be at an all-time low. At his request, U.S. generals and admirals provided Cheney with a list of items they could do without if a total of $180 billion, say, had to be cut out of the budgets from 1992 through 1994. Among the proposed cuts: The Army, the most labor-intensive service, would eliminate 200,000 of its 2.3 million soldiers, civilian workers, and reservists. It would also drop its plan for modernizing the M1 Abrams tank. Built to fight on the plains of Central Europe, the M1 is too heavy to be shipped easily to Third World countries, the 1990s' more likely battlefields. The Air Force would close 15 of its 261 bases. It also would buy only some half dozen B2 Stealth bombers -- designed to sneak into Soviet air space in a nuclear attack -- rather than an additional 124. It already has ordered eight. The Navy would retire two of its 14 deployable carrier groups, each a flotilla of up to 15 ships. The stock market reacted predictably to these proposed massive cuts in defense spending, knocking down the stock prices of a dozen defense contractors that would feel the impact. These included shipbuilder Litton Industries, B2 maker Northrop, and tank manufacturer General Dynamics. Still, when Congress looks at the defense budget it may make very different cuts. Legislators tend to sculpt a military budget that protects jobs. They demonstrated this all too well earlier this year when Cheney tried to stop production of Grumman's F14 fighter and the tilt-rotor Osprey plane made by a Boeing-Bell Industries joint venture. Congress overruled him. This time Congress might be tempted to cut costs with the least damage to employment by liquidating one or more of the five Army divisions in Europe. It's dangerously early to do so. Better to wait until President Bush, General Secretary Gorbachev, and the Europeans agree to make equalizing reductions all around.