The U.S. Army is expected to lay off 40,000 soldiers over the next two years, shrinking its size to 450,000, the smallest number since before World War II, a document obtained by USA Today shows.

USA Today notes that the reduction will impact “virtually all” of the Army’s domestic and foreign posts.

“An additional 17,000 Army civilian employees would be laid off under the plan officials intend to announce this week,” the article points out. “Under the plan, the Army would have 450,000 soldiers by Sept. 30, 2017, the end of the 2017 budget year.”

Moreover, the leaked document reportedly shows that pending automatic budget cuts known as sequestration would require the Army to slash an additional 30,000 soldiers.

“At that level, the Army would not be able to meet its current deployments and respond to demands for troops in other regions,” reports USA Today.

The troop reduction plan came to light one day after President Obama, speaking from the Pentagon, said there are “no current plans” to deploy additional American troops to fight the Islamic State (ISIS/ISIL) in Iraq. Obama, however, did not explicitly dismiss the possibility in the future.

The Pentagon first announced the plan to reduce the size of the Army to pre-WWII levels in February 2014, when then-Defense Secretary Chuck Hagel released the Department of Defense’s budget for fiscal year 2015.

Reduction schemes were also included in the Pentagon’s four-year planning document, the Quadrennial Defense Review 2014.

Budget constraints are behind the upcoming reduction in troops and civilians, the leaked document reportedly says.

Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, echoed that sentiment during a Senate Armed Services Committee hearing on Tuesday, indicating that “dwindling resources was a major factor in the decision to cut the number of active troops from 490,000 to 450,000,” notes Fox News.

The Army has reportedly declined to comment on its leaked plan to lay off soldiers.

Sequestration has already limited the U.S. military’s ability to respond to contingencies, according to the Government Accountability Office (GAO), a congressional watchdog.

To implement fiscal year 2013 sequestration reductions, the Pentagon took actions that “decreased the availability of forces and equipment, reduced global U.S. military presence, and increased risk by limiting some service capabilities and capacity for responding to contingencies or other emergencies,” the GAO reported in May 2015.

Sequestration refers to across-the-board spending reductions for all federal agencies and departments that began in 2013. The cuts were passed by Congress and signed into law by President Obama. Sequestration has and is expected continue to hit the U.S. armed forces particularly hard.