In a speech to the Council of Foreign Relations, Mr Rumsfeld said some of the US' most critical battles were now in the "newsrooms".
"Our enemies have skilfully adapted to fighting wars in today's media age, but... our country has not," he said.
Mr Rumsfeld said al-Qaeda and other Islamic extremists were bombarding Muslims with negative images of the West, which had poisoned the public view of the US.
The US must fight back by operating a more effective, 24-hour propaganda machine, or risk a "dangerous deficiency," he said.
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