Katherine Thompson and Benjamin Giltner
The annual process to provide the nation’s defense budget, the Fiscal Year 2027 (FY27) National Defense Authorization Act (NDAA), is well underway on Capitol Hill. The Armed Services Committees in both the House and Senate have put their pencils down, and legislation from both chambers is expected to be the focus of debate after the Fourth of July. This year’s price tag? Approximately $1.15 trillion.
A recent report from the Committee for a Responsible Federal Budget estimates that, if passed, this would be an approximately 67% increase from last year’s base funding levels. This year’s defense budget comes alongside separate discussions of providing additional funds to the Pentagon via an Iran war emergency supplemental and a third reconciliation funding package, both major asks of the Trump administration.
To promote the massive spending request to members, the chairman of the House Armed Services Committee released a fact sheet early in the process, pitching the FY27 NDAA as the key to rebuilding the US defense industrial base. While in our view the sales pitch is a bit overstated, the chairman’s summary fairly points out that the United States faces systemic and structural challenges that contribute to a defense industrial base bogged down by supply chain challenges, extremely long acquisition timelines, and regulatory barriers to entry. Yet, the chairman’s pitch fails to demonstrate how this year’s legislation gets at the root causes of such problems, which have compounded over time and cannot be solved simply by more spending. Moreover, Congress itself stymies the positive impact it could have by refusing to exercise fiscal responsibility in reducing expansive and expensive US security commitments that are out of step with the narrow set of priorities articulated in the Trump administration’s National Defense Strategy.
A Lack of Strategy
The FY27 NDAA lacks alignment with America’s overall strategic direction. Currently, US defense commitments outstretch our capabilities. The Trump administration’s National Defense Strategy (NDS) confronted decades of failed strategic doctrine and flipped the script from overextension to prioritization. The NDS narrowed the nation’s core defense interests down to four priorities: defending the US homeland, deterring China along the First Island Chain, increasing burden sharing with US allies and partners, and reviving the US industrial defense.
Ideally, the nation’s defense budget should largely align with the strategic priorities identified in the National Defense Strategy and reduce spending in non-priority areas. However, in practice, Congress is a hindrance to such strategic logic in two ways. First, prioritization has never been a strong suit for Congress, where special interests and pet projects abound. The proposed FY27 NDAA, for example, still includes funding for things like the Baltic Security Initiative in Europe and counter-ISIS train and equip programs in the Middle East, which do not incentivize greater burden sharing. Second, Congress refuses to live in strategic reality and give any credence to evidence that the United States is overcommitted globally. For example, the proposed budget continues significant limitations imposed last year on the Pentagon’s ability to reduce US defense commitments by reducing posture in Europe or certain segments of the Indo-Pacific.
The power of the purse and the stewardship of taxpayer dollars are massive constitutional responsibilities, and to execute them willfully blind to the realities of scarcity and tradeoffs is a dangerous operating posture.
High-Cost Programs
Spending more is the easy way of avoiding confrontation with systemic issues that arise in the procurement of high-value, high-cost weapons systems. Yet, these are the reforms, alongside strategic alignment, which are desperately needed. Take the F‑35 program and the modernization of the ground-based leg of the nuclear triad known as the Sentinel program as two prominent examples. Both have raised numerous oversight concerns on cost overruns, budget accuracy, timeliness at various stages, and the expected final product, and sustainability over each program’s lifecycle. Additionally, overregulation is another major factor minimizing competition in the defense industry and stymying the agility the defense industrial base so desperately needs. These are problems that arose from a lack of cash. Rather, such issues require a Congress willing to put parochial political special interests aside, delve deep under the hood of our costliest programs, and make tough reforms to both advance the development of necessary US weaponry and balance fiscal responsibility.
The Spending Problem
Lack of clarity on how the federal government will pay for this “historic” defense budget is also a major elephant in Capitol Hill backrooms. Adjusting for inflation, the United States will spend more on defense than it did at the heights of World War II, the Vietnam War, and the Reagan defense buildup in this year’s proposed defense budget. Amid skyrocketing national debt and increasing domestic costs, it’s unclear how the United States can afford this hike in defense spending.
The Trump administration also identified “supercharging” the American economy as a central element of its sales pitch for a $1.5 trillion defense budget. Let’s pull back the curtain on this. Unless the federal government raises taxes or interest rates, this drastic increase in defense spending would place upward pressure on inflation. Such inflationary pressure couldn’t come at a worse time, when Americans face serious challenges with affordability. Spending more money on defense also diverts funds and skilled workers from domestic spending and savings programs, which are more financially beneficial to the US economy, to the US industrial base, and to the American people.
Compared to sectors like healthcare, infrastructure, and domestic manufacturing, the defense industry creates fewer succeeding jobs, as it is heavily specialized work. For every dollar spent on infrastructure, for instance, over $1.5 in GDP is created, whereas every dollar spent on defense creates $0.6 to $1.2 of GDP. Taken together, these dynamics mean the priority shouldn’t be simply ballooning the defense budget. Rather, the more fiscally responsible path would be to right-size the topline and focus on structural reforms to reduce costs.
Process Problems
Finally, one political party shouldn’t have unilateral say over the entirety of our nation’s defense budget. Yet, this is exactly what is being proposed by the Trump administration and Republican leaders in both houses of Congress, in using the process known as reconciliation to pass a significant portion of defense spending. The Founders gave Congress the power of the purse, but certainly not with the intent that the majority party rig the entire process from start to finish and box out the minority. A durable defense budget, one that includes many of the structural reforms we discuss in this piece, demands a strong political consensus. Yes, that means bipartisan support. Such critical decisions about the nation’s security, made with eyes wide open to strategic reality, should be largely apolitical. Moreover, the budget process itself should prioritize preserving the Founders’ intent for a balance between majority and minority and the respective roles of the House and the Senate over quick political gains.
Conclusion
As it stands, the FY27 NDAA will largely preserve a wasteful and broken defense industrial base. But it is important to acknowledge that this does not have to remain the status quo. Throwing more money at the defense industrial base may ostensibly seem like an easy solution, but a facade won’t solve deeper structural flaws. Congress should take more time to critically evaluate the decision to spend over a trillion dollars on defense, make a greater attempt at serious structural reforms, and follow a regular order process for the defense budget to produce a strong political consensus.