This week on Facing the Future, Todd Harrison of the American Enterprise Institute and Michael O’Hanlon of the Brookings Institution discuss the Trump Administration’s fiscal year 2027 budget request for defense and whether it aligns with the goals of the national defense strategy.
In fiscal year 2026, the federal government spent just under $1 trillion on defense (3% of GDP), which amounted to 13% of the budget. Looking inside the defense budget, the largest category is operations and maintenance (37%) followed by Personnel (23%), Procurement (18%) and Research Development Testing and Evaluation (15%), with other items making up the rest.
Harrison said the current allocation of resources makes sense but it needs to change. “We’re entering an era of warfare where it’s going to make more and more sense to spend a greater share of that budget on modernization, on buying equipment, restocking our inventory of things like missiles and munitions, and preparing for change. But it’s hard to fund all those modernization programs because you have all of the steady state cost of paying people and their benefits and the cost of operating our current force. So I think we’re in a transition period now where that’s going to need to change.”
President Trump’s budget request would increase defense spending to $1.5 trillion.
O’Hanlon compared the administration’s budget priorities with its stated defense strategy. “When you read the national defense strategy,” he said, “there’s a lot of MAGA language about prioritizing the Western Hemisphere and about deprioritizing Europe. If you literally interpret all that to be the true strategic guidance of the United States, then I would say today’s budget does not really square with the strategy. But fortunately, there’s a silver lining, at least in my mind. The shift in strategy in this second Trump term is too much. The language about Europe is too dismissive. It downgrades our interests there. And most of the security that we need to do in the Western Hemisphere is not about using the military. Most of it is about dealing with the border and immigration flows.”
O’Hanlon continued, “If you were going to take this new defense strategy and literally interpret it the way they say, you would wind up pulling forces back home, probably from Europe, maybe even from Asia, certainly the Middle East. You would not go looking for opportunities to engage Iran militarily on the battlefield. And you would hunker down and probably cut the defense budget quite a bit, because we don’t need that much to defend the North American landmass in the Western Hemisphere. So the strategy and the budget are sort of out of whack, but since the strategy itself doesn’t make that much sense to me, I’m just as happy to see them out of whack.”
Harrison agreed with O’Hanlon’s assessment of the defense budget, noting an ironic twist: “If you were to just step back and look at it, you would say this is much more aligned with the strategic priorities of the Biden administration. It is really fleshing out what you would need in the military to be able to deter China and Russia and support our allies and partners around the world. Unfortunately, that’s never what the Biden administration submitted. But then, here we are with the Trump administration’s strategy going in the opposite direction, at least on paper, yet their budget is still going in the direction of the Biden administration.”
Another topic of discussion was whether the U.S. military is overstretched with its many commitments around the world. Harrison argued that, “with what’s been going on in the Middle East with Iran, we did overstretch ourselves in a way that, perhaps, we should have known. We have found ourselves in a situation where we don’t have the inventory of interceptors we need to continue to fend off these attacks from Iran. So I think we find ourselves overstretched just because we depleted our inventories to a dangerous level. And should a crisis break out that requires our intervention in the Pacific or in Europe or elsewhere, it’s going to be hard. We’re going to be operating at a lot of risk because of that.”
O’Hanlon agreed that munitions depletion contributes to elevated risk but noted a mitigating factor: “I don’t think Xi Jinping gets up every morning and says, ‘Oh, I hear the American Patriot and Tomahawk inventories are only half of what the Pentagon would prefer. So maybe today is a good day to attack Taiwan.’ I don’t think he’s going to make that decision based on reports of depleted inventory, because he knows how formidable our military is and how any war between the United States and China is potentially the most dire catastrophe in human history with the potential to go to nuclear war.”
Both experts suggested changes in the defense budget, including some that would produce cost savings. They warned, however, that the potential savings would not be large enough to result in major deficit reduction.
“Defense spending is not going to go down as a percent of GDP in the near future,” O’Hanlon predicted. “We will do well to hold it steady relative to GDP, and I think that’s an attainable goal, but that may be about as ambitious as I would suggest we could attain.”
Harrison added, “If you really want to address the long-term unsustainable deficit that we have, you’ve got to look at taxes, and you’ve got to look at the big mandatory programs like Social Security, Medicare, Medicaid, veterans benefits, all these things that are deeply unpopular to talk about cutting or reforming, even reforming gradually. If you don’t touch those things, and you just focus on the discretionary part of the budget, or just defense, you’re not going to get to a sustainable level of deficits.”
Hear more on Facing the Future. Concord Coalition Senior Advisor Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
