Following the recent midterm elections, the U.S. Congress faces a critical deadline to finalize the fiscal year 2027 budget. Without a new spending bill or an additional continuing resolution (CR), government funding is set to expire on December 11. This tight timeline places significant pressure on lawmakers, particularly concerning the defense budget, which is currently operating under a CR that freezes spending at fiscal year 2026 levels—approximately $858 billion annually.
The White House’s initial proposal for fiscal year 2027 defense spending, totaling $1.5 trillion, is widely considered by experts and observers to be unviable. This ambitious plan was split into a $1.15 trillion “base” appropriations bill and a $350 billion allocation proposed through a separate reconciliation bill. Analysts suggest that the reconciliation component, which often bypasses traditional legislative hurdles but has strict limitations, presents too many obstacles for congressional Republicans to overcome, effectively rendering the full $1.5 trillion proposal unattainable.
Despite this political reality, Pentagon leaders continue to advocate for the full requested amount. Secretary of Defense Pete Hegseth emphasized the urgency on November 10, stating that “this lame-duck period is critically important for funding of our department.” Similarly, Chief Master Sergeant of the Air Force David R. Wolfe, speaking to the Airlift/Tanker Association a few days prior, underscored the necessity of the full budget, asserting, “I can’t stress to you enough how important it is for Congress to pass this budget this year. We need the entire budget.” Their appeals highlight concerns over maintaining military readiness, modernizing forces, and addressing evolving global threats without adequate funding.
As the prospects of securing the full $1.5 trillion diminish, defense officials have begun discussing potential trade-offs and adjustments to their plans. This shift in discourse is mirrored by recent reports from prominent think tanks, the Center for Strategic and Budgetary Assessments (CSBA) and the American Enterprise Institute (AEI), which explore various alternative budget scenarios and their implications for defense priorities.
Travis Sharp, a budget analyst at CSBA, released “Plan B for Defense Hawks” on November 5. This report outlines four potential budget scenarios for the Department of Defense, ranging from $1.05 trillion to $1.15 trillion. Each scenario details different approaches to allocating resources under reduced funding levels, aiming to protect critical investments while identifying areas for potential cuts.
Concurrently, AEI scholars John G. Ferrari, Todd Harrison, and Elaine McCusker addressed the same challenge in their report, “FY 2027 Defense Budget End Game: Options for the Lame Duck Congress,” published on November 6. Their analysis delves into nine distinct scenarios, presenting what each analyst would prioritize and cut under budget caps of $1 trillion, $1.1 trillion, or $1.25 trillion. This multi-perspective approach highlights the divergent views on defense spending priorities even among experts who generally advocate for robust military funding.
The House Appropriations Committee previously passed a defense spending bill totaling $1.07 trillion, largely aligning with the White House’s “base” appropriations request. However, this measure was predicated on the assumption that a reconciliation bill would cover additional funding shortfalls. While some Republicans retain hope for passing a reconciliation bill, Majority Leader Sen. John Thune (R-S.D.) has expressed skepticism regarding its feasibility. Further complicating negotiations, Rep. Adam Smith (D-Wash.), currently the ranking minority member and expected to chair the House Armed Services Committee in January, advocates for capping the defense budget at $1 trillion, signaling a potential floor for reductions.
For the Air Force and Space Force, the outcome of these budget negotiations carries significant consequences for their modernization and operational plans. CSBA’s Travis Sharp, in his proposed scenarios, prioritized “high-priority investments” such as the acquisition of 85 F-35 fighter jets, deeming it a “no-brainer” regardless of the overall budget figure. This reflects a strategic emphasis on maintaining air superiority and leveraging advanced fifth-generation aircraft.
Conversely, all three AEI experts—Ferrari, Harrison, and McCusker—unanimously recommended cuts to purchases of both Air Force F-35As and Navy F-35Cs, regardless of the budget topline. They viewed this consensus as indicative of likely congressional reductions in these programs. The AEI report also proposed delaying or even canceling the F-47, the next-generation air dominance fighter program, which is crucial for future air combat capabilities. The variety of aircraft options presented in the AEI report ranged from Harrison’s avoidance of cuts at a $1.25 trillion topline to reductions of 89 airframes in his $1 trillion budget. McCusker and Ferrari outlined even deeper cuts, proposing reductions ranging from 300 to 582 airframes across their various scenarios, illustrating the potential scale of impact on force structure.
The Golden Dome missile defense shield, a significant priority from the previous administration, also became a point of contention in these budget analyses. Sharp suggested an incremental funding approach, arguing against a large upfront investment. He proposed reducing the requested $17.5 billion to $2 billion, sufficient to sustain the program modestly while allowing future base budgets to adjust funding based on demonstrated progress. This cautious approach emphasizes program efficacy and fiscal prudence.
The AEI experts offered differing views on Golden Dome. Ferrari, under a $1.25 trillion topline, cut funding to $7 billion, but at $1 trillion, he advocated for terminating the program entirely. Harrison proposed preserving funding but eliminating one specific element: space-based interceptors. McCusker suggested that if funding were capped at $1 trillion, the Golden Dome program should be delayed indefinitely into the future, reflecting a strategic choice to postpone certain large-scale projects under tight fiscal constraints.
Munitions
Munitions procurement emerged as another critical area of discussion. Sharp prioritized investments in key munitions, including the Joint Air-to-Surface Standoff Missile (JASSM), the Long-Range Anti-Ship Missile (LRASM), and the Advanced Medium-Range Air-to-Air Missile (AMRAAM). However, he conceded that cuts to munitions are inevitable if the budget falls short of the $1.5 trillion request. He noted that the number of missiles requested must align with the Pentagon’s capacity for responsible spending over a three-year period through the regular appropriations process, implying that the initial requests were likely inflated compared to what could realistically be spent given production timelines. The Pentagon has recently announced framework deals with various munitions suppliers to increase production, but scaling up manufacturing inevitably takes time, a factor Sharp considered in his assessment of feasible investments.
Harrison, from AEI, suggested a $10 billion cut from munitions accounts under a $1.25 trillion topline, trimming the allocation to “what could be reasonably executed.” He proposed deeper cuts at lower toplines. All AEI experts included some level of cuts to munitions, despite Ferrari’s assertion that it was essential for Congress to “replenish munitions and readiness dollars depleted from the Iran conflict,” referencing recent operational demands and their impact on existing stockpiles.
Despite their diverse priorities and varying approaches to potential cuts, all four analysts from AEI and CSBA converged on one critical point: the worst possible outcome for national defense would be the absence of a finalized budget, leading instead to a full-year continuing resolution. Sharp explicitly stated, “Harmful continuing resolutions are clearly the wrong answer.” The AEI experts reiterated this sentiment, emphasizing that while their exercise did not endorse a specific funding level, it illustrated how “each step down in funding leaves fewer choices.” They concluded that a return to CR levels would severely restrict strategic decision-making, allowing “budget math rather than strategy dictating the outcome,” thereby undermining long-term defense planning and operational readiness.
Why This Matters
The ongoing debate over the fiscal year 2027 defense budget is not merely a bureaucratic exercise; it carries profound implications for U.S. national security, economic stability, and geopolitical standing. The inability of Congress to pass a timely and strategically aligned budget can have cascading effects across multiple sectors.
National Security and Military Readiness:A primary concern is the impact on military readiness and the modernization of U.S. armed forces. A continuing resolution, or a budget significantly below strategic needs, can halt new defense programs, delay procurement of critical equipment like advanced fighter jets and munitions, and impede research and development into future technologies. This stagnation risks eroding the technological advantage of the U.S. military, potentially compromising its ability to deter adversaries, respond effectively to global crises, and protect national interests. Cuts to personnel, training, and maintenance can directly affect the morale and effectiveness of service members, impacting their ability to execute missions safely and efficiently.
Economic Impact:The defense budget is a significant driver of the U.S. economy. Reductions or prolonged uncertainty can lead to job losses in the defense industry, which employs millions directly and indirectly through its vast supply chain. Major defense contractors, small businesses, and academic research institutions all rely on consistent funding. Delays in contracts or program cancellations can disrupt regional economies heavily dependent on defense spending, creating economic instability in communities across the country. Furthermore, inefficient spending due to stop-gap measures like continuing resolutions can lead to higher long-term costs as programs are delayed and restarted, and suppliers incur additional expenses.
Geopolitical Standing and Alliances:The U.S. defense budget signals its commitment to global leadership and its capacity to act as a reliable security partner. A perceived weakening of U.S. military power or a lack of strategic investment can undermine confidence among allies, potentially encouraging rivals to assert themselves more aggressively. This could lead to shifts in the global balance of power, increase regional instabilities, and complicate international efforts to address shared security challenges, from terrorism to climate change. The ability of the U.S. to project power and maintain a credible deterrent is central to its foreign policy objectives.
Innovation and Future Capabilities:Investments in advanced technologies like next-generation aircraft, missile defense systems, and cyber capabilities are crucial for maintaining a competitive edge. Budget cuts or delays in these areas can stifle innovation, allowing competitors to catch up or surpass U.S. technological capabilities. The “Golden Dome” missile defense system and the F-47 fighter jet are prime examples of programs that represent significant future capabilities but are vulnerable to budget reductions, potentially delaying or derailing efforts to address emerging threats.
Domestic Priorities and Resource Allocation:The defense budget is also part of a larger federal budget pie, competing with other vital domestic priorities such as healthcare, education, infrastructure, and social services. The allocation of funds reflects national priorities, and significant defense spending can limit resources available for other critical areas. Conversely, a reduced defense budget, if not strategically managed, could necessitate re-evaluations of military commitments and capabilities. The challenge for Congress is to strike a balance that safeguards national security without unduly compromising other essential governmental functions and investments in the nation’s future.