Bipartisan Support Lacks Funding Commitment Amid Budget Constraints
While there is a bipartisan agreement within the national security community regarding the necessity for a larger and more resilient defense industrial base to fulfill military requirements, recent defense budget developments demonstrate a stark lack of consensus on increasing defense spending. This disconnect between the desire for expanded capabilities and the limitations of actual resources underscores the challenges facing the Department of Defense (DoD).
Significant changes in the 2025 continuing resolution indicate that the ambition for a revitalized defense industry may not align with available funding. The anticipated cuts to key investment accounts, as outlined in Defense Secretary Pete Hegseth’s budget framework, raise concerns about the future of defense funding. To realize the aspirations of defense advocates—such as welcoming new entrants into the defense market and increasing production rates—an increase of 15-25 percent in defense investment accounts, which encompass research, development, testing, evaluation (RDT&E), and procurement, is essential.
The Defense Budget’s Role in Industry Viability
The stark reality is that the health of the defense industry is directly tied to the defense budget and the programs it supports. Yet, American political leaders across the spectrum have struggled to make a compelling case for the necessary funding needed to strengthen the defense industrial base in a climate where competing domestic priorities dominate public discourse.
During the Biden administration, efforts to outline a national defense industrial strategy were undermined by a lack of meaningful funding to support its implementation. The rhetoric surrounding an expanded defense industry and the transition “beyond prototypes” failed to translate into actionable investment, even with supplemental funding following the recent Ukraine conflict.
Congress: A Lack of Action
Congress, regardless of which party held power, has not effectively responded to the pressing need for increased funding. The newly enacted 2025 continuing resolution is particularly concerning, as it has led to a decrease in net investment account spending by approximately $13.1 billion, or about 4 percent compared to 2024. Furthermore, when supplemental spending is included, this decrease rises to 10 percent, representing the first reduction in defense investment spending in a decade.
As the U.S. encourages its allies to boost their defense spending, the decision to cut domestic defense industrial funding sends conflicting messages.
Future Spending Challenges and Realignments
Looking ahead, Hegseth’s proposed 8 percent realignment in defense spending for the FY26 budget poses additional challenges. Utilizing an estimated baseline of an $850 billion budget, this might necessitate reallocating approximately $68 billion. However, a significant portion of the budget—roughly 61 percent—goes toward military personnel and operations and maintenance, leaving investment accounts particularly vulnerable to cuts.
Assuming only modest reductions in MILPERS and O&M, remaining accounts responsible for RDT&E and procurement would face deeper cuts. The exclusion of substantial budget areas, such as nuclear modernization and major shipbuilding, from these cuts further complicates the investment landscape, leaving other critical areas susceptible to significant reductions.
Seeking Comprehensive Solutions
Given these constraints, addressing the disconnect between anticipated defense strategy, characterized by the notion of „peace through strength,” and the financial realities has become increasingly urgent. Options for reform include making severe cuts to legacy platforms or military bases, which is politically difficult, or starving R&D—the latter being a detrimental approach given the evolving challenges on the global stage.
In an ideal scenario, a holistic reevaluation of defense capabilities could lead to greater efficiency across the DoD, eliminating redundancies, simplifying requirements, and fostering competition. In addition, fostering a culture of technical innovation by engaging non-traditional defense players may yield cost-effective and agile solutions in emerging domains.
The critical need for high-end capabilities—like manned fighters and advanced munitions production—should be balanced with the exploration of emerging technologies such as attritable unmanned vehicles. However, a complete pivot toward unmanned solutions without maintaining robust traditional capabilities may prove impractical.
Conclusion: Political Will and Strategic Choices Required
Ultimately, the onus is on both Congress and the executive branch to make informed decisions that will support a strong and capable defense industry. In a rapidly changing global landscape, fostering a robust industrial base that meets national security needs is not just a strategic imperative but a necessity for the future resilience of the United States. Only through decisive action can we hope to reconcile budgetary constraints with the demands of a modern military strategy.
