President Donald Trump announced Wednesday his intention to request a $1.5 trillion defense budget for fiscal 2027, a 50 percent jump from the current roughly $1 trillion Pentagon allocation. Trump unveiled the proposal via Truth Social, calling it necessary for what he termed "troubled and dangerous times."
The proposed $500 billion increase would fund what Trump described as his "Dream Military." He wrote on Truth Social: «This will allow us to build the 'Dream Military' that we have long been entitled to and, more importantly, that will keep us SAFE and SECURE, regardless of foe.»
The budget would support ambitious programs including the Golden Dome space-based missile defense system, a new class of battleships, and what Trump has called the Golden Fleet. A defense lobbyist, granted anonymity to discuss sensitive spending dynamics, noted: «Golden Dome and Golden Fleet are completely unaffordable without budgets of this size, so the Administration would need to come up with the numbers to back it up.»
Threat to Defense Contractors
Trump simultaneously issued a stark warning to major defense companies, singling out Raytheon as the "least responsive" producer. He demanded the company cease stock buybacks and invest more in manufacturing capacity or face contract termination.
«Either Raytheon steps up, and starts investing in more upfront Investment like Plants and Equipment, or they will no longer be doing business with Department of War,» Trump wrote on social media Wednesday. He added: «Also, if Raytheon wants further business with the United States Government, under no circumstances will they be allowed to do any additional Stock Buybacks, where they have spent Tens of Billions of Dollars, until they are able to get their act together.»
Trump also proposed capping executive pay at $5 million for defense company leaders who fail to build new production facilities. He criticized what he called "exorbitant and unjustifiable" executive compensation while companies remain "woefully behind on deliveries of critical weaponry."
Congressional Response
Some Republicans celebrated the proposal. Rep. Don Bacon (R-Neb.) called Trump's aspirations «a good news story» and emphasized the need for sustained defense spending. «We think we need a permanent 4 percent [of GDP] or better,» Bacon said. «That's what it's gonna take to build our Navy, our Air Force, our ICBMs, our bombers, and take care of our troops.»
House Appropriations Chair Tom Cole (R-Okla.) acknowledged that overall defense spending «needs to go up,» but wouldn't confirm the realism of Trump's massive increase. Rep. Steve Womack (R-Ark.), a senior House appropriator, strongly endorsed the plan, writing in a post: «For too long, we have underfunded our defense apparatus—undermining our national security and benefiting our foreign adversaries.»
The proposal faces expected resistance from Democrats and some Republican deficit hawks. The Committee for a Responsible Federal Budget estimated the spending increase would add $5.8 trillion to the national debt through 2035. Jessica Reidl, a Brookings Institution fellow, wrote on X: «President Trump will see our $1.8 trillion budget deficit and raise it by $500 billion more immediately.» She added the plan had «no chance of passing Congress» and that the military wasn't prepared to «ramp up spending 50% in one year.»
Market Volatility
Defense stocks initially plunged Wednesday following Trump's criticism of contractor practices. Northrop Grumman fell 5.5 percent, Lockheed Martin declined 4.8 percent, and RTX Corp. (Raytheon's parent company) slipped 2.5 percent.
The stocks recovered Thursday as markets absorbed the budget proposal news. Northrop Grumman and Lockheed Martin surged more than 6 percent in premarket trading. A Goldman Sachs basket of European defense stocks rose as much as 3.8 percent, extending weekly gains to approximately 13 percent.
Funding Mechanism
Trump indicated the massive spending increase would be funded through tariff revenues his administration has imposed since returning to office. According to the Bipartisan Policy Center, gross government revenues from tariffs and excise taxes rose from $98.3 billion in 2024 to $288.5 billion last year.
The proposal comes as the White House pursues increased military operations, including actions in Venezuela and the Caribbean. Trump has also called for taking over Greenland and suggested potential military operations in Colombia. Secretary of State Marco Rubio warned Cuba «is in trouble.»
Last year's budget received a $175 billion boost through a GOP reconciliation bill. The defense lobbyist suggested additional funds for Trump's proposal would likely require another reconciliation process.
Note: This article was created with Artificial Intelligence (AI).