Federal debt held by the public has now crept past 100% of GDP, making fiscally-responsible budgeting more important than ever. Against that backdrop, the Trump Administration recently requested $1.5 trillion for the FY2027 Defense Budget, a 44% increase from last year’s budget. If approved, it would represent one of the largest increases in defense spending in decades. Adjusted for inflation, that amount exceeds the WWII peak.
Providing for national defense is a core constitutional responsibility, but that does not exempt the Pentagon from fiscal scrutiny. Congress is being asked to approve a historically large increase for the Department of Defense (DoD), even though it has never passed an audit, remains vulnerable to waste and fraud, and has been slow to implement reforms recommended by federal watchdogs.
Before expanding the DoD’s budget, lawmakers should demand greater accountability, pursue available savings, and ensure the proposal reflects genuine defense priorities rather than an arbitrary spending target.
The FY2027 Defense Budget Proposal
The Administration’s proposal combines different funding streams. About $1.15 trillion is discretionary spending and goes through the normal appropriations process. It is reviewed line by line in Congress and requires 60 votes in the Senate to pass.
The Administration is seeking another $350 billion as mandatory spending through budget reconciliation. When funds go through reconciliation, it is far more likely that they will be passed by Congress because only 51 votes are needed in the Senate (or 50 if the vice president breaks a tie). This system is beneficial for the party that has the majority because it does not have to negotiate across the aisle. The opposite is true for the appropriations process. It requires long, tedious negotiations to pass a bill.
As taxpayers, it is worth asking what that money is actually spent on. The two funding streams together would be used for several key purposes. The $350 billion in mandatory reconciliation money goes overwhelmingly to modernization: buying new weapons and the research to develop them, from ships and drones to the Golden Dome missile shield. Put together with discretionary spending, the $1.5 trillion tilts heavily toward hardware. Procurement and Research, Development, Test, and Evaluation (RDT&E) claim the largest share at $756.8 billion, roughly half the entire budget. Operation and Maintenance, the cost of running the military day to day, takes another $430.7 billion. The remainder would support military personnel, construction, and family housing.
During a Brookings Institution panel discussion on defense spending, Todd Harrison of the American Enterprise Institute made an interesting observation:
This is a budget-driven budget . . . [H]e [President Trump] makes very clear that this budget was driven by a budget number, a budget target—an arbitrary level that was set based on 5% of last year’s GDP . . . then at relatively the last minute in the budget development process, the department was told, come up with a request that gets you to this number, this $1.5 trillion number. And so they did.
If Harrison is correct, the Administration did not develop the budget around a carefully considered strategy to balance defense priorities with fiscal discipline but instead filled in projects to reach a predetermined spending target.
While some additional defense spending may be justified given changing global risks and the need to replace aging equipment, the size of the request raises concerns given the increasing federal deficit and grim long-term fiscal outlook. In FY2027, the U.S. economy is projected at roughly $33 trillion, and the federal government expects to collect about $5.9 trillion in revenue. The Congressional Budget Office (CBO) projects $4.8 trillion in mandatory spending, such as Social Security and Medicare, plus another $1.1 trillion in interest on the debt. The $1.8 trillion spent on everything else results in a total deficit of $1.9 trillion. Against this fiscal backdrop, the President’s $1.15 trillion request would have to be financed through additional debt.
Longstanding Difficulties with Financial Oversight
It is hard to know if the DoD is using its resources effectively when it cannot even produce auditable financial statements. The DoD has consistently failed audits of its finances and is the only major federal agency never to pass one. Auditors, including the DoD Office of Inspector General, regularly issue a disclaimer of opinion, meaning the financial information the agency provided was insufficient for auditors to determine if its books were accurate.
The Pentagon’s most recent audit identified 26 material weaknesses in the books. These are areas where a significant mistake in accounting could take place and it would not be caught. A failed audit does not mean that all Pentagon spending is missing or fraudulent. It does mean, however, that DoD cannot provide Congress and taxpayers with sufficient assurance that its financial statements are complete and reliable. That is a serious concern with $1.5 trillion on the table for defense spending this year.
These deficiencies are not new. The Government Accountability Office (GAO) has had DoD financial management on its high risk list since 1995, and it has only worsened over time. In February 2025, GAO added fraud risk to its concerns over DoD financial management, warning that its systems are vulnerable. To solve these issues, GAO issued 17 recommendations from 2019 to 2025; only 4 have been implemented by the Pentagon. The DoD has its sights set on a clean audit opinion by 2028. It is implementing a new top down approach, focusing on material line items, and maximizing AI usage. However, GAO is doubtful that DoD will address many longstanding issues.
There are very real consequences to this mismanagement. Between 2017 and 2024, DoD reported nearly $11 billion in confirmed fraud, and GAO says that is only a fraction of the potential fraud exposure. A department that makes up one of the largest shares of federal spending needs to be able to track how every dollar is spent to prevent fraud and show taxpayers that it is using their money responsibly.
DoD’s financial problems are compounded by “use-it-or-lose-it” incentives. If the Pentagon does not spend every cent of its budget, next year’s budget will be smaller. This results in relatively conservative spending in the first three quarters of the year and a mad rush at the end of the fiscal year to spend the remaining budget. For example, in September 2025, the last month of the fiscal year, the Pentagon spent $93.4 billion, including $9 million on king crab and lobster. Such year-end spending surges can lead to rushed purchasing decisions, reduced competition, and less scrutiny of whether expenditures reflect genuine priorities or deliver good value for taxpayers.
Opportunities to Reduce Spending and Improve Oversight
Thankfully, Congress does not lack options to help reduce military spending. CBO and GAO have each identified numerous reforms aimed at cutting unnecessary spending and improving the efficiency of federal agencies.
Periodically, CBO publishes a report called Options for Reducing the Deficit, and it regularly includes ways to trim defense spending. One that has yet to be adopted would reduce the defense budget by about $1.1 trillion over ten years by shrinking active-duty personnel roughly 17% and relying more on U.S. allies to provide for their own defense. The last report was published in December 2024 and lists dozens of other options. A few that would reduce outlays include:
Stop Building Ford Class Aircraft Carriers: The Navy would complete the four Ford-class carriers already authorized but cancel plans for additional carriers, which are expensive and take years to construct. CBO estimates this would save about $15 billion over ten years.
Reduce the Size of the Fighter Force by Retiring the F-22: The Air Force would retire its 186 F-22s and rely on other stealth and nonstealth aircraft, including its more than 400 F-35As, to perform their missions. Eliminating the associated personnel and operating costs would save an estimated $29 billion.
Cap Increases in Basic Pay for Military Service Members: Military pay raises are generally tied to wage growth in the private sector. CBO examined limiting annual raises to 0.5 percentage points below that benchmark through 2030, which would reduce discretionary spending by about $22 billion over ten years, although some of those savings would be offset elsewhere in the budget.
GAO finds similar opportunities for savings. In June 2025, it flagged 79 priority recommendations for the Pentagon that would have the biggest returns. This includes a suggestion that the Army, Air Force, and Navy track whether their procurement offices deliver on time, at the quoted cost, and at the promised quality. This was first recommended in 2021, and while the Army and Navy agreed, neither has completed a tracking system. GAO believes instituting it would save $1 billion or more.
Another recommendation asks the Pentagon to explain how it forecasts the service contract budgets it sends Congress. Right now, the department cannot specify the data or method behind those projections, which makes it nearly impossible for Congress to evaluate them. A third, tied to GAO’s High-Risk List, would improve how DoD accounts for transactions between its own components. The Department agreed to it in 2021 and aimed to finish by October 2025, but GAO still lists the recommendation as open.
These recommendations give a clear, nonpartisan path for Congress to reduce federal spending without cutting many programs Americans rely on. They push for an efficient and transparent government, two goals that should be a top priority for every agency.
There are also significant amounts of recently-provided funding that remain unspent. For FY2026, Congress added $113 billion to the defense budget via reconciliation. This funding is subject to sequestration, meaning if it is not obligated by October 1 it will be reduced by 8.3%. That deadline places significant pressure on DoD to obligate the remaining funds in the final quarter of the fiscal year, and the 43-day government shutdown made the problem worse.
Going into the fourth quarter, DoD is looking at approximately $260 billion in contract awards that have yet to be obligated. Awarding that volume in such a short time span raises questions about the decisions acquisition offices will make. Often these offices will add orders onto contracts they already hold and skip the competitive bidding process, raising concerns that taxpayer funds are not being spent efficiently.
Conclusion
Support for a strong national defense should not mean giving the Pentagon a blank check. The size of the proposed increase to $1.5 trillion is especially difficult to justify when the budget appears to have been developed around a predetermined spending target rather than a carefully constructed defense strategy.
As Congress considers the Pentagon’s budget, it should require DoD to demonstrate how the funding advances genuine national security priorities, establish a credible path toward a clean audit, and implement outstanding reforms identified by federal watchdogs. Lawmakers should also consider available savings and examine whether existing funds are being managed effectively. A strong national defense depends not only on how much the country spends, but on whether those resources are used responsibly.