On April 3, 2026, the White House released its budget request for Fiscal Year (FY) 2027, proposing a historic $1.5 trillion in total defense spending. This represents a $445 billion (approximately 44%) increase over the FY 2026 defense funding level, building upon the $1 trillion overall defense topline enacted the previous year. If enacted, this would mark the largest increase in defense spending since the Korean War, exceeding the Reagan-era buildup of the 1980s.
Budget Structure and Funding Sources
The FY2027 defense request employs a unique funding structure that combines traditional discretionary appropriations with mandatory spending through the budget reconciliation process.
The budget includes approximately $1.15 trillion in base discretionary budget authority specifically for the Department of War.[1] An additional $350 billion in mandatory funding is requested through another budget reconciliation bill,[2] which would support critical priorities such as increasing access to critical munitions and expanding the defense industrial base.
According to Pentagon officials, the base FY2027 procurement account will be just under $260 billion, while the base request for research, development, test and evaluation (RDT&E) will be just under $220 billion. Through the reconciliation package, the Department of War seeks an additional $280 billion for procurement and RDT&E, bringing the total requested “modernization account” to approximately $760 billion.
Key Investment Priorities
Golden Dome Missile Defense System
A significant portion of the budget supports the “Golden Dome for America” missile defense system, as outlined in Executive Order 14186. Nearly all of the $17.5 billion being sought for this program will be funded through mandatory funding and a reconciliation bill, with approximately $400 million in the base budget. The investment supports development of space-based missile defense sensors and interceptors, kinetic and non-kinetic missile defeat capabilities, and enabling technologies for a layered, next-generation homeland defense system.
Industrial Base Expansion
A central theme of the FY 2027 request is shifting from a sustainment-based force to one investing in productive expansion of the defense industrial base and delivery of new innovation. The budget includes targeted investments in:
- Critical mineral supply chains;
- Drones and autonomous systems;
- Emerging technologies including artificial intelligence;
- Expanded shipbuilding capacity beyond traditional prime contractors.
Of note is Secretary of War Pete Hegseth’s announcement to establish a new sub-unified command for autonomous warfare, underscoring the centrality of drones and autonomous systems in future conflict and putting these systems front and center in FY2027 budget planning.
The newly established Defense Autonomous Warfare Group (DAWG) may be involved in overseeing the new command, which remains under development. The Trump administration has requested nearly $55 billion for the DAWG to support the coordination and advancement of unmanned and autonomous systems.
Establishment of a sub-unified command, which is similar in status to Joint Special Operations Command and Cyber Defense Command, signifies a high-level investment in joint, cross-domain drone operations. Secretary Hegseth emphasized that this entity is vital to both developing sophisticated, “exquisite” systems and scaling “attritable” drone swarms, as well as deploying capabilities to counter adversary platforms, lessons drawn from Ukraine’s four-year war and recent U.S. operations in the Middle East.
The Budget request also includes over $100 billion in Defense Industrial Base (DIB) investments, including:
- $48.8 billion to address critical mineral shortfalls and domestic supply chains through multiple funding streams from the National Defense Stockpile, Industrial Base Analysis and Sustainment (IBAS) program, and Defense Production Act making transformative investments in the U.S. critical minerals industry.
- $72.3 billion in IBAS program ($41.8 billion) and Defense Production Act Title III funds ($30.4 billion) to mitigate cross-cutting supply chain risks throughout the DIB, including strategic materials, microelectronics, batteries, and casting and forging (including $30.8 billion in critical minerals above).
- $20.2 billion for the Office of Strategic Capital to use federal credit tools to attract private capital investors to invest.
- $8.7 billion for the Submarine Industrial Base (SIB) and maritime industrial base, including $1.8 billion for the Shipyard Infrastructure Optimization Program (SIOP) to improve Navy’s organic maintenance capabilities by expanding shipyard capacity, optimizing shipyard configuration, and enabling the fulfillment of nuclear fleet maintenance requirements.
- $1 billion to establish the National Security Investment Fund (NSIF) to “secure America’s long-term national and economic security by making strategic, patient-capital investments in foundational technologies, critical supply chains, and the domestic industrial base.”
When it comes to accelerating innovation, the Budget request includes $58.5 billion in artificial intelligence and Combined Joint All-Domain Command and Control (CJADC2) including:
- $46 billion for a multi-year mandatory investment in a sovereign AI arsenal, prioritizing enterprise-scale AI infrastructure investment to build an enduring strategic advantage.
- $6.8 billion to integrate and apply department-developed and commercially available AI technologies into platforms, systems, and workflows that support analysis, automation, communication, maneuvering, monitoring, sensing, and other military and business activities.
- $2.3 billion for the Maven Smart System (MSS) and Joint Fires Network (JFN) to deliver CJADC2 to the Department’s joint warfighting capabilities.
- $2.2 billion in leading-edge research and development of AI technical approaches and capabilities for military and business purposes.
- $54.0 billion for autonomous and remotely operated systems across air, land, and above and below the sea, including $39.2 billion associated with the Drone Dominance mandatory funding request, providing a multi-year investment in autonomous systems procurement, domestic production capacity, and advanced capabilities.
- $25.7 billion for Science and Technology (S&T) focused on targeted investments in areas such as hypersonic defense industrial based and testing, battery development for critical weapon systems, and nuclear energy investments to develop and increase resilient power at domestic military installations.
- $956 million for the Defense Innovation Unit (DIU) for rapidly prototyping and fielding dual-use technologies, and $2.6 billion for the Strategic Capabilities Office (SCO).
Naval Shipbuilding and Maritime Dominance
The budget includes $65.8 billion in shipbuilding funding, which represents the largest shipbuilding budget when adjusted for inflation since 1962. This funding supports the procurement of 34 ships, including 18 battle force ships and 16 non-battle force vessels.
Key naval procurement includes:
- Two Virginia-class attack submarines and one Columbia-class ballistic missile submarine;
- Funding for Arleigh Burke-class destroyers and the first new FF(X) frigate;
- An Explorer-class T-AGOS ocean surveillance ship and other support vessels;
- $1 billion to support advanced procurement of the first Trump-class battleship, set to be christened the USS Defiant.
The proposal establishes what the administration calls the “Golden Fleet,” with initial funding for next-generation frigates and increased capacity at public shipyards.
Aviation Programs
The budget would continue strong investment in aviation modernization:
- F-47 Next Generation Air Dominance: The request prioritizes rapid development and production, targeting a first flight in 2028.
- F-35 Joint Strike Fighter: A total of 85 aircraft are requested (38 F-35As, 10 F-35Bs, and 37 F-35Cs), representing a significant increase from the 47 aircraft funded in FY 2026.
- F-15EX Eagle II: Funding for an additional 24 aircraft.
- B-21 Raider: Continued research and development funding with approximately $2.86 billion requested.
Munitions and Missile Defense Interceptors
The budget requests substantial increases in munitions procurement, addressing inventory shortfalls and expanding the industrial base. Notable increases include munitions such as THAAD Interceptors, SM-3 Block IIA, PAC-3 MSE Interceptors, Tomahawk Cruise Missiles, and JASSM Series Missiles. The budget would fund all of the Pentagon’s critical munitions frameworks announced in recent months, focused on expanding industry production capacity.
Nuclear Enterprise Modernization
The budget would increase funding for the Department’s nuclear enterprise to maintain deterrence, supporting modernization and diversification of nuclear forces. The National Nuclear Security Administration (NNSA) would receive $32.8 billion, a 12% increase over enacted appropriations in FY 2026.
Space Force Investments
The Space Force budget would grow significantly to $71 billion, up from approximately $40 billion in FY 2026. Key investments would include:
- Over $7 billion for Space-Based Air Moving Target Indicator (AMTI) capability
- Over $1 billion for Ground Moving Target Indicator (GMTI) capability
- $1.56 billion for Proliferated Low Earth Orbit Satellite Communications
Personnel and Readiness
The administration proposes a tiered military pay raise structure:
- Junior enlisted service members: 7% increase
- More senior enlisted members and officers through O-3: 6% increase
- Officers O-4 and higher: 5% increase
This would represent the largest above-Employment Cost Index pay raise since FY 1982. The military personnel budget would increase to approximately $192 billion in FY 2027, up from $185 billion enacted in FY 2026.
Medical Readiness and Quality of Life
The budget includes provisions to restore combat medicine by reversing prior reductions to the Military Health System. Additional investments would support trauma care systems, staffing at casualty-receiving facilities, expanded virtual health capabilities, and improvements to barracks and facility sustainment.
Border Security Support
The budget would increase funding for Department of War support to address border security, enabling the Department to fulfill operational requirements in National Defense Areas and along the southern border, including transportation, sensors, and intelligence, surveillance, and reconnaissance capabilities.
Congressional Considerations
While the president’s budget serves as a statement of administration priorities, it is not a binding document. Congress ultimately holds the power of the purse and will develop its own funding bills. The congressional defense committees have begun posture hearings in which the Pentagon’s senior civilian and military leadership, the military services, and certain defense agencies are invited to testify before the congressional defense committees on the budget request.
The structure of the request, relying on $350 billion in mandatory spending through reconciliation, may present challenges on Capitol Hill, where some lawmakers have voiced concerns about using reconciliation for additional defense spending increases. Recent appropriations cycles have demonstrated bipartisan input on final spending decisions, and the extent to which the budget request shapes final appropriations outcomes remains to be determined.
[1] Because the Budget documents refer to the Department of War instead of the Department of Defense, this GT Alert will be consistent with the public-facing documents.
[2] If Congress included defense funding in another reconciliation bill, it would be only the second time that funding for the DOW was included in a reconciliation bill. The first was earlier in the 119th Congress, when Congress passed the One Big Beautiful Bill Act (P.L. 119-21), which included $150 billion for the DOW.
