Tough Choices Ahead On US Defense Spending—Prepare Now

America’s Debt Level Is Alarming

The national debt hit $40 trillion last month, or nearly $118,000 dollars for every single American. Alarmingly, 50% of this debt has been accrued since President Donald Trump was first elected in 2016, according to The Council on Foreign Relations, and 75% since Barack Obama was elected president in 2008. The 2009 recession and the Covid-19 epidemic acted as jet fuel to the long-standing problems of government overspending and aggressive tax cuts.

(As an aside, any politician that tells you that the US debt problem can be fixed by simply lowering taxes and growing our way out of this problem doesn’t understand economics and the scale of America’s debt, or isn’t serious about fixing the problem.)

In fact, there are alarming indications the debt problem is only going to get worse. According to an op-ed in The Washington Post, interest payments on the national debt, as measured as a percentage of GDP, exceeded total defense spending last year. By 2029, the interest payments are projected to surpass federal spending on Medicare and, by 2038, they are expected to exceed all discretionary spending.

It’s worth noting that America’s debt challenge is already affecting the US bond market, driving up rates on everything, including home mortgages, credit cards and car loans.

What Does This Mean For Defense?

When asked whether this will eventually put a serious crimp in Pentagon procurement and overseas operations, I’m reminded of a quote attributed to New Zealand physicist Ernest Rutherford, who once wryly remarked upon facing budget challenges in his laboratory that, “We haven’t the money, so we’ve got to think.”

I anticipate that the Trump administration will try to protect defense spending over the next two years—the administration has, after all, made it a top priority—but certainly not to the level of the president’s initial request of $1.5 trillion for 2027. After that, however, America’s debt burden and the likelihood that the next administration, regardless of party, will likely have new policy priorities means that a serious relook at the defense budget and the department’s overall strategy is coming.

Five issues I anticipate will be front and center in the next serious defense policy review include:

Rethinking the fate of long-lead, high-cost weapons programs.

The combination of budgetary pressure and the lessons learned from the Iran and Russia -Ukraine conflicts concerning the value of cheap, low-technology weapons on the modern battlefield is likely to trigger a reexamination of several Department of Defense programs that are eating up an enormous share of the Pentagon’s current and future acquisition budget. These include, among others, the F-35 joint strike fighter; the next generation ICBM; the Columbia-class ballistic missile submarine; the Gerald Ford nuclear aircraft carrier; the Golden Dome for America missile shield; and the likely soon-to-be announced next generation US Navy fighter.

I believe at least a few of these programs, even if already awarded and under contract, will eventually be scaled back or outright canceled because of cost concerns, competing priorities, and long development timelines at a time of rapid battlefield adaptation.

Prioritizing force multipliers.

Part of the justification for reconsidering major weapons programs will be to reallocate funding toward new weapons and tools that can be brought to combat operations now, including more affordable drones and counter-drones, the full-suite of battlefield munitions, advanced communication, intelligence collection, and data integration capabilities, space and counterspace systems, and cyber tools. These assets are already having an outsized effect on the modern battlefield and the demand to increasingly integrate them into America’s arsenal will be enormous.

Rethinking America’s overseas footprint.

Given the proliferation of long-range precision strike weapons and the lessons learned from Iran’s ability to hit nearly two dozen US military facilities in the Middle East, there’s likely to be a serious discussion in the next few years of whether it’s wise to maintain a large presence in areas in and adjacent to conflict zones.

The United States currently has hundreds of military bases in more than 50 countries around the globe, and I can envision a strong push to offshore and even bring home many of these assets to save billions in hardening, reconstruction and new construction costs.

Better leveraging the commercial sector.

This discussion, which has begun in earnest under the Trump administration, will almost certainly gather steam in the next few years. At its best, in a tight federal budget environment commercial companies can help drive down defense costs, speed delivery timelines, increase government capacity by augmenting existing government assets (in space, for example), and fuel creativity.

However, leveraging the commercial sector for defense and national security purposes also requires thoughtful, objective analysis as this effort carries significant mission risks. These include whether the commercial sector can scale its production lines to meet government requirements, deliver products that can perform to standard in tough operating environments and survive the challenges inherent in dealing with the start-stop nature of government funding cycles, as well as navigate the government contracting and security bureaucracies.

There is no doubt that closer government-commercial sector cooperation is critical to the defense department’s future, but policymakers need to focus on how to do this in a way that incorporates the best of both the traditional defense industry and new market entrants.

Leveraging allies for critical burden sharing.

And finally, the Trump administration has spent a lot of time recently criticizing traditional allies, especially NATO, about their contributions to our collective security and unwillingness to spend more on their own defense. While many allies have responded by increasing their defense outlays—a good thing—the president’s pointed criticism and periodic threats to withdraw US troops from Europe and cancel joint exercises with South Korea has placed an enormous strain on these relationships.

A mature discussion in the future will need to carefully weigh the benefits that allies provide and avoid a simplistic focus only on our partners’ spending levels (usually measured as a share of GDP).

As defense resources tighten, policymakers should instead concentrate on how allies’ spending can balance and enhance existing U.S. combat capabilities, bolster allies’ capabilities to execute nontraditional mission such as mine-sweeping, intelligence collection, Arctic protection, and cyber defense, and help keep U.S. defense-industry production lines open. There is no better way to stretch every defense dollar.

Time To Get Creative

It would be easy to assume that the US military will continue to enjoy a steady share of the federal budget pie — around 13% — and retain the ability to do every type of mission, against any type of enemy, anywhere in the world. After all, we’ve been operating that way for years. But an objective analysis of America’s dire financial situation argues that we are fast approaching a critical inflection point, and that what’s required now is prudent planning on how the US military and the defense enterprise can operate at peak efficiency and stretch every dollar in advance of what’s likely to soon be a flat or even declining resource base.

It’s not an ideological or policy preference, it’s math.

Even so, I remain confident that if policymakers lay out a realistic set of future mission priorities, avoid catastrophizing every threat, avoid wasteful wars of choice, integrate defense and commercial expertise in a smart and cost-effective way, create a defense ecosystem that fosters world class creativity, and nurture true partnerships between the US and its historic allies, then even in a much tougher budget environment there is no security threat beyond America’s ability to counter.

We may indeed have less money, but we still have time to think.