As the saying goes, there are some weeks where decades happen.
Between intel leaks at home, the NATO summit in The Hague, and a rather unorthodox ceasefire in Iran, last week was (another) one of those in the defense world. And then came the kicker: On Thursday, the Pentagon unveiled its FY26 budget request. Like, finally.
The long-overdue request came in at a cool $961.6B, if you count the money the administration is banking on from the Big Beautiful Bill. Without it, the request is at a pretty-much-flat $848.3B. Between a 144-day delay and the unusual choice of “one budget, two bills,” this process has, to put it lightly, caused some issues in the Senate (sorry Thom Tillis).
Big picture: Let’s break it down.
Within that $961.6B request, $205.2B is going to procurement, $180.3B to R&D (up 17.5%), and $360.2B to Operations & Maintenance (O&M), a 4.5% bump. Here’s how it breaks down between the services:
- Army: $197.4B, including $15.1B for R&D, $28.4B for procurement, and $71.4B for O&M. That’s a pretty much across-the-board cut to the Army’s funding.
- Navy: $292.2B, including $26.6B for R&D, $95.2B for procurement, and $92.9B for O&M. Of that big boy procurement budget, a whopping $47.4B is going to shipbuilding, though that is (like several other big programs) split between the NDAA and reconciliation bill.
- Air Force: $301.1B, including $58.9B for R&D, $39.8B for procurement, and $80.6B for O&M. Space ain’t cheap.
- Defense-wide: $170.9B, including $79.6B for R&D, $41.7B for procurement, and $115.3B for O&M.
Priorities: In case you haven’t noticed, space is a big thing for the administration. The Space Force is taking a $40B chunk of the Air Force’s budget—a 30% bump from current levels—to build out America’s capabilities in that all-important domain. On top of that, the Pentagon is requesting $25B for the Golden Dome missile defense system, which no one seems to have a particularly firm grasp on.
But like many of the big, top-line items in the budget, all of this spending is subject to the reconciliation bill passing. If it doesn’t, the Space Force would face an 8.7% cut from current levels, while the Air Force’s spending would be effectively flat. Plus, we could kiss Golden Dome goodbye. In any case, it might be high time for a certain centibillionaire and SpaceX CEO to don the red hat once again.
Here’s what else the budget prioritizes:
- Shipbuilding: The Navy is looking to build 19 new ships, including 14 in FY25, while “maintaining 287 ships across key platforms.” 16 of those are in the reconciliation bill. Given that the Navy’s shipbuilding efforts have historically been pretty consistently over-budget and delayed, we’ll have to see how that goes.
- F-47: The Pentagon is going all-in on Boeing’s F-47 with a $3.5B development budget. The Navy’s next-gen F/A-XX combat jet, on the other hand, has been put on ice. As an official put it, “The Navy’s FA-XX program will maintain minimal development funding to preserve the ability to leverage F-47 work while preventing over-subscription of qualified defense industrial base engineers.”
Autonomy in the spotlight: In a first, autonomy gets its own section, and for good reason. The budget request features $13.4B for “autonomy and autonomous systems.”
- That includes: $3.1B for cUAS, $9.4B for “unmanned and remotely-operated aerial vehicles,” $1.7B for maritime autonomous systems, $210M for autonomous ground vehicles, and $1.2B for the software that makes all that stuff work.
Out with the old: The budget request also featured some big Warthog and Wedgetail woes, with both the A-10 Warthog and E-7 Wedgetail ending up on the chopping block.
- According to the Pentagon, the E-7 early warning and control aircraft is getting cut due to cost increases, “survivability concerns in a contested environment,” and “significant delays.”
- In its place, the government is looking to fill that ISR gap with space-based assets and more E-2D Hawkeyes.
The trusty but aging A-10 fleet of 162 jets, meanwhile, is headed for an early exit ahead of its scheduled retirement in 2028 due to cost issues. The A-10s have been the Air Force’s workhorse for decades. RIP to a real one.
The F-35 did not emerge unscathed either. Given the laser focus on the F-47, the Pentagon is cutting its next purchase of F-35s from 74 to 47. That’s a whole lot of 47s. Probably a coincidence.
In with the new: While the Pentagon’s request boosts R&D funding by 17.5% to $180.3B, $37.1B hinges on the reconciliation bill. If that fails (we’re beginning to sense a pattern here), R&D spending would drop slightly below last year.
While the Navy and Air Force (especially Space Force) saw jumps in proposed R&D spending, the Army’s would be cut by 10%, which tells you a few things about where the Pentagon expects to be fighting wars in the future.
Here’s a snapshot of where that R&D moolah is going:
- Hypersonics: The DoD is requesting $3.9B for hypersonics, including $387M for the Air Force to start developing the Lockheed-made Air-launched Rapid Response Weapon (ARRW) hypersonic missile, as well as funding for the Army’s “Dark Eagle” Long Range Hypersonic Weapon (LRHW) and the Navy’s Conventional Prompt Strike (CPS) system.
- DARPA: DARPA has a $4.5B RDT&E request, $350M of which is in reconciliation. That’s $800M more than last year if all goes well.
- Cyber: US Cyber Command requested $1.37B for RDT&E with reconciliation, $885M without.
- Kill Chain: The Space Force requested $6.4B for “system development and demonstration” of Long Range Kill Chains—satellite payloads that identify and track ground-based moving targets—in the reconciliation bill.
The request also allocates $1.2B for the Office of Strategic Capital loan program, meant to bring more private capital into defense tech.
Reconciliation: The reconciliation bill’s $113B in mandatory defense spending is a bit of a gamble, but the administration feels like they have the power (and Truth Social account) to get it done.
As one Pentagon official told reporters on Thursday, “The President and the administration’s commitment to reconciliation is what led the department to be so confident in putting so many critical capabilities in the reconciliation bill.”
Lawmakers and defense industry players are less convinced. Many view the tactic as sending mixed demand signals to the industry, particularly as the proposal would raise procurement funding by a measly $300M over last year.
When asked about plans for the future, an official said, “Unless the President’s tone changes, I imagine [we] will stick with a trillion dollars for national defense” in FY27 and beyond. It’s unclear if they’ll stick with this “two bills, one budget” approach—the pinnacle of government efficiency—but we’ll have to cross that bridge when we get there.