The Trump administration is set to propose a record $1.5 trillion defense budget for fiscal year 2027, a historic military spending increase that fiscal watchdogs warn would add nearly $7 trillion to the national debt over the next decade.
"The level of the debt is not unsustainable, but the path is not sustainable," Federal Reserve Chair Jerome Powell said in a discussion at Harvard University. "What’s clear is that our debt is growing much faster; the federal government debt is growing substantially faster than our economy... in the long run, that’s kind of the definition of unsustainable."
The massive request earmarks funds for major weapons programs, including $17.5 billion for the "Golden Dome" missile defense system, $65.8 billion for 34 new naval vessels, and funding for 85 Lockheed Martin F-35 jets. However, much of this spending is contingent on a separate reconciliation bill that faces an uncertain path in Congress.
The proposal creates a direct conflict between the administration's goal of military expansion and the stark warnings from economists about the nation's fiscal health. With the national debt already over $39 trillion and interest costs projected to exceed $1 trillion in fiscal 2026, the plan forces a difficult choice between funding a larger military and addressing a debt load that Powell says "will not end well if we don’t do something fairly soon."
The proposed budget, set to be unveiled on Friday, consists of a $1.15 trillion base budget and a $350 billion supplemental request that would require a separate reconciliation bill to pass, according to officials. The total represents the largest year-over-year defense spending increase in the post-World War II period.
A significant portion of the funding is aimed at procurement and research, with plans to deter Chinese aggression and rebuild weapons stocks depleted by conflicts in Ukraine and the Middle East. Key investments include:
The proposal also includes a 10 percent cut to non-defense discretionary spending to partially offset the increases. The Pentagon is expected to release a more detailed breakdown of its request on April 21.
The Committee for a Responsible Federal Budget (CRFB), a nonpartisan fiscal watchdog, calculated the defense buildup would increase discretionary spending by $5.8 trillion through 2036, adding $6.9 trillion to the debt once interest is factored in. The group called on lawmakers to fully offset the request with other spending cuts or revenue increases.
The warning echoes concerns from top economic figures. Net interest payments on the national debt reached $270 billion in the first three months of the current fiscal year, surpassing defense spending over the same period. The Congressional Budget Office projects that debt held by the public will surge from 101 percent of GDP today to 120 percent by 2036, a level not seen since the end of World War II.
"If you look at our national debt, which is insanely high, the interest payments exceed the Defense Department budget—and they keep rising," Elon Musk said at a conference last September. His conclusion: "If AI and robots don’t solve our national debt, we’re toast."
This article is for informational purposes only and does not constitute investment advice.
