With the 2027 fiscal year just over two months away, the defense budget remains uncertain. Three of Congress’ four defense committees have approved amendments aligned with the Trump administration’s $1.1 trillion topline request. However, no committee has addressed the White House’s proposal to allocate $350 billion through reconciliation funding—a strategy last used in 2025 for non-defense purposes. Discussions are ongoing for a scaled-down reconciliation package, which could include supplemental funds for Iran-related operations and other priorities.
The administration’s reliance on reconciliation for key defense initiatives—unprecedented in scope—has drawn criticism. Sen. Susan Collins (R-Maine) called the approach a “terrible risk,” warning that reliance on this funding mechanism could result in significant reductions for critical programs if Congress resists.
According to Forecast International’s U.S. Defense Budget Spotlight dashboard, the most significant budget cuts would impact defense industrial base and equipment investments under Defense-Wide accounts. Projected reductions include: $54.6 billion for the Defense Autonomous Warfare Group, $40.6 billion for Industrial Base Analysis and Sustainment, $30.5 billion for Office of the Secretary of Defense (OSD) equipment, $30 billion for Defense Production Act purchases, $20 billion for the Golden Dome missile defense initiative, and $17.1 billion for the OSD’s Capital Loan Program.
The White House’s push to purchase munitions via reconciliation faces challenges due to recent military engagements, such as the Iran conflict, which depleted existing stockpiles. For instance, the administration requested $10.9 billion for Patriot interceptors and $10.5 billion for Terminal High Altitude Area Defense (THAAD) systems through reconciliation. Additionally, reconciliation funds are proposed to fill gaps in programs like the F-35, KC-130J, and multiple shipbuilding initiatives.
Acquisition Adjustments
Approximately 150 programs across all military services would undergo funding revisions based on marks from the House and Senate Armed Services Committees (SASC) and the House Appropriations Committee (HAC). The Senate Appropriations Committee has yet to release its version. Notably, the HAC proposed a $9.2 billion trim to procurement programs alongside a $2.2 billion increase for research, development, test, and evaluation (RDT&E).
Discretionary RDT&E budgets received across-the-board increases: the HAC recommended $2.2 billion, the SASC $1.1 billion, and the House Appropriations Committee (HASC) $687.2 million. Adjustments for the Air Force’s RDT&E were mixed, with the HAC and SASC proposing $1.7 billion and $1.6 billion, respectively, while the HASC suggested a $480.9 million reduction. Conversely,space Force RDT&E faced cuts ranging from $201.4 million (HASC) to $3.1 billion (HAC). Defense-Wide RDT&E would see a near-$1 billion cut under HAC and SASC proposals, though the HASC recommended a $558.1 million increase. The Air Force’s E-7, the Navy’s F/A-XX fighter, and unmanned surface vehicles (USVs) are poised for funding gains, while efforts like the hypersonic Conventional Prompt Strike and the Space Force’s Automate Sat C2 initiative may face cuts.
Below is a visualization of procurement and RDT&E funding adjustments across the three released defense bills:
On the procurement front, Army aviation stands out as an underperformer. Despite the large budget request, FY27 funding for Army aviation fell compared to FY26 levels and is $1 billion below the previous administration’s planning. Transformational efforts drove cuts to key programs like the UH-60 Black Hawk and CH-47 Chinook. While the HASC and HAC proposed increases of 27% and 47%, respectively, the SASC recommended further reductions, trimming Army aircraft funding by 7%. Additional funds for Army aviation are expected in the final bill, with outyear plans potentially more favorable.
The SASC pushed for a 12% increase in Air Force missile spending, an adjustment unmatched by other committees. This stems from an additional $845 million for the Family of Affordable Mass Missiles (FAMM) program, which targets low-cost cruise missiles. The HAC supported a $300 million FAMM boost, offsetting a lack of reconciliation funding, but across-the-board missile cuts were recommended for Army and Navy accounts.
The White House sought increased Navy shipbuilding funds, but lawmakers opposed. The SASC and HAC proposed 5.1% and 5.8% cuts, respectively. Key reductions included $1 billion for the BBG(X) battleship program and $2.4 billion for CVN refueling overhauls. The submarine tender program faces potential halving, and the HAC recommended removing $1.4 billion for the Navy’s P-8A maritime patrol aircraft.
Topline With Caveats
Even without reconciliation funding, the proposed $1.1 trillion defense budget—approximately $242 billion above FY26’s base budget and $91 billion above FY26’s enacted total—would maintain higher spending levels for many accounts. The $152 billion reconciliation appropriation from FY26 remains a critical component.
However, the administration’s urgent needs in munitions, drones, and missile defenses may face constraints. Multiple Republican lawmakers reported insufficient support for a $350 billion reconciliation bill, while defense contractors struggle to meet production demands. The GOP is pursuing a smaller $60 billion reconciliation package, primarily targeting Iran war supplemental needs, particularly munition replenishment. Meanwhile, both chambers are drafting continuing resolution proposals, suggesting the FY27 budget process will extend beyond the mid-term elections.
