Unpacking the $1.5 Trillion FY 2027 Defense Budget Topline

Q2: How does the FY 2027 request compare with previous spending levels?

A2: The approximately $1.15 trillion discretionary total for national defense in FY 2027 is a 24 percent increase above FY 2026 discretionary levels when adjusted for inflation. Incorporating reconciliation funding, the $1.5 trillion national defense topline for FY 2027 represents a real increase of 38 percent above FY 2026 spending levels, which includes $155 billion in reconciliation funds from P.L. 119-21. (Given P.L. 119-21 was signed into law on July 4, 2025, some FY 2027 budget materials compiled by OMB classify most of the associated reconciliation funding in FY 2025 rather than FY 2026. However, OMB’s budget overview document shows it under the latter year “as most of the funds are intended for use in 2026.”) DoD’s topline of $1.45 trillion, including both discretionary and reconciliation, is a nearly 40 percent increase above FY 2026 levels when adjusted for inflation.

P.L. 119-21, which the budget refers to as the Working Families Tax Cut Act, provided approximately $157 billion in reconciliation funds for national defense activities, which were available for obligation between FY 2025 and FY 2029. While the Trump administration had specified in its FY 2026 budget request that it would spend only $119.3 billion in FY 2026 ($113.3 billion for DoD and $6.0 billion for NNSA) of the $150.0 billion it assumed Congress would pass through reconciliation for national defense, a DoD FY 2026 Mandatory Funding Allocation Plan detailed that the Pentagon would instead spend approximately $1.8 billion of the total $153.3 billion provided to DoD under the act in FY 2025 and $151.5 billion in FY 2026. NNSA also planned to spend most of the $3.9 billion it received for Weapons Activities funding in FY 2026, according to the Department of Energy’s FY 2027 budget request.

Relative to historical funding levels, spending under the FY 2027 budget request would be the highest ever, surpassing the previous peak of defense spending during World War II—over $1.2 trillion in outlays in FY 1945—when adjusted for inflation. Outlays—or the amount that the Treasury actually pays out in a given year—estimated under the plans in the FY 2027 budget are estimated to peak in FY 2028 at just under $1.3 trillion in FY 2027 dollars. (OMB only publishes budget authority data back to FY 1976, so national defense (050) spending trends for prior years must be assessed in outlays, which lag behind budget authority.)

The FY 2027 defense budget request represents an increase in the percentage of federal spending allocated to defense. Figure 2 shows trends in national defense as a percentage of both discretionary budget authority and total budget authority (including discretionary, mandatory, and reconciliation funds). The FY 2027 discretionary request for national defense is 63 percent of total discretionary spending, up from an average of 50 percent in the few years prior. As a percentage of overall budget authority, defense accounts for 18 percent when mandatory and reconciliation funding is included. The growing share of defense as a portion of the federal budget stems from both growth in defense funding as well as the Trump administration’s proposed $73 billion cut to nondefense spending in the FY 2027 request.

Defense spending as a share of GDP is similarly estimated to increase given the administration’s request. Figure 4 shows national defense outlays as a percentage of GDP from FY 1948 and projected through FY 2031. Defense spending as a share of GDP has decreased from a postwar peak of nearly 14 percent in FY 1953 to a low of 2.9 percent between FY 1999 and FY 2001. However, the decline of defense spending as a percentage of GDP stems from the growth of the U.S. economy rather than a decrease in real spending—as Figure 1 shows otherwise. Defense outlays as a share of GDP are estimated to increase from 3.0 percent in FY 2026 to 3.6 percent in FY 2027 and 3.7 percent in FY 2028. While OMB measures defense spending as a percentage of GDP as outlays rather than budget authority—given outlays are generally a more appropriate metric when “observing the effect of spending on the economy” and provide a “more direct comparison to GDP”—the administration’s total national defense request of $1.541 trillion in discretionary and mandatory budget authority (including reconciliation) amounts to 4.6 percent of GDP.

Q3: What level of funding does the request project for the future?

A3: The Trump administration’s budget request projects that the dramatic increase in defense funding in FY 2027 will not be sustained into the future. National defense funding falls 16 percent in real terms from FY 2027 to FY 2028, after which spending levels remain largely flat with inflation. While DoD base discretionary funding does remain higher than FY 2026 and FY 2027 levels at future spending levels, total DoD resources (including discretionary and reconciliation funding) decline by almost 17 percent in real terms from FY 2027 to FY 2028.

Q4: Does the FY 2027 request include supplemental funding for the cost of military operations against Iran?

A4: The Trump administration did not submit a supplemental funding request with the FY 2027 budget to cover the costs of military operations against Iran or provide any details in OMB’s budget documents that suggest it is forthcoming. Moreover, the limited documents published by DoD thus far do not denote any additional funding specifically for war costs. Given the administration announced its intent for a $1.5 trillion defense budget in January well before the start of the war with Iran, supplemental war funds are likely not included.

In March, DoD reportedly submitted a request for $200 billion in supplemental funding to the White House to cover the cost of military operations against Iran, but that request was never sent to Congress for consideration. Recent reporting suggests the administration may request a lower level of funding—between $80 billion and $100 billion—as a war supplemental.

Q5: What are the request’s prospects on Capitol Hill?

A5: In FY 2027 OMB budget documents, the Trump administration characterized its approach to increasing defense spending using reconciliation funding as “decoupling funding for Republican priorities from Democrat waste.” According to the administration, “For decades . . . Democrats have demanded and received corresponding increases in wasteful and harmful programs for every increase in the Defense Budget.” But it claims using “a reconciliation bill passed with only Republican votes” allows it to “[shift] the paradigm” and “[avoid] the traditional spending ratchet.”

Such a partisan political approach to pursuing budgetary priorities presents significant challenges to actually securing the requested $1.5 trillion in resources for defense from Congress.

While the bulk of the planned increase is funded by a planned $350 billion in resources from reconciliation, the request calls for an increase in the discretionary national defense topline by over $250 billion. Such an increase in discretionary appropriations will necessitate 60 votes in the Senate for passage and, coupled with the administration’s requested cuts to nondefense funding, will likely face significant Democratic opposition and necessitate a compromise between lawmakers from both parties. Moreover, midterm elections in November could likely see the passage of full-year appropriations delayed.

Additionally, while the reconciliation process—which first necessitates the passage of a budget resolution—would only require votes from the Republican majorities in both chambers of Congress and a simple majority in the Senate, its outcome is far from certain. The passage of the last reconciliation bill (P.L. 119-21) in July 2025 overcame major challenges and disagreements within the Republican Party between fiscal hawks seeking to cut spending and reduce deficits and moderates more open to increasing spending for party priorities. Republicans would likely face similar dynamics and obstacles this year with only a slim majority in the House of Representatives. Moreover, there is currently not a clear path forward on how the party will approach reconciliation, with calls to include funds for Immigration and Customs Enforcement (ICE) and Customs and Border Patrol (CBP) in addition to defense limiting the prospects of securing a narrow bill. Some party leaders have suggested passing two reconciliation bills to incorporate all party priorities, although passage of a second act would have to wait until after the October 1 start of FY 2027, given Congress can only pass a reconciliation bill that impacts federal spending once per fiscal year.

Seamus P. Daniels is a fellow for Defense Budget Analysis in the Defense and Security Department at the Center for Strategic and International Studies in Washington, D.C.