BTIG Aerospace and defense analyst Andre Madrid discusses the Space Force and the opportunity to invest in the wider monetization industry.
The president Donald Trump On Wednesday he called for an increase in next year’s defense budget to $1.5 trillion, up from his previous $1 trillion proposal that the budget watchdog warned would add billions to the national debt.
Trump said in a post on his Public Truth platform that, after discussions with lawmakers and administration officials, he decided that “in these very troubled and dangerous times, our Military Budget for 2027 should not be $1 billion, but instead $1.5 billion.”
The President said that the proceeds from the fund will be used to cover expenses increased defense spending and to support other important things he proposed, such as a tax dividend. He explained that the expansion will allow the US to “build the ‘Dream Army’ that we have long had the right to and, more importantly, that will keep us SAFE and SECURE, regardless of the enemy.”
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The nonpartisan Committee for a Responsible Federal Budget (CRFB) analyzed the proposal and found that a $500 billion annual increase in defense spending would be nearly twice as much as expected revenue, and that the increase in spending would increase the national debt by $5.8 trillion over the next decade.
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President Donald Trump has requested a $1.5 trillion defense budget for FY2027, up from his original $1 trillion proposal. (REUTERS/Kent Nishimura/File Photo / Reuters Images)
The CRF noted that the Congressional Budget Office it is estimated that tariffs will generate $2.5 trillion in additional revenue by 2035, or $3 trillion with interest, while on a variable basis that revenue may be less after accounting for economic changes caused by tariffs.
Additionally, a large portion of the president’s tax was spent under the International Emergency Economic Powers Act (IEEPA) as well Supreme Court is expected to rule on the legality of those import taxes in the near future.
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Trump said his proposed $500 billion increase in the defense budget would allow the US to build a “dream military.” (US Army Communications Specialist/Jacob Mattingly/DVIDS/Fox News)
If IEEPA’s tariffs are overturned, CRFB says tax revenue it will decrease by $700 billion by 2035 and, based on previous estimates, will cover only 15% of the cost of the president’s proposal with $500 billion in additional defense spending per year.
“Given the $175 billion allocated to the defense budget under the One Big Beautiful Bill Act (OBBBA), there is little case for an imminent increase in military spending. Any future increases that may be necessary should be fully paid for, ideally twice—given our high and rising national debt, with new revenue or spending cuts,” CRFB wrote.
“Policymakers should not rely on existing revenues – otherwise the deficit would be too high – and even if they did it would fall far short of meeting the cost of rising defense costs,” added the budget watchdog.
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Congress will consider FY2027 defense spending levels this year before the new fiscal year begins on Oct. 1. (Photo by Anna Moneymaker/Getty Images/Getty Images)
The budget process for fiscal year 2027 will play out during the year before FY2027 begins on October 1 — though Congress and The White House continuing decisions to extend funding at current levels are often used to avoid a funding lapse that causes a government shutdown.
Most recently, Congress enacted a temporary CR in November following the 43-day government shutdown, the longest in history, that extends FY2026 funding for most agencies through January 30, 2026.
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Lawmakers have already approved appropriations for FY2026 under three 12-year discretionary spending bills, although the defense portions of the package are funded under CR and run through Jan. 30 only.
