House GOP's Reconciliation 3.0 Sets Defense Number at $60 Billion, Well Below Pentagon's Ask

House Republicans released the outline of their third reconciliation bill this week, a $95 billion budget resolution that allocates $60 billion for defense. That number is public ahead of a markup scheduled for Thursday, and it lands well short of what the Pentagon says it needs.

The Defense Department asked for $67 billion in a June supplemental request to cover costs tied to the ongoing Iran War, according to Breaking Defense. The reconciliation bill doesn't even clear that bar. It falls further still from the $350 billion the Pentagon wanted as part of its fiscal 2027 budget submission, money department leaders said was critical for munitions production, drone procurement, and programs including the F-35.

Todd Harrison, a defense budget expert at the American Enterprise Institute, told Breaking Defense the Pentagon's hopes for a $1.5 trillion FY27 defense budget are "effectively dead." He expects a messy scramble ahead, with items shuffled between reconciliation and the regular appropriations process depending on what survives.

Byron Callan, an analyst at Capital Alpha Partners, called the $60 billion figure "confusing" given that House Speaker Mike Johnson had previously signaled support for the Pentagon's full $350 billion ask. Callan pointed to a recent slide in defense prime stock prices, unusual timing given the active Iran War, as a sign investors had already concluded weeks ago that full funding wasn't coming.

The $95 billion resolution tasks the House Armed Services Committee with figuring out how to divide the $60 billion. Likely targets include pieces of the original supplemental request: $21 billion to replace expended munitions, $17.3 billion for operational costs, $5.1 billion for cybersecurity and autonomy programs, $2.4 billion for drones, and roughly $4 billion for airborne moving-target-indication systems and space data network infrastructure.

The other side of the argument

Not everyone thinks a smaller number is a problem. Daniel Horowitz, writing at TheBlaze, argues Republicans are making the same mistake for a third straight time, throwing money at the Pentagon without auditing whether the spending fixes anything. He notes that a $1 trillion annual defense budget hasn't kept the Strait of Hormuz reliably open, and asks whether procurement reform, not bigger checks to Boeing and General Dynamics, is the actual fix.

Horowitz's broader complaint is that none of the three reconciliation bills under this Trump term have delivered on the two issues that won the 2024 election: inflation and immigration enforcement. He points out that the first bill focused on tax provisions that didn't cut the deficit on net, the second threw more money at the Department of Homeland Security without touching sanctuary city funding, birthright citizenship, or judicial review of deportations, and now the third is mostly a defense number that isn't even what the Pentagon requested.

Neither of the first two reconciliation bills reduced the deficit, and neither addressed the structural immigration enforcement issues Horowitz lists. Whether $60 billion in new defense spending, on top of an existing roughly $1 trillion annual base budget, represents a real strategic choice or just more of the same undifferentiated spending is a legitimate open question, and one Congress has not seriously litigated in public hearings tied to this bill.

The Pentagon wanted $67 billion just for Iran War-related costs. It's getting $60 billion for defense overall in this bill, which will have to cover both the war costs and whatever else the Armed Services Committee decides to fund. Something in that $67 billion supplemental request is going to get cut, delayed, or pushed into the regular appropriations process, which itself isn't guaranteed to pass on time or on the terms the Pentagon wants.

What happens next

The House Armed Services Committee now has to decide how to slice $60 billion across munitions replenishment, operations, cybersecurity, drones, and space infrastructure, categories that summed to more in the original supplemental request than the bill provides. The full House is expected to take up the bill after Thursday's markup, and the fight over what survives into final appropriations versus what gets left out entirely is where the final number will get set. Whether Speaker Johnson's earlier public support for the $350 billion Pentagon ask reappears in that later fight, given Callan's read that markets have already discounted it, is the question defense investors are watching most closely.