A return to the White House for Donald Trump will include major defense policy changes but also budget shifts and reform efforts.

As part of a Reagan Institute Strategy Group (RISG) discussion I joined this summer, some key priorities emerged about what the future holds for defense budgets and policy come January 2025. The new team coming in believes defense budget allocations are out of alignment with warfighting priorities.

Former Trump Army Secretary Ryan McCarthy spelled out possible defense related items atop the inbox of the next Pentagon team in his panel and paper. They include:

Reduce demands on the force

The U.S. military is not sized for its expansive missions under the National Defense Strategy. The armed forces continue to deter adversaries across three theaters, defend the homeland, and thwart non-state actors and terrorist threats. Yet the military has drastically shrunk in capacity and capability in recent decades.

As platforms age and the active force shrinks, everything and everyone has to work harder to meet the same mission set that only seems to ever grow. McCarthy highlights the Army as the poster child for this problem, “Despite providing, by one estimate, up to 60 percent of combatant command requirements, the Army base budget in real terms has declined by more than 25 percent over the past four years. Demand has surged recently… with no slackening on the horizon.”

One solution is “right-sizing” the combatant commands to better balance supply and demand for forces. This may align with efforts underway by the Chairman of the Joint Chiefs General CQ Brown to have commanders consider risk globally and the possibility of no additional capability in every crisis. 

Bolster military recruiting, retention and accessions

Consecutive years of declining recruiting numbers have been plaguing the services. While renewed initiatives have shown promise in reversing this trend, much work remains to be done to see a lasting improvement. As the air bubble of missed targets and empty billets starts moving through the proverbial garden hose of the enlisted force, there may be strain ahead for retention. Restoring confidence in national service and attracting and motivating the next generation of servicemembers will require sustained leadership from the top.

Reverse the Navy’s decline and the shipbuilding “doom loop”

Shipbuilding is one of the few areas of the defense budget that has seen real and large increases in spending over the past decade. The 2025 shipbuilding request stood at $32.4 billion—over twice as large as the 2015 request of $12.4 billion. Yet, the FY15 budget request called for the construction of 8 new ships, and the FY25 request would build just 9 of comparable classes.

The Navy remains locked in a shipbuilding “doom loop” where retirements have consistently outpaced construction of new hulls, shrinking the fleet. Sec. McCarthy highlights aside from scrubbing this area of the budget for inefficacies, without massive new funding to continue to reverse the backlog, tradeoffs will need to be made about the Navy’s “…modernization plans and aspirations.” Innovative contracting ideas will be required, alongside consideration for a special fund outside the regular Navy and Air Force budgets for triad modernization.

Retire legacy systems, particularly Air Force aircraft

As the Air Force struggles with balancing nuclear and conventional modernization in the “Terrible ‘20’s” and sees continue program delays, Sec. McCarthy and others are advocates for accelerating the retirement of costly legacy aircraft.

While this idea has merit, it will important for the next administration to ensure that these cuts are followed by real increases to procurement funding for new programs like the Collaborative Combat Aircraft to ensure that these programs are accelerated and acquired at scale to replace the capabilities retired.

There is also a debate to be had about repurposing select legacy systems to give them a new lease on life—like the Navy’s recent modification of the AIM-174B missile thereby extending the Super Hornet’s reach and operational viability through new warfighting roles and greater target sets. Not everything should head to the boneyard because it is old if there is nothing new in the pipeline ready to be built now in large quantities.

Invest more across the board in munitions

The vulnerability of the munitions industrial base and rosy war planning assumptions on expenditure rates have been exposed by valiant U.S. military efforts to supports allies in two grinding, violent wars of attrition.

Munitions have historically served as a billpayer for other Pentagon priorities—eroding the industrial base and creating inadequate stockpiles. McCarthy calls for the return of “high-rate, mass-scale munitions production—last seen during the 1980s.” This will help stem a 30-year decline, identify additional new entrants for missile production, and expand multi-year buys even after current wars end to rebuild stocks and restore select surge capacity.

Scrubbing the Pentagon’s so-called “Fourth Estate” and reallocating funds

The Defense Department’s “Fourth Estate” pot of funds is for a range of defense agencies and organizations outside of the traditional services, with roles and responsibilities spanning special operations and intelligence collection to sensitive research and missile defense. Sec. McCarthy suggested ten to 15% of this $140 billion budget “could be reallocated to the services to better man, train, and equip the Joint Force.”

The so-called “Night Court” model used by Esper and McCarthy when running the Army will be applied across the Pentagon budget for a scrub beyond simply weapons systems and re-validation of everything on which funds are expended.

Nonpartisan Reality Remains the Military Requires More Investment

While President Trump’s first term did see a defense increase over previous projections—$225 billion during his four years in office—many of the issues above must still be addressed. The military readiness and other potholes were so deep left by the Budget Control Act era that Trump’s desired military rebuild was stymied by the need for immediate repairs.

President Reagan pledged a military buildup during his tenure, and he accomplished it. Over 8 years, Reagan grew the Navy, Air Force, and the U.S. Army. This buildup was accompanied by real increases to defense with a skeptical Congress—encompassing both parties. The result was a Pentagon topline increase of over 30 percent and a defense spending peak at almost 6 percent of gross domestic product.

Today, the nation can afford much more but spends less at just 3 percent; the lowest since the Cold War drawdown. If President Trump is seeking to repair and rebuild the military, budgetary growth above inflation will be required for his entire second term. While there are savings to be had and efficacies to be found throughout the bureaucracy, the force needs more resources to avoid strategic insolvency. 

About the Author: Mackenzie Eaglen 

Mackenzie Eaglen is a senior fellow at the American Enterprise Institute (AEI), where she works on defense strategy, defense budgets, and military readiness. She is also a regular guest lecturer at universities, a member of the board of advisers of the Alexander Hamilton Society, and a member of the steering committee of the Leadership Council for Women in National Security. Ms. Eaglen is also one of the 12-member US Army War College Board of Visitors, which offers advice about academic program objectives and effectiveness, and serves on the US Army Science Board, an advisory body that provides guidance on scientific and other matters to the Army’s senior leadership. In 2023, she became a member of the Commission on the Future of the Navy, established by Congress to study the strategy, budget, and policy concerning the future strength of the US Navy fleet.

Image Credit: Creative Commons.