Exceeding $50 billion and arriving amid a unique federal budget cycle, this year’s unfunded priority lists from uniformed military leaders offer a lot to consider.
Let us summarize the environment in which they were submitted. In a historic first, Congress failed to pass an appropriations bill for the Defense Department for the current fiscal year. Lawmakers then passed a reconciliation bill, which gives DOD more than $150 billion in FY 2025 funding, spendable over several years. (Interestingly, the White House Office of Management and Budget characterizes most of the reconciliation funding as part of the President’s budget request for FY 2026.) While President Trump talks about nearly $1 trillion in 2026 defense funding, the actual proposed budget contains about $850 billion—less than President Biden had proposed. Finally, the likelihood of a series of continuing resolutions leading to a potential second straight year where no appropriation is passed, along with a government shutdown or two, grows with each passing day.
Against that background, four insights leap from this year’s funding-gap lists. First, the military’s leaders took a mostly unconstrained approach, listing $22 billion more in unfunded priorities than last year, thereby, in our view, fully exposing the insufficiency of the White House defense topline.
Second, the Air Force and Navy were the most aggressive of the services, listing gaps totaling $10 billion and $9 billion respectively, implying that they may not have taken reconciliation funding into account, or if they did, they see it for what it is, a one-time supplemental to fill long-existing gaps. One must also wonder why other forces are perennial laggards: this year, the Army’s list totals $4.3 billion; the Marine Corps’, $2.8 billion.
Third, INDOPACOM once again produced the biggest list: $11.9 billion, up from $11 billion last year. Whether or not they considered the $12.7 billion-plus in budget-reconciliation funding when developing this list, the number is clearly without constraints, as it was last year.
Finally, only about 15 percent of the total would serve near-term readiness needs, suggesting that military leaders are more satisfied with the priority on these needs in the budget which prioritized near-term readiness and relied, perhaps incorrectly, on the budget reconciliation bill to make up the investment shortfalls, which remain a high unfunded concern.
More can be deduced from year-over-year shifts in the lists. Three components added more than $4 billion apiece, led by the Air Force, which more than doubled its 2024 total. The service’s list is dominated by munitions and military construction items, but also includes $1.5 billion for spare parts and $1.4 billion in facilities, sustainment, restoration and modernization. The cumulative shortfall signals an overall troubling state of Air Force infrastructure and readiness.
The Navy list, which is about one-third larger than last year’s edition, is dominated by procurement, including $3.5 billion for munitions, reserve aircraft, a ship-to-shore connector, and items to boost production capacity. The service also listed nearly $3 billion in research and development, almost half of which would go toward the Air Wing of the Future. Like the Air Force, the Navy identified a large shortfall in military construction: $1.7 billion for a wide variety of facilities.
In fact, six of the 14 components list military construction shortfalls. With 93 projects ranging from a $319 million parking apron on Wake Island to a $4 million apron expansion in West Virginia, there is pretty much something for everyone from a political perspective. The list also signals that despite the reported excess in defense infrastructure across the enterprise, there are still plenty of needs for new, improved or expanded brick and mortar facilities.
The Space Force gap list also rose this year, with MILNET Block II accounting for about two-thirds of the $6 billion total.
Though the INDOPACOM request for military construction is down from last year, possibly in part due to the $1.6 billion in the 2025 reconciliation bill, the command’s reported investment gap totals $9.6 billion and includes many capabilities needed by the entire enterprise, such as all domain unmanned systems, critical munitions, space control, cyber security and defense and find, fix, track and target systems.
Taken as a whole, the need to buy things is the largest of the declared shortfalls and covers the full range of modernization and capacity challenges resident in the force. This is interesting given the $38 billion in 2025 procurement-related reconciliation funding.
Thematic priorities in the longer-term investment accounts include electronic warfare systems, addressing munition production backlogs and identifying alternative supplier options, and unmanned capabilities.
The readiness shortfall story is mostly about the Air Force, followed by INDOPACOM and the Navy with facilities, sustainment restoration and modernization, training, prepositioning, cyber defense, mission network, installation base support, and the ever-nebulous INDOPACOM “campaigning” effort topping the list.
These unfunded-priority lists really only matter in one of two ways. First, the appropriators would actually have to pass and get the President to sign an 2026 appropriation that includes them. With sixty votes needed in the Senate to make this happen and with failure to do this in 2025, the odds are not good.
The other way it matters is if there is some grand deal to have another modified full-year continuing resolution to keep the government open. One could see an end-game budget bargain that adds this unfunded-list-driven $50 billion to the White House request for defense, while garnering the sixty votes needed in the Senate with a politically driven deal that adds, dollar-for-dollar, about $50 billion for domestic programs above the request.
Either way, the lists provide valuable insight into how budget decisions were made and the resulting potential shortfalls that help Congress fulfill its constitutional mandate to raise and maintain our military forces.
Elaine McCusker is a senior fellow at the American Enterprise Institute (AEI). She previously served as the Pentagon’s acting undersecretary of defense (comptroller). Retired U.S. Army Maj. Gen. John G. Ferrari is a senior nonresident fellow at AEI. He previously served as a director of program analysis and evaluation for the service.
Read the full article here