The U.S. defense budget fast approaches $1 trillion; however, bloat and mismanagement hamper modernization, as American Enterprise Institute Senior Fellow Elaine McCusker observes.
“… [A]nalysis reveals that the fiscal year 2023 defense budget request of $773 billion contains close to $109 billion in programs and activities that do not directly contribute to military capability,” McCusker wrote. “The bottom line is that the US is not spending as much on its defense as people may think.”
The U.S. military continues to reel from the mismanagement caused by ripple effects from sequestration set in motion during the Obama administration. This led to a severe decline in military readiness that let America’s adversaries, including China, catch up and then surpass the U.S., particularly in the areas of the deployment of hypersonic missiles and shipbuilding.
Over $800 billion, roughly one out of every $30 billion in the U.S. economy, is dedicated to defense or national security. Defense-related dollars overwhelmingly remain in the hands of large defense contractors like Boeing, Lockheed Martin, Northrop Grumman, and Raytheon. In 2022, one-third of the defense budget found its way into top defense contractors such as these, with Lockheed Martin accounting for $47 billion in that same year.
Should Donald Trump return to the White House in January, he should sign executive orders to end defense contractor monopolies over weapons systems to force down prices.
Retired U.S. Air Force Brig. Gen. Blaine Holt notes that “vendor lock” results in increased costs together with decreased innovation by giving contractors a strangle hold over legacy systems.
Holt argues ending monopolies could increase competition and push down costs.
President Trump noted in 2019 that the number of defense contractors had contracted so much that it “hard to negotiate” prices with them because competitiveness had disappeared.
Reagan Navy Secretary John Lehman recalled at a Heritage Foundation dinner in 2021 that when he worked on the Reagan administration’s 600-ship Navy that he could count on at least 20 vendors to build anti-aircraft missiles. That created competition that drove down costs.
A Trump Justice Department should break up defense behemoths like Boeing, Raytheon, Lockheed Martin, and Northrop Grumman into smaller constituent pieces to restore competition in the defense sector. Monopolies have made deterrence increasingly unaffordable, in contrast with China’s state-owned industries. Defense monopolies cost the U.S. government billions in inefficiencies and cost overruns.
Following the Cold War, a period of consolidation took place among U.S. defense contractors that saw a total of 51 vendors contract to fewer than 10. President Trump should also invoke the Defense Production Act to put to use the defense industrial base on a war footing.
CSIS (Center for Strategic and International Studies) notes that the U.S. defense supply chain would likely buckle in the event of a protracted war with China in the Indo-Pacific. Current defense spending hovers around 3% compared with the 9% to 11% at the height of the Cold War during the Eisenhower administration. Defense spending should be about modernization instead of congressional pet projects.
“Today’s defense budget of roughly 3 percent of GDP is not consistent with a security environment in which authoritarian states, such as China, Russia, Iran, and North Korea, are threatening the United States and its allies and partners across the globe,” Seth Jones and Alexander Palmer of the CSIS wrote in a paper last March.
Eliminating monopolies would benefit the government and the taxpayer alike. China’s state-controlled industries churn out military hardware at a wartime pace that U.S. defense contractors struggle to keep pace with.
“Overall, the U.S. defense industrial ecosystem lacks the capacity, responsiveness, flexibility, and surge capability to meet the U.S. military’s production and warfighting needs. Unless there are urgent changes, the United States risks weakening deterrence and undermining its warfighting capabilities,” CSIS said. “China is heavily investing in munitions and acquiring high-end weapons systems and equipment five to six times faster than the United States. China is also the world’s largest shipbuilder and has a shipbuilding capacity that is roughly 230 times larger than the United States.”
They continued: “One of China’s large shipyards, such as Jiangnan Shipyard, has more capacity than all U.S. shipyards combined.”
The contrast between Chinese efficiency and American bloat and inefficiency could not be starker. The Chinese increased their defense munitions spending by 7.2% in 2024. The CSIS report also takes note that the U.S. cannot rebuild deterrence against China without a massive increase in spending on the defense industrial base. It notes that the U.S. spent between 9% and 11% of GDP on defense during the Eisenhower administration at the height of the Cold War.
In the event President Trump receives another term as president, he should be prepared to end vendor lock and to invoke the Defense Production Act to ramp up defense modernization on everything from shipyards, to planes, and tanks.
Every major defense procurement item, ranging from the F-35 to the Eisenhower-class aircraft carrier, to the Columbia-class ballistic missile submarine has come in severely over budget. Programs such as the Littoral Combat Ship (LCS) and the Virginia-class submarines have been riddled with design flaws.
Trump should appoint a procurement czar with the power to rebid mismanaged contracts and to keep tabs on procurement items.
Time is of the essence. A Trump administration must bring down procurement costs and ramp up production to compete.
