Conservative Priorities for the 2027 Defense Budget

Backgrounder Defense

Conservative Priorities for the 2027 Defense Budget

October 16, 2025 21 min read Download Report

Summary

This report outlines conservative priorities for the upcoming fiscal year (FY) 2027 budget as recommended by The Heritage Foundation. It provides recommendations across geographical regions in terms of capabilities, capacities, weapons systems, and warfighting concepts that must be prioritized in the defense budget and are in alignment with Secretary of War Pete Hegseth’s push for a more lethal U.S. military that is built anew to advance a modernized national security architecture capable of meeting the national security imperatives and interests of the American people.

Key Takeaways

The defense budget must align with defense strategy to build a military that can defend the U.S. and deter China by strengthening America's warfighting capacity.

The air, space, and maritime domains must be prioritized with increased funding for fighter and bomber aircraft, warships, and precision-guided munitions.

The extensive work done by Secretary Hegseth and Congress to reallocate inefficient or wasteful spending to legitimate U.S. warfighting needs should be continued.

 

Defending the Homeland

Regain preeminence in the Western Hemisphere. Securing the Western Hemisphere is linked intrinsically to securing the homeland, which stretches across the Pacific to American territories Guam and Northern Marianas. It is also important that the economic, trade, and security maritime linkages between the Western Hemisphere and the Indo-Pacific be recognized. Recent U.S. operations against cartels—criminal enterprises that are aided and abetted by narco-terrorist regimes—serve as a steadfast deterrent to actors seeking to sow instability in Central and Latin America. An invigorated Joint Interagency Task Force (JIATF) South is certainly helpful in this effort, but its operational scope is too limited to undermine the efficacy of the cartels, which operate in safe havens deep in Latin America. In addition, the linkages between JIATF South and JIATF West must be strengthened and aligned.

Support border security. The Department of War has an important role to play in assisting other agencies with border security.REF President Donald Trump and Secretary War Pete Hegseth, for example, recently deployed the National Guard and the Marines to Los Angeles to protect federal immigration agents and detention centers that are under attack. This responsibility should further extend to the Coast Guard’s capacity to interdict illegal substance and human trafficking flows into the mainland United States.REF

A legislative review expanding the charter of JIATF South to interdict all narcotics trade through the southern border is needed to degrade the capacity of drug cartels. Such a change requires new authorities backed by resources to increase operational tempo and enable the persistent presence of counter-narcotics and border security missions. Recognizing that the precursors for narcotics originate in China, U.S. Coast Guard operations should also be expanded to ensure the Coast Guard’s capacity to work with our allies and partners across the Indo-Pacific. Maritime border security is convergent and extends across nation-state Economic Exclusion Zones (EEZs).

Increase Operations and Maintenance funding for NORTHCOM and SOUTHCOM. Both the U.S. Army and U.S. Air Force will need increases of several hundred million dollars each in Operations and Maintenance funding for activities in U.S. Northern Command (USNORTHCOM) and U.S. Southern Command (USSOUTHCOM) to support President Trump’s border security operations.REF

Building Warfighting Capabilities and Deterring China

Prioritize the Indo-Pacific. The Indo-Pacific should remain the primary focus of long-term strategic planning, and our defense budgets and expenditures should reflect that reality. Prior National Defense Strategies have maintained that China is the primary threat facing the United States and will remain so for the foreseeable future.REF Our budget must therefore prioritize and allocate resources to address this threat. Because China is America’s near-peer adversary and great-power rival, appropriate and energized action must be taken to build relative-comparative advantages over the scale of industrial production that China has developed to threaten the United States and its Indo-Pacific allies.REF

In the event of conflict with China, the U.S. Navy and Air Force will play the key deterrence and combat roles and should therefore receive an expanded and sustained relative share of military funding. This means that the U.S. Army’s budget may have to be reduced or held relatively flat to expand air, space, and maritime capacity. Without a topline increase in the defense budget, this reprioritization and reappropriation is essential to the building and advancement of U.S. relative-competitive advantages.

The Army may need to restructure, and the approach taken by the Marine Corps in Force Design 2030 could represent a viable model.REF In this plan, the Marine Corps has restructured its force to allow for the introduction of modern capabilities tied definitively to an Indo-Pacific conflict. The Corps also has moved away from counterinsurgency plans and capabilities used in Iraq and Afghanistan and toward preparing for a major theater conflict in the Indo-Pacific on multiple fronts.

Expand munitions procurement. An examination of the unfunded priorities lists for the Army, Navy, and Air Force will show that precision-guided munitions procurement is one of the most common requests for additional funding across the services. U.S. munitions stocks are running low as the U.S. struggles to balance its global commitments. Our munitions stockpiles are insufficient for a two-front war in the Indo-Pacific, much less for two major regional conflicts, and war games support this conclusion.REF Over the past few years, for example, certain munitions, including Patriot missiles, more than a quarter of all the Terminal High Altitude Area Defense (THAAD) interceptors the U.S. has ever procured, and a year’s worth of Standard Missile-3s (SM-3s), have been expended at exceptionally high rates defending Ukraine and Israel.REF Some contend that “industry can’t handle additional orders” and argue against increased procurement of munitions. However, the only way to expand capacity is to expand orders, thereby sending a strong demand signal to industry to invest in labor and infrastructure to build more munitions.

Sustained investments in the most critical munitions will be needed if the United States is to replenish and expand munition inventories to sufficient levels to deter Chinese aggression in the Indo-Pacific. In particular, the U.S. military needs additional procurement of Precision Strike Missiles (PrSM); Patriot Advanced Capability-3 (PAC-3) Missiles; THAAD interceptors; Long-Range Anti-Ship Missiles (LRASM); Joint Air-to-Surface Standoff Missiles (JASSM); Naval Strike Missiles (NSM); Standard Missile-3 and Standard Missile-6 (SM-3 and SM-6); MK-48 Torpedoes; anti-radiation missiles (AARGM/SiAW); and Advanced Medium-Range Air-to-Air Missiles (AMRAAM), and accelerate development and then procurement of new long-range air-to-air missiles like the AIM-120 and the AIM-174B with ranges comparable to Chinese weapons.REF

Increase support for the prepositioning of fuel. Prepositioned war reserve material (PWRM) is critical to maintaining swift reaction times and force longevity and sending clear signals of intent to adversaries of America’s commitment to its interests abroad. PWRM also enables the U.S. to support forces in their initial operational phases wherever they are in the world and reduces Department of War expenses.

Concrete steps to increase and maintain such a capacity in priority theaters abroad will significantly enhance U.S. force projection and mobility in the event of conflict. Additionally, PWRM should be positioned in partner countries in the Indo-Pacific as the Army has done in Germany, Belgium, Italy, and the Netherlands to prepare more effectively for conflicts within multiple theaters.

Direct the services to base munitions requests on warfighting requirements. Service-specific requests for precision guided munitions (PGMs) should be tailored to warfighting requirements based on a definable metric like a protracted 12-month conflict with China in the Indo-Pacific.

Fund and incentivize the accelerated construction of two Aviation Support Logistics Ships. Aviation Support Logistics Ships (T-AVBs) are floating depots capable of simultaneously conducting maintenance, refueling aircraft, and resupplying the equivalent of 75 C-17 loads of unique aviation-specific items.REF The only two currently in existence, the SS Wright and SS Curtiss, are more than 50 years old and operating past their expected service lives. The Marine Corps requires two T-AVBs (one each for the Pacific and Atlantic theaters) to implement its Expeditionary Advanced Base Operations and Distributed Aviation Operations concepts and will face “a critical shortfall” if they are not replaced.REF

Fund the creation of a third Maritime Prepositioning Force squadron. The Maritime Prepositioning Force (MPF) is a program of ships that are filled with Marine Corps equipment, stationed around the world, and able to respond rapidly to crises. MPF squadrons are designed to link up with their supported Marine Expeditionary Brigade (MEB) and equip and supply 16,000 Marines for 30 days.REF Cost reduction and political decisions over the past 15 years have led to the elimination of an MPF squadron, leaving the 3rd Marine Expeditionary Brigade in Japan without such support.

Expand the B-21 production line. With its upgraded stealth technology and vital long-range deep-strike capability, the B-21 will be the backbone of America’s 21st century bomber force. However, the current build rate of 10 bombers per year does not meet U.S. requirements in a deteriorating global threat environment.REF It is estimated that at this rate, the U.S. probably will not have even 100 B-21s until the late 2030s—a deficiency that would leave the U.S. in a precarious position in the event of a future conflict with China.

To correct this deficiency, Congress should allocate funding to build a second production facility so that the United States can build 20 bombers a year and increase its inventory and rate of production. This would also reduce the vulnerability inherent in having only a single facility: Currently, if the Palmdale facility was destroyed, the B-21 program would necessarily be delayed for years. Higher production numbers also mean greater order volume, which in turn would enhance both the long-term health of subcontractors and the capacity and viability of America’s defense industrial base.

Increasing production of B-21s would also enable the U.S. to begin considering sales of B-21s to other nations, some of which have already displayed interest. This ultimately would both increase the capabilities of U.S. allies and demonstrate for adversaries the strength of U.S. alliances.

Continue to modernize the nuclear triad with significant temporary increases in the U.S. Air Force and Navy budgets. The costs to recapitalize the triad are significant, and asking the services to do so within existing top-line budgets puts other programs and our military readiness at significant risk.REF Temporarily increasing the Air Force and Navy budgets to cover these nuclear obligations until the triad is recapitalized will free resources for the two services to pursue other key budgetary efforts that are needed to deter and defeat China.

Specifically, we recommend increased funding for the B-21, the Sentinel intercontinental ballistic missile (ICBM), and the nuclear-armed sea-launched cruise missile (SLCM-N)REF as already proposed in the so-called One Big Beautiful Bill Act.REF In addition, given the breakout of the Chinese nuclear arsenal, the National Defense Authorization Act (NDAA) should include funds to upload 400 additional warheads to the ICBM force.REF

Prioritize funding for programs that enable the core Air Force missions of air superiority and global strike. To the extent possible, the F-47 and B-21 programs, along with the munitions required to maximize their effectiveness, should be accelerated. The Air Force’s air superiority fleet is the smallest it has ever been, and investing in these platforms will posture the Air Force and thus the U.S. military for success in the event of conflict against China.

Limit the number of U.S. Air Force aircraft divestitures to the number of aircraft procurements. Aircraft divestitures cannot continue to outpace procurements. Ideally, new aircraft would exceed retirements, but even maintaining current numbers would be relative progress. Halting the drawdown of aircraft would alleviate pressure on the pilot absorption pipeline. Over time, a larger, younger fleet would lower sustainment costs while improving force capacity and capability.REF

Consider, for example, the Air Force’s recent announcement that it will be retiring the last A-10, a dedicated close air support fighter, by the end of fiscal year (FY) 2026 instead of FY 2028. Due to the accelerated timeline for divesting the A-10, the Air Force will incur a cost of $57 million. This is also a concern because there is no direct replacement for the A-10, although the Air Force has claimed the F-35 has reduced the need for the A-10 fleet—even though the F-35 carries fewer weapons than the A-10.

Improve the readiness of Air Force combat units. Flying readiness depends on having the right mix of jets, maintenance capability, and hours of flying time per pilot and aircrew. To gain and maintain combat skills, pilots need aircraft to fly, which is not completely possible when there are not enough planes and even fewer pilots, all supported by insufficient spare parts and maintainers.REF Although the shrinking and aging fleet complicates the balance, fully funding the sustainment of weapons systems is a necessary step in the right direction.

Until the Air Force can lower the age of its fleet through recapitalization, the service must prioritize its readiness accounts for each budget. This is especially concerning because the average age of the U.S. Air Force fighter fleet is 26 years, and the People’s Liberation Army Air Force (PLAAF) fleet is almost completely new. Additionally, the PLAAF is well supported with parts, maintainers, and flying hours for its combat pilots, but U.S. Air Force pilots receive barely enough hours to be combat proficient.

Start rebuilding the U.S. Air Force’s strategic depth. Specifically, we need to invest in the infrastructure and supply chains necessary to scale aircraft and munitions rapidly during a conflict. This should include deploying advanced Command and Control (C2) systems like the Advanced Battle Management System (ABMS); using AI-powered sensors and long-endurance drones to enhance intelligence, surveillance, and reconnaissance (ISR) capabilities; and investing in emerging technology like hypersonic weapons and advanced space systems.REF Surge capacity will not materialize on demand, and current lead times are measured in dozens of months.

Prioritize the deployment of kinetic counter unmanned aerial systems (C-UAS). The Advanced Precision Kill Weapon System (APKWS) has been used effectively in demonstrations, and the Thales Lightweight Multirole Missile (LMM) is designed for multidomain warfare and can be fired from land, air, or sea. Directed Energy Weapons (DEWs) may be promising, but their energy needs are expansive, and their range is limited. The services should continue to prioritize C-UAS, which are cost-effective and kinetic.REF

Order three Virginia-class submarines. Virginia-class submarines are integral to U.S. Indo-Pacific strategy, and the submarine industrial base is subject to serious delays. To send a demand signal to industry and spur investment in labor and infrastructure, Congress should expand orders of Virginia-class submarines to three a year at least for the next few years.REF At the same time, Congress should encourage the use of new contracting mechanisms like the Shipyard Accountability and Workforce Support (SAWS) effort to enable the workforce improvements and capital investments that are needed to grow shipbuilding capacity.REF Congress should also consider implementing distributed profits taxes that allow for full expensing and impose no tax on profits spent on infrastructure and workforce.

Meeting or exceeding annual shipbuilding goals for the Virginia-class is also necessary if the Australia–United Kingdom–United States (AUKUS) agreement is to be maintained.REF The need to preserve this generational investment in the broader security of the Indo-Pacific provides yet another reason for lawmakers to fund and fix the delays, cost overruns, and insufficient procurement of Virginia-class subs, which are being produced today at the rate of 1.33 per year instead of the 2.33 per year that we need.REF

Propose and execute a modern naval act. A sizeable block buy is a proven way to take advantage of economies of scale and reduce construction costs. It also enables better workforce planning and, with appropriate tax incentives, helps to ensure that capital investments made at naval shipyards also increase shipbuilding capacity. Such a buy would fund the procurement of all warships of a stable design through the current Future Years Defense Program (FYDP) at an estimated cost of $150 billion.

Supporters of President Trump’s shipbuilding goals should try to get as many new warships as possible funded through reconciliation or some other novel method like a naval act with a separate block buy.REF At a certain point, if you want more ships, you have to buy more ships, and it may be a very long time before Congress again has the opportunity that reconciliation offers to revitalize the American shipbuilding industry and expand the number of warships in the U.S. Navy.

Reestablish First Fleet. In the event of a conflict with China in the Indo-Pacific, the Navy must be able to establish forward presence and sustainment capabilities in the region. To facilitate this, $60 million should be allocated for a modest reestablishment of the First Fleet with a principal focus on conducting a maritime campaign to counter Chinese coercive activities in the South China Sea and advance the AUKUS partnership. Additionally, the first submarine should be rotationally based at HMAS Stirling in Australia with an Expeditionary Fast Transport (T-EPF) logistics ship serving as flagship. In 2018, the Seventh Fleet temporarily designated a vessel of the same class as flagship during major repairs to the former flagship Blue Ridge.

Break ground on a fifth public shipyard. Until 1996, the Navy had eight public shipyards that conducted all nuclear maintenance on submarines and aircraft carriers. Today, there are four, and nuclear maintenance is behind schedule despite efforts since 2018 to modernize and optimize these yards as part of the Shipyard Infrastructure Optimization Program (SIOP). Congress will need to be notified of the selection of a site by the Secretary of the Navy. It is estimated that the initial cost of a fifth shipyard would be $10 billion.REF

Name and contract construction of Constellation-class frigates at a second shipyard. It was originally planned that a second shipyard would be named to build Constellation-class frigates in order to meet the Navy’s urgent need for this class of warship and its plan to procure at least 20 of these vessels. At this time, the program is facing severe delays, but the design has matured. Construction using this design should begin at a second yard as construction also progresses at the current shipyard in Marinette, Michigan.REF

Fund the SLCM-N and modernize the nuclear triad. Both the House and Senate NDAAsREF support the nuclear-armed sea-launched cruise missile, a program that was targeted for cancellation by both the Obama and Biden Administrations (although the Senate version includes slightly more funding for the program). Modernization is sorely needed in the U.S. arsenal in view of the modernization efforts of such nuclear adversaries as China and Russia. The SLCM-N fills a critical gap in the current nuclear posture and deserves support. The NDAA should also include funding to upload existing W80 nuclear warheads from the Ready Reserve stockpile and load them onto existing cruise missiles as a stopgap until SLCM-N and other non-strategic nuclear systems come online in the 2030s.REF

Accelerate Golden Dome deployment. Building a missile defense shield is one of the hallmarks of President Trump’s agenda. The One Big Beautiful Bill Act provided important funding to jump-start that program,REF but if the United States is going to field space-based missile interceptors before the end of the decade, more resources are needed to make Golden Dome credible. Accordingly, the Pentagon should make space-based interceptors a priority for the upcoming fiscal year even at the expense of other no doubt important programs.

Acknowledge and fund kinetic and non-kinetic capabilities with deep magazines to permanently disable and destroy adversary ISR, communication, and counterspace satellites. China is rapidly developing satellites to target U.S. and allied air, land, maritime, and space forces. The U.S. must be able to deter hostile action in space by making space assets more difficult to target: The Proliferated Warfighter Space Architecture (PWSA) program, for example, aims to deploy small, low-cost satellites to make it more difficult for America’s adversaries to cripple U.S. space capabilities. Jamming-resistant communications, cyber-hardened space systems, and maneuverable satellites are other modes of deterrence that should also receive funding.

However, if deterrence fails, the U.S. must be able to gain and maintain control of the space domain rapidly during conflict by employing electronic warfare tools, rendezvous and proximity operations (RPO), and ground-based kinetic and non-kinetic capabilities. Victory in the air, on the ground, and at sea cannot otherwise be assured.

Fund the adoption and adaptation of commercial space capabilities. According to the U.S. Space Force’s Commercial Space Strategy, “wherever possible, the USSF will leverage the use of commercial space solutions and integrate them into its architectures and force offerings to ensure the Joint Force maintains an advantage over strategic competitors.”REF Congress must provide funds and procurement flexibility for the Space Force to leverage the commercial sector’s innovation, production capacity, and rapid technology refresh rates.

In recent years, private companies have demonstrated their ability to revolutionize the space industry, offering lower-cost solutions for satellite launches and orbital services and overtaking state-led space industries’ volume of launches. By commercializing space infrastructure, the Department of War could rapidly expand its space capabilities without the significant up-front costs associated with government-run programs.

Eliminate non-defense research and development programs. The U.S. military’s research, development, test, and evaluation (RDT&E) budget contains much that is vital for maintaining technological superiority and readiness. However, a significant portion of this budget is often allocated to non-defense programs that do not contribute directly to warfighting capabilities.

One major reform proposal is to eliminate non-defense RDT&E programs that do not directly align with the military’s core mission, particularly non-warfighting medical RDT&E, which has substantially drained defense resources.REF Non-defense medical RDT&E, including research on areas like disease prevention or public health initiatives that are unrelated to combat operations, could be redirected to civilian health agencies such as the National Institutes of Health (NIH). Military medical RDT&E programs amounted to almost $1 billion in FY 2025.

Other non-defense RDT&E programs should be similarly re-evaluated. The military has long invested in research that is unrelated to its core defense needs, including projects related to environmental protection and advanced civilian technologies. According to the Government Accountability Office’s 2024 annual report, reducing fragmentation, overlap, and duplication among federal research and development programs—including both the civilian and defense sectors—could yield significant financial and operational benefits.REF These savings could be reinvested in cutting-edge technologies such as artificial intelligence, cybersecurity, and advanced weaponry that enhance military lethality and readiness.

Conclusion

Planners and policymakers should remember always to align defense budgets with defense strategy, prioritizing spending for lines of effort that align with the national security strategy of the United States. Building a more lethal military capable of deterring Chinese aggression and investing in regional security to stabilize and secure the Western Hemisphere should be at the forefront of budgeting for the Department of War. Most important, building a more lethal military for deterrence means prioritizing procurement of the ships, planes, and munitions needed for conflict with a great power in the Indo-Pacific.

Wilson Beaver is Senior Policy Advisor for Defense Budgeting and NATO Policy in the Douglas and Sarah Allison Center for National Security at The Heritage Foundation. Robert Peters is a Senior Research Fellow for Strategic Deterrence in the Allison Center. Brent D. Sadler is a Senior Research Fellow for Naval Warfare and Advanced Technology in the Allison Center. Jason Camilletti, Shawn Barnes, and Mike Jernigan are Visiting Fellows in the Allison Center.

Authors

Wilson Beaver
Wilson Beaver

Senior Policy Advisor, Allison Center for National Security

Robert Peters
Robert Peters

Senior Research Fellow for Strategic Deterrence

Brent Sadler
Brent Sadler

Senior Research Fellow, Allison Center for National Security

Jason Camilletti

Visiting Fellow, Allison Center for National Security

Shawn Barnes

Visiting Fellow, Space Force

Mike Jernigan

Visiting Fellow, Allison Center for National Security

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