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$1.5 Trillion Defense Budget May Struggle to Pass; Internal Republican Disagreements Over the Deficit Could Prove a Stumbling Block
Bernstein analysts say it is hard to imagine the U.S. defense budget reaching $1.5 trillion by 2027. While it is a foregone conclusion that defense spending will continue to rise, President Donald Trump may face significant challenges in pushing Congress to approve such a massive budget.Analysts pointed out that Republicans may utilize the “budget reconciliation” process—a fast-track procedure that allows Congress to make changes to spending, revenue, and the federal debt ceiling—to pass the defense budget without Democratic support.However, Republicans within the party who advocate for reducing the U.S. deficit may defect due to policy differences, thereby derailing the process. They added that while proposals for massive budget increases are clearly positive for defense stocks, they will be followed by stricter regulatory scrutiny of the industry.
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