WASHINGTON — If US president-elect Donald Trump pursues multi-billion-dollar plans to “rebuild” the military with new fighter jets, ships and troops, analysts are optimistic the Republican-led Congress will lift spending caps to fund it.
But to do so, he would have to surmount GOP fiscal hawks with an aversion to deficit spending and Democrats who want parity for defense and non-defense spending.
Far from a doctrinaire conservative, Trump cast himself as a pragmatist and transformational figure. He ran on populist promises to cut taxes, rebuild infrastructure and to expand the military, all while refusing to cut Medicare or Social Security benefits. Simple math suggests this yields higher budget deficits—a debt increase of between $4.4 and $5.9 trillion, according to the Tax Foundation.
The campaign’s proposed action plan for the first 100 days includes a Restoring National Security Act, aimed at “eliminating the defense sequester” — assumed to mean repeal of the Budget Control Act and its multi-year caps — “and expanding military investment.” It would also expand health care options for veterans, protect infrastructure from cyberattacks and impose politically charged screening on immigrants.
In service of Trump’s peace-through-strength approach, his proposed military buildup features an active-duty Army of 540,000 soldiers, a Navy of 350 ships, an Air Force fleet of 1,200 fighter aircraft and a Marine Corps stocked with 36 battalions. He has also said he also will build a “state-of-the-art missile defense system” and modernize the Navy’s cruisers to provide ballistic missile defense capabilities.
Following Trump’s win, Lockheed Martin shares gained 6 percent, Raytheon added 7.5 percent, and Northrop Grumman advanced 5.4 percent, the Wall Street Journal
Wednesday. Shipbuilder Huntington Ingalls led the charge with a rise of 11.4 percent.
“Defense stocks are way up because Trump has been pretty clear about what they want to do,” said Democratic congressman-turned-defense-lobbyist Jim Moran. “First thing, he wants to repeal the sequester—big deal and he’s been adamant about it.”
Though Republicans will have control of both chambers, they will lack a filibuster-proof majority of 60 votes in the Senate, which means Democrats have room to block GOP legislation as leverage to get parity for defense and non-defense spending.
Yet Democrats won’t have traction they had with a Democrat in the White House.
“I think Democrats will insist upon [parity], but I think they have less leverage,” said Moran, now with the firm McDermott Will and Emery. “The only way that worked was with Obama in the White House, with the veto threat. I don’t think they can any longer insist on a budget balanced between defense and non-defense because Trump’s budget won’t be.”
Moran predicted Republicans and Democrats might have to expend significant political capital fighting over other issues, like dismantling the Affordable Care Act or Supreme Court nominations, and won’t find defense spending increases worth fighting over.
“You have the major defense contractors who are respected and liked in many parts of Congress, Dem and Repub alike,” Moran said. “When [Trump] talks about 350 ships, well yeah, you have [shipbuilding centers] Connecticut, Rhode Island and Maine, all Democrat and all wanting the same thing … I mean it’s a way to generate jobs.”
Democrats may find the Trump administration unreceptive on the issue. One of Trump’s senior campaign advisers, Senate Armed Services Committee member Jeff Sessions, R-Ala., told Defense News the idea of parity for non-defense spending is “absurd.”
On the other side of the political spectrum, a potential foe is the fiscally conservative House Freedom Caucus, for which controlling the national debt has been a watchword—but it remains to be seen whether they would go to bat against a president from their own party or find a compromise.
“There is still that same political challenge inside the House, of different perspectives, from the fiscal hawks and the defense hawks — but I think having a [Republican] president who is pushing it fundamentally changes that,” said Justin Johnson, an analyst with the conservative Heritage Foundation.
“World events are moving in the wrong direction here, so I think you’re seeing, even among fiscal hawks, some recognition that defense does need to receive some more,” Johnson said. “Some sort of deal will have to be fiscally responsible, so I don’t think the House can pass defense increases that aren’t paid for in some sense.”
There are signs a reconciliation may be in the offing between factions in the divided House GOP conference.
“The focus is: How we can make sure that the Trump administration is the most successful administration, in the first 100 days, of any administration we’ve seen in modern history?” Freedom Caucus co-founder Mark Meadows, R-N.C.,
Politico recently. “What I think you’re going to see is honest and forthright negotiating … on how we’re going to get regulatory reform, lower health care costs and veterans taken care of.”
The proposed defense buildup will have natural allies in the armed services committees, and it dovetails with the traditional Republican argument that the military is overstretched, suffering from a critical readiness shortfall and in dire need of expansion.
“The odds for some sort of a defense budget increase next year went way up,” Johnson said. “It’s clearly on his agenda, and he’s got a Republican House and Senate, which will make it much easier to do.”
If the House Freedom Caucus does balk at Trump's proposals, they may find themselves outflanked, according to Moran.
“Trump probably has the ear of the conservative media, more than the Freedom Caucus, so I think in terms of defense, that’s an area where President Trump can deliver,” Moran said. “Trump could trump any of them individually and as a group.”
The force structure Trump described would cost an estimated $80 billion more than President Obama’s military budget plans, according to Mark Cancian, of the Center for Strategic and International Studies. While “a lot of money,” it falls within the amount proposed under former Defense Secretary Robert Gates and amounts to about 3.5 percent of GDP, which is less than Cold War levels and the height of the Iraq and Afghanistan wars, he said.
“Doing a defense buildup at the same time you cut taxes will have a major impact on the deficit, and to do either you would have to eliminate the caps under the Budget Control Act,” Cancian said. “There is a lot of sentiment in Congress to repeal the caps, and there will be a run-in with the fiscal hawks.”
Cancian predicted that, like the administration of Ronald Reagan, the Trump administration will have to decide between a defense buildup and balancing the federal budget. Reagan chose the buildup and deficit spending.
Yet that approach could lead to problems later on. Moran noted that Reagan, contrary to his place in popular memory, ultimately wound up increasing taxes 11 times to rein in the federal deficit.
“By the time he got to his second term, [Reagan] realized deficits are too high,” Moran said, “and that may be what happens with Trump.”