APRIL 2025
Trump Restructures
the Pentagon Budget
Two Views
By Mark Cancian and Melissa Dalton
I
n February, Secretary of Defense Pete Hegseth directed the military services and defense agencies
to identify 8 percent, or about $50 billion, in annual cuts that could be reinvested in higher-priority
activities. Who would be the winners and losers? CSIS experts Mark Cancian and Melissa Dalton
took distinctly dierent approaches to this task in an exercise organized by the American Enterprise
Institute (AEI) in partnership with CSIS. Because their approaches represented not just dierent
program priorities but also dierent national security strategies, they help illuminate the major choices
and trade-os the Trump administration faces.
The Exercise
The exercise required eight defense experts to identify the programs they would cut and then
determine where to allocate the resulting savings using the Defense Futures Simulator, an interactive
online tool developed by AEI and CSIS.
Following the Department of Defense (DOD) guidance, cuts would total about $50 billion a year.
1
O-
limits for cuts were seventeen areas, ranging from program-specic (Virginia-class submarines) to broad
(“munitions”).
2
By making large parts of DOD o-limits, these restrictions channeled cuts into a few
areas, such as Army force structure.
1 The exact targets were $50 billion in FY 2026, $51 billion in FY 2027, $52.1 billion in FY 2028, and $53.2 billion in FY 2029. FY 2025
was excluded because Congress was nearing enactment of a budget, which happened subsequently.
2 The 17 areas were audit, collaborative combat aircra, combatant command support agency funding, combating transnational
criminal organizations in the Western Hemisphere, core readiness including full Deployment Readiness Training (DRT) funding,
counter-unmanned aerial system (c-UAS) initiatives, executable surface ships, executable U.S. Indo-Pacic Command military con-
struction (MILCON), homeland missile defense, medical private sector care, munitions, munitions and energetics organic industrial
bases, nuclear modernization, one-way attack/autonomous systems, priority critical cybersecurity, southwest border activities, and
Virginia-class submarines.
