The Department of Defense’s (DOD) fiscal year (FY) 2027 budget proposal hinges on a major gamble: that Congress will approve $350 billion in mandatory spending through reconciliation to help reach a $1.45 trillion defense topline.
Under the Trump administration, the DOD was rebranded as the Department of War.
Officials told reporters this week that the reconciliation funds are central to accelerating high-priority initiatives that require speed, adaptability, and one-time spending surges.
“We wouldn’t ask for money if we didn’t want it,” said Jules Hurst, who is performing the duties of the department’s comptroller.
Hurst said the department intentionally placed critical priorities in the reconciliation package to allow greater flexibility in how and when funds are used, particularly for rapidly evolving technologies.
However, the plan hinges on Congress approving a reconciliation bill that would unlock the proposed funding.
Reconciliation bills are budget measures that allow Congress to fast-track certain spending, revenue, and debt-limit changes with a simple majority vote in the Senate, bypassing the filibuster. Republican lawmakers used this tool in the FY 2026 budget cycle to approve roughly $150 billion in defense-related funding.
However, that funding was intended to be spread over a 10-year period, but the DOD instead used the full amount within a single fiscal year, drawing criticism from Republican lawmakers during the FY 2026 budget cycle.
If Congress declines to approve the $350 billion request, Hurst said the department is prepared to revise its approach.
“We’ll go back to the White House, and we’ll work with Congress to come up with a new strategy, if the White House and Congress decide reconciliation is just not the right vehicle,” Hurst said.
Funding areas
The largest portion of reconciliation funding – nearly $113.11 billion – is allocated to expanding and modernizing the defense industrial base. That includes $1.9 billion to overhaul acquisition and technological capabilities, supporting efforts such as Acquisition Transformation Support programs and the Nuclear Command, Control, and Communications enterprise. The funding also aims to deploy supply chain risk management tools to at least 50 major defense acquisition programs by leveraging commercial technologies and private-sector practices.
The proposal also sets aside $1 billion for a National Security Investment Fund, designed to invest in long-term, dual-use technologies. These include critical minerals, advanced manufacturing, artificial intelligence (AI) hardware, quantum computing, energy infrastructure, and global logistics systems.
Another area receiving the majority of its funding from reconciliation – $17.12 billion – is the Golden Dome missile defense program. Overall, the administration is requesting about $17.5 billion, but less than $400 million would come from the discretionary budget.
The new funding would accelerate development of space-based tracking sensors, deploy space-based interceptors, enhance terminal-phase interception systems, and integrate all components into a unified command and control network. It also includes investments in non-kinetic defense tools, testing infrastructure, allied interoperability, and supply chain resilience.
However, uncertainty remains over the inclusion of space-based interceptors. Space Force Gen. Michael Guetlein recently told lawmakers the interceptors could be excluded from the final design due to cost concerns.
Beyond the Golden Dome, the budget allocates nearly $11.74 billion for additional space initiatives.
The largest share, $7.7 billion, would expand a space-based radar system to track airborne targets globally. Another $3.1 billion would fund a low-Earth orbit satellite network to provide resilient, high-speed communications for joint forces. Other investments include $800 million to bring in new commercial vendors as technologies mature, and $140 million to develop complementary low-band radar capabilities.
Additionally, the proposal directs $102.5 billion toward next-generation technologies and autonomous systems. This includes $53.6 billion to scale production of small aerial drones, including one-way attack systems, and expand domestic manufacturing capacity.
Another $46 billion would fund “sovereign” AI infrastructure, which, according to the administration, “shifts away from fragmented computing systems toward a unified, government-owned AI architecture.”
Additional AI-related funding includes $2.4 billion for AI-enabled deterrence capabilities, though details remain classified, and $500 million for “pace setting projects” designed to accelerate AI adoption across military operations, including cyber, intelligence, manufacturing, and maintenance.