Trump’s $1.5 Trillion Defense Spending Plan Seen Worsening U.S. Fiscal Deficits

BY COMFORT   OGBONNA

U.S. President Donald Trump’s proposal to sharply increase defense spending in 2027 is unlikely to be offset by spending cuts or new revenues elsewhere and would add to the nation’s already large fiscal deficits, according to an analyst at Moody’s Ratings.

Trump said on Wednesday that the U.S. military budget should rise to $1.5 trillion in 2027, a dramatic increase from the $901 billion defense budget approved by Congress for 2026. Any such expansion in military spending would still require authorization from Congress, but analysts say the scale of the proposal highlights growing fiscal risks for the United States.

The Committee for a Responsible Federal Budget, a nonpartisan think tank, estimated that raising defense spending to the level proposed by Trump could cost about $5 trillion through 2035. Including interest costs, the proposal could add roughly $5.8 trillion to total U.S. government debt over the same period, further straining federal finances at a time when deficits are already elevated.

David Rogovic, senior vice president in Moody’s sovereign risk group, said a defense spending increase of the magnitude suggested by Trump would be extremely difficult to balance with savings or new revenue measures. He noted that political and policy constraints make it unlikely lawmakers could identify offsetting cuts or tax increases large enough to neutralize the added costs.

Rogovic warned that a large and sustained increase in defense spending financed primarily through borrowing would widen already sizeable U.S. fiscal deficits, push up the government’s interest burden over time, and reduce fiscal flexibility. He added that higher debt servicing costs could limit the government’s ability to respond to future economic downturns or unexpected shocks.

While increased defense spending could provide a short-term boost to economic growth through higher government outlays and increased activity in defense-related industries, Rogovic said the resulting rise in government revenue would not be sufficient to counterbalance the overall increase in spending. As a result, the net effect would still be a deterioration in the fiscal outlook.

The proposal comes as investors and credit rating agencies closely monitor U.S. budget policy amid rising debt levels and higher interest rates. Analysts say that without a clear plan to fund a major expansion in military spending, Trump’s proposal could intensify concerns about the long-term sustainability of U.S. public finances.