US President Donald Trump on Wednesday said next year's defence budget should be $1.5 trillion, a 50 per cent increase that would result in America having a “dream military".
The US already spends more on its military than the next nine countries combined, a total of about 40 per cent of global defence outlays. The next biggest defence spender is China, at about $300 billion annually.
“I have determined that, for the good of our country, especially in these very troubled and dangerous times, our military budget for the year 2027 should not be $1 trillion, but rather $1.5 trillion,” Mr Trump said in a Truth Social post after negotiations with US senators and political representatives.
He said the additional expenditure would be paid for by revenue from tariffs.
His announcement came shortly after another proclamation on Truth Social in which he said he would not allow American defence companies to issue dividends or buy back stock until they increase – and improve – their production.
Mr Trump said in that post that defence executives' pay should be capped at $5 million.
Those comments led to a sell-off in defence company shares, with Northrop Grumman down more than 5 per cent. But his comments on additional defence spending erased those losses in after-hours trading,
Mr Trump said executive pay at defence companies should be capped until they build “new and modern production plants”.
He has enough influence to make such demands given the reliance defence companies have on US government contracts.
Mr Trump said companies are not building military equipment fast enough or maintaining it properly. He did not name any specific companies or executives, but said executive salaries in the defence industry are “exorbitant and unjustifiable”.
“Until they do so, no executive should be allowed to make in excess of $5 million which, as high as it sounds, is a mere fraction of what they are making now,” he said.
Mr Trump and Pentagon officials have for months been criticising what they called the costly and slow-moving defence industry.
Defence Secretary Pete Hegseth has called out companies for high costs and delayed equipment deliveries.
Last month, Mr Trump said he planned to meet executives from major defence contractors to press them to prioritise capital investment over buy-backs, dividends and executive compensation.
Also in December, Punchbowl news reported that Mr Trump was drafting an executive order that would limit stock buy-backs, dividends and executive wages for military contractors.
