The final outcome of the fiscal year 2026 federal budget process is uncertain. Continuing resolutions, potentially for the entire year, are a strong possibility. The specter of a complete process breakdown and a government shutdown also loom large as political disagreements persist while the fiscal year clock runs out.
Within the larger federal picture, the defense budget landscape is complicated as well. Analysis of House and Senate Authorization and Appropriation bills shows plenty of work ahead in reaching compromise measures.
At the same time, the Defense Department owes Congress spend plans for the unprecedented split of military programs and budgets between the normal discretionary budget and a new form of supplemental funding—over $150 in mandatory spending provided in the budget reconciliation bill.
Balancing competing priorities and contradictory guidance from its leadership and congressional managers is nothing new for the Pentagon. However, budget reconciliation funding is new. It was written by authorizers, not appropriators. It has more permissive funding categories and longer timelines to spend the money. It also came with congressional intent spreadsheets and direction to submit spend plans—which were due by August 22.
Putting those spend plans together is also following a somewhat different path than usual. It is a particularly difficult task given the White House Office of Management and Budget (OMB) expectations on how the money should be spent is not exactly consistent with what Congress has in mind. In addition, rather than take large programs or groups of capabilities and put them into a supplemental—or in this case budget reconciliation—as has been done in the past, the division of finances between the regular budget and the anticipated mandatory accounts in the President’s budget (PB) request involved hundreds of line items.
Following are observations on the big areas of divergence between the two primary sources of guidance—Congress and OMB—as the Pentagon struggles to submit the requested spend plans.
Congressional Intent
By allocating resources into 12 big capabilities areas and then giving direction through intent tables, Congress has taken important steps toward a new way of managing Pentagon budgets, but has also contributed to an already very messy financing picture. This approach points to the first big area of difference between the President’s Budget expectations for the mandatory money and direction provided by Congress.
Of the 260 funding lines in the congressional intent tables, more than half are not assigned to a particular account. They are either assigned to ‘multiple’ accounts or left blank for the Department to determine (Table 1). Furthermore, while each other component has some assigned funding, no lines direct funding to a particular appropriation title for the Space Force, despite a clear intent in the bill for a priority on space capabilities.
Table 1. Armed Services Committees’ Intention Table
In contrast, the Navy is assigned $32 billion in budget reconciliation money, $15 billion of which is for a procurement of a Virginia-class Submarine, two Guided-missile Destroyers, a Landing Ship Medium, and T-AO Oilers. Expecting support for shipbuilding from Congress, the PB cut the discretionary budget for these same programs by 75 percent.
Unassigned funding lines can be reduced to about a third of the total by making some relatively straight forward inferences from capability and program descriptions (Table 2). For example, “for additional advanced manufacturing processes across the naval shipbuilding industrial base;” goes to Navy. Or F-47 acceleration funds go to Air Force. We can also assume that projects such as the X-37B spacecraft ($1 billion) or “…development, procurement, and integration of United States military satellites and the protection of United States military satellites” ($3.65 billion) would be executed by the Space Force.
Table 2. Armed Services Committees’ Intention Tables with Inferences
President’s Budget
As noted, unlike a normal supplemental which contains large blocks of funding—typically O&M—that is easy to track from the base budget, PB 2026 aligns the assumed $113.3 billion in budget reconciliation financing to more than 240 budget lines.
Comparing congressional intent to the PB request by appropriation titles (Table 3) it appears that the money that is not assigned to a specific account, would go toward all appropriation titles, further emphasizing the scatter-shot nature of the split between the base budget and mandatory spending. Procurement would get $52 billion; RDT&E $37 billion, O&M $23 billion, MILCON $892 million, and MILPERS $687 million, leaving approximately $33 billion left in flexible spending for future years.
Flexibility is good for the defense budget. So is opening the door to mandatory funding for must-pay bills in support of the nation’s security. Navigating these changes and the conflicting guidance associated with them risks delaying contracting actions necessary to modernize and sustain the force and will require a much stronger partnership between the executive and legislative branches of government than witnessed in the recent past.
Table 3. HASC/SASC Intention Tables vs. PB 2026 Reconciliation Request
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