An analyst from Moody's has indicated that the proposed increase in US defense spending for 2027 by President Trump is unlikely to be counterbalanced by savings or revenue, and will negatively impact the already substantial US fiscal deficit.
On Wednesday local time, Trump stated that the US military budget for 2027 should reach $1.5 trillion, a figure far exceeding the $901 billion budget approved by Congress for 2026. Any such increase in military spending would require authorization from Congress.
The non-partisan think tank, the Committee for a Responsible Federal Budget, estimates that the proposal would cost $5 trillion by 2035 and simultaneously increase US debt (including interest) by $5.8 trillion.
David Rogovic, a Senior Vice President in Moody's Sovereign Risk Group, stated in a release, "Given the political and policy difficulties in finding corresponding savings or revenue sources, the scale of President Trump's proposed 50% increase in defense spending is unlikely to be offset elsewhere."
He added that a large-scale and sustained increase in expenditure financed by borrowing would enlarge the United States' already considerable fiscal deficit, increase the interest burden over time, and further constrain fiscal flexibility.
Rogovic stated, "While increased defense spending would also boost GDP growth, the associated additional government revenue would be insufficient to offset the increased expenditure."
Comments