Trump's Defense Spending Push May Start With Boeing Super Hornet

(Bloomberg) -- President Donald Trump's push to increase defense spending is starting with a $30 billion amendment to this year's budget that may boost funding for war supplies, readiness and depots, but also possibly for Boeing Co.'s Super Hornet jet, according to officials.

The $30 billion amendment that the Pentagon may submit to the White House Office of Management and Budget this week will set the stage for the $54 billion increase that administration officials announced on Monday for the budget year that begins in October. That boost would be offset by cuts from the rest of the government's discretionary budget.

Deputy Defense Secretary Robert Work is assessing what immediate personnel, readiness and maintenance priorities to fund in addition to procurement programs -- perhaps including the fighter that Boeing makes in its St. Louis plant, according to the officials, who asked not to be identified discussing budget deliberations. Trump has said the Pentagon is “looking seriously at a big order” of the Boeing jet, which he has also touted as a potential alternative to Lockheed Martin Corp.'s more advanced and costlier F-35 fighter.

While the funding for this year would be categorized as war spending to sidestep budget caps, that only postpones a fight over Trump's plans to add $54 billion next year by cutting funds for domestic programs such as the Environmental Protection Agency and slashing foreign aid.

The outcome of that fight will determine whether Trump will be able to deliver on his longer-term campaign promises to bolster the military, in part by adding more Navy ships and Army troops.

Huntington, Raytheon

Additional surface ships and submarines would benefit the nation's top warship makers -- Huntington Ingalls Industries Inc. and the marine unit of General Dynamics Corp. Increases in the Army would benefit military vehicle builders General Dynamics and BAE Systems Plc, as well as Lockheed and Raytheon Corp., makers of air defense and anti-armor systems such as Thaad, Patriot and the Javelin.

Trump's defense spending plan would require raising the 2018 budget cap for defense while keeping the one for domestic programs, an approach Democrats in Congress have fiercely resisted in the past. While a one-year adjustment would mark the fourth one since the 2011 Budget Control Act passed, the caps were raised for both domestic and defense spending in the past.

“The president proposes and the Congress disposes,” said Mark Cancian, a defense budget analyst with the Center for Strategic and International Studies. “The administration will need Democratic votes in the Senate, and the Democrats have signaled their commitment to defending domestic spending. It's going to be quite a show in Congress.”

White House officials told reporters Monday that the basic defense budget would total about $603 billion. That's almost 10 percent over the $549 billion cap for national security spending in fiscal 2018 called for under the Budget Control Act, according to analysts.

The increase is “not as large as some people had expected,” Cancian said, because the Pentagon is “underfunded compared with what it has been asked to do in the last few years with the rise of” Islamic State, “Russian aggression in the Crimea and Ukraine, and Chinese assertiveness in the South China Sea.”

Bipartisan Criticism

While it was no surprise that Senate Democratic Leader Chuck Schumer protested that Trump's proposed cut in domestic spending “almost certainly means cuts to agencies that protect consumers from Wall Street excess and protect clean air and water,” the White House may not have expected denunciations from Republican defense advocates that the Pentagon increase was far too small.

Senator Armed Services Chairman John McCain said that the promised $54 billion increase actually would represent only “an increase of $18.5 billion above the level proposed by President Obama for fiscal year 2018” or “a mere 3 percent above President Obama's defense budget, which has left our military underfunded, undersized, and unready to confront threats to our national security.”

President Barack Obama's projected national security request for fiscal 2018, as in prior years, would have exceeded the budget caps by billions of dollars.

“This budget will ensure more gridlock in Washington and an inability to return to regular order -- even with a Republican-controlled Congress and White House,” MacKenzie Eaglen, a defense analyst with the conservative American Enterprise Institute, said in an e-mail.

To contact the reporter on this story: Tony Capaccio in Washington at acapaccio@bloomberg.net.

To contact the editors responsible for this story: Kevin Whitelaw at kwhitelaw@bloomberg.net, Larry Liebert