Pentagon Seeks Higher Military Spending to Keep Pace With China, Russia

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Officials cite threat of Beijing’s expanding forces in budget request that focuses on space and nuclear capabilities as Congress eyes Ukraine war

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The Biden administration’s military-budget request focuses on development of new weapons systems, especially refreshing America’s arsenal of long-range nuclear missiles delivered from bombers, land-based silos and submarines.

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The request will be sent to Congress, which typically changes the amounts spent on individual weapons systems such as the F-35 combat jet made by Lockheed Martin Corp.

Analysts said they don’t expect a final budget to be approved before the midterm elections in November.

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The overall request for military spending of $813 billion, which includes departments outside the Pentagon, is also up 4% from the prior year.

Shares in military contractors such as Lockheed Martin and Northrop Grumman Corp.

have been trading around all-time highs in recent weeks, which analysts said was spurred by investor expectations of higher global military spending following Russia’s invasion of Ukraine.

Northrop Grumman is developing a new US bomber and system for intercontinental ballistic missiles, while General Dynamics Corp.

is building new submarines.

The increase over the recently enacted military-funding bill for fiscal 2022 doubles the pace of the White House request for last year. Defense stocks underperformed the broader market in 2021 after companies forecast a flat or shrinking budget this year in real terms when inflation was taken into account.

Spending on procurement in the new request is little changed from last year, but analysts expect Congress to press for more to support Ukraine. There is more planned spending on research into new weapons and systems, especially in space.

The budget also has to cover inflation-driven increases in pay—including a 4.6% rise for the department’s civilian and military personnel next year—and materials such as fuel.

Write to Doug Cameron at [email protected]

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Credit: www.Businesshala.com /

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