Significance of the Presidential Budget Request (PB):
The Pentagon recently unveiled the president’s fiscal year (FY) 2026 budget request, outlining the administration’s funding priorities and strategic vision for the Department of Defense (DoD). With the defense spending bill already making its way through Congress, the Presidential Budget Request (PB) provides a detailed description of how the DoD intends to allocate resources and will shape ongoing discussions. As is standard, the request highlights departmental priorities and sets the overall direction for defense spending.
This year, the budget request is uniquely tied to reconciliation funding, which was signed into law by President Trump on July 4. Reconciliation adds approximately $113 billion in additional defense dollars for FY26, to an otherwise flat FY26 base budget of about $848 billion. In May, President Trump called for a 13% increase in defense spending, raising the total proposed defense budget to over $1 trillion. Combined, the FY26 budget request and reconciliation bring defense spending to around $960 billion.
For stakeholders, it is important to track where funding is trending and to distinguish which dollars come from the baseline request versus reconciliation. Although $960 billion represents a sizable increase in the defense budget, reconciliation dollars are unique due to their one-time lump-sum nature and should be regarded as supplemental funding rather than a recurring baseline adjustment.
Account Shifts by Service
*FY26 Total= FY26 Base Request + Reconciliation
- All military services receive larger budget allocations in FY26 when accounting for reconciliation.
- The Space Force relies heavily on reconciliation for growth. Without reconciliation, its budget is down 10% from FY25 ($24.8B); with reconciliation, its budget is up 40% ($38.7B).
- With reconciliation, the Army sees the smallest increase ($117.8B, +6.1%), reinforcing a downward trend in its share of total defense funding relative to the other military branches.
- When considering only the base budget request, the Army, Marines, and Air Force fare the best among the services, receiving slight budget increases that are not dependent on one-time reconciliation funding.
- FY26 Without Reconciliation:
- Army: +1.4%, $112.6B
- Marines: +6.9%, $17.8B
- Air Force: +1.3%, $182.3B
- Army: +1.4%, $112.6B
Account Shifts by Color of Money
*Percent changes computed from FY25 Enacted
*FY26 Total= FY26 Base Request + Reconciliation
- Procurement, RDT&E, and O&M all receive increased funding compared to FY25 enacted, but only when accounting for reconciliation.
- Including reconciliation, FY26 is expected to have the largest RDT&E budget in U.S. history ($180.3B).
- Reconciliation adds about $37.1B in one-time funding to RDT&E, a demand signal for accelerating modernization and innovation.
- RDT&E and Procurement rely heavily on reconciliation for significant account growth.
- RDT&E: $180.3B (+25.3%) with reconciliation, $143.2B (-0.4%) without.
- Procurement: $221.3B (+18.3%) with reconciliation, $166.1B (-11.2%) without.
What's Up & What’s Down—Winning and Losing Programs and Organizations
Notable Themes:
- Hypersonics
- Encompassing all vehicles capable of traveling at speeds greater than Mach 5, hypersonic capabilities are accelerating in FY26, as evidenced by a significant funding boost for the Joint Hypersonics Transition Office (JHTO) (+121%, $651M). This increase reflects the DoD’s push to advance hypersonic research and rapidly transition new technologies into operational use. While the development of these advanced systems is closely linked to the construction of the Golden Dome and the future of missile defense, the JHTO’s role supports hypersonic innovation across all domains, not just missile defense.
- Defense Innovation Unit (DIU)
- The Defense Innovation Unit (DIU) is receiving a sharp increase in funding for FY26 (+101%, $975.2M), with over $900 million coming through reconciliation[1]. This reflects a DoD-wide push for the rapid development and adoption of emerging technologies. The funding surge will enable DIU to accelerate the integration of innovative capabilities such as artificial intelligence, autonomy, quantum technologies, and advanced manufacturing—getting critical technologies to the battlefield faster.
- Golden Dome
- Program Executive Office (PEO) Missiles and Space is set to play a leading role in the development and deployment of the U.S.’s next-generation missile defense architecture and receives expanded funding in FY26 (+52%, $12.4B). In January, President Trump signed an executive order establishing the “Golden Dome” to address the threat of advanced aerial attacks facing the U.S. PEO Missiles and Space will contribute by developing and fielding advanced missile defense systems integral to the project.
- Nuclear Modernization
- The Bombers Directorate receives an increase in funding (+43%, $8.8B), signaling DoD emphasis on nuclear modernization and the nuclear triad. The increased funding will support the development of the next generation of bombers and modernize existing platforms. For example, the B-21 Raider is set to receive $7.3B in FY26, a $2B increase from FY25 enacted.
- Army Modernization
- The Command Post Integrated Infrastructure (CPI2) (+1498%, $723.2M) program is a key component of the Army’s modernization efforts. CPI2 works to modernize network capabilities for command posts, and advance mobile, modular, and resilient command post infrastructure.
- Slashed F-35 Procurement
- The F-35 Lightning II (Joint Strike Fighter) sees a sharp reduction in procurement for FY26 (-98%, $10.6B), with no additional reconciliation dollars to offset cuts. The cuts to F-35s have received pushback—more than a dozen retired Air Force generals urged congress to restore F-35 funding.
- Navy as Both a Winner and a Loser:
- Reconciliation has added significant complexity to the Navy budget, making programs across the service both winners and losers. For FY26, the Navy heavily relies on reconciliation for funding. Without reconciliation, the Navy base budget sits over 10% lower than FY25 enacted levels. Out of the Navy budget, shipbuilding has disproportionately depended on reconciliation dollars to make up for the reduced base request. Although reconciliation ultimately boosts the overall service budget to $212.7B, a +12.5% compared to FY25, funding has not been distributed evenly. A heavy dependency on one-time reconciliation funding, and the asymmetrical distribution of the lump-sum, create stand-out winners and losers.
- Programs such as the Ocean Surveillance Ship (T-AGOS) and the Medium Landing Ship are prioritized build projects in the FY26 plan and emerge as winners.
- The base budget cuts run deep, and even with reconciliation dollars, planned builds such as the Virginia-class submarine and the Arleigh Burke-class destroyers remain at a net loss.
- Reconciliation has added significant complexity to the Navy budget, making programs across the service both winners and losers. For FY26, the Navy heavily relies on reconciliation for funding. Without reconciliation, the Navy base budget sits over 10% lower than FY25 enacted levels. Out of the Navy budget, shipbuilding has disproportionately depended on reconciliation dollars to make up for the reduced base request. Although reconciliation ultimately boosts the overall service budget to $212.7B, a +12.5% compared to FY25, funding has not been distributed evenly. A heavy dependency on one-time reconciliation funding, and the asymmetrical distribution of the lump-sum, create stand-out winners and losers.
What’s Next?
The Presidential Budget Request, combined with reconciliation funding, highlights key priorities across the DoD and identifies emerging opportunities for stakeholders. Although the budget request does not officially appropriate funds, it serves as an important guide and forecast that will shape the final appropriations bill. For stakeholders, it is critical to track trends in overall funding, understand the implications of reconciliation dollars, and assess how these shifts may impact specific programs and areas of interest. As the funding picture evolves, follow along as Obviant provides ongoing coverage of markups and tracks spending from appropriations through to final authorization.
Footnotes:
- Readers are encouraged to check out the Obviant Budget Dashboard for additional analysis and to track what matters most to them.
- Reconciliation amounts are based on explicit allocations tied to Program Element Managers (PEMs), as published by the DoD. Additional funding may be available.
- [1]DIU is set to receive $2B in reconciliation funding according to the Reconciliation Bill. This is one of many examples where J-Books do not align with allocated funding. We intend to explore this further on our platform and in future content.
- Percent increases shown in the “Notable Themes” section are based on the “Winning and Losing Programs and Organizations,” and are therefore weighted by each organization’s and program’s FY26 total funding (inclusive of reconciliation).
