Why It Matters
The Trump administration's fiscal 2027 budget proposes a $1.154 trillion defense discretionary request, about 3.4% of GDP, alongside cuts that would bring nondefense discretionary spending below 2% of GDP by fiscal 2028, according to a new Congressional Research Service (CRS) report.
Since fiscal 2002, federal outlays have exceeded revenues, resulting in a series of deficits through fiscal 2026. The Congressional Budget Office projects the fiscal 2026 deficit at $2.1 trillion, or 6.6% of GDP.
The Big Picture
The fiscal 2027 defense request sits 0.6 percentage points of GDP above the fiscal 2026 baseline of 2.8% of GDP. The administration requested $67.1 billion in war funding in a June 24 letter from Office of Management and Budget Director Russell T. Vought to Rep. Mike Johnson, and Congress is considering whether and how to provide that funding.
The 2025 reconciliation act (P.L. 119-21) provided $150 billion in net mandatory defense funding over fiscal 2025 through fiscal 2034 and $129 billion to the Department of Homeland Security over the same period. Its Medicaid policy changes are expected to reduce outlays and decrease enrollment in Medicaid and the Children's Health Insurance Program.
Mandatory outlays account for an estimated 14.2% of GDP in fiscal 2026, while discretionary outlays are estimated at 5.9%; mandatory spending's share has grown over time as discretionary spending's share has declined. Net interest costs as a share of GDP have doubled in recent years, driven by rising interest rates and higher debt levels.
The Inflation Reduction Act of 2022 (P.L. 117-169), sponsored by Rep. John Yarmuth (D-KY), is cited as one measure that increased mandatory spending above previous levels.
The Bottom Line
The Administration has requested $67.1 billion in war funding, and Congress is considering whether, and if so how and at what scale, to provide it.
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