President Donald Trump submitted a $1.5 trillion defense spending request for fiscal year 2027 on Friday — the largest military budget proposal in U.S. history, a roughly 40% increase over current funding levels, arriving in the fifth week of the U.S.-led war against Iran.

According to Breaking Defense, the $1.5 trillion total is structured in two parts: a $1.15 trillion base budget — the first time the base Pentagon budget has crossed $1 trillion — and $350 billion to be passed through budget reconciliation.

What the Budget Includes

The base budget requests approximately $260 billion for procurement and $220 billion for research, development, testing, and evaluation. The Golden Dome missile defense shield would receive $17.5 billion through reconciliation. The Air Force’s R&D account is slated to rise from $57 billion to $74.2 billion, funding programs including the F-47 stealth fighter scheduled for first flight in 2028. Shipbuilding capital reaches $65.8 billion for 34 vessels.

Budget Director Russell Vought said the plan “builds on the president’s vision by continuing to constrain non-defense spending and reform the federal government.”

Political Backdrop

NPR reports the request arrives as U.S. forces remain engaged in active combat with Iran, burning through Pentagon reserves at an estimated $1.2 billion per week. A separate emergency war supplemental is expected before Congress in late April or May. The Committee for a Responsible Federal Budget estimated the proposal would add $6.9 trillion to the national debt over 10 years, once interest costs are included. Federal Reserve Chair Jerome Powell warned separately that the debt trajectory “will not end well if we don’t do something fairly soon.”

Democratic Senator Patty Murray said she refuses “to provide a blank check to the Pentagon,” adding the department’s challenge is efficient spending, not funding volume. Republicans control both chambers but need to pass the reconciliation vehicle this year — with midterm elections approaching in November.

Market Implications

A budget of this scale, built on deficit spending during active military engagement, adds materially to inflation risk across global markets. As escalating military costs and oil supply disruption from the Iran conflict compress monetary policy options, investors in all asset classes — including digital assets — are recalibrating. The DeFiance CEO warned months ago that Middle East escalation would hit supply chains and financial markets in ways that would ripple broadly. Meanwhile, surveys show that 72% of financial institutions now classify digital assets as essential — a baseline that makes crypto markets increasingly sensitive to the macro signals this budget transmits.