Defense supplemental spending critique (with Joe Matthew, Kailey Leinz)

Supplemental budget request finally dropped - $88 billion total, $67B for Pentagon, up from $29B estimate six weeks ago for Iran war costs.

Steve Ellis says either administration wasn't honest then or isn't honest now.

Joe Matthew

Steve Ellis

Numbers don't add up - $29B after 70 days of shooting war, now $67B after 40 more days of mostly ceasefire. More than double in short period.

Pentagon is awash in cash: $1.5T request this year, extra from One Big Beautiful Bill Act, $100B still sloshing around.

Administration will argue this is necessary for national defense and restocking munitions - should it be considered discretionary?

Kailey Leinz

Steve Ellis

Pentagon is trying a money grab - asked for $250B more in base budget, $350B more in reconciliation, now another $67B. Non-defense items include $1.35B for Ebola, $10B farm bailout, $1B for Penn Station.

Christmas tree effect - adding adornments to attract votes.

How does Penn Station apply to defense?

Joe Matthew

Steve Ellis

It doesn't. Farm sector got $60B+ in bailouts over 5 years; this is more money sloshing around. Also includes year-round E15 for ethanol.

Whether it gets over finish line is anybody's guess.

Can this smaller supplemental pass, or is $350B reconciliation 3.0 still possible? House wants to attach Save America Act.

Kailey Leinz

Steve Ellis

Reconciliation 3.0 ($350B for Pentagon) is dead in the water - hard to get support without offsets. This supplemental gets legs as a smaller ask: 'You don't want $350B? How about $67B?'

They won't offset it for the most part.

$40 trillion debt, September deadline, midterms in November - cruising for a shutdown?

Joe Matthew

Steve Ellis

Neither party has appetite for shutdown before election. More likely a continuing resolution into lame duck after election.

Last shutdown was bruising and still in voters' consciousness.

Could Pentagon end up with less money under a CR?

Kailey Leinz

Steve Ellis

They got a big boost last year and significant boost in base budget - they'll be fine. Can survive on $1T for a few months.

Is there enough money for generational investment in defense industrial base? Should it be separate?

Joe Matthew

Steve Ellis

Request includes $2B for UAVs - lesson from Ukraine and Iran is need for cheap, plentiful platforms, not exotic expensive ones. Pivot to smaller, more replaceable items like drones vs F-15s.

We still need aircraft carriers but need investments in less exotic, more replaceable items.

Speaker Johnson meeting president now - what should he say about these asks?

Kailey Leinz

Steve Ellis

There is not unlimited appetite for spending, particularly in Republican conference with very small majority. They need to pick their fights.

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