In a complex and changing global landscape, the United States faces a range of critical challenges to its security and leadership role in the world. At the same time, America’s unsustainable national debt is a dangerous threat to the country’s national security and economic strength. Defense is the largest component of discretionary spending and accounts for approximately 13 percent of all federal outlays. In 2024, SIPRI estimated that the United States spent $997 billion on defense — more than the next nine countries combined.
Policy Options
A strong national defense is crucial to the country’s security; however, it should be possible to reform defense spending while meeting national security priorities. The Coalition for Fiscal and National Security proposed three categories of reform that Congress and the Department of Defense should focus on: eliminating unnecessary or outdated weapons systems, close and realign military facilities, and reassess personnel needs and deployment strategies.
Specific solutions range from simply reducing funding across defense programs to pairing reductions with new national security strategies. Policymakers could also adopt a piecemeal approach by eliminating particular defense programs that are found to be outdated or unnecessary.
Decrease the Number of Full-time Active-Duty Forces
The Congressional Budget Office (CBO) has estimated that reassessing the Department of Defense’s annual budget could save $959 billion over the next 10 years. Reducing the number of active-component military personnel, reducing ground combat and air combat units, or relying on allies to provide their own defenses rather than using a U.S. combat force are possible methods of achieving the reform.
Close Military Installations Overseas
In 2021, the United States had approximately 750 military bases across 80 foreign countries and territories at a cost of $55 billion annually, according to a report by the Quincy Institute for Responsible Statecraft. That is about three times more military bases than all other countries combined. Closing some of those bases would create savings and allow for prioritizing higher-risk needs. In addition, proponents argue that the policy would help deter future military action because closing overseas bases would increase the costs of intervening, complicate logistics, and lower expectations for intervention from nearby allies.
Reduce Service Contracting
The DoD obligated $205 billion in service contracts during fiscal year 2022, which represented 49 percent of all department contracts. The cost of service contracting has grown significantly over the past few decades, and contractor employees can cost two to three times more than federal employees doing the same work. The Center for International Policy estimated that reducing DoD spending on service contractors by 15 percent would save $263 billion over 10 years.
Eliminate Improper Payments
In a 2024 report, the Government Accountability Office (GAO) noted that it was not able to calculate the extent of improper payments by the Department of Defense (DoD) because DoD did not comply with its obligation to publish satisfactory improper payment estimates. In fact, DoD has not published reliable improper payment estimates in 14 consecutive years. In 2020, DoD approximated that it paid roughly $11 billion in improper payments, which is 1.7 percent of all payments the department made that year. By comparison, the federal government spent $13 billion on veterans’ education, training, and rehabilitation the same year. Improving DoD’s financial management could help eliminate waste and find efficiencies. For example, after taking steps to implement some of GAO’s recommendations, the Navy identified a warehouse of unused aircraft parts and was able to fill $20 million in open orders using those parts.
Smaller Policy Options to Reduce Defense Spending
CBO has also identified several other options available to policymakers that would cut defense spending on a smaller scale from 2025 to 2034. Of those smaller options, the most significant savings would come from reducing the size of the aircraft fleet by retiring the F-22 fighter aircraft, which would reduce defense spending by $29 billion over the next decade. Other reforms include capping increases in basic pay for military service members (saving $22 billion), replacing some military personnel with civilian employees (saving $17 billion) and reducing the basic allowance for military-personnel housing (saving $17 billion).
Additional Defense Resources:
- Congressional Budget Office, Illustrative Options for National Defense Under a Smaller Defense Budget
- Government Accountability Office, Opportunities Exist to Improve DOD’s Management of Defense Spending
- CATO Institute, National Security Implications of Unsustainable Spending and Debt
