Projected Surge in US Defense Spending Fueled by China’s Security Threat

F-15C Eagles from the 67th Fighter Squadron at Kadena Air Base, Japan, are refueled by a KC-135R Stratotanker from the 909th Air Refueling Squadron during joint bilateral training with other U.S. forces and the Japan Air Self Defense Force Feb 25, 2010. (U.S. Air Force photo/Tech. Sgt. Angelique Perez)

China’s position as a threat to US security remains a primary driver behind a projected surge in US defense spending over the next four years, according to a report by investment bank TD Cowen.

The Pentagon’s spending on major weapons and munitions is expected to increase by 22% from fiscal 2024 to 2028, reaching $140 billion annually by the end of the period, according to a report by TD Cowen analyst Roman Schweizer. The report, based on an analysis of the Defense Department’s latest budget request and future years defense program, forecasts a “robust” growth in procurement and research and development spending, driven by the need to counter China’s military modernization and expansion.

“China is the primary pacing threat for the U.S. military and its allies in the Indo-Pacific region and beyond,” Schweizer wrote in the report. “China’s growing capabilities across all domains — air, land, sea, space, cyber — pose significant challenges to U.S. deterrence and defense.”

The report identifies several areas where the Pentagon is investing heavily to maintain its edge over China, such as hypersonic weapons, missile defense, artificial intelligence, cyber warfare, space systems, nuclear forces, and long-range strike platforms. The report also highlights the importance of strengthening alliances and partnerships in the region, as well as enhancing readiness and training.

The report comes as the Biden administration has proposed a $813 billion defense budget for fiscal 2023, a 4% increase from the previous year. The budget request reflects the administration’s national defense strategy, which prioritizes China as the main global competitor and Russia as an acute threat.

The budget request also includes $6.9 billion for the European Deterrence Initiative, a program that aims to bolster NATO’s defenses against Russian aggression and support Ukraine. The request follows Russia’s invasion of Ukraine in January 2023, which sparked a major crisis in Europe and heightened nuclear risks.

The budget request is likely to face resistance from both Republicans and Democrats in Congress, who have different views on how much to spend on defense and where to allocate the funds. Republicans have argued that the budget request is insufficient to address the growing threats from China and Russia, while some Democrats have called for cutting defense spending and redirecting resources to domestic priorities.

The budget request is also subject to uncertainty due to the expiration of the Budget Control Act in fiscal 2022, which set caps on discretionary spending for both defense and non-defense programs. Without a new bipartisan agreement on spending levels, the Pentagon could face automatic cuts or sequestration under current law.

Sources: AirGuide Business airguide.info, msn.com, cnbc.com, defensenews.com, reuters.com, bloomberg.com