Defense Secretary Pete Hegseth directed Pentagon officials Tuesday to develop plans for substantial defense spending reductions, targeting annual cuts of 8% over the next five years from the current $850 billion budget.
The directive, detailed in a memo obtained by the Washington Post, requires senior military commanders and defense agency directors to submit their cost-cutting proposals by February 24. The planned reductions would amount to approximately $68 billion in decreased spending each year.
Several key defense categories will be protected from the cuts, including:
- U.S.-Mexico border operations
- Nuclear weapons modernization
- Missile defense systems
- Submarine acquisition programs
- One-way attack drones
- Select munitions
"Our budget will resource the fighting force we need, cease unnecessary defense spending, reject excessive bureaucracy, and drive actionable reform," Hegseth stated in the memo.
The announcement aligns with President Trump's recent statements about potentially reducing military spending "in half" once geopolitical tensions ease. Trump indicated he plans to discuss mutual defense cuts with leaders of China and Russia during his term.
The news sparked immediate market reactions, with major defense contractors seeing stock declines. Palantir Technologies, a prominent defense software provider, experienced a 12% drop in share price following the announcement.
Vice President JD Vance has emphasized the need to "spend smarter" while acknowledging increased defense requirements. "This is not just about spending more money. This is also about changing our procurement process, changing our industrial base, and preparing ourselves with the weapons of the future," Vance said in a recent Wall Street Journal interview.
The Pentagon and White House have not yet commented on the specific areas targeted for reduction under the proposed cuts.