With great fanfare, but lacking fine details, President Donald Trump sent his budget to Congress last month, much of which closely mirrored what he said he would deliver when he was a contestant in the race for the White House.
On the campaign trail, candidate Trump promised, ‘We’re going to build our military bigger, better, stronger than ever before. Nobody is going to mess with us — that I can tell you.’
Following up at a rally in Kentucky, President Trump told the roaring crowd, ‘We are going to rebuild the United States military, finally. I proposed a budget that calls for one of the largest increases in defence spending history, and we need it, we need it.’
Trump said the increase in military spending would create jobs, ‘because we are going to make this equipment right here in the US.’
However, while his proposals will increase defence spending by $54 billion, according to analysis by The New York Times, there have been at least 10 larger increases to the base defence budgets since 1977 than President Trump’s.
And where, exactly, will this money come from?
More money for defence won’t come from tax increases, since Trump told the Louisville crowd, ‘We are going to massively reduce your taxes,’ while promising deep cuts in the corporate tax base as well.
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The Pentagon windfall included in his $1.1 trillion spending plan envisions slashing many government departments, such as Health and Human Services, Education and Agriculture.
And with the ongoing ‘The Russians are coming, the Russians are coming’ fear campaign that began during the 2016 presidential campaign and persists today, and military threats between North Korea and the United States heightening, building America’s military budget, despite it being as large as the next seven largest military budgets around the world combined, will face minimal domestic opposition.
Indeed, the military-first mindset that has prevailed since George W Bush launched the ‘War on Terror’ in 2001 continues to evolve under Trump.
Personnel from the military and defence companies fill Cabinet and top administrative positions. And White House officials report that Trump has shifted more authority over military operations to the Pentagon.
The precise defence budget details of who among the military-industrial complex will reap the most rewards, at this time, are few.
President Trump said he would increase today’s naval battle force from a 272-ship fleet to 350. And the Defense Department has asked for more Apache helicopters, anti-submarine planes, fighter jets and $5.1 billion in its fight to defeat ISIS in Iraq, Yemen and Syria, as well as more money for Afghanistan operations.
We also estimate more defence dollars funnelling into Homeland Security and intelligence agencies, particularly for both domestic and foreign Deep State surveillance and cybersecurity.
And with the US ratcheting up its military spending, we forecast so too will other nations, thus increasing America’s foreign military arms exports, which will greatly benefit its domestic defence contractors.
Increased military spending is a trend that’s here to stay. The more aggressive Trump becomes, in fact, the more the big-name defence contractors stand to benefit.
That means you have outsized profit potential if you get in front of this trend today while Trump and his economic policy team are still filling out the details of their proposed budget.
This is a new era of military spending. You should profit from it.
Until next time,
For Markets & Money