US debt ceiling deal freezes $16 billion in parallel defense projects

By Mike Stone and Patricia Zengerle

WASHINGTON (Reuters) – A $16 billion list of lower-priority defense items like tanks, helicopter upgrades and a ship, which would normally be paid for as part of the defense budget, may not be funded after the United States passed a landmark bill that lifts the debt ceiling but curbs federal spending.

The deal to avoid default has left lawmakers, the Department of Defense and other agencies wondering how to pay for projects that for the past few years were last-minute additions to defense policy and appropriation bills, which are generally approved without discussion.

The debt deal capped national security spending in fiscal year 2024 at $886 billion, which US President Joe Biden has called for.

Among the military services’ “unfunded priorities” lists are Abrams tanks made by General Dynamics, an aircraft made by Lockheed Martin and a ship for the Marines made by Huntington Ingalls Industries.

Each service generates its own list, and this year includes new facilities, ship upgrades, ordnance, and long-range radar to protect the United States.

Congressional aides said that prior to the debt deal, relevant committees were considering a national security budget of more than $900 million for fiscal year 2024.

Typically, some of the $16 billion in unfunded priorities would be added, along with billions in legislative initiatives. Ultimately, the aides said an additional $30 billion to $40 billion could have been added to defense revenue.

In recent years, Congress has increased defense spending more than any president would ask, typically by tens of billions of dollars.

In 2022 and 2023, Congress increased spending by more than $20 billion each year. Previously, the Pentagon had used “overseas emergency operations” (OCO) funds for a decade to increase the amount of money available to avoid budget caps passed by Congress.

This year, the debt ceiling agreement could make that more difficult.


Biden is expected to seek additional funding in August or September to support Ukraine against the Russian invasion, after the $48 billion approved by lawmakers in December for Ukraine has been spent.

This request for additional spending from Ukraine should now include a broader range of military spending and may include some pet items and projects being left behind.

After complaints from defense hawks, Senate Democratic and Republican leaders made a formal pledge Thursday night before the debt cap bill passed that spending caps in the measure would not prevent the Senate to pass additional spending legislation to provide more money to the Department of Defense.

Mackenzie Eaglen, senior fellow at the American Enterprise Institute, said: “I’m sure there will be an emergency supplementary spending bill for Ukraine that will include non-Ukrainian defense needs and priorities.

“This supplement will not be enough to entirely close the gap between what Congress would likely have increased defense above the president’s budget and major non-Ukrainian end lines,” Eaglen added. “But it will be a release valve for certain priorities.”

(Reporting by Mike Stone and Patricia Zengerle in Washington; Editing by David Holmes)

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