Executive Summary

  • The White House's FY2027 budget requests $1.5 trillion in total defense spending — the largest military budget in American history — representing a 44 percent increase over FY2026 levels, according to the Committee for a Responsible Federal Budget.
  • The Pentagon has failed its congressionally mandated financial audit for eight consecutive years. Auditors identified 26 material weaknesses in fiscal year 2025, and the department remains unable to account for trillions of dollars in assets, according to the Department of Defense Agency Financial Report.
  • The budget proposes $73 billion in cuts to domestic programs, including a 52 percent cut to the EPA, a 30 percent cut to the State Department, and a 13 percent cut to HUD, according to the White House budget topline fact sheet.
  • OMB Director Russell Vought is scheduled to testify before the House Budget Committee on April 15. Lawmakers from both parties have introduced legislation to penalize the Pentagon if it fails to achieve a clean audit by 2028, according to Federal News Network.

Tomorrow morning, Office of Management and Budget Director Russell Vought will sit before the House Budget Committee and make the case for the largest defense budget any nation has ever proposed. The White House is requesting $1.5 trillion in total defense spending for fiscal year 2027 — a 44 percent increase over the current year — while simultaneously cutting $73 billion from the domestic programs that fund housing assistance, environmental protection, food safety, and labor enforcement, according to the Committee for a Responsible Federal Budget.

The hearing will focus on priorities, tradeoffs, and national security imperatives. Here is a question that deserves equal time: why is Congress preparing to increase funding by hundreds of billions of dollars for the only major federal agency that has never passed a financial audit?

Eight Years, Eight Failures

Congress mandated annual financial audits of the Department of Defense beginning in 2018. Every year since, the Pentagon has failed. Not narrowly. Not on technicalities. Failed with 26 material weaknesses and two significant deficiencies identified in the most recent fiscal year 2025 audit, according to the Department of Defense Agency Financial Report.

The Pentagon reported $4.65 trillion in total assets. As of the most recent comprehensive assessment, the department was unable to account for more than 60 percent of them, according to analysis by the Government Accountability Office. Auditors found that the department could not verify the existence, completeness, or value of assets in programs as significant as the Joint Strike Fighter Global Spares Pool — the logistics backbone of the F-35 program — according to the DoD Inspector General.

The Department of Defense is the only one of the federal government's 24 major agencies that has never achieved a clean audit opinion. Every other department — from the IRS to the Department of Agriculture to the Small Business Administration — has managed to produce financial statements that independent auditors can verify. The Pentagon, which receives more discretionary funding than all other agencies combined, has not.

The department has promised to achieve a clean audit by 2028. It made a similar promise in 2017, when then-Defense Secretary Jim Mattis set a 2024 deadline. That deadline came and went.

The Scale of What's Being Requested

The FY2027 budget request breaks down to $1.15 trillion in base discretionary defense funding plus $350 billion in additional spending through the reconciliation process, according to the White House budget topline fact sheet.

To put that in perspective: the entire federal budget for non-defense discretionary programs — education, transportation, housing, science, environment, justice, and everything else the government funds outside of defense and mandatory programs — would receive approximately $653 billion under the proposal. Defense spending would exceed all other discretionary spending combined by a ratio of more than two to one.

The proposed increase alone — roughly $500 billion above FY2026 levels — is larger than the total military budgets of every NATO ally combined, according to NATO's most recent annual report on defense expenditures.

What Gets Cut

The $73 billion in domestic cuts are not abstractions. They represent specific programs that affect specific communities.

The Environmental Protection Agency would lose 52 percent of its funding — a $4.6 billion cut that would bring the agency to staffing and capability levels not seen since before the Clean Air Act amendments of 1990, according to the budget analysis by the Center on Budget and Policy Priorities. EPA Administrator Lee Zeldin has already cancelled more than 400 grants in four rounds of cuts, according to EPA press releases. The proposed budget would make those cuts permanent and deepen them.

The Department of Housing and Urban Development would lose 13 percent of its funding — approximately $10.7 billion — affecting rental assistance, homelessness prevention, and community development block grants that flow directly to cities and counties, according to the Committee for a Responsible Federal Budget. HUD has already delayed delivering $3.6 billion in homelessness assistance funding, according to the Center on Budget and Policy Priorities.

The State Department and international programs would lose 30 percent — $15.5 billion — at a time when the administration is simultaneously engaged in a military conflict with Iran that has expanded diplomatic demands across the Middle East, according to the White House budget documents.

The Department of Labor would lose 26 percent — $3.5 billion — reducing enforcement capacity for wage theft, workplace safety, and mine safety programs, according to the budget analysis by Akin Gump.

The Department of Agriculture would lose 19 percent — $4.9 billion — affecting food safety inspections, rural development grants, and agricultural research, according to the White House budget topline fact sheet.

The Accountability Gap

The fundamental accountability question is not whether defense spending is necessary. It is whether Congress can responsibly appropriate $1.5 trillion to an institution that cannot demonstrate what it did with the last $1 trillion.

Private-sector federal contractors received $2.4 trillion in Pentagon contracts between 2020 and 2024 — approximately 54 percent of the department's total discretionary spending over that period — according to a study by the Costs of War Project at Brown University. The concentration of spending among a small number of defense contractors has increased steadily, with the top five firms receiving a growing share of total contract value.

Meanwhile, the Government Accountability Office — the congressional watchdog responsible for auditing federal spending — saw its own budget cut by 6 percent in FY2026, with further reductions proposed for FY2027, according to the budget documents. The Council of the Inspectors General on Integrity and Efficiency has reported that inspector general offices across the federal government face growing vacancy rates and budget constraints, reducing their capacity to conduct the oversight that makes accountability possible.

DOGE, the administration's government efficiency initiative, has focused its cost-cutting efforts overwhelmingly on domestic agencies. The Pentagon — which represents the single largest category of discretionary spending and has the worst financial accountability record in the federal government — has received comparatively minimal scrutiny from the efficiency effort, according to the DOGE savings tracker.

A bipartisan bill introduced in February 2026 would impose penalties on the Pentagon if it fails to achieve a clean audit within three years and grant greater budget flexibility if it succeeds, according to Federal News Network. Whether that bill advances — or whether Congress simply appropriates the $1.5 trillion without new accountability requirements — will say more about Washington's commitment to fiscal responsibility than any campaign speech about government waste.

What to Watch Tomorrow

Director Vought's testimony before the House Budget Committee begins at 10:15 AM in the Cannon House Office Building. The hearing is open to the public and will be livestreamed on the committee's website.

The questions that matter are not about whether America needs a strong defense. The questions that matter are about whether Congress will attach accountability conditions to the largest defense appropriation in history — or whether a department that cannot account for 60 percent of its assets will receive a 44 percent raise with no strings attached.

Eight failed audits. $4.65 trillion in reported assets that auditors cannot verify. And tomorrow, a request for $1.5 trillion more.

Related Bastion Daily coverage: DOGE's Hidden Costs | The GAO Under Siege | Inspector General Purge