On Wednesday, a Washington Post report that Defense Secretary Pete Hegseth had directed senior Pentagon leaders to prepare for 8% budget cuts sent Palantir and other defense stocks plunging.
"The proposed cuts, if adopted, would mark the largest effort to rein in Pentagon spending since 2013," wrote WaPo.
Except that's not what's going on...
On Wednesday night, Breaking Defense's Aaron Mehta and Ashley Roque reported that the 'cuts' are actually Hegseth ordering the review of the department's 2026 budget "in order to shift funds from legacy programs towards President Donald Trump’s priorities, including border security and the Iron Dome for America."
"Secretary Hegseth has directed a review to identify offsets from the Biden Administration’s FY26 budget that could be realigned from low-impact and low-priority Biden-legacy programs to align with President Trump’s America First priorities for our national defense," acting Deputy Secretary of Defense Robert Salesses said in a Wednesday night statement.
"The Department will develop a list of potential offsets that could be used to fund these priorities, as well as to refocus the Department on its core mission of deterring and winning wars. The offsets are targeted at 8% of the Biden Administration’s FY26 budget, totaling around $50 billion, which will then be spent on programs aligned with President Trump’s priorities."
As Breaking Defense notes further;
After the statement was released, Breaking Defense obtained a portion of Hegseth’s memo, which lists 17 “offsets” which “may not be included by services and component in their eight percent decrease” recommendations. Those are:
- Southwest Border Activities
- Combating Transnational Criminal Organizations in the Western Hemisphere
- Audit
- Nuclear Modernization (including NC3)
- Collaborative Combat Aircraft (CCAs)
- Virginia-class Submarines
- Executable Surface Ships
- Homeland Missile Defense
- One-Way Attack/Autonomous Systems
- Counter-small UAS Initiatives
- Priority Critical Cybersecurity
- Munitions
- Core Readiness, including full DRT funding
- Munitions and Energetics Organic Industrial Bases
- Executable INDOPACOM MILCON
- Combatant Command support agency funding for INDOPACOM, NORTHCOM, SPACECOM, STRATCOM, CYBERCOM, and TRANSCOM
- Medical Private-Sector Care
It’s unclear what kind of programs will be targeted outside this list, although Salesses in his statement said the department will target “unnecessary spending” like “so-called ‘climate change’ and other woke programs, as well as excessive bureaucracy.” It’s also unclear if the decision not to exempt support for EUCOM, AFRICOM, CENTCOM or SOUTHCOM is a sign that those regions may be downplayed as priorities.
According to Salesses, the department will target "unnecessary spending" such as "so-called ‘climate change’ and other woke programs, as well as excessive bureaucracy."