America Can't Win Tomorrow's Wars with Yesterday's Defense Budget

Experts warn that the U.S. military's aging equipment and lack of investment in new defense technologies could put the country at a strategic disadvantage.

Apr. 6, 2026 at 9:35am

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In an era of increasing geopolitical conflict and rapid technological change, the United States faces a critical challenge: its defense spending is misaligned with the demands of modern warfare. While Pentagon spending has increased in recent years, less than 1% of contract dollars go to top defense technology companies, limiting the military's access to the latest innovations. This has resulted in the U.S. relying heavily on aging weapons systems, with only one new system seeing operational use in recent conflicts. Experts argue that the U.S. must rebalance its defense budget to preserve critical legacy capabilities while significantly expanding investment in emerging technologies to maintain its technological edge.

Why it matters

The mismatch between the U.S. defense budget and the needs of modern warfare has serious implications for the country's national security. If the Pentagon continues to underfund defense technology companies, it risks losing access to the latest innovations and falling behind adversaries who are rapidly developing new capabilities. This could put the U.S. at a strategic disadvantage on the battlefield, jeopardizing its ability to project power and protect its interests globally.

The details

The U.S. government has taken steps to improve the demand signal for defense innovation, such as creating new offices and expanding pathways for non-traditional contractors. However, the funding does not yet reflect these priorities, with less than 1% of Pentagon contract spending going to top defense technology companies. This has resulted in the U.S. military relying heavily on weapons and platforms that are decades old, with only one new system, the Low-cost Unmanned Combat Attack System (LUCAS), seeing operational use in recent conflicts. Experts argue that the U.S. needs to rebalance its defense budget to preserve critical legacy capabilities while significantly expanding investment in emerging technologies, such as autonomy, software, and other advanced systems.

  • In recent weeks, the USS Abraham Lincoln aircraft carrier, built in the 1980s, has been crucial to U.S. power projection in the Middle East.
  • In 2025, venture capital investment in defense tech companies totaled $56 billion, up 83% from the previous year.

The players

Rachel Hoff

The Policy Director at the Ronald Reagan Institute, where she leads the National Security Innovation Base Program that publishes the annual NSIB Report Card. She formerly served as Speechwriter and Policy Advisor to John McCain at the Senate Armed Services Committee.

USS Abraham Lincoln

An aircraft carrier built in the 1980s that has been crucial to U.S. power projection in the Middle East in recent weeks.

Low-cost Unmanned Combat Attack System (LUCAS)

A new weapons system developed in the last 15 years that provides a cheaper alternative to missile systems like the Tomahawk, with each drone costing around $35,000 compared to millions for traditional missiles.

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What they’re saying

“Innovation is our advantage…But innovation is not enough. We must follow through. Blueprints alone don't deter aggression. We must translate our lead in the lab to a lead in the field.”

— President Reagan

What’s next

Congress and the Pentagon must drive change by not just making policy reforms and strategy announcements, but by making real investments to rebalance the defense budget and significantly expand funding for defense technology companies. This will help ensure the U.S. can maintain its technological edge and sustain its ability to project power globally.

The takeaway

The mismatch between the U.S. defense budget and the needs of modern warfare poses a serious threat to the country's national security. To address this challenge, the U.S. government must make a deliberate effort to rebalance its defense spending, preserving critical legacy capabilities while significantly increasing investment in emerging technologies. Failure to do so could put the U.S. at a strategic disadvantage on the battlefield, jeopardizing its ability to protect its interests and project power globally.