(Bloomberg) — The emerging deal Kevin McCarthy is discussing to make him speaker of the House would propose a roughly $75 billion cut in defense spending at a time when the US is intent on backing Ukraine against the Russian invasion and grows more wary of China’s stepped up aggression toward Taiwan.
(Bloomberg) — The emerging deal Kevin McCarthy is discussing to make him speaker of the House would propose a roughly $75 billion cut in defense spending at a time when the US is intent on backing Ukraine against the Russian invasion and grows more wary of China’s stepped up aggression toward Taiwan.
Part of the agreement being discussed would be to cap fiscal year 2024 spending across government at 2022 levels, according to three people familiar with the discussions. National defense spending, which primarily funds the Pentagon, was about $782 billion in fiscal 2022 and rose $75 billion to $857 billion in fiscal 2023.
Shares of defense contractors declined on the news. Northrop Grumman Corp. and Lockheed Martin Corp. erased gains and were down more than 1% as of 12:17 p.m. in New York, while Raytheon Technologies Corp. pared its advance to trade up 1.2%.
McCarthy’s idea won’t sit well with most GOP defense hawks on the armed services and appropriations panels, who for years have pushed for major increases in national security. Those lawmakers such as Michael McCaul and Mike Gallagher have so far backed McCarthy. It would also need to get signoff from Democrats and the Senate.
“If report of this deal are accurate, it doesn’t reflect the will of the party or the will of Americans and imperils our national security,” said Roger Zakheim, the Washington director of the Ronald Reagan Presidential Foundation and Institute and former general counsel on the House Armed Services Committee.
Indeed, one person familiar with the matter said the issue came up on a call McCarthy had with Republicans Friday and that defense hawks were concerned about it.
The 2023 spending boost underscored bipartisan concerns about rising inflation, strategic competition with China and Russia’s invasion of Ukraine. It was also the only way to receive Republican support for the annual defense authorization bill and the omnibus spending bill containing the Pentagon’s budget as well.
“China and Russia are watching,” former Republican Representative Liz Cheney wrote in a tweet that included a link to the Bloomberg story. “If @GOPLeader agreed to weaken our national defense for his own personal gain, that will be his legacy, and our nation will suffer.”
Some holdouts against McCarthy such as Representative Matt Gaetz are also fierce opponents of continued military assistance for Ukraine, and have threatened to try to block additional aid. Later Friday, the Biden administration was set to announce a new package of assistance including about 50 Bradley Fighting Vehicles, for Ukraine’s military.
(Updates with comment from an analyst and former Rep. Liz Cheney starting in 5th paragraph.)
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