Prioritizing Air and Missile Defense Spending in the Broader Budget Debate

The first level of prioritization is within the Golden Dome architecture and the broader missile defense portfolio. Based on both the executive order and reported guidance from Secretary of Defense Pete Hegseth, the administration is likely to prioritize increasing funding for homeland missile defense. On average, about 12 percent of air and missile defense funding has gone to homeland defense since 2009 (Figure 2). Mixed-use air and missile defense systems, such as space-based missile tracking sensors, make up 32 percent of spending, and theater missile defense systems make up the remaining 56 percent. This spending profile makes sense considering the scope of prior missile defense policy; whereas DOD invested in theater defenses against the full spectrum of air and missile threats, its homeland defense investments were limited to ballistic missile defense against adversaries with limited capabilities, like North Korea.

Decisions about priorities within the various mission sets of the Golden Dome architecture will determine the magnitude of the shift towards spending on homeland defense. Two choices stand out as likely cost drivers: the scale of both the space-based interceptor (SBI) layer and the homeland cruise missile defense architecture. In each case, maximalist goals would increase the cost of the Golden Dome effort considerably, which would increase the trade-offs required.

With regards to SBIs, although certain assumptions of prior cost estimates have changed, other fundamental challenges remain. Technological developments like reusable space launch vehicles and miniaturization of key interceptor components like sensors, avionics, and turbopumps have combined to reduce the cost of space launch and the weight of each interceptor payload. These trends promise considerable savings as compared to prior cost estimates of an SBI constellation. Nevertheless, due to the physics of low Earth orbit, providing coverage against larger salvos of missiles requires procuring significant numbers of interceptors that might need to be refreshed every five years or so. As a result, a maximalist SBI architecture could balloon in cost, requiring even greater resource allocation.

The homeland cruise missile defense component of Golden Dome faces a similar problem. Compared to SBIs, cruise missile defense involves a relatively mature set of technologies, but maximalist goals would again cause significant cost growth. Two studies examining the costs of the homeland cruise missile defense mission illustrate this problem. In 2021, the Congressional Budget Office assessed that a maximal homeland cruise missile defense architecture with coverage of the entire continental United States could cost between $77 and $466 billion (in 2021 dollars) over a 20-year period. By contrast, the Center for Strategic and International Studies analyzed a more focused cruise missile defense architecture that provided preferential defense to certain key areas, with a resulting cost estimate of around $32 billion (in 2023 dollars). Marginal differences in the capabilities examined for each architecture explain some of this variance, but the scale of defended area envisioned was by far the biggest driver of cost savings.

Some might be tempted to find funding for more expansive homeland missile defense projects by reallocating resources from theater defense programs. For example, certain theater defense systems could be repurposed as part of the homeland cruise missile defense architecture or a ballistic missile defense underlay. However, the persistent demand for these assets will constrain the ability to reallocate resources within the missile defense portfolio without incurring strategic risk. The administration’s challenges in redirecting scarce theater missile defense assets from the Indo-Pacific to the Middle East underscore this trade-off. Reallocating theater defense systems to the homeland or reducing investments in their capacity could meaningfully reduce the flexibility of the U.S. to deploy forces in increasingly contested and missile-rich environments. These homeland deployments also could have operational tempo implications for the already stretched air and missile defense force structure. To incorporate mature systems like Aegis, THAAD, and their associated elements into homeland defense, DOD should consider a more distributed and disaggregated approach, which could be less manning intensive.

Golden Dome could also be prioritized within the DOD budget by making trade-offs between the missile defense portfolio and other capabilities. Figure 3 shows that, relative to other capabilities, air and missile defense funding has been prioritized at consistent levels since 2009, accounting for between 7 and 9 percent of modernization spending. If the Pentagon declines to make trade-offs within the missile defense portfolio itself, funding for Golden Dome programs might require cuts to other operations or capabilities. Secretary of Defense Pete Hegseth’s February memo seeking realignment of $50 billion suggests the Pentagon is already exploring this option.

The largest challenge to resourcing Golden Dome through internal DOD budget reallocation is finding meaningful funding that can be cut easily. Budget exercises conducted by the American Enterprise Institute using the Hegseth memo constraints have required significant cuts to the Army and additional cuts to Air Force programs. Attempts to trim spending on older systems are likely to face congressional opposition, and previous administrations have already picked much of the low-hanging fruit. This suggests that trying to fund Golden Dome through internal reallocations alone would either yield too few resources for the supposedly transformational effort to succeed, or create unacceptable risk to other DOD priorities.

The final lever the White House can pull for Golden Dome is in the U.S. government’s overall fiscal policy. Historically, the total size of the defense budget has had the largest effect on missile defense resourcing, as evidenced by its relative consistency as a percentage of modernization spending (Figure 3) compared to the variation in real dollar terms (Figure 1). The Trump administration has been somewhat inconsistent in its approach to the defense top line, alternately suggesting deep cuts to defense spending and, more recently, submitting a nominally $1 trillion budget request.

At such a level, defense spending must be considered in comparison to other national priorities like economic policy and domestic spending programs. A historical study of the economic burden of defense spending suggests room for top-line growth compared to recent years. Congress’ budget resolution, which includes an additional $150 billion for defense, is an important marker of intent. Across its various sections, the House Armed Services Committee’s mark-up of the reconciliation bill includes nearly $30 billion of air and missile defense funding, nearly 20 percent of the defense reconciliation funds (Figure 4). The bill shows Congress’s clear support for prioritizing space-based missile defenses. Its two largest line items are $7.2 billion for space-based sensors and $5.6 billion for space-based and boost phase intercept.

The larger challenges here will be the mechanics of the appropriations process and broader economic factors. While the reconciliation bill seems to have momentum, many hurdles to a final bill remain. Even with broad agreement about the defense spending portion of the bill, disagreements about tax cuts and other spending cuts could threaten the whole package. The White House’s “skinny budget,” which counted $113 billion of the reconciliation bill’s funding towards its fiscal year 2026 DOD budget request, calls into question the magnitude of the actual defense spending increase. Broader economic policies (like tariffs) could also affect Golden Dome implementation, as price increases in key materials could eat into DOD buying power.

Reorienting U.S. missile defense policy on the scale envisioned by Golden Dome will require significant decisions at multiple levels of government. Each of these decisions builds upon one another. The more expansive the Golden Dome architecture becomes, the greater its need for budget share within the missile defense portfolio. If sufficient funding cannot be found within missile defense programs, it would require trade-offs with other defense capability areas. If resources cannot be found there, then it will necessitate greater overall defense funding, which could constrain broader fiscal and economic policy. Navigating these budget prioritization decisions will determine whether the Trump administration will have greater success in its second attempt to build a next-generation missile defense than it did the first time.

Wes Rumbaugh is a fellow in the Missile Defense Project at the Center for Strategic and International Studies in Washington, D.C.