New and existing defense programs may face funding delays or challenges, and companies could see a flurry of Congressional anti-corruption inquiries when the new Democrat-majority Congress takes office next year, experts say. Until then, industry can expect a push for funding by the current majority.
“There’ll be a lot of pressure on the Republicans to get something passed during the lame duck [session] because they know how hard it will be after that. And defense hawks will be pushing very hard,” said Mark Cancian, a government budget expert and senior adviser with the Center for Strategic and International Studies.
While Republicans being able to amass enough support to pass $350 billion in reconciliation funding for defense “looks iffy,” he said, passing the base budget of around $1.1 trillion is “quite doable.”
But that reduced funding ceiling—along with the possibility of another continuing resolution—means the Pentagon will need to choose what gets funded.
“At $1.5 trillion, [the Pentagon] could do everything. In other words, they could fund a lot of legacy systems, but also fund a lot of new systems. And a $1.1 trillion dollar budget will require them to make some trade-offs—which [ones] get protected will be an important question,” Cancian said.
Defense spending, overall, typically garners bipartisan support. But this year, the U.S.-Israel war on Iran has been a source of political contention—from the Trump administration starting it without Congressional approval to the downstream economic effects.
Also, the administration has, again, tethered funding for several prominent national security programs to a supplemental funding bill instead of the regular defense budget. Those programs include the White House’s massive missile defense effort dubbed Golden Dome, some shipbuilding, and munitions production.
A failure to secure that extra funding could constrain some of the Pentagon’s modernization programs, said Shaun McDougall, lead defense analyst for Forecast International, a sister brand of Defense One.
If Congress passes a long-term continuing resolution instead of a new budget for 2027, the Army would not be able to start building its MV-75 program, to replace the UH-60 Black Hawk, or its Bradley replacement, XM-30.
“They’re wanting to start production on those using FY27 funds,” McDougall said.
Navy shipbuilding programs that would take a hit include “new submarine tenders [and] work on the new frigate,” while the “Air Force has several missile programs, and…the collaborative combat aircraft.”
And, when that potential stopgap funding expires, it may be replaced by another continuing resolution—or result in a government shutdown.
“You have the possibility of a government shutdown if there’s disagreements over using the Iran War as a bargaining chip or something like that. So there’s a lot of potential for budget disruptions, and that’s been one of the big struggles for the Pentagon in general,” McDougall said.
However, Democrats could opt to pass the more-than-trillion-dollar defense budget to cover big expenses like munitions.
And in that case, “the war funding is essentially covered” if the base budget includes “a little flexibility to move money around,” CSIS’s Cancian said. “The biggest piece is munitions,” though it likely would also include other operational costs of the Iran war.
Plus, even as polarizing as the Iran war is, stockpiles of the exquisite munitions that were used must be replenished.
“Democrats obviously aren’t happy with the war and how it’s going, but replacing all those munitions, it has to be done, whether you support how those munitions were used up in the first place,” McDougall said.
Under the microscope
A Democrat-led Congress will likely focus on anti-corruption, with probes into companies that have close ties to the White House and broader Trump administration, said Kristina Moore, a partner with Womble Bond Dickinson law firm in Washington, D.C.
The “first wave of investigations” would likely explore “where there is evidence that a family member close to the president or the administration had an unfair advantage, or somehow benefited directly financially because of a transaction—an acquisition, a merger, a government loan or a contract,” Moore said. “Was a contribution made, say to the White House ballroom, and—close in time—a policy outcome or a contracting decision, right?”
Then, Congressional oversight and defense committees may examine individual policies for potential wrongdoing.
Venezuela, Iran, drones, AI use: “What is that oversight angle there? Was there a no-bid contract awarded in one of those scenarios? What influenced the administration’s policy? Who benefited from a change in the administration policy? And then there’s just simply who holds information,” which could be interesting to investigators, said Moore, who was previously a Congressional investigator and has advised clients undergoing such probes.
“You kind of get there either because you were involved in a transaction that looks suspicious, or you were involved in a policy area that is of interest and under scrutiny.”
That means companies must know how to navigate public opinion, and the risks that arise because Congress is investigating.
“They operate in the court of public opinion. Who are those third parties that might be amplifying this? What is that specific risk that exists because Congress cares about us? And what’s our fact pattern…our narrative?” she said. “Is there any alignment between what the Congress is looking for in our actions or activities?” and is there “internal awareness of what people were saying to the administration?”
Moreover, a company’s general counsel, regardless of size, “might not be fully aware of conversations that were happening or reasons why things were happening, and you have to do due diligence.”
And the new wave of freshman lawmakers will likely want to make a splash, Moore said.
“You’re going to have different personalities brought to bear…House Oversight is aggressive. It’s going to be populated with freshmen that want to show a win…they want to use social media to amplify their tough questioning,” she said.
“The goal for Democrats is going to be ‘how do we coordinate and not step on each other,’ but the tension is going to be, ‘this needs to be investigated and I want to do it now and I’ve got this pressure to do it now.’”
‘A mixed bag’ for Golden Dome
The new Congress may also force the Pentagon to make tough choices about what to spend money on—and work more collaboratively across the aisle to secure funding.
“There’ll be a lot of pressure to work with Democrats, particularly with the Pentagon. The current team has not been very good at that. In fact, they’ve been quite outspoken in their contempt for Congress. But now, if they want to get any bills through, they’re going to have to talk to Democrats and make deals,” Cancian said. “That will add pressure to get a new team in there…because they need a team in there who can deal with the Democrats.”
And while missile defense, like munitions, can be a bipartisan issue, parts of the Trump administration’s Golden Dome effort could see more scrutiny under a Democrat-led Congress.
“It’s kind of a mixed bag. Some portions of Golden Dome, before it was called Golden Dome, were already well underway under the Biden administration—missile interceptors, space-based tracking, space-based communications to support connecting the interceptors and the sensors. So there’s generally broad support for that,” McDougall said.
But “implementation of their space-based interceptor layer, that’s one of the controversial areas where Congress could put up some roadblocks. And we’ve already seen some pretty big contract movement on that space-based interceptor layer.”
Probing Golden Dome’s space-based interceptor layer could bring SpaceX, which is run by Elon Musk, under the Congressional microscope.
“SpaceX’s involvement at such a large scale could be something that lawmakers will want to examine further,” McDougall said. “Democrats are going to have a much closer eye on some of that work because they’ve received a couple real big contracts for their space-based air moving target indicator, and then their space data network. And now those are part of the broad sensing layer and communications layer that has already been worked on.”
