The Trump Administration's recent security budget deal of $716 billion will reportedly allocate $470 billion to the Pentagon. The new defense budget represents a 20% increase over the Obama administration. Purchases such as aircraft, ships, and appliances for classified programs will be covered under the new budget. The allotment for new tanks and military vehicles have increased by 59 percent, while the smaller percentages of the new budget are reserved for space initiatives. The hefty investment in U.S Defense for the 2019 year will be the first defense-related financial plan for President Trump, whose 2017 campaign was heavily focused on national security.
Such aspirations were detailed during the announcement of the new defense budget from the White House, which asserts that the U.S. "faces an increasingly competitive and dangerous international security environment, characterized by the reemergence of great power competition with China and Russia [and] dangerous new technologies." According to the White House, plans to execute such a large budget are "needed to compete with great powers and others, deter conflict, and win the nation's wars."
According to the new tax plan, about 26,000 new troops will be drafted for the fiscal year of 2019. The budget announcement has garnered both praise and criticism. Prior to the announcement, Deputy Secretary of State John Sullivan expressed his acknowledgement of the criticism surrounding a defense budget increase, saying that he thinks the policy "acknowledges that there isn't a military solution or a complete solution" but that security interests in other regions are "significant enough." In contrast, Republican Senator Rand Paul argued that there are billions of dollars "just being thrown down a hatch" for defense plans in regions such as Afghanistan, where American troops have been located for 17 years.
The Pentagon is not the only one receiving benefits out of the new budget deal - a number of defense industrial corporations are also projected to have increased sales. Companies such as Lockheed Martin (NYSE: LMT) and Raytheon (NYSE: RTN) will work on new defense projects. Both companies rose at least 1.5 percent in stock price following the announcement. Likewise, the aircraft manufacturer Boeing (NYSE: BA) will have increased sales for its defense department, given the expected value of future purchases from them are approximately $3.6 billion with plans to reach $20 billion by the year 2023. Likewise, Aerospace company United Technologies Aerospace Systems (NYSE: UTX) have been given a $2.5 billion contract.
Along with the recent tax reform that has contributed to a new stimulation in the job market, additional funding for U.S. defense manufacturers will also lead to a growth in job growth. Raytheon plans to add 2,000 jobs at its missile plants, while Lockheed's initiative for the next 3 years is adding 1,800 employees.