WASHINGTON — With Congress headed on break, a continuing resolution in place through Dec. 11 and no hope for a near-term defense supplemental, Defense Department planners are scrambling to stretch available funds and make it through the end of the fiscal year.
The issue took center stage this week, thanks to a Thursday statement from Rep. Rosa DeLauro, the top Democrat on the House Appropriations Committee, where she said the Pentagon is making a “secretive attempt to siphon” billions of dollars away from the National Institutes of Health through an “interagency agreement.”
“These funds were provided for lifesaving medical research, not as extra money for the Department of Defense,” she added. “It is no secret that the Department of Defense is facing enormous financial pressure because of President Trump’s war of choice with Iran. But the Trump administration cannot make American patients, families, and scientists pay the price.”
In a statement to NOTUS, NIH said the proposed agreement was around a collaboration on medical technologies, and notably, neither NIH or DeLauro said a deal was ever consummated. Appropriations Committee chairman Tom Cole, R-Okla., said in a statement late Friday that “not one dollar has been transferred from the NIH to the Department of War.”
DeLauro’s office did not respond to a request for additional details, and neither did DoD and the Office of Management and Budget. DoD also did not respond to multiple requests for comment about ongoing FY26 budget pressures.
Regardless of the specifics around the NIH claims, the fact the Pentagon’s budget is under stress is no secret, thanks to a mix of six months of military operations against Iran, National Guard deployments inside the US, increased fuel costs, end-strength overages and the lack of full reimbursement from the Department of Homeland Security for DoD border operations.
The White House in June sent lawmakers a supplemental spending request that included $67.1 billion in defense funds, though Defense Secretary Pete Hegseth later said that he expects “certain aspects” of the Iran war to cost $37.5 billion through the end of September. However, with Congress effectively shuttered until after November’s elections, that supplemental isn’t coming anytime soon, if it ever gets done.
Finding outside sources of money and putting them towards the Pentagon is just one of a handful of options available to defense budget planners, a pair of former defense officials told Breaking Defense. But none of them, they said, are pretty.
“Their problem right now is the operating costs that they didn’t plan for, and that has to be solved by 26 days from now,” a former senior defense official granted anonymity to speak freely, told Breaking Defense this week.
“If I were still in the building, I would say, ‘I’m probably screwed now.’”
Viable Options And Roadblocks
Both the former senior official and Elaine McCusker, an acting comptroller during the first Trump administration, spoke to Breaking Defense before DeLauro’s statement came out. However, they broadly laid out some of the available options to get operations and maintenance (O&M) funds lined up.
One option is via DoD requests to reprogram money between coffers. Broadly speaking, Pentagon officials have more legal wiggle room to reshuffle O&M as they see fit — cancelling training exercises, for example, is fully within the department’s decision space.
In July, US Pacific Air Forces Commander Gen. Kevin Schneider warned that the military would do just that and was reevaluating its upcoming exercise schedule to help preserve “readiness” in the face of increased commitments around the globe, including the Middle East.
Such moves are likely more wide-spread, especially for the Navy given its operational tempo in the Middle East.
“[You] can’t really let the services go ahead, go full speed ahead, on training and stuff, on the 45 percent chance that more money will show up because we’ll be broke in the operating accounts if we don’t slow down,” the former defense official added.
Another option is to seek Congressional approval to move dollars between accounts. In early July, for example, the Pentagon asked Congress for permission to reroute roughly $4.3 billion from FY26 coffers in order to pay for “higher priority items,” including increased personnel and operational costs around the globe.
Lawmakers on the appropriations committees did not respond to questions about the status of this reprogramming request, but $4.3 billion is just a fraction of Hegseth’s $37.5 billion Iran estimate and the $67.1 billion requested for defense in the supplemental ask.
“Reprogramming requests submitted to Congress, if approved, would help with some immediate cash flow challenges, particularly in the military personnel account, but the sources to fund these reprogramming actions are not good and will need replenished as well,” McCusker explained.
“The Pentagon is close to the cap on general transfer authority (GTA),” she added. “If it does not get supplemental relief, it will have to defer maintenance and potentially stall acceleration of modernization and procurement. Some bills could carry into next year.”
But given the Pentagon is in the middle of a major modernization push, and how officials always like to note that delayed modernization usually costs more down the road, cutting technology buys to fund O&M isn’t ideal.
Another option on the table to cut costs by furloughing civilian workers or cutting back their hours.
“You could tell civilians to only work three days a week, but the question is how much you can do this late in the year that would really move the needle,” the former senior defense official added. “You could also slow purchases of things that you normally buy with O&M funds and hope for relief later.”
Then there are more creative “maneuvers,” like using funds from the $152 billion reconciliation pot to pay the bills, the former senior defense official said. While that money has been earmarked, the Pentagon could shift funding around, similar to how the department diverted $3.8 billion to pay for the wall along the southern border in 2020.
Notably, the Pentagon has to get its reconciliation funding on contract this year or lose roughly 8.3 percent of its funds. In theory, that means the department could do some acrobatics and shift money from procurement to O&M, then shift reconciliation to cover those holes in procurement — but eventually, something gets cut.
While some of DoD’s funding pressure could abate on Oct. 1 when FY27 starts, it still has funds to backfill and will likely be under a continuing resolution until early December.
“The financial challenges will only get worse until a final appropriations bill and supplemental are passed,” McCusker said. “Always wasteful and disruptive, a CR will be particularly destructive this year as only the 2026 base budget will extend. This means an immediate budget reduction of more than $150 billion or about $400 million per day compared to what was requested and planned for 2027.”