Inside the NDAA Markup

The House Armed Services Committee spent all of Thursday, June 4th, marking up the National Defense Authorization Act, and what happened inside that room was anything but routine. TCS Policy Analyst Gabe Murphy was there for the debate, and he joins Steve Ellis to break down an unprecedented fight over the Pentagon's $1.14 trillion top line, a bipartisan push on military right to repair that actually passed by voice vote, and a series of amendments on Iran war funding that exposed just how politically charged this budget season has become.

Transcript

announcer (00:02):

Welcome to Budget Watchdog All Federal, the podcast dedicated to making sense of the budget, spending, and tax issues facing the nation. Cut through the partisan rhetoric and talking points for the facts about what's being talked about, bandied about, and pushed to Washington. Brought to you by taxpayers for common sense. And now the host of Budget Watchdog AF. TCS President Steve Ellis.

Steve Ellis (00:40):

Welcome to all American taxpayers seeking common sense. You've made it to the right place. For 30 years, TCS, that's taxpayers for common sense, has served as an independent nonpartisan budget watchdog group based in Washington, DC. We believe in fiscal policy for America that is based on facts. We believe in transparency and accountability because no matter where you are on the political spectrum, no one wants to see their tax dollars wasted. It's June 2026. The House just voted this week 215 to 208 to demand that President Trump withdraw from hostilities with Iran. Four Republicans crossed the aisle to get it done. The resolution isn't going to end the war on its own, but what it did do is put Congress on the record. The Senate has passed a similar measure as well. At the same time, budget season is now in full swing, so it's time to check back in on the president's $1.5 trillion, that's right, $1.5 trillion Pentagon budget request.

(01:35):

The House Armed Services Committee just spent all of yesterday marking up the National Defense Authorization Act or NDAA, the Pentagon's annual authorization bill and they did it against the backdrop of the Iran war, the cost of which are still piling up. Here to help us understand those costs and how they're making their way into the debate over the Pentagon's astronomical top line request is TCS Policy Analyst Gabe Murphy. Gabe, welcome back to the podcast.

Gabe Murphy (02:02):

Thanks for having me on, Steve.

Steve Ellis (02:03):

So Gabe, you spent a good chunk of your day Thursday in the Rayburn House Office Building, watching the debates unfold in the House Armed Services Committee. I don't think you stuck around until midnight when lawmakers ultimately advanced the bill audit committee. Let's start with the biggest headline as you see it.

Gabe Murphy (02:19):

Yeah, Steve. Well, I was there for about the first four hours or so and then my eyes started to gloss over on some of this because some of the debates were not honest debates to be honest. But that said, there was a lot of big news coming out of this markup. And I think for me, one of the biggest takeaways was an unprecedented fight over the Pentagon's top line.

Steve Ellis (02:43):

All right, Gabe, don't make our listeners wait. What was the top line?

Gabe Murphy (02:46):

Well, so in this National Defense Authorization Act or NDAA, as we're going to keep calling it here, the top line they set in the mark of the bill, the chairman's mark was $1.14 trillion. Now, this is still part and parcel to President Trump's request for 1.5 trillion because that was their request for the base budget and they're hinging the other 350 billion to get to 1.5 on reconciliation.

Steve Ellis (03:13):

So Gabe, what was this amendment to this battle royale to trim the chop line?

Gabe Murphy (03:19):

Well, Representative Moulton, that's Seth Moulton, Democrat of Massachusetts, offered an amendment to cut $150 billion from this top line and that would bring the Pentagon's base budget right back under a trillion dollars. This amendment exempted personnel, health, and military construction accounts and we weren't sure exactly how many lawmakers were going to ultimately support it. I mean, normally in this committee, you don't see a lot of support for cutting the Pentagon budget. Ultimately, 11 different members spoke out in support of this amendment on the floor, which I think was a really strong indication of just how important of an issue this is this year. And ultimately, all but two Democrats, Representatives Davis and Golden, voted for the amendment. Unfortunately, all Republicans voted against it.

Steve Ellis (04:04):

But you watch out AF faithful, you should know this, that the people who are going to get on the Armed Services Committee are the people who are the most supportive of the Pentagon generally. And so that's part of why as opposed to other committees which are much more partisan that this is actually a pretty good showing while the vote ultimately failed is still a pretty good showing, right?

Gabe Murphy (04:23):

Yeah. I mean, all but two Democrats on this committee supporting a cut of $150 billion is a pretty huge deal. And I think importantly, it sends a signal to the rest of Congress, to appropriators as this budget process moves forward. To be clear though, I do think this is not a reflection that everyone on this committee is suddenly becoming more radical. This is a reflection of how radical the budget request is. Less we forget, cutting $150 billion is still a $100 billion increase over last year's base budget of 900 billion.

Steve Ellis (04:56):

You're right, not radical, Gabe, because even that cut of $150 billion would still be giving the Pentagon a raise.

Gabe Murphy (05:04):

Right. I mean, lest we forget cutting $150 billion from the $1.14 trillion top line, that's still a $100 billion increase roughly over last year's base budget of 900 billion.

Steve Ellis (05:17):

So what were the arguments lawmakers were making in support of this cut, Gabe?

Gabe Murphy (05:22):

Well, Steve, I think in light of other cuts in this budget to non-defense discretionary spending, domestic programs that many folks rely on, healthcare funding, funding for things like SNAP. I think given some of those cuts from the one big beautiful bill last year and just given the general affordability crisis that folks are feeling right now with gas prices at the pump elevated due to the Iran war, I do think a lot of folks on committee tied this top line to the underfunding of those more human needs. And I think that was a major point of focus. At the same time, a lot of Democrats were laser focused on the fiscal implications of this, which is, as our listeners will know, our primary focus. And before the vote on the top line cut amendment, ranking Member Smith, that's Adam Smith, Democrat of Washington, offered an amendment to raise taxes on corporations and the ultra wealthy to pay for this enormous budget.

(06:26):

He ultimately withdrew it because it was out of the committee's jurisdiction, but he was making the point that if lawmakers think we need a $1.5 trillion Pentagon budget, they shouldn't pay for it by digging us even deeper into debt. And he then went on to support the amendment to cut the 150 billion.

Steve Ellis (06:44):

Certainly that's something that we want to see as things paid for. All right, Gabe, what happened on the final vote? The vote on whether or not to advance the NDAA out of committee

Gabe Murphy (06:55):

Well, unfortunately though not surprisingly, some who supported the cut still voted for the underlying bill. And that's disappointing because at the end of the day, that does mean they're endorsing the number that they actually voted against earlier that day. However, and this is a big however, this was an unprecedented showing of opposition to this top line in terms of the number of no votes at a committee. Ultimately, 12 Democrats voted no. Normally it's like two. Representatives Khana and Jacobs who often get booed in committee for their votes. So I think that is a sign of the times, a sign that a lot of lawmakers are not willing to just green light this massive budget increase.

Steve Ellis (07:42):

Wow. Yeah. I mean, normally the NDA passes out of committee as you pointed out almost unanimously. So this is a rare rebuke, although albeit along partisan lines.

Gabe Murphy (07:52):

Right. But while these votes were partisan and largely that this isn't a partisan issue for taxpayers and I think lawmakers are starting to recognize that. The Washington Post had a poll recently showed that 65% of Americans oppose increase in the Pentagon budget from a trillion dollars to $1.5 trillion. Republican lawmakers are growing increasingly vocal in their concern over the Iran war as evidence through enough Republicans joining with Democrats to pass war powers resolutions now out of both the Senate and just this week, the House. These are war powers resolutions to direct the end of hostilities. We've also heard Republican appropriators challenging the budget on process, voicing concerns about how the request relies on $350 billion from a reconciliation package that may or may not ever materialize and that leads to far worse oversight. And I think as for the top line, I saw Senator Rand Paul, a Republican of Kentucky on TV the other day, saying that he'd be totally fine with $1.5 trillion for the Pentagon if money grew on trees.

Steve Ellis (08:55):

Which we all know they don't and it is a radical jump in the Pentagon budget request. So Gabe, as the fight moves from the Armed Services Committee because Budget Watchage have faithful, as you know, the NDAA is a policy bill. It may set the top line, but then the appropriators actually have to write to that however much they want. And as this fight moves from the Armed Services Committee to the appropriations committees and then to the floor of each chamber, we may see some consternation on both sides of the aisle given this Pentagon increase would be largely financed by adding to the national debt because as I pointed out before, the people on the Armed Services Committees, both in the House and the Senate are people who are more generally Pentagon aligned. And once you get to the rank and file, there may be some more fiscal concerns about this dramatic debt financed increase in Pentagon spending.

Gabe Murphy (09:52):

Right. And yeah, to be clear, the folks on the appropriations committee also tend to be fairly Pentagon aligned. However, I do think it sends a really good signal for those folks to see this from the Armed Services Committees heading into the appropriations, markups, and your right, Steve, the rank and file, that's a whole different story. So we've been raising these concerns about the fiscal implications of this budget with lawmakers. Along with National Taxpayers Union and Taxpayers Protection Alliance, we sent a letter to the relevant committees urging lawmakers to reject the top line and vote against the NDAA if the top line wasn't lowered because you can't budget for national security in the long run if you keep digging the nation deeper and deeper into debt. I mean, if you look at interest payments on the debt, right now they're about as large as the Pentagon budget, not accounting for this proposed 45% increase.

(10:44):

So giving an extra $500 billion to the only federal agency that's never passed an audit, it's not exactly our idea of fiscal responsibility.

Steve Ellis (10:51):

Okay, Gabe, shifting gears, what were some of the other votes that you were watching closely during the markup?

Gabe Murphy (10:57):

Well, probably the single biggest other issue I was watching here was something called Warrior Right to Repair. Now we've written about this before. We've done podcasts on it before. In fact, it's a pretty common sense issue. Basically, we think that the military should be able to repair its own equipment, plain and simple. Currently, that is not guaranteed. A lot of contracts don't have provisions that require contractors to make sure that the military has access to the tools and data they need to repair equipment, that leads to massive delays in repairs. It leads to safety concerns for troops on the front lines and it's costly for taxpayers because these contractors charge quite a lot for those sustainment contracts. So there was an amendment offered bipartisan amendment offered by Representatives Goodlander and Harrigan that essentially would've codified military right to repair. And after a vigorous debate, this actually passed by voice vote and that's shocking because lawmakers actually had a real exchange of ideas on this one, not just a bunch of partisan posturing.

(12:11):

And lo and behold, right to repair is so common sense that the chairman who argued against the amendment read the room and allowed passage on a voice vote. That's significant. I mean, normally in that scenario, the chair would side with the majority, even if it sounded like the minority had it and then the minority would request a recorded vote.

Steve Ellis (12:31):

Yeah. We just have to watch to make sure what gets into the final version. They kind of knife right to repair in the back last NDAA. And so that's definitely an issue that you have to dig into the weeds to understand that better. So we'll keep an eye on that and report back to you Budget Watchdog AF Faithful. What were some of the other amendments there, Gabe?

Gabe Murphy (12:53):

Well, Representative Chris Deluzio had an amendment to codify an executive order on Pentagon contractors and their stock buybacks. They do this thing where they like to buy back their own stock. It sort of boosts shareholder profits, boost executive compensation since they have a lot of shares of their own stock. And they're doing this at a time when the Pentagon has been funneling money towards their research, of course, but also industrial based needs, workforce development, a lot of things that most businesses invest in on their own without help from the government. So this executive order, which we strongly support does need more teeth and this was an effort to codify that. However, the amendment was ultimately withdrawn due to jurisdictional issues. So it was really more of a show of support at this stage than an effort to pass legislation. But I do think it signals that there will be ongoing efforts on this front.

(13:46):

Another issue was an amendment offered by Representative Ryan who actually won a voice vote and I don't think there was any vocal opposition in this voice vote to force Secretary Hegseth to explain all of his firings of senior military officers and to do so within five days. So that's a pretty strong bipartisan rebuke right there.

Steve Ellis (14:06):

Right. Five days though from when the NDAA passage. So that'll be probably late this year. But anyway, I get it. I get it.

Gabe Murphy (14:14):

Yes. Yeah, certainly that's an important caveat, Steve. So just a couple more amendments. I mean, obviously this went on all day, so we could talk all day about all the different amendments that got votes and many of them were very interesting, but this was an important one. There was a vote prohibiting the use of funds for the Iran war. This was offered by Representative Ryan. It failed almost entirely on party lines with one Democrat and Representative Davis breaking ranks.

Steve Ellis (14:40):

And that wasn't the only vote on the Iran War funding, right?

Gabe Murphy (14:43):

No, I mean, there were several, but another one that I want to flag is an amendment by Representative Moulton, the same representative who led the top line cut. And this amendment simply required a report detailing the cost of the Iran war. This broke entirely on party lines, which is pretty frustrating because as Representative Crow who supported the amendment eloquently put it, the only reason to vote against this amendment is that you don't want to know what the cost of this war is. And that of course begs the question of why.

Steve Ellis (15:12):

Yeah, Gabe, the war is casting a pretty big political shadow in Washington right now and around the country folks are paying a lot more at the pump mostly because of the issues with the closure of the Straits of Hermus. The National Priorities Project I saw recently estimated that consumers paid an extra $40 billion at the pump from the start of the war through about mid-May and that comes out to about $300 extra per household, which is real money. We also published an issue brief recently that looked at the direct and indirect costs of the Iran war. What can you tell us more about that game?

Gabe Murphy (15:51):

Well, Steve, we looked at a number of costs as far as direct costs of the conflict. Pentagon, as of May 12th, told Congress that it was $29 billion. However, once Congress started probing that a little more, it became clear that they didn't include the damage to bases, which is extensive. I think more than a dozen bases have been damaged in this conflict and there were likely other emissions as well. Now, independent estimates have ranged and looked at, depending on what they're looking at and on the timeline, but the most comprehensive one that we saw estimated $71.8 billion for this conflict over the first 60 days of the war. And we're now over 90 days, those costs are certainly higher by now.

Steve Ellis (16:36):

Right. And although there has been, not holding entirely, but there has been a ceasefire. So it's not like we're shooting munitions at the same rate. But nevertheless, the point is well taken that the costs are racking up and maybe it's turning over a little bit slower than it was at the beginning, but it's still costly. And obviously troops, we're still deploying them, we're still feeding them, we're still dealing with all those issues so that the costs are piling up.

Gabe Murphy (17:02):

And the ceasefire doesn't appear to be going particularly well right now. I mean, last I heard Iran has stopped communicating with the US, at least for the moment. And while hostilities have not significantly ramped back up yet, that is a concerning prospect, I think, for everyone. So yes, I'm definitely worried about these costs continuing to rise.

Steve Ellis (17:22):

So that's the direct cost, Gabe. What about indirect? Well,

Gabe Murphy (17:25):

We looked at a variety of things. I mean, obviously folks know that with the closure of the Strait of Hormuz, the cost of fuel has gone way up, the cost of the pump has gone up. And believe it or not, the federal government also uses fuel and consumes a lot of fuel. So we looked at those federal government costs that are real cost to taxpayers based on federal fuel consumption and found that over a 78-day period, taxpayers had to spend an extra $1.19 billion, that's mostly on military aviation. So I think that was one cost that we looked at increased debt, increased interest payments due to that debt based on that more comprehensive $72 billion estimate, which is again, dated at this point. We looked at CBO's interest rate projections and estimated that additional interest payments on those debt finance war costs would cost taxpayers an extra $2.4 billion over the next year, or an extra $27 billion over the next decade.

(18:28):

But the costs are still rising, which means the additional cost of interest payments are still rising too.

Steve Ellis (18:34):

And there's other indirect costs. We're talking about housing and office space for military personnel that had their bases damaged, veterans benefits, emissions, and inflation is going to have an impact as well, right?

Gabe Murphy (18:47):

Yeah. I mean, inflation raises costs across the board. So I think we didn't necessarily put a number on all of these. Some of these are very difficult to estimate due to all the variables, but we wanted to flag that these are real costs that are going to come home to taxpayers sooner rather than later.

Steve Ellis (19:03):

So turning back to the markup for a minute here, Gabe, this one and a half trillion dollar Pentagon budget proposal surfaced before the war started. So it doesn't include funding for the war, right?

Gabe Murphy (19:15):

Well, that's a great question, Steve, and it has a complicated answer. The administration has said that the request does not include the cost of the Iran war. They've also talked about a supplemental funding package with a cost ranging anywhere from $50 billion to $200 billion, which we heard the Pentagon actually requested and then the White House never submitted that request. So that 200 billion was met with strong resistance. Frankly, all of this funding has been met with strong resistance given the fact that this war was never authorized by Congress. And I think it probably wouldn't pass if they vote on it while the war is ongoing at least because you can't fund an unauthorized war and then claim to be against it.

Steve Ellis (19:57):

Well, and to be clear, there are certainly some members of Congress that are not necessarily against this war and those people are in leadership positions. But I do think that the politics, it's going to be a lot easier to vote for something that sounds like it's resupplying or restocking the coffers of the Pentagon rather than funding an ongoing hostilities that are not very popular in this country. But there are some things in this budget though that could go towards that effort of restocking munitions and funding on this war, right?

Gabe Murphy (20:32):

That's right. Yeah. I mean, when the budget first came out, we looked at the increase in munition spending across the board and I think it was like 150% or something. It was a significant number. And then we looked at munitions specifically used in this war and it was an even higher increase in the 300% range. I think that's a pretty clear indication that there is some funding to address the use of munitions in this war in the base budget and they want the supplemental funding too, but I think this was probably an effort to hedge their bets. So it's really not possible to separate this war budget from the Iran war, particularly because voting for this massive increase would send a signal to the administration that it can continue waging unauthorized wars with impunity, but also because of the impact on people's finances. We heard from the president last month that he doesn't think about people's finances and that's all good and well, but lawmakers certainly do, particularly in election years.

Steve Ellis (21:29):

All right, Gabe, what happens next?

Gabe Murphy (21:31):

Well, there's a ongoing schedule that we're tracking very closely. So the Senate Armed Services Committee is marking up its version of the National Defense Authorization Act during the week of June 8th, that is a closed door set of hearings, which is pretty frustrating. I mean, this is our taxpayer dollars here that they're debating about and they're not even willing to televise that debate. Obviously, there are certain classified things that need to be discussed in the context of the Pentagon budget, but the House manages to do that separately and still have a public debate. It's pretty mysterious and strange that the Senate continues to have these closed door hearings. Now, as far as schedule, turning back to that, on June 11th, that same week that House Appropriations Subcommittee on Defense is having also a closed door markup on its portion of, well, really just on the Defense Appropriations Act.

(22:25):

I mean, there are 12 appropriations bills that the Appropriations Committee is supposed to pass each year. Then we move on to the full committee markup. The House Appropriations Committee will mark up the Defense Appropriations Act on June 24th. So that's a really important date coming up. And then we have yet to see when the Senate Appropriations Committee will do these markups and of course the floor votes are also unknown.

Steve Ellis (22:46):

Yeah. And it wouldn't be unheard of to have a continuing resolution and push it past the election either. So I would not at all be surprised about that. So wrapping this up, Gabe, what are some of the factors that are going to be at play on this, both the Iran War funding and on the NDAA?

Gabe Murphy (23:06):

Yeah. Well, I think there's a lot of unknowns out there, Steve. I mean, how this war continues to play out with the ceasefire potentially on the ropes at least, how the Iran supplemental is going to play out. We just don't know. It depends on timing and it depends on the context of what's happening in Iran. We also don't know how reconciliation is going to play out. I mean, we know that lawmakers are still pursuing this effort to fund $350 billion of the $1.5 trillion request through budget reconciliation. I've heard that the House is aiming to have floor votes in late July on that before the August recess and that would likely come before the appropriations bills get floor votes, but all of that could have an impact on where Congress lands on the top line request when they actually move into regular appropriations.

Steve Ellis (23:54):

And BudgetWatch.AFaithful, you should know that the reconciliation that we're talking about is what people are calling Budget Reconciliation 3.0, which is not to be confused with Reconciliation 2.0, which is making its way through Congress as we tape and that was the one that funded ICE and CBP Immigration and Customs. And so this would be another package that is targeted at the Pentagon, but so we'll have to see exactly how that plays out.

Gabe Murphy (24:24):

That's right, Steve. We'll have to see. And I just want to drive this point home though, turning back to this markup that happened this week that happened on Thursday. It is unprecedented for so many lawmakers on these committees to one, support a significant cut to the Pentagon's top line request and two, to vote no out of committee on final passage of this bill. And I think that should send a really strong signal as we've said to the rest of Congress that this is not a normal budget and I think that's how it should be approached.

Steve Ellis (24:56):

And it's not hard to think that there is some sort of gimmicking going on here where you have this $350 billion that's going to potentially go through reconciliation that may never materialize, but that makes that $1.14 trillion, which is this big boost in the Pentagon's budget look a lot smaller and more quote unquote reasonable when in reality it is a huge stretch and a huge increase in the Pentagon's top line. All right, Gabe, thanks for being here. Thanks for helping us sort through this mess. Of

Gabe Murphy (25:26):

Course, Steve, thanks for having me on. Well,

Steve Ellis (25:27):

There you have a budget watchdog AF faithful. Three months into the Iran war, lawmakers are showing some signs of life when it comes to reigning in runaway Pentagon spending and using their power of the purse to reassert their long lost war powers. This is the frequency, market on your dial, subscribe and share and know this. Taxpayers for common sense has your back America. We read the bills, monitor the year marks, and highlight those wasteful programs that poorly spend our money and shift long-term risk to taxpayers. We'll be back with a new episode soon. I hope you'll meet us right here to learn more.