Rep. Khanna Proposes Reallocating Defense Spending Toward Domestic Economic Programs

Representative Ro Khanna, the California Democrat who represents the heart of Silicon Valley, has spent the past two years building a policy framework he calls "New Economic Patriotism" — an argument that the United States can simultaneously maintain military superiority and reverse decades of domestic industrial decline, but only by redirecting tens of billions in Pentagon spending away from weapon systems he considers redundant or overpriced [1].

The proposal sits at the intersection of defense policy, industrial strategy, and progressive economics. And while proposals to cut military spending have a long, mostly unsuccessful history in Congress, Khanna's version arrives at a moment when the defense budget is pushing toward $1 trillion annually, bipartisan concern about manufacturing decline is at a peak, and both parties are claiming the mantle of "economic patriotism" [2].

What Khanna Actually Proposes to Cut

Khanna's defense spending reductions target five specific weapon programs, with savings estimated over a ten-year window [1][3]:

• F-35 Joint Strike Fighter: Reduce new acquisitions and substitute upgraded versions of existing aircraft, saving approximately $80 billion over a decade.
• Ground Based Strategic Deterrent (GBSD): Extend the life of the current Minuteman III intercontinental ballistic missiles instead of developing their replacement, saving roughly $40 billion.
• Long-Range Standoff (LRSO) missile: Replace with modern conventional cruise missiles, saving $12.5 billion.
• B-1B bomber retirement: Phase out the aging bomber now that the B-21 Raider is entering service, saving about $8 billion.
• Low-yield nuclear warhead development: Cancel the program, saving $6.5 billion.

Source: Rep. Khanna Office / Hoover Institution Speech

Data as of Jun 1, 2025CSV

The total comes to approximately $147 billion over ten years — or roughly $14.7 billion per year. Against the FY2024 National Defense Authorization Act of $886 billion, that annual figure represents about 1.7% of the defense budget [4]. Against the FY2026 Pentagon request of $892.6 billion in base budget authority (or $961.6 billion including supplemental funding), the percentage is slightly lower [5].

Khanna has also called for reviewing more than 800 overseas military bases, citing former Chairman of the Joint Chiefs General Mark Milley's assessment that the U.S. maintains "too much infrastructure overseas" [1]. No specific dollar figure has been attached to base closures, though prior BRAC (Base Realignment and Closure) rounds have produced savings in the tens of billions [6].

His broader Progressive Deficit Reduction Plan, unveiled in June 2025, proposed roughly $1 trillion in military modernization and contracting reform savings over a decade — a much larger figure that includes procurement reform beyond specific weapon system cuts [7].

Where the Money Would Go

Khanna's domestic investment agenda spans several categories [1][7][8]:

Manufacturing and industrial policy: A proposed National Development Strategy and Coordination Act would create a cabinet-level committee to direct investment into domestic manufacturing. Khanna has advocated expanding the CHIPS and Science Act model — which allocated $280 billion for semiconductor manufacturing — to aluminum, steel, paper, microelectronics, advanced auto parts, and climate technologies [3]. The legislation would give the Federal Financing Bank $20 billion to supplement federal lending programs [8].

Education: Khanna has co-sponsored Senator Bernie Sanders's College For All Act, which would eliminate tuition at public colleges [8]. He has also called for increased investment in primary and secondary education.

Healthcare, housing, and childcare: The deficit reduction plan identifies these as priority areas, funded through a combination of defense savings, tax increases on corporations and high-income individuals, and Medicare reform [7].

Emerging technology: Khanna argues the Pentagon should shift investment toward cyber warfare, biotechnology, artificial intelligence, quantum computing, and space capabilities — areas he says matter more to modern deterrence than legacy platforms [1].

The International Spending Context

The United States spent approximately 3.4% of GDP on defense in 2024, according to SIPRI data — more than any other major Western democracy and roughly double the percentage spent by most NATO allies [9].

Source: SIPRI Military Expenditure Database

Data as of Apr 1, 2025CSV

South Korea, which faces an immediate land border threat from North Korea, spent 2.6% of GDP on defense. Germany spent 1.9%, though it has pledged to increase spending. The United Kingdom spent 2.3%, and France 1.9% [9]. Russia, with a wartime economy, allocated 6.8% of GDP to defense.

In absolute terms, federal defense consumption expenditures and gross investment reached $1,159 billion (annualized) as of October 2025, up 3.3% year-over-year [10].

Source: FRED / Federal Reserve

Data as of Oct 1, 2025CSV

Khanna's argument is that the U.S. can maintain spending well above allies like Germany and South Korea while still redirecting $14-15 billion annually toward domestic programs. Cutting his proposed $147 billion over a decade would still leave the U.S. spending more than twice the combined military budgets of Russia and China, by his accounting [1].

The Jobs Question

The programs Khanna targets are not abstractions — they support hundreds of thousands of workers concentrated in specific congressional districts. The F-35 program alone supports more than 254,000 direct and indirect jobs through a supply chain of over 2,100 suppliers, including nearly 1,000 small businesses, and generates an estimated $72-79 billion in annual economic impact [11]. The program's primary assembly takes place at Lockheed Martin's facility in Fort Worth, Texas, with supplier jobs spread across all 50 states.

The GBSD missile replacement program, built by Northrop Grumman, similarly supports jobs in multiple states.

Evidence from prior BRAC rounds offers a mixed picture on worker transitions. According to Congressional Research Service data, across previous base closure rounds, more than 75% of civilian jobs at bases closed for at least two years were eventually replaced [6]. In some cases, redeveloped sites far exceeded original employment — one former military installation reached 176% of its pre-closure job levels [6]. However, these transitions often took years and required significant federal assistance through programs like the Office of Economic Adjustment and Community Development Block Grants.

A critical question is whether defense workers can transition into the domestic sectors Khanna proposes to fund. Research from the Political Economy Research Institute at the University of Massachusetts Amherst found that defense spending creates about 6.9 direct and indirect jobs per $1 million spent, while the same amount spent on elementary and secondary education creates 19.2 jobs [12]. Healthcare spending produces 84% more jobs than military spending, and infrastructure and clean energy produce 24% to 64% more [12].

These figures suggest that dollar-for-dollar, Khanna's proposed reallocation could create more total jobs — but that does not address whether the specific workers displaced from defense manufacturing would fill those positions. Defense industry workers earned an average of $115,000 in 2025, roughly 56% above the national average [13]. Many education and healthcare jobs pay significantly less, and the skills mismatch between aerospace engineering and, say, classroom teaching is substantial.

Legal and Treaty Constraints

Congress has broad constitutional authority over military spending through the Appropriations Clause. There is no statutory or treaty obligation that mandates a specific level of U.S. defense spending. NATO's 2% of GDP spending guideline — recently raised to a 5% target by 2035 at the 2025 Hague Summit — is a political pledge, not a legally binding commitment [14][15]. The United States already far exceeds these thresholds.

That said, specific weapon programs are authorized through the National Defense Authorization Act, and major cuts require overcoming both the House and Senate Armed Services Committees, where defense industry interests have significant influence. The Appropriations Committees exercise separate control over actual funding levels. Unilateral executive redirection of Pentagon funds is constrained by the Impoundment Control Act, but congressional reallocation through the normal legislative process faces no constitutional barrier — only political ones [14].

The Case That Defense Is Already Underfunded

Critics of Khanna's proposal argue the military cannot absorb cuts of any size. The Heritage Foundation's 2026 Index of U.S. Military Strength rates overall U.S. military posture as "Marginal" — meaning the force faces "significant risk of being unable to meet the demands of a single major protracted regional conflict" [16].

Service-specific ratings paint a granular picture [16]:

• Army: Marginal. Capacity rated "weak" at 62% of the force needed for two major conflicts simultaneously.
• Navy: Weak. The fleet is projected to shrink to 280 ships by 2027 against a stated need of roughly 400.
• Air Force: Weak. Only two-thirds of required active-duty combat aircraft are available, and the service describes itself as "smaller, older, and less ready than at any point in its history."
• Marine Corps: Strong, thanks to modernization and reorganization efforts.
• Space Force: Marginal. Has not kept pace with rapidly advancing threats despite a 250% budget increase since inception.
• Strategic Nuclear Forces: Strong, though plutonium pit production and Sentinel missile program concerns exist.

The Sentinel program — the Air Force's name for the GBSD that Khanna proposes canceling — is one of the Heritage Foundation's specific concerns. Proponents argue that the Minuteman III, first deployed in 1970, cannot be indefinitely life-extended and that the Sentinel replacement is essential to maintaining nuclear deterrence against peer adversaries [16].

The broader strategic argument is that the U.S. faces simultaneous challenges from China's military buildup in the Indo-Pacific, Russia's war in Ukraine and threats to NATO's eastern flank, Iran's regional proxy networks, and North Korea's expanding nuclear arsenal. The Joint Chiefs have consistently testified that the military needs sustained real growth in spending to address these concurrent threats [17].

How This Compares to Prior Progressive Proposals

Khanna's approach is not the first progressive attempt to redirect Pentagon spending, and the fate of earlier efforts is instructive.

In July 2020, Senator Bernie Sanders introduced an amendment to the NDAA that would have cut the $740.5 billion Pentagon budget by 10% — approximately $74 billion — and redirected the savings to a domestic grant program for communities with poverty rates above 25% [18]. The amendment secured 23 Senate votes (roughly half the Democratic caucus) but failed 23-77. A companion House amendment by Representatives Mark Pocan and Barbara Lee attracted 93 votes — 40% of the House Democratic caucus — but also failed [19].

The Congressional Progressive Caucus has introduced recurring "People's Budget" alternatives proposing significant defense reductions, none of which have advanced to a floor vote.

Khanna's "New Economic Patriotism" differs from these predecessors in framing and specificity. Sanders's amendment proposed an across-the-board percentage cut; Khanna names individual weapon systems. Sanders framed the issue primarily as anti-poverty spending; Khanna frames it as industrial competitiveness with China [3]. Khanna also explicitly endorses maintaining U.S. military superiority — he argues the issue is allocation, not spending levels — while Sanders's framing was more openly skeptical of the military's overall budget [18].

Whether this distinction makes a practical difference in vote-counting remains untested. Khanna cast the sole "no" vote against the FY2024 NDAA, suggesting his position currently has even less congressional support than Sanders's 2020 amendment attracted [2].

The Silicon Valley Contradiction

Khanna represents California's 17th congressional district, home to Apple, Intel, LinkedIn, and Yahoo — but also adjacent to significant defense-technology activity. Lockheed Martin, Northrop Grumman, and numerous defense-adjacent technology firms operate in the broader Bay Area. Silicon Valley's tech sector increasingly overlaps with defense through artificial intelligence, cybersecurity, and autonomous systems contracts [20].

Khanna has sought to navigate this tension in several ways. He founded the No PAC Caucus and does not accept contributions from lobbyists or Political Action Committees [20]. His campaign funding comes overwhelmingly from individual donors, primarily in the technology sector. He has also advocated for increasing Pentagon investment in AI, cyber, and quantum computing — areas where his district's companies stand to benefit — even as he proposes cutting legacy hardware programs [1][3].

This creates a nuanced rather than straightforward contradiction: Khanna is not proposing to reduce defense technology spending broadly, but to shift it from traditional hardware manufacturers (Lockheed Martin's F-35 production in Fort Worth, Northrop Grumman's GBSD work) toward software-intensive capabilities more aligned with Silicon Valley's strengths. Critics could frame this as representing his district's economic interests under the banner of reform.

Khanna's supporters counter that his opposition to the overall NDAA — including programs that benefit Bay Area contractors — demonstrates independence from local economic interests [2].

The Economic Modeling Gap

One significant limitation in the debate is the absence of independent scoring. Khanna's $147 billion in weapon-system savings are derived from his office's estimates and think-tank analyses, not from a Congressional Budget Office score [7]. The CBO has scored individual weapon programs — it estimated the Sentinel ICBM program at $141 billion in 2024, a 81% cost overrun from original estimates — but has not evaluated Khanna's specific package of cuts and reallocations as a unified proposal [16].

The broader $12 trillion deficit reduction plan similarly lacks CBO scoring, relying instead on estimates from the Khanna office that combine defense savings with revenue increases from corporate and billionaire taxation ($6.7 trillion), Social Security cap removal ($2.9 trillion), and Medicare reforms ($1 trillion) [7].

Without independent scoring, claims about job creation from domestic reallocation remain projections. The University of Massachusetts research on jobs-per-dollar is peer-reviewed but based on input-output modeling that carries its own assumptions and limitations [12]. RAND Corporation research on defense spending multipliers found they are generally below 1.0 — meaning a dollar of defense spending produces less than a dollar of GDP growth — but also noted that the relationship between defense spending and economic growth varies significantly depending on context and time horizon [21].

What Happens Next

Khanna's proposals have not been introduced as standalone legislation with co-sponsors in the current Congress. They exist as a policy framework articulated through speeches, op-eds, and the deficit reduction plan. The FY2026 defense budget debate is underway, with the Trump administration requesting $892.6 billion in base budget authority — and proposing to reach total national defense spending above $1 trillion through supplemental measures [5][22].

The political headwinds are strong. Defense spending increases have bipartisan support, and the administration's proposed budget would pair a $1.5 trillion defense package with cuts to housing, social services, and healthcare — the opposite direction from what Khanna advocates [22]. The question is whether "New Economic Patriotism" can attract support beyond the progressive caucus by framing defense reallocation as industrial strategy rather than anti-militarism — a distinction that previous efforts failed to establish convincingly enough to shift votes.