- President Trump has delegated more authority to the Pentagon and shown a willingness to pitch U.S. arms sales abroad.
- Yet the president has not made good on his campaign pledge to end the defense sequester and submit a budget that would "rebuild our military."
- Still, defense stocks have outperformed the broad market in the year since Trump was elected.
President Donald Trump made a campaign promise to eliminate the defense sequester and submit a new budget that would "rebuild our military."
A year after the election, though, Trump has not made good on his campaign pledge to increase military spending and fully eliminate the defense sequester, or the automatic federal spending cuts mandated under the 2011 Budget Control Act. Getting rid of the budget caps will require at least 60 votes in the GOP-controlled Senate, or support of every Republican and eight Democratic senators.
Also, Trump's call for a Navy of up to 355 deployable ships — up from the current 278 — is delayed. His fiscal 2018 request unveiled in May didn't include a major buildup but only eight new vessels, part of his predecessor's plan.
During the campaign, Trump also complained about a shrinking Army and the Air Force flying old planes.
"They haven't yet come up with a budget that does much more than what President Obama was going to do but there's still hope that they will do so," said Dan Blumenthal, a resident fellow at the American Enterprise Institute, a Washington-based conservative think tank.
Pentagon officials have said the Trump administration is waiting until its fiscal 2019 budget request to begin ramping up national defense spending and modernization initiatives and in the near term focusing investments on military combat readiness. It comes amid increased threats from nuclear-armed North Korea and progress by Russia and China in closing the military-technology gap with the U.S.
Defense Secretary James Mattis pointed out in June that there've been nine years of continuing resolutions by Congress, resulting in negative impacts to military readiness, innovation and modernization. The Pentagon is currently operating under a short-term CR, which expires Dec. 8.
Still, major defense stocks are up 30 percent or more since Trump was elected a year ago compared with the S&P 500 index gaining about 20 percent. Boeing has been a top performer with a gain of more than 85 percent in the past year but analysts say that is more reflective of its booming commercial aircraft business.
If national defense spending is increased, investors could see defense stocks going even higher due to "great upside to earnings," said Jim Corridore, a defense analyst at CFRA Research in New York.
Meantime, Trump has delegated more authority to the Pentagon than his predecessor.
"We have seen the president grant the Department of Defense and Secretary Mattis more authorities to prosecute the various wars and conflicts," said Thomas Spoehr, director of the Center for National Security at the Heritage Foundation, a Washington-based conservative think tank.
Trump authorized Mattis to send more troops to Afghanistan. Similarly, Mattis can decide whether to go up or down on troop numbers in Iraq and Syria, without having to go back to the president for repeated approvals.
By comparison, two former Pentagon chiefs under President Barack Obama essentially accused the commander in chief and the White House National Security Council of micromanaging military action, including basic strategy and tactics as well as the use ground combat troops.
Spoehr, a retired Army lieutenant general, said the granting of authority "conveys a lot of trust to the Department of Defense that trickles down all the way to the lowest level. I wouldn't underestimate how he has kind of given the Pentagon more authority within some defined limits."
Yet Trump also surprised the Pentagon in July by tweeting a ban on transgender people serving in the military. The action touched off criticism from even some Republican lawmakers, including Sen. John McCain, and a federal court recently blocked enforcement of the ban.
In the Middle East, Trump stepped up the fight against the so-called Islamic State with increased airstrikes. Today, the terror group no longer controls Raqqa, Syria, the self-described capital of the caliphate.
"I totally changed rules of engagement," Trump told radio host Chris Plante recently. "I totally changed our military. I totally changed the attitudes of the military and they have done a fantastic job. Yeah, ISIS is now giving up."
Regardless, Trump has demonstrated a willingness to promote U.S. arms on his trips abroad, whether Saudi Arabia, Poland, Israel or his visit this week to Japan.
"Trump has been a bit of a salesman for the defense industry, and that's led to some incremental deals," said Corridore. "We've seen nothing certainly that has moved the dial for the U.S. defense industry, but it's positive for sure."
On Monday, Trump and Japanese Prime Minister Shinzo Abe held a press conference in Tokyo and discussed the threat from nuclear-armed North Korea, and they spoke about Japan purchasing U.S. military equipment. North Korea has test-fired several ballistic missiles that have flown over Japanese territory or splashed down in waters inside the country's exclusive economic zone.
"He will shoot them out of the sky when he completes the purchase of lots of additional military equipment from the United States," Trump remarked Monday. "He will easily shoot them out of the sky, just like we shot something out of the sky the other day in Saudi Arabia, as you saw."
It was a Raytheon-made Patriot air defense missile system deployed in Saudi Arabia that thwarted a ballistic missile attack by Houthi rebels in Yemen against the kingdom's capital city of Riyadh on Saturday. In May, the White House announced an agreement for Saudi Arabia to buy $110 billion worth of U.S. weapons — including more Patriot defense systems — ahead of Trump's state visit to the kingdom.
Yet some question whether Trump is taking credit for some multibillion-dollar arms sales that were already in the works when he took office, such as the Saudi weapons deal.
"A lot of these sales were negotiated before, so I think some of it is just pushing this narrative that it's good for jobs, good for the economy — elements he's been sort of trumpeting since January 20," said Mike Noonan, director of the Program on National Security at Foreign Policy Research Institute, a think tank in Philadelphia.
Even so, the Trump administration is working to make it easier to sell U.S.-made military drones to allies such as India since China and Israel have profited when the U.S. turns down business. In June, the U.S. approved the sale of $2 billion worth of drones made by California-based General Atomics to India.
The administration also is considering selling the Lockheed Martin-made F-35 stealth fighter jets to the United Arab Emirates, which has long had economic ties to Iran. If that happens, it would be only the second country in the Middle East after Israel to have the advanced aircraft.
Trump also has spent the last year critical of the Iran nuclear deal, which was orchestrated by Obama. Last month, Trump said he won't certify the Iran deal and is pushing for fixes. The administration also placed new sanctions on Iran's elite Revolutionary Guards.
"In the event we are not able to reach a solution working with Congress and our allies, then the agreement will be terminated," Trump said.