How Washington can advance national security with looming defense spending caps 

While the U.S.-China competition will be this century’s defining dynamic, the apex of that rivalry is now. With top military leaders warning that China could mount armed invasions in the next few years and a potentially shrinking window on Chinese capabilities, the United States needs to be urgent in resourcing its China strategy. The recently passed bipartisan debt deal, or Fiscal Responsibility Act, is an outstanding achievement that cuts national spending and initiates significant reforms for federal programs. However, it caps the 2024 defense budget at a 3 percent nominal increase. When accounting for inflation, this 3 percent increase will result in a real budget cut to defense spending. Right now, it is unlikely that congressional leadership will support supplemental bills to boost defense spending. To adapt to this situation and maintain progress in securing our national defense, Washington should focus on accelerating new and stalled national security initiatives that fall outside traditional defense spending. Specifically, Washington should focus on strengthening our advanced STEM talent base, reforming the defense industrial base, and actualizing technology initiatives with partner countries.             

Congress needs to reform our immigration system to recruit and retain vital advanced STEM talent. Unlike any other time in history, technology will play a paramount role in this competition with China. Advancements in artificial intelligence, advanced computing, and autonomous systems could dramatically restructure the fields of competition. Critical to succeeding in this domain will be attracting and retaining foreign talent. Nearly two in three graduate students in the United States specializing in electrical engineering and computer science for the semiconductor industry were born abroad. Half of the advanced STEM-degree holders working in the defense industrial base were also born abroad. And while China is growing its STEM talent pipeline, American immigration restrictions are forcing about 80 to 90 percent of foreign-born STEM master’s graduates to leave the United States. While some legislative initiatives have tried to address this vulnerability, nearly all have stalled. Congress needs to enact visa reforms and steadily raise the caps on the 65,000 H1-B specialty occupation visas issued each year to make it easier for advanced STEM immigrants to work and stay in the United States. With Congress capping 2024 defense increases, renewing this initiative as a national security priority is an ideal way to offset the debt agreement’s adverse effects.  

The defense industrial base is a second area of national security that needs reform. Since the war in Ukraine started in February 2022, the United States’ steadfast support for the Ukrainian people has been rightly resolute. However, the arming of the Ukrainian military has revealed the glaring atrophy that the defense industrial base has undergone. We need to restock our supplies, improve our procurement process, and clarify our acquisition objectives. Years of dramatic start-and-stop Pentagon funding and a lack of communication with industrial partners are primarily to blame. The 2024 spending cap may make investing the needed funds to revitalize the industrial base more difficult. However, Washington should use this period to find new and innovative ways to work with the private sector. Rep. Chrissy Houlahan (D-Pa.) has introduced a bipartisan bill to initiate a public-private partnership pilot program to hasten the acquisition and procurement of advanced capabilities. Additionally, the Pentagon has explored several reforms, like stripping back the highly regulated bureaucratic acquisition process and implementing ease-of-business reforms like multiyear procurement contracts. Since Washington will be forced to make tough decisions in the next couple of years, studying these reforms will help ensure our national security remains fortified.  

Finally, Washington should look for easy ways to force multiply by bolstering endeavors with allies and partners. Washington should prioritize actualizing multilateral statements on technology cooperation. Unfortunately, this is an area where the United States sorely lacks. The Ronald Reagan Institute’s National Security Innovation Base Report Card graded the U.S.’s technology cooperation with international partners an unimpressive C-. In 2013, the U.S. and its foreign partners boasted 102 Science and Technology Agreements. That number dropped to only 47 in 2023. And while the U.S. has enacted more than 900 digital policies in the last couple of years, only nine were about international trade considerations. Even though several high-level multilateral statements affirm the importance of technology cooperation, the U.S. still lags in realizing these goals. Congress should explore passing the bipartisan Democracy Technology Partnership Act. If passed, the secretary of State would be required to establish an interagency office that would work with our partners to coordinate technology policies, oversee a $5 billion Technology Partnership Fund, and submit a report to Congress on the status and trajectory of international technology cooperation. While defense research spending might have to plateau, Washington can supplement that reality by taking strides to bolster the national security innovation base with allies and partners.  

The Fiscal Responsibility Act will force Congress and the Pentagon to make tough strategic choices. However, we cannot let this become an excuse for inaction. Many initiatives need attention. Washington will have to think creatively over the next couple of years or risk debilitating our national security. Washington can make the most of the moment by clearing our talent pipeline bottleneck, reforming our defense industrial base, and fostering international technology cooperation. An adequately resourced military will always be the core of American power, but ignoring other national security vulnerabilities is not an option. Washington must now consider new priorities until we can focus again on increased defense spending.  

Connor Fiddler is a research assistant at the American Enterprise Institute and a Young Leader with the Pacific Forum. His work has been published in RealClearDefense, American Purpose, and The Diplomat. Follow him on Twitter @Connor_Fiddler.