Analysis
How Defense Reconciliation Could Fund Indo-Pacific Deterrence
As Congress considers passing the One Big Beautiful Act, otherwise known as the reconciliation bill, addressing everything from healthcare to housing, among its provisions includes something consequential for America’s national security: over $100 billion in defense spending that would finally fund over $11-billion of long-delayed priorities for deterring conflict in the Indo-Pacific.
The bill’s defense sections read like a direct response to the U.S. Indo-Pacific Command’s unfunded priorities list—a yearly catalog of critical military capabilities that have been highlighted on the Indo-Pacific Commander’s wish list for the theater due to budget constraints, and which have remained consistent as unfunded priorities for years. From Guam’s missile defense system to advanced space-based sensors, to an Indo-Pacific mission network and posture improvements to maritime mines and joint training exercises, this legislation would address dozens of requirements that military leaders have identified as essential for maintaining deterrence against an increasingly assertive China.
This represents a belated but welcome recognition of what should have been funded years ago under the Pacific Deterrence Initiative (PDI). Enacted into law in December 2020, the PDI was designed to enhance U.S. military posture in the region through targeted new investments in critical capabilities. Yet year after year, these priorities have remained chronically underfunded, appearing instead on INDOPACOM’s unfunded priorities list where mission requirements go to wait for the following year’s budget cycle.
The reconciliation bill would start to change that dynamic (see image below) by providing a set amount of funding for specific unfunded programs for the Indo-Pacific theater over four years. It would support INDOPACOM’s $800 million plus request for persistent custody sensors and space-based architecture needs, providing $2.6 billion of munitions covering the amount on the unfunded list. The bill allocates for military training and exercises across services, $1 billion for offensive cyber operations, over $1 billion for infrastructure improvements and prepositioning of equipment as well as a start for a Guam Defense System, separate to $24 billion for Golden Dome. This reconciliation bill signals recognition that the Indo-Pacific theater requires substantial investment that has been lacking for too long.
Additionally, the timing is particularly significant as we wait for the President’s full fiscal year 2026 budget request, as well as the congressionally mandated Independent Assessment required by law for U.S. Indo-Pacific Command to outline the activities and resources required to implement the National Defense Strategy. Those documents, once matched with the reconciliation funding, will highlight underlying gaps.
Yet military readiness alone, while necessary, is insufficient for the challenge we face. China’s strategy relies heavily on gray zone activities—economic coercion, disinformation campaigns, and political interference that fall below the threshold of armed conflict but steadily erode America’s competitive position. A truly comprehensive response requires robust investments in economic statecraft, development and infrastructure assistance, and information operations capabilities.
The reconciliation bill would make modest but positive gestures in this direction, including $410 million for economic competition effects and analysis capabilities. While this pales in comparison to the scale of China’s strategic investments or its sophisticated influence operations, this funding is a major step to complement military investments with substantial commitments to economic and diplomatic tools of competition.
While the funds in the reconciliation bill are intended to be used over the course of four years, many if not all, of those programs still require yearly funding baked into the base Department of Defense budget. Seeing each of these programs in the forthcoming J-books, specifically tagged to the Indo-Pacific theater, will determine whether resources are truly pivoting.
Moreover, these budget items will need to be sustained over time with the respective implementing services or offices prioritizing implementation of such efforts. This will require direction from Pentagon leadership and each of the services to fully accelerate and achieve the mission requirements for the Indo-Pacific theater to get these programs across the finish line. The Pentagon, and Congress, should measure progress on how quickly and robustly all these programs are getting actualized and perhaps create an internal report card to ensure all elements of defense enterprise are being held accountable to enact such progress on these programs.
Doing so would signal resolve to both allies and adversaries as well as to the defense and technology industry to help accelerate these demands.
With China’s military modernization and influence campaigns proceeding relentlessly, America’s response cannot be episodic. China’s leaders are watching closely to see whether America will match its rhetoric about Indo-Pacific priorities with actual resources.
