The Army has been forced to take drastic measures due to a massive budget shortfall, even as Defense Secretary Pete Hegseth seeks a “historic” $1.5 trillion in military funding for 2027.
Leaked internal documents cited by ABC News revealed broad spending cuts to make up for what one U.S. official described as a shortfall of between $4 billion and $6 billion. The crunch comes as the cost of Donald Trump’s Iran war continues to climb and the president weighs a major escalation in the conflict.
The cuts have triggered abrupt cancellations of training courses, reduced aviation readiness, and intensified scrutiny over Army spending months before the fiscal year ends on Sept. 30. News of the budget woes also comes just a few months after a government watchdog report revealed that the Pentagon embarked on a $93.4 billion spending splurge in late 2025 that included lobster tails and ribeye steaks, part of a move to exhaust “use-it-or-lose-it” funds and avoid future budget cuts.
ABC News reported that major drivers behind the shortfall included costs associated with the Iran war and the Trump administration’s mission to secure the southern U.S. border. Large National Guard deployments are also contributing to the strain, including the ongoing Washington, D.C., deployment, which the Congressional Budget Office projected would cost roughly $1.1 billion this year.
The reductions are expected to hit the Army’s III Armored Corps particularly hard. The corps commands approximately 70,000 soldiers and represents nearly half of the Army’s combat power.
According to internal documents reviewed by ABC News, aviation units within the corps are expected to deploy next year at “a lower state of readiness.” The documents also warned of “career stagnation” among mid-level officers responsible for overseeing major training exercises and projected that units could require a full year to rebuild “combat proficiency.”
The reductions reportedly included cutting roughly half of the corps’ budget and reducing pilots’ flight hours to minimum mandatory levels.
The Army also canceled several training programs and an artillery course that was scheduled to begin Monday at Fort Campbell, Kentucky.
“Army commanders are taking all necessary measures to prioritize critical readiness and operational requirements, ensuring we operate responsibly within our currently enacted funding levels,” Army spokesperson Col. Marty Meiners told the publication in a statement.
The Pentagon’s budget squeeze comes as the Trump administration is debating whether to intensify military action against Iran as negotiations with Tehran appear close to collapse.
According to CNN, Trump’s advisers said the president was more seriously weighing resuming military action in Iran than at any point in recent weeks.
Axios separately reported that U.S. officials said Trump was considering some form of military action intended to pressure Tehran into concessions over its nuclear program.
One U.S. official told Axios the president “will tune them up a bit,” while another said, “I think we all know where this is going.”
Axios reported that the Trump administration is weighing restarting its “Project Freedom” naval mission that temporarily guided commercial vessels through the Strait of Hormuz, a vital waterway through which about a fifth of global oil supplies normally flow.
Trump is also weighing resuming strikes against Iran to attack the 25 percent of targets that have been identified by the Pentagon but not yet struck.
Pentagon estimates on Tuesday placed the cost of the Iran conflict at $29 billion, up from an estimate of $25 billion issued at the end of April, though internal estimates reportedly place the figure closer to $50 billion.
The Daily Beast has reached out to the Pentagon for comment.
