Donald Trump’s war on Iran has driven the US military into a severe financial crisis, with the US navy forced to transfer money from its payroll and other sources to cover the costs of combat, according to documents obtained by the Guardian, and interviews with navy officials, contractors and defense analysts. The US-Israeli operation, which has depleted US munitions stockpiles and prompted retaliatory Iranian strikes that have wrecked strategic bases across the Middle East, is piling pressure on budgets across the military. One Pentagon memo about navy funding seen by the Guardian warns that there are “shortfalls in payroll” accounts due to the department “raiding” them to fund combat operations.
Experts and former officials say the accounts are running dry. Ullman is a member of the National Commission for the Future of the Navy but he said he is not speaking on the commission’s behalf. One official and one navy contractor said non-emergency maintenance on shore-based facilities has been deferred because of the cash crunch.
When Trump started the war on 28 February, it quickly strained the military’s existing budgets – particularly that of the navy, which not only helped launch the initial wave of attacks but was later responsible for an extensive naval blockade. The White House eventually asked Congress for emergency funding to pay for the war efforts, but prospects that the request will be approved are dim amid the unpopularity of the war. A navy official who was briefed on how the service is planning to address the shortfalls said money is shifted around in imaginative ways.
They are backfilling payroll so we get enough money in our paycheck.” The navy’s budget for 2026, almost $300bn, has different batches of money allocated by Congress for various requirements: personnel, shipbuilding, procuring specific weapons systems and “operations and maintenance”, the day-to-day running of the fleet and its bases. The law limits how money can be rejiggered throughout all those batches of money. The issue has occasionally surfaced in some hearings on Capitol Hill.
Susan Collins, in a 21 July hearing of the Senate appropriations committee, said: “I’m told some military services face near-term solvency challenges.” A staffer said the navy was one of the services Collins was referring to. In a statement, a navy spokesperson said maintenance and operations funds have not been depleted. We continue to work closely with Congress to address ongoing operational demands and sustain our personnel and readiness throughout the fiscal year.” Inside the service, the cash shortage is no secret.
In mid-May, Adm Daryl Caudle, chief of naval operations, cautioned Congress that the crunch would hit in July. That could make differences between how I do exercises, how I do routine operations in order to make sure that I … have the funds necessary to continue the war effort for Epic Fury.” Pete Hegseth has pushed Congress for emergency funding, without which, he said in July, “we face critical shortfalls”. The defense secretary testified that the Iran war cost $35.7bn, but it’s unclear if that is a full accounting of the war’s costs.
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