Joe Biden doesn't foresee major Pentagon budget cuts if he is elected president, and in fact believes some areas of defense spending need to be increased.
In an interview with the newspaper Stars & Stripes released Thursday, the Democratic Party nominee for president said he would like to see the U.S. draw down its military presence in the Middle East, but given the threats the country faces, he would not support efforts to significantly cut defense spending.
"I don't think [budget cuts] are inevitable, but we need priorities in the budget," Biden told the newspaper.
Biden's comments should provide some reassurance to defense investors worried about how the November election could affect Pentagon spending. Defense leaders have signaled that after years of steady increases, they expect the budget to plateau in the years to come, and there is some concern pandemic-related spending could force deeper-than-expected budget cuts.
Defense contractors and their investors are prepared for a flat budget, but not for a massive decline.
Biden said he would push for continued military modernization, including efforts to upgrade technology, strengthen cybersecurity, and develop drones and other autonomous vehicles. Added funding in those areas would be a potential boost for a wide range of defense contractors, from titans including Northrop Grumman (NYSE:NOC) to smaller companies such as Leidos Holdings (NYSE:LDOS) and Kratos Defense and Security Solutions (NASDAQ:KTOS).
"We have to focus more on unmanned capacity, cyber and IT, in a very modern world that is changing rapidly," the former vice president said. "I've met with a number of my advisors, and some have suggested in certain areas the budget is going to have to be increased."