Please ensure Javascript is enabled for purposes of website accessibility

Biden Defense Budget Focuses on R&D, Cuts Some Mainstay Programs

By Lou Whiteman - May 28, 2021 at 4:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There were surprising winners and losers among contractors.

The Biden Administration's first Pentagon budget submission slashed defense procurement by 6% to $133.6 billion, and picks winners and losers among some high-profile programs.

On Friday, the White House requested $715 billion for the Pentagon in the government's fiscal 2022. The budget proposes $112 billion for research and development, the largest total on record in that area, and an $8 billion decline to $133.6 billion for new equipment.

Aerial view of the Pentagon.

Image source: Getty Images.

Among individual programs, Lockheed Martin (LMT 1.26%) got an unexpected boost with the Pentagon upping F-35 Joint Strike Fighter research and modifications to more than $2 billion, from $1.5 billion last year. Northrop Grumman (NOC 1.97%) also saw a $1 billion uptick in funding for the Ground Based Strategic Deterrent, a massive program to replace the aging Minuteman intercontinental ballistic missiles.

Spending on Army radios also got a boost, which should benefit L3Harris (LHX 2.36%).

Among the disappointments, the Pentagon did not request any funds for Boeing (BA 1.26%)-made F-18 Super Hornet jets or P-8 planes. And spending on land equipment, including tanks, also is forecasted to fall -- a hit to General Dynamics (GD 2.64%).

The budget request is submitted to Congress, which will now use it as a framework for a final spending bill. In years past, Congress has tended to boost spending on large programs, meaning it is possible some of the totals could be higher and the lost business restored in the months to come.

Lou Whiteman owns shares of General Dynamics, L3Harris Technologies, and Lockheed Martin. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lockheed Martin Corporation Stock Quote
Lockheed Martin Corporation
LMT
$434.24 (1.26%) $5.39
The Boeing Company Stock Quote
The Boeing Company
BA
$169.99 (1.26%) $2.11
Northrop Grumman Corporation Stock Quote
Northrop Grumman Corporation
NOC
$479.58 (1.97%) $9.27
L3Harris Technologies, Inc. Stock Quote
L3Harris Technologies, Inc.
LHX
$236.74 (2.36%) $5.45
General Dynamics Corporation Stock Quote
General Dynamics Corporation
GD
$237.95 (2.64%) $6.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.