At a time when global military budgets are expanding and geopolitical tensions are reshaping defense priorities, Anduril Industries founder Palmer Luckey is challenging one of Washington’s most deeply held assumptions: that more money automatically equals more military power.
Speaking during discussions around Singapore’s airshow circuit, Luckey argued that the United States could dramatically reduce its defense spending while maintaining, or even improving, military effectiveness – if it focused on efficiency and output rather than headline budget figures.
Rethinking how military strength is measured
Luckey took aim at the way defense success is typically evaluated. In his view, military strength is too often judged by how much money governments allocate, rather than by what that money actually produces.
He said that measuring power in dollars creates the wrong incentives across the defense industrial base. When budgets grow regardless of performance, contractors are rewarded for scale and complexity, not speed, reliability, or cost discipline.
Instead, Luckey believes defense capability should be measured by tangible output – how many systems are delivered, how well they perform, and how quickly they reach the field.
Trump’s proposed budget and the efficiency debate
The comments come against the backdrop of renewed debate in Washington after Donald Trump floated the idea of lifting U.S. military spending to $1.5 trillion by 2027, a level he said would enable the creation of a “Dream Military.”
While Luckey did not dispute the importance of a strong defense, he questioned whether such a massive figure reflects necessity or inefficiency. According to him, the United States already spends more than enough to meet its security needs, but fails to extract sufficient value from that spending.
He suggested that with a more modern, agile defense ecosystem, the same capabilities could be achieved at a fraction of the cost.
Incentives that reward inefficiency
One of Luckey’s sharpest criticisms focused on how the current defense procurement system operates. He argued that many U.S. defense contractors are effectively incentivized to move slowly, over-engineer solutions, and accept frequent failures because delays and overruns rarely result in serious consequences.
In his assessment, the system rewards companies that build the wrong things at high cost, rather than those that deliver effective systems quickly and affordably. Over time, this has produced an industrial apparatus that is bloated, risk-averse, and resistant to innovation.
Luckey described this as a structural problem rather than a short-term disruption, noting that inefficiency has persisted for decades.
Comparing U.S. output with China’s
To illustrate his point, Luckey contrasted American defense output with that of China. While the U.S. spends far more in absolute terms, he argued that China often generates significantly greater output per dollar.
China’s official military budget for 2025 stood at roughly 1.78 trillion yuan, or about $249 billion, far below U.S. levels. Yet Luckey said China is producing more aircraft, missiles, ships, and ground systems relative to its spending.
He pointed to shipbuilding as a particularly stark example. China’s shipbuilding capacity now dwarfs that of the United States, giving Beijing a structural advantage in naval production that money alone cannot easily offset.
A radically smaller budget, if it works
Luckey went further, suggesting that an efficient defense system could allow the U.S. to operate with a defense budget well below current levels.
He said he would welcome a defense budget under $500 billion, provided it delivered the capabilities the country actually needs. The key condition, he emphasized, is performance – not optics.
Such a proposal runs counter to decades of defense thinking in Washington, where budget growth has often been equated with preparedness. Luckey’s argument flips that logic, proposing that excess spending can actually undermine effectiveness.
Trump’s criticism of defense contractors
Luckey also weighed in on Trump’s recent criticism of major U.S. defense companies, which accused them of prioritizing executive compensation and shareholder returns over timely delivery and fiscal discipline.
Trump had warned that companies running billions over budget and years behind schedule should not be rewarding themselves with dividends and stock buybacks. Luckey described this criticism as justified.
He argued that defense firms occupy a unique position, drawing nearly all their revenue directly from taxpayers. As a result, he said, they should be held to a higher standard of accountability than companies operating in competitive commercial markets.
A long-standing pattern, not a pandemic problem
Luckey rejected the notion that supply chain disruptions caused by the Covid-19 pandemic are the primary reason for chronic delays and overruns in defense programs.
While acknowledging that the pandemic strained global manufacturing, he said the defense industry’s problems long predate those disruptions. According to him, slow delivery, frequent breakdowns, and ballooning costs have been characteristic of major defense programs for generations.
This pattern, he argued, reflects systemic flaws rather than temporary mismanagement.
Anduril’s contrasting model
Founded in 2017, Anduril Industries has positioned itself as a counterexample to traditional defense contracting. The company focuses on AI-driven autonomous systems, rapid iteration, and commercial-style engineering practices.
Now valued at approximately $30.5 billion and ranked first on CNBC’s 2025 Disruptor 50 list, Anduril emphasizes delivering systems on time and within budget – principles Luckey says are largely absent from legacy defense procurement.
When asked whether Trump’s criticism could one day apply to Anduril, Luckey dismissed the concern. He said the company’s record of meeting deadlines and controlling costs sets it apart from older defense primes.
The future of defense spending and accountability
Luckey acknowledged that Anduril will “almost certainly” go public in the future, but insisted that market success should be tied to execution rather than financial engineering.
For him, the broader debate is not about cutting defense for its own sake, but about redefining what effective defense spending looks like in an era of autonomous systems, artificial intelligence, and rapidly evolving threats.
In his view, the question facing the United States is no longer how much it spends on defense, but how intelligently it spends – and whether it is willing to overhaul a system that has grown comfortable with inefficiency.
