The USS Wasp, an American amphibious assault ship. (Credit: AFP)
BEIRUT — President Donald Trump’s war on Iran has pushed the U.S. military into a severe financial crisis, with the Navy transferring funds from its payroll and other accounts to cover the cost of combat operations, according to documents reviewed by The Guardian and interviews with Navy officials, contractors and defense analysts.
The U.S.-Israeli operation has depleted American munitions stockpiles and triggered Iranian retaliatory strikes that have damaged strategic bases across the Middle East, putting growing pressure on military budgets.
A Pentagon memo reviewed by The Guardian warns of “shortfalls in payroll” accounts because the department has been “raiding” them to finance combat operations.
Experts and former officials say the Navy’s accounts are running dry.
“The piggy bank is broken,” said Harlan Ullman, a retired naval officer and member of the National Commission for the Future of the Navy. He stressed that he was not speaking on behalf of the commission.
A Navy official and a contractor said non-emergency maintenance at shore-based facilities had been postponed because of the cash shortage.
When Trump launched the war on Feb. 28, it quickly strained existing military budgets, particularly those of the Navy, which helped launch the initial wave of attacks before taking responsibility for an extensive naval blockade.
The White House later asked Congress for emergency funding to finance the war effort, but the request faces slim prospects amid growing opposition to the conflict.
A Navy official briefed on how the service is dealing with the funding shortfalls said money was being shifted between accounts.
“The money for payroll,” the official said, “was robbed to pay for overseas contingencies and is being backfilled by money that hasn’t been spent. They are backfilling payroll so we get enough money in our paycheck.”
The Navy’s 2026 budget is worth nearly $300 billion and is divided into congressional allocations for personnel, shipbuilding, specific weapons systems, and “operations and maintenance,” which covers the day-to-day running of the fleet and its bases.
Federal law limits the military’s ability to move money between these categories.
The issue has surfaced occasionally during congressional hearings. At a July 21 Senate Appropriations Committee hearing, Sen. Susan Collins said: “I’m told some military services face near-term solvency challenges.”
A committee staffer said the Navy was among the services Collins was referring to.
The Navy, however, denied that its maintenance and operations funds had been depleted.
“The Department of the Navy,” a spokesperson said, “is actively managing its resources to meet current pay obligations on time. We continue to work closely with Congress to address ongoing operational demands and sustain our personnel and readiness throughout the fiscal year.”
Inside the Navy, however, the cash shortage is reportedly well known.
“They’re just not speaking publicly about it,” said Todd Harrison, a defense analyst at the conservative American Enterprise Institute.
“And I suspect that is a deliberate decision of the civilian leaders in the Pentagon, starting at secretary, that this is for political reasons, that they don’t want to look like they’re damaging future military readiness over a war that is becoming increasingly a political liability.”
‘We face critical shortfalls’
The military had anticipated the financial strain. In mid-May, Adm. Daryl Caudle, the chief of naval operations, warned Congress that the crunch could arrive in July.
“The FY ’26 budget didn’t bake in Epic Fury,” he said. “I do fear that I’ll have to start making decisions in the July timeframe on how I do force generation. 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.”
Defense Secretary Pete Hegseth has urged Congress to approve emergency funding. Without it, he said in July, “we face critical shortfalls.”
Hegseth testified that the war with Iran had cost $35.7 billion, although it remains unclear whether that figure represents the conflict’s full cost.
The Trump administration has requested $67 billion in emergency funding for the Defense Department, but did not specify how much would go to the Navy.
The House passed a $1.15 trillion defense bill in July, as well as a separate authorization providing $73 billion for the war in Iran. Neither measure is expected to become law.
Ullman noted that Congress was more willing to fund the wars in Iraq and Afghanistan because those conflicts had been authorized by congressional resolutions.
“There is no authorization to use force in this case. Is Congress obliged to pay for a conflict it did not authorize?” he said.
‘They ran out of their money’
The Navy’s financial difficulties could prove particularly embarrassing for Trump, who has frequently compared his naval ambitions to those of former President Theodore Roosevelt.
Roosevelt, who served from 1901 to 1909, oversaw the expansion of the U.S. Navy and sent the so-called “Great White Fleet” around the world.
Trump’s administration has instead promoted the idea of a “Golden Fleet,” alongside plans for enormous “Trump class” ships that would become the largest battleships in U.S. history.
Trump has also personally intervened in naval matters, including directing the Navy to redesign an aircraft carrier so that it uses a steam and hydraulic catapult system rather than an electromagnetic one.
As The Guardian has reported, Trump has repeatedly expressed his preference for steam-powered carrier launch systems since 2017.
But the immediate challenge is financing a war with no clear endgame.
A former military officer now working for a Navy contractor, who had been briefed on the financial shortfalls, put it bluntly: “They’re fucked. They shot all their weapons; they trashed all their ships; they ran out of their money.”
