OPINION:
The midterm elections have delivered a divided government and increased uncertainty over defense spending, reconciliation funding and Washington’s ability to quickly signal long-term financial commitments.
America’s adversaries are not waiting for our next budget agreement, and neither are the new and advanced technologies required to defeat ever-increasing threats to our national security.
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National security leaders often cite the “Arsenal of Democracy” as the pinnacle of defense-industrial base mobilization.
Indeed, it was a seminal moment in America’s history. Detroit converted automobile plants to military production. Manufacturers such as Chase Brass & Copper Co. converted from producing industrial brass and copper products to more than 1 billion small-caliber bullets. Shipyards launched vessels at astonishing speed.
American factories, workers and capital overwhelmed the industrial capacity of tyranny.
This incredible feat is often and rightly attributed to President Franklin D. Roosevelt and the federal government, but the U.S. had a critical partner in the massive buildup: private capital.
Private capital accounts for more than 20% of spending on war industrial facilities, representing more than $4 billion in investment.
Today, America once again finds itself in need of an Arsenal of Democracy. Once again, we will require our partners on Wall Street.
We need the full might of American capital — private equity, venture capital, private credit, infrastructure funds, pension funds, insurers and public markets — mobilized alongside American industry in the national interest.
We have the world’s strongest military, most innovative economy and deepest capital markets. Yet historically and often intentionally during long eras of peacetime, those mechanisms operate separately. The Pentagon identifies requirements. Congress appropriates money. Industry waits for contracts. Investors allocate trillions of dollars elsewhere.
Yet in a moment of growing conflict, divided government, increasingly sophisticated threats and heightened competition, we need all parties moving together in one coordinated motion, as we did nearly 100 years ago.
A plan to address a crisis of velocity
Modern warfare moves at the blistering speed of software, compute, energy and financial markets. Yet defense infrastructure remains dependent on annual appropriations and procurement systems designed for another era.
Even historic defense budgets cannot independently finance every data center, power plant, advanced manufacturing facility, critical mineral refinery and resilient supply chain our security demands. We need a strategy that attracts trillions of dollars to help defense infrastructure keep pace with modern warfare.
I have proposed a National Security Capital Strategy that would turn our financial advantage into national power by aligning government resources, private investment and American innovation behind the capabilities necessary to deter, compete and win.
First, we need clear, credible and durable national security priorities. Investors cannot commit long-term capital when demand signals disappear with each budget cycle. Critical infrastructure requires confidence extending beyond annual appropriations and administrations.
Next, we need to leverage government purchasing power, land, infrastructure, contracting authorities and targeted financial tools to remove investment barriers.
Then, we can engage the full depth of American capital markets. Banks, institutional investors and private funds should have opportunities to finance infrastructure and industrial capacity that deliver competitive returns alongside national security benefits.
Finally, we need to scale. Innovation without production does not create deterrence. America must move promising technologies from prototypes to production, infrastructure from concept to operation, and industrial capacity from fragile supply chains to resilient American scale.
The Army is proving out this model
The U.S. Army is already demonstrating how this approach works.
We manage more than 33 million acres of land, as well as installations, depots, arsenals and testing grounds. Historically viewed primarily as cost centers, these assets can become a strategic asset on the balance sheet.
Through the Army Strategic Capital Initiative, we are combining secure land, existing infrastructure and government authorities with private investment to generate commercial returns and military capability.
Consider computing power. Super intelligence and next-generation military systems demand enormous computing capacity. The Army is actively pursuing privately financed, dual-use data centers on military installations, including initiatives with Carlyle and CyrusOne. Commercial demand helps finance secure computing infrastructure without requiring taxpayers to fund every dollar upfront.
Energy presents another opportunity. Privately financed generation and microgrid-capable infrastructure strengthen installation resilience while serving commercial energy markets. Long-term agreements provide dependable military power and commercially attractive returns.
Critical minerals offer similar potential. Army depots and arsenals can support domestic processing of materials essential to advanced weapons, batteries and manufacturing. Initiatives involving Red River, Anniston, Pine Bluff and Tooele show how federal industrial assets can attract investment while reducing dependence on foreign supply chains.
In logistics, collaboration with FedEx Dataworks and Google Cloud is applying predictive analytics and supply chain expertise to improve our organic industrial base.
These initiatives are mobilizing America’s balance sheet for our nation’s defense.
Capital formation itself is an instrument of national power
Government possesses assets that private markets value, such as land, infrastructure, purchasing power and long-term demand. Private markets contribute capital, entrepreneurial ingenuity and speed. Working together, they turn public spending into a catalyst for private investment.
The opportunity is to create a national security investment market where competitive returns and American strategic interests reinforce each other. Here, America possesses an advantage no authoritarian government can manufacture by decree.
Private capital cannot, and should not, replace congressional appropriations. Congress establishes national priorities, finances essential military capabilities and safeguards public accountability.
Properly structured, public investment can become the foundation for substantial private investment, allowing government to focus scarce resources on inherently military requirements while enabling private capital to finance the infrastructure, energy, compute and industrial capacity required to strengthen our national defense.
A nation-state can order a factory built, but America can unleash millions of entrepreneurs, companies and investors competing to build something better, faster and more efficiently — and make money doing it.
That is the genius of American capitalism.
Roosevelt’s Arsenal of Democracy succeeded because government established the mission and enterprise answered. Our generation faces another defining opportunity. We must make rebuilding America’s industrial strength the defining investment of the 21st century.
• The Honorable Marc E. Andersen is the assistant secretary of the Army for financial management and comptroller.
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