Defense executives worry Trump’s proposed military splurge could backfire

In today’s CEO Daily: Diane Brady checks in with defense leaders about the military spending hike Trump has requested.

The big leadership story: The fallout from the Iran conflict is still taking shape.

The markets: Mostly up as investors digest Strait of Hormuz uncertainty.

Plus: All the news and watercooler chat from Fortune.

Good morning. I’ve been calling defense contractors, consultants and people who work or have worked in the military this week to get reaction to Trump increasing military spending by more than 40% in his proposed 2027 budget. I didn’t expect them to speak on the record: Who wants to gloat about good fortune when the nation is at war?

What I didn’t anticipate was the pessimism and concern. Coming from four top executives whose companies stand to gain the most from federal spending, it’s a window into deeper concerns about the economy. The optimism about AI-enabled productivity gains is real, as is the support for the president’s priorities when it comes to innovation and strengthening America’s military. The concerns:

Is this level of spending sustainable? My colleague Shawn Tully argues that it is not: “If the expenditures blowout happens, and the rosy assumptions needed to offset the new outlays fail to materialize, America will edge even closer to a fiscal cataclysm prompted by a ruinous rise in interest expense.” With a $39 trillion national debt and public opposition to the attacks on Iran, opposition could come from several fronts: “We’re in a volatile and dangerous time right now,” one executive told me on Monday, prior to the ceasefire. “You need stable commitments, a stable........

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