Righting the Ship: Building a Relevant US Navy Fleet for Twenty-First-Century Deterrence and Combat

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Executive Summary

The United States Navy is contending with a new era of competition after more than 80 years as the world’s dominant maritime force. For one thing, it no longer boasts more vessels than other militaries. China now fields the largest naval, constabulary, and commercial fleets as well as missile formations that can threaten hundreds of ships more than 1,000 nm from China.^[1]

US and allied militaries face challenges in other theaters as well. Russia’s invasion of Ukraine starting in 2014 marked the return of armed conflict to Europe 20 years after the war in Kosovo. In addition to threatening the eastern flank of the North Atlantic Treaty Organization through ongoing air incursions, Russian proxies have been conducting cyber and terror attacks against European financial and transportation targets.^[2] And the Russian undersea reconnaissance program continues to surveil and perhaps interfere with seabed communication cables and energy infrastructure.^[3]

The US military remains focused on the Middle East despite attempts to pivot to these other regions. US and Israeli forces launched tens of thousands of strikes from 2023 to 2026 against Iran and its proxies in response to terrorism by Hamas against Israeli civilians, Houthi strikes on Red Sea shipping, and Iranian missile and drone attacks across the Middle East. However, the Iranian Revolutionary Guard Corps (IRGC) reconstituted its capabilities after each attack using commercial technologies to field new targeting networks, precision-guided missiles, and long-range drones.^[4]

The IRGC’s resilience should be a wake-up call to the US Department of War (DoW). US forces were unable to prevent Iranian attacks across the region, including against shipping in the Strait of Hormuz, despite the presence of two carrier strike groups, an amphibious ready group, and numerous ground-based attack aircraft and helicopters.^[5] Traffic through the strait remains contested as US and Iranian negotiators seek a resolution to the conflict.

The US government’s response to the changing threat environment is surprisingly conventional. During the past 20 years, the Navy has published ever-increasing goals for fleet size, peaking most recently at 381 battle force ships by the 2050s, or about 100 more than today. And the fleet’s composition largely resembles the force that won the Cold War 35 years ago. The only significant new platform is the proposed Trump-class nuclear-powered battleship (BBGN) in the Navy’s 2027 shipbuilding plan.

To reach its higher targets for fleet size, the Navy nearly doubled its annual shipbuilding budgets during the 2020s compared to the preceding decade. The president’s proposed budget for fiscal year (FY) 2027 is even higher and, at $82.3 billion, will be the largest shipbuilding budget since the early 1960s, even after accounting for inflation.^[6]

To its credit, the Navy is complementing the increase in shipbuilding with higher spending on new technologies. Congress appropriated more than $4 billion in 2026 for unmanned surface vessels and unmanned undersea vehicles and billions more for new missiles, electromagnetic warfare systems, and directed energy weapons. Yet the government’s new technology investments are only a small fraction of the research and procurement funding devoted to ship development and construction.^[7] They suggest that US defense officials believe that a larger manned force, with modest support from new technologies, will address the fleet’s highest-priority operational problems.

This approach faces two fundamental problems. First, it is unsustainable. The Navy is unlikely to receive more than $100 billion a year—more than double today’s cost in inflation-adjusted terms—to maintain, crew, and sustain the fleet that the FY 2027 shipbuilding plan produces by 2045.^[8] It will also have difficulty manning the force, considering that the Navy is already struggling to fill at least 20,000 gapped billets at sea in 2026.^[9]

Second, the government’s plan to massively increase shipbuilding funding is unlikely to expand the industrial base or accelerate construction. Investor reports and Navy records suggest that shipbuilders have been using increased construction funding to grow their order books rather than their shipyards. US Navy shipbuilders suffered through two decades of anemic ship construction budgets during the 1990s’ peace dividend and the Global War on Terror’s emphasis on land wars. They are understandably reluctant to invest substantially in infrastructure or workforce when a future administration could reverse course.

The Navy’s plans fundamentally misunderstand the emerging security landscape. Adversaries threatening the Navy are exploiting new technologies to increase their forces’ lethality, adaptability, and scalability. Ukrainian forces vividly demonstrated this dynamic against Russian invaders.^[10] However, the Navy’s future force structure plans do not take advantage of the same innovation and remain stuck in a twentieth-century paradigm that assumes larger numbers of more capable platforms will win future wars.

For example, China, Russia, or Iran and its proxies can hold naval forces at risk with large numbers of precision weapons in many of the areas where US leaders hope to deter and defeat aggression. These adversaries are fielding weapons faster and cheaper than the US Navy can build and deploy ships. As a result, each new manned vessel devotes more of its firepower to defense and less to offense.

The Navy needs a new theory of victory that exploits, rather than ignores, the opportunities in new technologies. With dominance no longer within reach, it should refocus on its legislated role of deterring and defeating aggression rather than attempting to restore a Pax Americana by commanding the seas.^[11] The Navy could implement this approach by orienting the fleet’s structure and operations toward countering the most likely or consequential enemy actions while retaining the capacity to address unpredictable crises.^[12]

Generalized crisis response tends to require versatile multimission forces that are inefficient when applied to any specific situation. Deterring and defeating specific scenarios will demand tailored capabilities and force postures. To balance out these competing demands, this study proposes a model that combines a fiscally sustainable general-purpose force of manned multimission ships and aircraft with tailored forces that hedge against the most consequential situations the Navy could face.

The proposed general-purpose force, shown in figure ES.1, incorporates the same basic elements as today’s fleet but rebalances the mix to privilege sustainability and resilience over dominance. It includes fewer aircraft carriers and surface combatants than in Navy plans and more logistics and support vessels. It also replaces the Trump-class BBGN that the Navy has proposed with a guided missile cruiser. As a result, this study’s proposed fleet is more affordable and requires 50,000 fewer sailors than the Navy’s planned fleet.

Figure ES.1. Hudson Institute Proposed 2045 General-Purpose Force

Source: Hudson Institute.

Note: Each block is one ship; block area is proportional to full-load displacement. The design shifts weight toward submarines, logistics, and support and away from the large-combatant-heavy plan of record.

The proposed hedge forces address challenges like anti-submarine warfare against large numbers of quiet submarines in the North Atlantic or Western Pacific, mine-clearing in the Persian Gulf, and the defense of Taiwan from invasion and blockade. To support these forces, the fleet design includes nearly 1,600 robotic and autonomous systems (RAS) in a pool that the Navy can integrate with appropriate payloads and distribute to operational commanders. Table ES.1 summarizes the number and mix of RAS in the fleet design’s hedge force pool.

Table ES.1. Number and Mix of RAS Included in the Proposed Fleet Design

Source: Hudson Institute.

Notes: USV = unmanned surface vessel; MUSV = medium USV; sUSV = small USV; CCA = unmanned collaborative combat aircraft; UAS = unmanned aerial system; MALE = medium-altitude, long-endurance aircraft; sUAS = small UAS; UUV = unmanned undersea vehicle; MUUV = medium UUV; LUUV = large UUV; XLUUV = extra-large UUV; ULUUV = ultra-large UUV; SHORAD = containerized short-range air defense system.

The combined costs of the new fleet design’s general-purpose and hedge forces will not require Navy budgets to rise substantially above the rate of inflation and are within the capacity of the current defense industrial base. This should make the design robust against defense spending reductions that future presidential administrations initiate or that rising US government debt compels.

The US Navy should not sleepwalk into irrelevance. Instead of attempting to recapture the lost fleet and industrial base of a bygone era, the US government needs to “right the ship” by building a force to compete rather than dominate. The Navy has a window during which private companies are accelerating production, defense spending is increasing, and lessons from Ukraine to Iran are fresh. It needs to exploit this opportunity or risk losing the ability to protect freedom of the seas or US interests outside America’s own hemisphere.

Endnotes

1. Military and Security Developments Involving the People’s Republic of China (US Department of Defense, 2025), https://media.defense.gov/2025/Dec/23/2003849070/-1/-1/1/ANNUAL-REPORT-TO-CONGRESS-MILITARY-AND-SECURITY-DEVELOPMENTS-INVOLVING-THE-PEOPLES-REPUBLIC-OF-CHINA-2025.PDF. ↑
2. Anna Wieslander, Aaron Korewa, and Justin Sherman, “Dispatches from the Front Lines of Russia-Linked Cyberattacks on Europe,” Atlantic Council, April 16, 2026, https://www.atlanticcouncil.org/dispatches/dispatches-from-the-front-lines-of-russia-linked-cyberattacks-on-europe. ↑
3. Samu Paukkunen and James Black, “Deterring Russia Beneath the Waves: Securing NATO’s Critical Undersea Infrastructure,” War on the Rocks, June 1, 2026, https://warontherocks.com/deterring-russia-beneath-the-waves-securing-natos-critical-undersea-infrastructure. ↑
4. Maziar Motamedi, “What Military Capabilities Does Iran Possess as It Negotiates with US?,” Al Jazeera, July 1, 2026, https://www.aljazeera.com/news/2026/7/1/what-military-capabilities-does-iran-possess-as-it-negotiates-with-us. ↑
5. William F. Wechsler, “A Misguided War, a Flawed Deal, and a Dangerous Future. Here’s What to Do Next on Iran,” Atlantic Council, July 2, 2026, https://www.atlanticcouncil.org/content-series/the-big-story/a-misguided-war-a-flawed-deal-and-a-dangerous-future-heres-what-to-do-next-on-iran. ↑

6. FY 2026: The difference is mainly that we included Coast Guard and other shipbuilding in the numbers.

   In the reconciliation bill (PL119-21), we determined these were relevant to count toward shipbuilding:

   § 20002. Enhancement of Department of Defense Resources for Shipbuilding (notably, there are other industrial base investments, but they are not tied to shipbuilders in the legislation)

   $17.95 billion for warship construction (Shipbuilding and Conversion, Navy, or SCN)

   $750 million for shipbuilding industrial base supplier improvements

   $250 million for additive manufacturing in shipbuilding industrial base

   § 40001, Coast Guard Mission Readiness. § 1181: $14.08 billion in shipbuilding funding

   § 20003, Enhancement of Department of Defense Resources for Integrated Air and Missile Defense: $530 million for a new missile range safety ship

   The appropriations bill (PL119-75) added discretionary funding: $27.2 in SCN funding (Stat. 187, p. 140).

   These amounts, $17.95 billion + $750 million + $250 million + $14.08 billion + $530 million + $27.2 billion = $60.7 billion in total shipbuilding for FY26.

   FY 2027: “The Department requests $87.2 billion in shipbuilding and maritime platforms, a 25 percent increase over FY 2026 enacted levels, to reinvigorate the Nation’s shipbuilding industry. Of the $87.2 billion, $65.8 billion is requested in the Shipbuilding and Conversion, Navy appropriation, and the request supports the procurement of 18 battle force ships and 16 non-battle force ships.” FY 2027 Department of War Budget Overview Book (Office of the Under Secretary of War [Comptroller], 2026), 3–18, https://comptroller.war.gov/Budget-Materials/#summary.

   The FY 2027 submission is vague about what exactly is entailed in the $87.2 billion. We could trace it to the following:

   $60.2 billion for Navy shipbuilding in the base budget plus $5.6 billion in reconciliation/mandatory spending

   $2.5 billion for SIB

   $3.1 billion for wage improvement for nuclear shipbuilding prime contractors

   $1.3 billion for MIB

   $1.8 billion for Navy Shipyard Infrastructure Optimization Program (SIOP; not part of the shipbuilding investment since it upgrades public shipyards)

   $432 million for Coast Guard cutter procurement

   $110 million for Army vessels

   $900 million for National Science Foundation Arctic Research Vessel

   An unknown amount for National Park Service ferry

   $185 million for National Oceanic and Atmospheric Administration (NOAA) vessel construction

   $100 million for NOAA USVs

   $171 million for MUSVs

   An unknown amount for other UUVs and USVs

   We came to $82.3 billion by taking out the SIOP, MIB (that goes to a variety of functions), MUSVs, and the estimated cost of USVs and UUVs since those investments don't go to shipbuilders. We still need to refine those numbers now that more budget materials are coming out through the posture hearings.

   The 2010–19 and 2020–25 SCN averages are calculated from the collected account history: $18.0 billion and $33.6 billion, respectively, a $15.6 billion or 86.8 percent increase per Hudson Institute analysis and its DPHULL database. This uses the same convention: SCN account 1611N, full-view dollars through FY 2026, and a dashed FY 2027 request extension. Under that convention, FY 2026 is $60.697 billion, and FY 2027 is $82.339 billion; the $19.6 billion supplemental increment is the difference between the FY 2026 full-view figure and the pre-supplemental request-like series. A wider FY 2027 display that also includes the Maritime Industrial Base Fund (1613N) would show $61.9 billion for FY 2026 and $23.9 billion of PL 119-21 shipbuilding-plus-industrial-base funding. Fiscal Year 2027 Department of War Budget: Procurement Programs (P-1) (Office of the Under Secretary of War [Comptroller], 2026), Shipbuilding and Conversion, Navy (1611N, p. 131–52), Maritime Industrial Base Fund (1613N, p. 157–60), https://comptroller.war.gov/Portals/45/Documents/defbudget/FY2027/FY2027_p1.pdf. ↑

7. The $4.1 billion figure sums Navy FY 2026 procurement and RDT&E lines explicitly titled for unmanned surface or undersea vehicles: small unmanned surface vehicles ($694.0 million), medium unmanned surface vehicles ($2.0 billion procurement and $39.4 million RDT&E), small and medium UUVs ($352.1 million procurement and $180.3 million RDT&E), extra-large UUVs ($3.3 million), LUSVs ($57.9 million RDT&E), unmanned undersea vehicle core technologies ($124.2 million), large unmanned undersea vehicles ($360.0 million), and USV-enabling capabilities ($339.4 million). The query excludes aerial UAS and counter-UAS lines. FY 2027 DoW Budget: Procurement Programs (P-1) and FY 2027 DoW Budget: Research, Development, Test & Evaluation Programs (R-1) (Office of the Under Secretary of War [Comptroller], 2026), FY 2026 enacted and PL 119-21 spend-plan displays. ↑
8. Extrapolating from Eric J. Labs, An Analysis of the Navy’s 2025 Shipbuilding Plan (Congressional Budget Office, 2025), https://www.cbo.gov/publication/60732; also, chapter 2 of this study report provides more detailed analysis. ↑
9. Heather Mongilio, “Navy Has 20,000 Gaps at Sea Due to Training Backlog, Past Recruiting Shortfall,” USNI News, December 15, 2025, https://news.usni.org/2025/12/15/navy-has-20000-gaps-at-sea-due-to-training-backlog-past-recruiting-shortfall. ↑
10. Bryan Clark, Ian Crone, and Dan Patt, The Quick and the Dead: How Adaptation in Contact Drives Military Advantage (Hudson Institute, 2026), https://www.hudson.org/defense-strategy/quick-dead-how-adaptation-contact-drives-military-advantage-bryan-clark-dan-patt-ian-crone. ↑

11. Robert C. Rubel, “Command of the Sea Redux,” Naval War College Review 75, no. 2 (Spring 2022): 6,

    https://digital-commons.usnwc.edu/nwc-review/vol75/iss2/6. ↑

12. Bryan Clark and Dan Patt, One-Size-Fits-None: Overhauling JADC2 to Prioritize the Warfighter and Exploit Adversaries’ Weaknesses (Hudson Institute, 2022), https://www.hudson.org/national-security-defense/one-size-fits-none-overhauling-jadc2-to-prioritize-the-warfighter-and-exploit-adversaries-weaknesses. ↑