Sen. Elizabeth Warren is giving President Trump rare credit for pressuring defense contractors to invest in weapons production over Wall Street payouts, and she wants the policy made permanent.
Warren, a Massachusetts Democrat and one of the Senate's most reliable progressive voices, joined Republican Sen. Mike Lee of Utah in a letter to War Secretary Pete Hegseth urging him to codify Trump's January executive order restricting stock buybacks at underperforming defense contractors. The letter, obtained by Fox News Digital, asks Hegseth to back the senators' proposed legislation, the Prioritizing the Warfighter in Defense Contracting Act, which would write the order's central provisions into federal law.
The bipartisan push comes after years of cost overruns and schedule delays on major Pentagon weapons programs. During those same years, top defense firms reported strong profits and funneled billions back to shareholders through buybacks and dividends rather than reinvesting in production capacity.
Staff for Warren and Lee reviewed earnings calls and financial reports from the twenty largest publicly traded U.S. defense contractors. Their findings suggest Trump's executive order is already reshaping how those companies spend their money.
Across all twenty firms, buybacks and dividends fell by $2 billion in the first quarter of 2026 compared with the same period a year earlier. Capital spending, money that goes toward factories, equipment, and production lines, rose by $1.2 billion over the same stretch.
The shift was sharpest among the four largest contractors. Lockheed Martin, RTX, Northrop Grumman, and General Dynamics together sent roughly $4.2 billion to shareholders through buybacks and dividends in the first quarter of 2025. By the first quarter of 2026, that figure dropped to approximately $2.7 billion, a reduction of about $1.5 billion. Lockheed, Northrop, and General Dynamics all reported declines. RTX's payouts rose slightly year over year.
Not every contractor followed the trend. GE Aerospace actually increased its stock buybacks, a fact Warren and Lee cited as evidence that the executive order alone is not enough to force lasting change across the industry.
The scale of the problem predates Trump's order by years. Over the past five years, top defense contractors, including Lockheed Martin, RTX, Boeing, Northrop Grumman, and General Dynamics, spent more than $100 billion on buybacks and dividends, according to the Washington Examiner. That figure is double what those companies put toward capital expenditures in the same period.
Meanwhile, a Government Accountability Office study found that weapons-building programs experienced average delays of eighteen months and combined cost estimate increases exceeding $49 billion in 2025 alone. The Pentagon kept writing checks; contractors kept missing deadlines; shareholders kept cashing in.
Warren framed the dynamic bluntly in a separate statement on the legislation.
"Giant military contractors are cheating our government out of billions in taxpayer dollars and lining their executives' and shareholders' pockets instead of investing in our national defense. It's time to stop these contractors from putting Wall Street over our national security."
The January executive order that started this push directs the Pentagon to identify contractors falling behind on performance, investment, or production. For future contracts, the order restricts stock buybacks and corporate distributions during periods of underperformance. Where existing law permits, it also allows the Pentagon to cap the base salaries of executives at those firms.
A provision the senators describe as a "keystone" ties executive incentive pay to on-time delivery and production improvements rather than short-term financial metrics like earnings per share. In plain terms, defense company CEOs would get bonuses for building weapons on schedule, not for juicing the stock price.
The Warren-Lee bill would codify those provisions so they survive beyond any single administration. Key elements of the legislation have already been folded into the Senate's version of the fiscal year 2027 National Defense Authorization Act as Section 815. That section would prohibit defense contractors from repurchasing shares or paying dividends without War Department approval if they fail to meet Pentagon performance standards.
The provision has drawn resistance. The U.S. Chamber of Commerce and major corporations are lobbying against Section 815, viewing the buyback restrictions as government overreach into how private companies allocate capital. The fight sets up a direct clash between defense hawks on both sides of the aisle and the corporate lobby that typically aligns with the Republican establishment on deregulation.
Fox News Digital reached out to the War Department, Lockheed Martin, RTX, General Dynamics, and GE Aerospace for comment on the Warren-Lee letter. None responded before publication.
The political alignment is unusual. Warren rarely praises any Trump policy, and Lee is among the Senate's most libertarian-leaning Republicans. But both arrived at the same conclusion: contractors collecting billions in taxpayer-funded contracts should not be allowed to shortchange weapons production while enriching shareholders and executives.
Their joint letter to Hegseth put the argument in direct terms:
"The Pentagon is handing companies billions, and now potentially trillions, of taxpayer dollars. Congress and the Administration must work together to ensure they fulfill their contractual obligations and enhance national security."
Sen. Josh Hawley, another Republican, has also backed the NDAA provision, broadening the bipartisan coalition behind the effort.
The early financial data suggests the executive order moved the needle. Whether Congress locks it in or lets the corporate lobby water it down will tell taxpayers everything they need to know about who Washington actually works for.
