The House of Representatives just approved a $900 billion defense policy package that does a little bit of everything—pay raises for troops, mandatory minimum force levels overseas, base upgrades, and the elimination of diversity programs. It's the kind of massive annual bill that usually sails through Congress, but this year's version arrived with some extra political tension.

What's Actually In This Thing

The National Defense Authorization Act passed Wednesday with a 312-112 vote, which sounds comfortable until you learn that Speaker Mike Johnson (R-La.) had to keep voting open for over an hour while he convinced four Republican members to flip their votes from "no" to "yes." Rep. Thomas Massie (R-Ky.) held out as the only Republican voting against the procedural rule.

For service members, the bill delivers a 3.8% pay increase effective January 1. Those with families will also see their monthly separation allowances jump from $250 to $400 when they're deployed or away from home for 30 days or more. The legislation also mandates upgrades to military bases and housing, which is overdue considering the state of some military housing has been making headlines for years.

On the geopolitical front, the NDAA sets some hard numbers. The Pentagon must maintain at least 76,000 troops and key equipment in Europe, with requirements to consult NATO allies. In South Korea, the minimum is 28,500 U.S. troops. These aren't suggestions—they're mandates, reflecting congressional nervousness about potential changes in U.S. military commitments abroad.

The bill also takes aim at Diversity, Equity, and Inclusion programs, proposing cuts to DEI offices across the military. And speaking of NATO, Massie introduced separate legislation on Wednesday to withdraw the U.S. from the alliance entirely, calling it a "Cold War relic." That move has amplified the ongoing Republican debate about America's role in the alliance.

Defense Stocks Are Having A Moment

While Congress debates force structure, defense contractors are enjoying a renaissance. The sector is riding high on increased budgets, global tensions, and supportive U.S. policy. Trump's "One Big Beautiful Bill Act" from July 4 pumped $156.2 billion into defense—the Pentagon's largest funding boost in over a decade.

The numbers tell the story. Year-to-date, the iShares U.S. Aerospace & Defense ETF (ITA) has surged 41.13%, while the Global X Defense Tech ETF (SHLD) has rocketed 72.98% higher. Compare that to the Vanguard S&P 500 ETF (VOO) at 17.62% and the Invesco QQQ Trust (QQQ) at 23.01% for the same period.

Individual defense stocks are showing similar strength. Over the past six months, Lockheed Martin Corp. (LMT) returned 2.48%, while RTX Corporation (RTX) gained 23.21% and General Dynamics Corporation (GD) climbed 24.07%.

The defense sector's momentum reflects more than just this single authorization bill. It's part of a broader rearmament cycle that began under Trump and continues as global security concerns intensify. With Congress now locking in troop levels and funding commitments, defense companies have the kind of visibility they love—guaranteed government spending stretching into the future.