With Zach Montellaro and Connor O’Brien

BUDGET BLUES — TRUMP PLAN FALLS SHORT OF HOPES, via Connor O’Brien and your Morning D correspondent: “President Donald Trump’s new budget proposal promises to lay the groundwork for his much-anticipated military buildup. But it is already being criticized as over-hyped.

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“Without more money and greater detail about how it will be spent, the plan falls far short of paying for what Trump promised during the campaign, according to lawmakers and military budget experts.

“The blueprint proposes $639 billion in defense spending for fiscal 2018 — or $52 billion more than the current year, a 10 percent increase. But while it boasts that it “fully repeals" spending limits imposed in 2011, the plan includes only a one-year increase — and one that is only a tad larger than what the Obama administration had laid out in its long-term spending plan.

“Nor does it detail how it would allow the administration to reach its lofty goals of a larger Navy and Army, close the gap on military readiness and reduce costs.”

— HAWKS STILL AREN'T FANS: Sen. John McCain (R-Ariz.) and Rep. Mac Thornberry (R-Texas), who chair the Senate and House Armed Services Committees, doubled down on their critique that Trump's defense topline isn't enough to pursue a major military expansion. The pair have instead advocated a $640 billion topline for national defense programs, well above the Trump’s $603 billion, which covers the Pentagon’s base budget and nuclear weapons programs under the Energy Department.

"It is clear that this budget proposed today cannot pass the Senate," McCain flatly stated.

"Unfortunately, the Administration’s budget request is not enough to repair that damage and to rebuild the military as the President has discussed," Thornberry said.

— AND IT STILL RILES PROGRESSIVES, Connor adds: “A handful of progressive and fiscal watchdog groups today criticized President Donald Trump's proposed defense boost blueprint, citing cuts to domestic agencies and calling the increase unjustified.

“‘Gutting our investments in every corner of government to pay for a spending binge at the Pentagon is beyond counterproductive,’ said Stephen Miles, the director of Win Without War. ‘Our nation's security depends on a strong economy, robust diplomacy, and our nation living its values at home and abroad. This budget does the exact opposite and makes America less safe.’"

“Democrats also criticized the proposal over cuts to domestic and diplomatic agencies. House Armed Services ranking Democrat Adam Smith argued cuts to the State Department show ‘a profound lack of understanding of our approach to international engagement.’"

— SHUTDOWN SHOWDOWN: SUPPLEMENTAL TAKES AIM AT CAPS, Connor and Greg write: “The Trump administration is aiming to comply with strict budget laws with its proposed supplemental funding request for fiscal 2017, something that could be a dicey proposal on Capitol Hill.

“Of the $30 billion the administration requested in budget supplemental unveiled Thursday, almost $25 billion is allocated to the Pentagon’s base budget, which is capped by the 2011 Budget Control Act.

“The plan would require lawmakers to alter the law and effectively re-litigate a previous deal to increase both defense and domestic spending with just over six months left in the fiscal year.

“At worst, this could imperil efforts to increase the defense budget for this year advocated by both the Trump administration and Republican defense hawks on Capitol Hill — and provoke a spending showdown as lawmakers scramble to avoid a late April government shutdown.”

THE BUDGET BOOSTS VA, TOO: The Veterans Affairs Department would be funded at $78.9 billion under the budget, a 6 percent increase over the current year. The budget also requests legislation to extend the VA Choice Program as well as $3.5 billion in mandatory funding for it. The non-VA care program is set to expire in August.

MORE BUDGET DETAILS: Trump's 62-page fiscal 2018 budget outline is here. The administration's supplemental request for fiscal 2017 is here. And additional documents from the Pentagon are here.

HAPPY FRIDAY AND WELCOME TO MORNING DEFENSE, where we swear we didn’t even look up from the “skinny budget” Thursday to check our brackets. Email us at ghellman@politico.com, and follow on Twitter @greg_hellman, @morningdefense and @politicopro.

POLITICO EVENT — Outside In - Digital Health Pioneer: Lessons from the VA — A deep-dive conversation exploring the future of the VA and how the political debate over the Department of Veterans Affairs has overshadowed the ways in which it has been an innovator in patient care coordination and health technology. Featuring a Keynote Conversation with David Shulkin, M.D., secretary, Department of Veterans Affairs. March 21, 8 a.m. — The Newseum. RSVP: here.

NEW ON POLITICO PRO! Reporters track some of the most politically dynamic defense programs and policy fights in regularly updated briefings highlighting legislative action, budget documents and key influencers in government and the private sector. Explore Defense Program Watch Have questions, comments or tips? What programs should we consider adding? Contact us at DefenseProgramWatch@politico.com and to receive notifications, sign up for alerts here.

MORNING D TRIVIA: Today’s Morning D trivia comes from last week’s winner, Cmdr. Alex McConnell. The last living — and probably most well known — five-star admiral in the Navy was Fleet Adm. Chester Nimitz. Name the other three admirals to hold the rank of fleet admiral, and the name the only individual to hold the rank of admiral of the Navy or "six-star admiral.”

The first person to email the correct answer to Morning D (ghellman@politico.com) wins a mention in Monday’s edition.

HAPPENING TODAY — TRUMP MEETS MERKEL: The president confers with German Chancellor Angela Merkel for the first time at the White House, and the two will hold a joint news conference. POLITICO’s Matthew Karnitschnig has a preview here.

— ALSO TODAY, THE ATLANTIC COUNCIL DISCUSSES THE MIDEAST: The Atlantic Council hosts a forum on the Middle East, featuring House Foreign Affairs Committee member Rep. Adam Kizinger (R-Ill.) and former Utah Gov. Jon Huntsman, chairman of the think tank.

TILLERSON TALKS TOUGH: DIPLOMACY HAS ‘FAILED,’ The Washington Post reports: “The Trump administration made a clear break Thursday with diplomatic efforts to talk North Korea out of a nuclear confrontation, bringing the United States and its Asian allies closer to a military response than at any point in more than a decade.

“Secretary of State Rex Tillerson said that 20 years of trying to persuade North Korea to abandon its nuclear program had failed and that he was visiting Asia ‘to exchange views on a new approach.’

“Soon after Tillerson’s remarks, in a sign of mounting tensions, the North Korean Embassy held an extraordinary news conference in Beijing to blame the potential for nuclear war on the United States while vowing that its homegrown nuclear testing program will continue in self-defense.”

— AND ‘ALL OPTIONS ARE ON THE TABLE,’ The Post adds: “The Trump administration gave its clearest signal yet that it would consider military action against North Korea, with Secretary of State Rex Tillerson saying Friday that ‘all options are on the table.’

“‘Certainly, we do not want for things to get to a military conflict, we’re quite clear on that in our communications, but obviously if North Korea takes actions that threaten the South Korean forces or our own forces, then that would be met with an appropriate response,’ Tillerson said at a press conference in Seoul with Yun Byung-se, the South Korean foreign minister.

DEFENSE SUPPLEMENTAL — AN OCO SURPRISE: While $5.1 billion of the request falls under the war-related Overseas Contingency Operations account for operations in Iraq, Syria, Afghanistan and elsewhere — which isn’t capped by law — the remaining $24.9 billion is specifically allocated to the Pentagon’s base budget for this fiscal year. And it would require Congress to lift the defense budget caps for 2017.

Lawmakers have shown a willingness in recent years to tap the war budget to circumvent defense spending caps. Former President Barack Obama vetoed a version of the National Defense Authorization Act in 2015 that included $38 billion in war funding dedicated to base budget priorities. And the fiscal 2017 NDAA, signed in December, included several billion dollars in OCO used to restore readiness gaps in the regular Pentagon budget.

But the $25 billion in base funds outlined Thursday includes a number of items popular on Capitol Hill.

— AND A NEW SLUSH FUND? The supplemental also includes a request for a nearly $2 billion “Overseas Contingency Operations Transfer Fund” that would allow the administration to obligate war funding as it sees fit.

“It’s ironic that Mulvaney, who’s railed against slush funds for years, creates one,” Mark Cancian, a senior adviser at the Center for Strategic and International Studies, told POLITICO, referring to White House Budget Director Mick Mulvaney, a former Republican congressman from South Carolina.

— HERE COMES THE HARDWARE: The supplemental also proposes adding $13.5 billion in procurement for additional platforms. That includes five extra F-35s for the Air Force, 24 additional Navy F/A-18 Super Hornets, 20 more Apache and 17 more Black Hawk helicopters for the Army, 12 additional THAAD interceptors and full funding of an Arleigh Burke class destroyer. Acting Pentagon Comptroller John Roth detailed the ask in Pentagon briefing.

— AND PASS THAT APPROPS BILL, TOO: Roth made clear Thursday that, in addition to the supplemental, the Pentagon still views passage of a full-year defense spending bill as a top priority. Operating on a continuing resolution beyond the April 28 deadline for the current temporary funding measure, he warned, "would be very problematic" for the department.

"Our request to Congress is that they pass a full-year defense appropriations bill and that bill include these additional appropriations," Roth said. "We would find that extremely harmful to the defense program to have to live under a full year of continuing resolution."

PENTAGON DEBATES MIDEAST ‘MISSION CREEP,’ writes POLITICO’s Bryan Bender: “President Donald Trump’s pressure on the military to "demolish and destroy" the Islamic State is raising anxiety inside the Pentagon that the United States could end up in another open-ended ground war, according to current and former military officials.

“The U.S. has quietly sent hundreds of additional troops to Iraq and Syria since Trump took office, and is considering dispatching thousands more to counter ISIS, fight militants in Yemen and stem a Taliban resurgence in Afghanistan. But the deliberations are testing Trump’s promise to steer clear of foreign entanglements, and has his military commanders questioning whether they can maintain their meticulously drawn line between supporting local forces and leading the fight.

"’How much more blood do we want to shed for Iraq?’ asked one senior officer who recently returned from the war zone.”

TRUMP TAPS PENTAGON NO. 2, reports Connor: “President Donald Trump today tapped six individuals to fill senior positions at the Pentagon, including Boeing executive Patrick Shanahan to be deputy defense secretary.

“Shanahan, a senior vice president for supply chain and operations at Boeing, would be the second most senior civilian official at the Pentagon. He also served as Boeing's senior vice president of airline programs and as well as vice president and general manager of Boeing Missile Defense Systems.”

Also tapped: David Joel Trachtenberg to be principal deputy undersecretary of defense for policy, David Norquist to be the Pentagon comptroller, Elaine McCusker to be principal deputy undersecretary in the comptroller's office, and Kenneth Rapuano to be assistant secretary of defense for homeland defense and global security.

The president also selected House Armed Services staffer Bob Daigle, who spearheaded Chairman Mac Thornberry's acquisition reform efforts last year, to be the director of Cost Assessment and Program Evaluation.

THORNBERRY WILL WAIT ON MATTIS HEARING: While Defense Secretary Jim Mattis will make his first appearance before the Senate next week, Thornberry says he's in no hurry for the new Pentagon chief to testify on his budget.

Since taking the gavel, the Texas Republican has preferred to hear from the military services before the secretary and says he's "gotten really good feedback" on the process. "I don't know exactly when he'll come, but it'll be at or towards the end," Thornberry told reporters on Capitol Hill.

SEND IN THE SUBCOMMITTEES: Thornberry was joined at a Thursday press gaggle by Rep. Elise Stefanik (R-N.Y.), who chairs the HASC Emerging Threats and Capabilities Subcommittee. It's the second time in as many weeks Thornberry has included a subcommittee chair to detail their work. Last week, Strategic Forces Subcommittee Chairman Mike Rogers (R-Ala.) briefed reporters with Thornberry.

INTEL LEADERS SHOOT DOWN TRUMP WIRETAP CLAIM, via our colleague Austin Wright: “President Donald Trump suffered the second bipartisan rebuke from Congress over his wiretapping claims in two days — and left it to his embattled spokesman, Sean Spicer, to explain that the president didn’t actually mean what he wrote.

“The Republican chairman and top Democrat on the Senate Intelligence Committee on Thursday shot down Trump’s claim that former President Barack Obama wiretapped Trump Tower in the run-up to the 2016 presidential election.

“Their statement comes a day after the Republican chairman of the House Intelligence Committee also cast doubt on Trump’s claim.

“The stunning rebukes from senior Republicans are the latest sign that many in the GOP are increasingly frustrated with a president who has made a habit of hurling inflammatory insults on Twitter at his political rivals — or even his reality-television rivals — often without evidence and sometimes based on conspiracy theories.”

MOSCOW PAID FLYNN $34K FOR SPEECH, Austin also writes: “Former National Security adviser Michael Flynn was paid nearly $34,000 to speak at a 2015 gala in Moscow honoring the Russian propaganda outlet RT, according to documents released Thursday by congressional investigators.

“Flynn has previously acknowledged being paid to speak at the 2015 event but has not disclosed the amount. He resigned last month after just 24 days as President Donald Trump’s national security adviser after it became clear that he misled officials about the nature of his conversations with Russia’s ambassador.”

NCIS ID’S 1,200 SOLDIERS ON NUDE PHOTO-SHARING SITE, reports Stars and Stripes: “Lawmakers were weighing their options [Thursday] as the number of identified members of the Facebook site Marines United grew to 1,200, including 700 active-duty and 150 Reserve Marines, according to Rep. Jackie Speier (D-Calif).

“Speier disclosed the figures from the Naval Criminal Investigative Service after a closed-door briefing to the House Armed Services Committee by Marines Commandant Gen. Robert Neller on the service’s unfolding photo-sharing scandal. Flanked by famed attorney Gloria Allred and a victim of the site, Speier also unveiled a bill criminalizing the nonconsensual posting of nude images.”

Also, inside the rise and fall (and rise) of the Marines United nude-photo group: Task & Purpose

WAR REPORT — FOREIGN FIGHTERS SURROUNDED IN MOSUL, reports The Wall Street Journal: “Islamic State fighters from outside Iraq are increasingly being abandoned by local militants as the group loses ground in Mosul, leaving a hardened core of extremists dominated by foreigners that is girding for a fight to the finish.

“Teams of up to 10 fighters composed mainly of foreigners control individual streets in the group’s last major Iraqi stronghold, using rooftops as sniper positions and outfitting vehicles with explosives, residents said.”

— U.S. DENIES MOSQUE BOMBING IN SYRIA, via The New York Times: “The United States military said that it had carried out an airstrike against a meeting of Qaeda militants on Thursday in Syria and that a number of the extremists had been killed.

“The American military statement came as Syria activists reported that a mosque had been bombed and that scores of innocent civilians had been killed and wounded.

“A spokesman for the United States Central Command said the American aircraft had struck a nearby building, but did not hit the mosque."

SPEED READ

— Syria launches anti-aircraft missiles against Israeli aircraft in Israel’s territory after they carry out airstrikes: The Associated Press

— Lockheed Martin hands a 60-kilowatt laser system to the U.S. Army Space and Missile Defense Command for testing: The Washington Post

— The House passes contentious bills on VA accountability and veterans gun rights: Military Times

— An IMF employee is injured after a letter bomb explodes in its Paris office: Reuters

— The Pentagon has few places to send troops to in Europe if it wants to expand the size of the force: Stars and Stripes

— Construction is scheduled to begin soon on the National Museum of the U.S. Army at Fort Belvoir, Va.: Military.com

— Somali pirates release oil tanker and crew, officials say: The Washington Post

— The Pentagon asks employees not to stream March Madness games at work: CBS News