I think you makes good points, and that's the real issue here. It's not going to be an issue of illegality, but priority. Will we tolerate taking 10 billion out of the 700 billion military budget? It's less than 2%. Sure seems like that's a possibility.
The other key will be responsible spending on the part of the military. Trump has a knack for finding good deals. My guess is, he's going to haggling with military vendors, getting them to drop their prices.
Well hold on. I actually think legality is going to be the harder of the obstacles. The biggest part of MILCON funding is that it has to be for a DoD end user.
Second thing, the military budget is 700 billion but that is not all MILCON. There are several different colors of money used by the DoD. MILCON, O&M, Environmental Restoration, etc. The DoD MILCON budget is simply one of the many colors of money. It doesn’t mean we have 700 billion to spend on all things military.
Third, the POTUS doesn’t negotiate government procurements. That is handled by the Contracting Officer and Technical Lead of the respective command. Government negotiations like this aren’t about finding a deal, they are for finding a fair market price for the requisite supply or service. The cost estimates go line by line of what they think the job will cost and that is the basis of negotiation.