(Adds details on military branch funding)
By Mike Stone
WASHINGTON, May 23 (Reuters) - While U.S. President Donald Trump's budget proposal for national defense increases spending, it falls short of campaign promises to rebuild the Navy and a "historic" increase in military spending.
The budget proposes a modest increase in military spending. Trump is seeking a $52 billion hike for the Pentagon as part of an overall defense spending increase of $54 billion. That is almost 10 percent higher than current budget caps, but only 3 percent more than what former President Barack Obama had sought in his long-term budget plan.
The $603 billion includes funding for nuclear weapons programs at the Department of Energy and other national defense programs as well as the Department of Defense.
The Pentagon's specific defense request is for $574.5 billion, an increase of 4.6 percent compared with the budget for fiscal year 2017.
"Looking at defense specifically, this is not a historic budget - much less a buildup," said Mackenzie Eaglen, an analyst at the American Enterprise Institute, a think tank based in Washington.
"This budget seeks to repair the cracked military foundation by plugging gaps and filling holes," she said.
At the direction of Defense Secretary James Mattis, the Pentagon is carrying out a broad budget and strategy review, and experts said this budget is more of a placeholder until that is complete.
"It feels to me like the Trump administration just doesn't really have it all together at this point," said Laicie Heeley, a fellow at the Stimson Center, another Washington-based think tank.
The budget request must be passed by Congress but faces skeptical lawmakers. U.S. officials said the focus of the budget proposal was to improve readiness.
U.S. Senator John McCain, one of the leading military and foreign policy voices in Congress, said on Tuesday that the White House's budget proposal was "inadequate" and "dead on arrival" in Congress.
McCain has been a proponent of increasing base defense spending to above $640 billion in order to renew the military and invest in modern capabilities.
"Obviously it is going to take a lot in Congress, in both the House and Senate, to try to get it done and we are here to help in any way we can," Acting Comptroller John Roth told reporters.
The proposal includes an additional $65 billion in Overseas Contingency Operations (OCO) money, which is intended to fund ongoing wars and does not count against the budget caps.
The fiscal 2018 budget proposal's OCO funding includes $46 billion for operations in Afghanistan, but is based on current U.S. troops levels at about 8,400. The Trump administration is weighing sending between 3,000 and 5,000 additional U.S. and coalition troops to the war-torn country to stem gains made by Taliban militants.
The OCO fund also includes $13 billion for the fight against Islamic State militants in Iraq and Syria and $4.8 billion for the European Reassurance Initiative, which is an increase of about $1.4 billion from the 2017 request.
The budget proposes $137.2 billion for the Army, which is looking to keep active-duty troop levels at 476,000.
The Obama administration had planned for the number of Army active-duty troops to go down to 450,000 by the end of fiscal 2017.
The White House's proposal also earmarks a total of $171.5 billion for the Navy.
As a presidential candidate, Trump made repeated calls to expand the current 275-ship fleet to 350.
However, that will have to wait because the budget proposal did not accelerate the Navy's schedule for purchasing additional ships, but instead increased funding for ship maintenance as the duration of overseas deployments increases.
The Navy added a Boeing Co P-8 submarine-hunting aircraft, but delayed the purchase of two F-35C variant jets made by Lockheed Martin Co. (Additional reporting Idrees Ali; editing by Andrea Ricci, Chizu Nomiyama and Jonathan Oatis)