Taiwan's cabinet approved a record government budget for next year, with defense spending topping the equivalent of about NT$1.1 trillion for the first time — good news for the military and for families on welfare, but it leans on more borrowing at the edges.

• Both income and spending are set at NT$3.93 trillion, a record, and the government says it will not add net debt because new borrowing matches what it pays back.
• Defense passes 3% of the economy for the first time, counting regular military money plus special budgets, the coast guard, and veterans' pensions under NATO-style accounting.
• Social spending jumps the most — welfare rises about 40%, with big money for family support, farmer and pension payments, and top-ups to the labor insurance and health insurance funds.
• Public works and grants to local governments both rise more than 30%, and help for small businesses nearly triples.
• The plan now goes to parliament by the end of August, where the opposition-controlled legislature has cut and frozen past budgets.

Outlook: Expect a fight in the legislature over the size and shape of the package, with the defense number the main test of Taiwan's promise to Washington.