"While President Obama and [Democratic presidential nominee]are shrinking America's military, they are also expanding, through allowing it to happen, the military of Iran," Trump said at a rally in Fredericksburg, Va.

"They are doing this with their disastrous deal that puts Iran on a path to nuclear weapons and gives them another $150 million, not to mention the $400 million in cash, which turned out to be a ransom payment after all, just like I said. In other words, our president lied to us. He lied to us."

The cash payment to the Iranian government is at the center of a new fight between Republicans and the Obama administration. Republicans allege that the payment was a ransom in exchange for the release of three American prisoners in Iran.

Obama has denied that it was a ransom and dismissed the criticism. He said it was money the U.S. owed Iran and had been announced months ago as part of a larger diplomatic agreement over Tehran's nuclear program. The payment was part of a $1.7 billion settlement resolving a dispute from an arms deal that occurred in the 1970s.

The Wall Street Journal reported earlier this week that U.S. officials had withheld the payment until they were sure the captive Americans had been released.

The State Department on Thursday said they had withheld the payment as "leverage" but insisted again that it was not a ransom.