US Military Spending

A History of Military Spending: From Militia to Empire

The story of US military spending is the story of America's transformation from a small republic that feared standing armies into the largest military power in human history. The Founders were explicit: a large permanent military was a threat to liberty. James Madison warned that “a standing military force, with an overgrown Executive, will not long be safe companions to liberty.” George Washington counseled that “overgrown military establishments are under any form of government inauspicious to liberty, and are to be regarded as particularly hostile to republican liberty.”

For the first century, America largely heeded this warning. The peacetime army was tiny — rarely more than 25,000 troops. Wars were fought by mobilizing citizen-soldiers and then rapidly demobilizing. After the Civil War, the Union Army went from over 1 million to 25,000 in two years. After World War I, the Army shrank from 4.7 million to 140,000. This pattern — mobilize, fight, demobilize — was the American way of war for 170 years.

World War II changed everything. For the first time, America maintained a large permanent military after the war ended. The Cold War made the “temporary” military-industrial complex permanent. And after the Cold War ended, the apparatus didn't shrink — it found new enemies, new missions, and new justifications. The Founders' nightmare came true: a permanent military establishment that consumes more wealth than any empire in history.

More Than the Next 10 Countries Combined

The United States spends $886B on defense. The next 10 highest-spending nations — China, Russia, India, Saudi Arabia, the UK, Germany, France, Japan, South Korea, and Australia — spend a combined $867B. The US alone accounts for approximately 39% of all global military spending.

But raw totals only tell part of the story. Per capita, the US spends $2,640 per citizen per year on defense. A Chinese citizen's share is approximately $200. An Indian citizen's: $58. Americans spend 13 times more per person on their military than Chinese citizens — despite facing no existential military threat.

Even as a percentage of GDP, the US spends more than most allies. NATO members are supposed to spend 2% of GDP on defense — a target most don't meet. The US spends 3.4%. Japan spends about 1.1% (though rising). Germany spent just 1.5% until the 2022 Ukraine crisis prompted a commitment to 2%. America doesn't just lead the alliance — it subsidizes it, spending more so its allies can spend less on defense and more on their own citizens.

Where the Money Goes

The $886 billion DOD budget is divided into six major categories. The largest — Operations & Maintenance at $290 billion — includes the ballooning cost of private military contractors, who now cost the Pentagon more than its own uniformed personnel. The second-largest is military pay and benefits at $170 billion, covering 1.3 million active-duty troops, 800,000 reservists, and 750,000 civilian employees.

The Hidden Costs: The True $1.4 Trillion National Security Budget

The $886 billion DOD budget dramatically understates true US military spending. The figure excludes multiple categories of military-related spending spread across other agencies. When economists and security analysts calculate the total national security budget, the number is staggering:

53% of Discretionary Spending

Federal spending falls into two categories: mandatory (Social Security, Medicare, Medicaid) and discretionary (everything Congress votes on annually). Military spending consumes approximately 53% of all federal discretionary spending — more than education (5%), health (7%), housing (3%), NASA (2%), and the environment (1%) combined.

To put it differently: for every discretionary dollar Congress spends, 53 cents go to the military. The remaining 47 cents fund every other function of the federal government — from the FBI to national parks to food safety to NASA to education to environmental protection.

The Pentagon Has Never Passed an Audit

Despite being required by law since 1990, the Department of Defense has never passed a comprehensive financial audit. It first attempted one in 2018 — and failed. It has failed every year since. In 2023, its sixth consecutive audit failure, the Pentagon still could not account for $3.8 trillion in assets.

The Pentagon manages 2,300+ financial software systems, many of which cannot communicate with each other. Some date to the 1960s. The DOD Inspector General found in 2016 that the Army made $6.5 trillion in accounting adjustments in a single year — more than the entire federal budget — just to make the books “balance.” These weren't real transactions; they were plug numbers with no supporting documentation.

No other federal agency has this problem. If a private company operated this way, its executives would face criminal charges. But the Pentagon's audit failures carry no consequences — and Congress continues increasing its budget regardless. The Pentagon says it may achieve a “clean audit” by 2028. Nobody believes it.

The Budget Always Grows

One of the most remarkable features of US military spending is its political immunity. Regardless of the party in power, the global security environment, or the fiscal situation, the defense budget almost never shrinks:

• FY2015: $586B (Obama — supposed “sequestration” era)
• FY2018: $700B (Trump — blew through spending caps)
• FY2021: $740B (Biden transition)
• FY2023: $858B (Biden — $45B more than he requested)
• FY2024: $886B (Congress added $44B above the White House request)
• FY2025: $895B requested (Congress will likely add more)

Notice the pattern: Congress consistently appropriates more than the President requests. Both parties compete to appear more pro-defense than the other. The Pentagon gets more than it asks for, year after year, regardless of whether America is at war or at peace.

Budget Tricks: OCO, Supplementals, and Base Budget Manipulation

The Pentagon has developed sophisticated techniques for circumventing budget limits:

• Overseas Contingency Operations (OCO): For years, the Pentagon maintained a separate “war fund” that didn't count against budget caps. At its peak, OCO added $160+ billion per year. The Pentagon routinely stuffed non-war base budget items into OCO to evade the Budget Control Act caps. OCO was formally eliminated in FY2022 — the spending was simply absorbed into the base budget, which promptly surged past $800 billion.
• Supplemental Appropriations: Emergency funding bills that bypass normal budget scrutiny. Iraq and Afghanistan war costs were funded through supplementals for years, keeping them “off the books” of the regular defense budget.
• Unfunded Priorities Lists: Each service chief submits a “wish list” of items not in the President's budget. Congress uses these lists to add billions in spending the Pentagon didn't officially request — providing political cover (“the generals asked for it”) while funneling money to favored districts.
• Multi-year Procurement: Committing to buy weapons over multiple years locks in future spending and makes cancellation politically painful. Once a weapons program starts, it becomes nearly impossible to kill because jobs are distributed across dozens of states and hundreds of congressional districts.

State-by-State Defense Spending

Defense spending is deliberately distributed across as many states and congressional districts as possible. This is by design — it makes the defense budget politically untouchable because every member of Congress has defense jobs in their district. The F-35 alone provides jobs in 45 states. The top 10 states for defense spending:

These ten states alone account for over $350 billion in annual defense contracts and spending — creating a powerful constituency of workers, companies, and elected officials whose livelihoods depend on the military budget growing. This is precisely the “military-industrial complex” that Eisenhower warned about in 1961.

Who Benefits: The Defense Lobbying Machine

The defense industry spends lavishly to ensure the budget keeps growing. The top five defense contractors — Lockheed Martin, Boeing, Raytheon (RTX), General Dynamics, and Northrop Grumman — received $2.4T in Pentagon contracts from 2020–2024. They reinvest a fraction of those profits into lobbying and campaign contributions to ensure the cycle continues:

The “revolving door” between the Pentagon and defense contractors is the engine of this system. Over 500 former senior DOD officials have been identified working for defense contractors. Generals retire on Friday and start consulting for Lockheed Martin on Monday. Congressional staffers who write defense authorization bills leave to become lobbyists for the companies those bills fund. The system is self-reinforcing: the people who decide how to spend the money are the same people who profit from it.

Per Capita Comparison: What Other Countries Spend on Citizens Instead

While the US spends $2,640 per person on defense, other nations invest differently:

• Denmark spends $900/person on defense — and provides free healthcare, free university education, and a year of paid parental leave
• Japan spends $400/person on defense — and has universal healthcare, a life expectancy 5 years higher than the US, and the world's best rail system
• Germany spends $670/person on defense — and provides free university education, universal healthcare, and 30 days mandatory paid vacation
• Canada spends $580/person on defense — and provides universal single-payer healthcare and a year of paid parental leave

Americans pay more for defense per capita than any of these nations, yet rank lower in life expectancy, healthcare outcomes, education, and infrastructure quality. The money spent on missiles and carriers cannot simultaneously be spent on schools and hospitals. This is the opportunity cost of empire.

What $886 Billion Could Fund Instead

The $886B defense budget could simultaneously make all public universities free ($79B), end homelessness ($20B), provide universal pre-K ($34B), triple the NIH budget ($94B), double the EPA budget ($12B), repair every deficient bridge ($125B), eliminate all medical debt ($195B), and provide clean water infrastructure ($45B) — and still have $282 billion left over. That remaining amount would still be larger than the military budget of any country on Earth except China.

The Libertarian Case Against Military Overspending

From a classical liberal and libertarian perspective, the current level of military spending represents a profound failure of limited government principles:

• Constitutional overreach: The Founders envisioned a small defensive military, not a global empire with 750 bases in 80 countries. Article I gives Congress the war power, yet the executive now wages war at will.
• Taxation as confiscation: Every dollar spent on an unneeded weapons system is a dollar taken from a citizen by force. Military spending is the largest single category of federal discretionary expenditure — and the least accountable.
• Crony capitalism: The defense industry is the purest example of corporate welfare. Cost-plus contracts reward inefficiency. The revolving door ensures insiders profit. Competition is limited or nonexistent for major weapons programs.
• Threat inflation: The national security establishment systematically overstates threats to justify spending. Russia's GDP is smaller than Italy's. China's military budget is one-third of America's. Yet the US spends as if facing an existential threat.
• Debt and future burden: Military spending, especially war spending, is financed through borrowing — transferring the cost to future generations who had no voice in the decision. This is taxation without representation across time.

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”
— Dwight D. Eisenhower, Farewell Address, January 17, 1961

“Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.”
— Dwight D. Eisenhower, “Chance for Peace” speech, 1953

“Of all the enemies to public liberty, war is, perhaps, the most to be dreaded, because it comprises and develops the germ of every other. War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few.”
— James Madison, “Political Observations,” 1795

“War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.”
— Major General Smedley Butler, USMC (two-time Medal of Honor recipient), 1935

Jobs: Military Spending Creates the Fewest

One common defense of military spending is “it creates jobs.” This is true — but it creates fewer jobs per dollar than any other major category of government spending. Research by the Political Economy Research Institute at UMass Amherst found that $1 billion in military spending creates approximately:

• 5,000 jobs in the military sector
• Versus 13,000 jobs in education
• Versus 9,000 jobs in healthcare
• Versus 8,000 jobs in clean energy
• Versus 7,000 jobs in infrastructure

Redirecting even $100 billion from military to education spending would create a net gain of approximately 800,000 jobs. Military spending is the least efficient form of economic stimulus — the high cost of weapons systems means most money goes to capital-intensive manufacturing, not labor. Try our Jobs Calculator to see the impact of redirecting military dollars.