A Different Kind of Federal Responsibility
In our view, national defense is different from most other major areas of government spending because it is one of the few things only the federal government can truly provide. States cannot maintain fleets, nuclear deterrence, global intelligence systems, treaty commitments, or unified command structures. By contrast, many social programs involve some mix of federal, state, local, family, charitable, and private-sector roles—even when the federal government is a major funder. That does not make those programs unimportant. It does mean defense occupies a more uniquely federal space.
Why Analyzing Military Spending Is Hard
It is nearly impossible for an ordinary citizen – let alone pundits, newspaper reports, or even members of Congress — to know the “right” level of military spending. The country does not get to choose defense spending in a vacuum. The answer depends on strategy, alliances, geography, technology, industrial capacity, nuclear deterrence, and the behavior of other countries. A military sized for homeland defense alone would look very different from one designed to deter China, support NATO, protect shipping lanes, sustain a nuclear umbrella, and fight in multiple regions with very different tactics if necessary.
That is why simplistic arguments in either direction are weak. “Just cut waste” does not tell you whether the force is large enough. But “just spend more” does not tell you whether the money is buying real readiness, deterrence, and capacity. Defense is one of the hardest parts of the budget to judge from the outside.
Similarly, in our view it is not sufficient to argue that defense spending should be reduced simply because there are pressing domestic needs such as healthcare affordability, poverty, or education. Those concerns are real and important. But they do not automatically determine the appropriate level of defense spending. National defense addresses a different category of responsibility—protecting the country from external threats and maintaining stability in a world where risks still exist. Reducing defense spending to fund domestic priorities may make sense in some cases, but it requires a clear understanding of the tradeoffs involved, including potential impacts on security, deterrence, and global stability. In other words, these are not interchangeable choices—they are competing priorities that must be weighed, not assumed.
Historical Guideposts: Ratios That Help
One useful way to think about defense spending is not just in raw dollars, but as a share of the overall economy. That metric does not tell us the “correct” level of spending, but it helps place current defense policy in historical context and compare it to both past threats and current fiscal burdens.
According to the U.S. Department of Defense FY 2025 budget overview, defense spending reached roughly 11.4% of GDP during the Korean War in 1953, 8.6% during Vietnam in 1968, and about 5.9% during the Reagan-era Cold War buildup in 1986. After the collapse of the Soviet Union, spending fell sharply, reaching about 2.8% of GDP in 1999 during a period when many policymakers believed the world had become relatively safer. By comparison, defense spending is projected at roughly 3.0%–3.2% of GDP in 2025.
Those numbers are striking because today’s geopolitical environment is becoming substantially more dangerous than the one that existed during the post-Cold War draw down. The United States now faces simultaneous long-term challenges from China and Russia, instability across the Middle East, growing tensions around Taiwan, and rapid military competition in cyber-warfare, drones, missiles, artificial intelligence, naval power, and space. Unlike the 1990s, the U.S. is no longer operating in a world where it faces no near-peer competitors.
Viewed in that context, current defense spending does not appear exceptionally high by historical standards. In fact, one could reasonably argue that the United States is attempting to manage a far more complex global threat environment while devoting a smaller share of its economy to defense than it did during much of the Cold War. That does not automatically mean every increase is justified or every dollar is well spent, but the broader historical comparison arguably points more toward pressure for higher spending than lower spending.
The comparison with interest payments is also revealing. For decades, the United States spent far more on defense than on servicing debt. That gap has narrowed dramatically. Net interest costs are now approaching — and in some projections exceeding — annual defense spending. Niall Ferguson refers to his “Ferguson’s Law” in this context, the idea that when a great power begins spending more on debt interest than on defense, it is often a sign of strategic and geopolitical decline. However, the lesson from that comparison does not point so much to how much we should spend on defense but rather to the danger of allowing debt to grow so large that interest payments crowd out national priorities, including military preparedness. In practical terms, rising interest costs reduce strategic flexibility. Money spent paying creditors cannot be used to modernize the Navy, expand munitions production, strengthen cyber defenses, develop next-generation technologies, or deter adversaries abroad. A heavily indebted country may eventually find itself less capable of responding to crises not because threats declined, but because fiscal capacity eroded.
How much our allies spend on defense, and their capabilities, should also be part of the analysis. For many years, the United States effectively subsidized a large portion of Western defense while many allied countries spent relatively little relative to their economies. That is beginning to change, particularly after Russian invasion of Ukraine, but many analysts argue allied defense spending still remains too low given current risks. A more dangerous world likely requires both higher allied contributions and a United States that maintains sufficient military strength to preserve deterrence.
Of course, defense budgets should be subject to scrutiny. Waste, procurement failures, and strategic misjudgments are real concerns in any system this large. But historical comparisons suggest the United States is not currently operating at anything close to historic wartime mobilization levels, despite facing a significantly more contested global environment than existed during the unusually peaceful post-Cold War period. Meanwhile, the larger danger may not be that America spends too much on defense, but that persistent deficits and rising debt eventually leave the country unable to sustain the level of military capability that the world situation increasingly demands.
What Today’s Threat Environment Looks Like
The problem is that today’s world does not look especially safe or stable. The U.S. intelligence community’s 2025 Annual Threat Assessment says China, Russia, Iran, and North Korea have grown closer, and that their cooperation increases the risk that conflict with one could draw in others.
China is the most important long-term military challenge. ODNI says Beijing wants greater power and influence and is deeply focused on countering U.S. opposition and U.S.-allied coalitions. Activity around Taiwan and across the Indo-Pacific has increased, including large-scale exercises simulating blockade and strike operations.
Russia remains a serious threat even after heavy losses in Ukraine. Its nuclear arsenal remains formidable, and it continues to invest in strike capabilities that can threaten U.S. allies and potentially the homeland.
Iran is no longer just a theoretical concern. As of 2026, it is actively engaged in conflict and has taken significant damage from U.S. and Israeli strikes. But that does not remove the threat. Iran still retains the ability to launch missiles and drones, disrupt shipping through key chokepoints like the Strait of Hormuz, and create instability through asymmetric means. In that sense, Iran is a wildcard: weaker than before, but still capable of imposing meaningful military and economic costs.
North Korea remains dangerous because of nuclear weapons, missile development, and the ability to threaten U.S. forces, allies, and potentially the homeland.
So while defense is not the main driver of long-term debt growth, foreign threats also cannot simply be waved away. The U.S. faces a more demanding security environment than the one that existed during the 1990s draw down.
Industrial Base, Procurement, and Capacity
A central issue in defense is not just how much the United States spends, but how effectively that spending translates into real, usable military capability. In a serious conflict, the challenge would not just be the size of the current force. It would be whether the country can build more—ships, aircraft, missiles, drones, and munitions—quickly enough to sustain operations. That depends on the defense industrial base: shipyards, aerospace manufacturing, supply chains, specialized components, and skilled labor.
Recent experience has exposed limitations in this area. The U.S. has at times struggled to replenish munitions quickly, scale production, or accelerate timelines for key systems. Procurement challenges—cost overruns, delays, and long development cycles—compound the problem. This means that a large defense budget does not automatically produce strength. What matters is whether that budget can be translated into capacity at speed and scale. In a prolonged conflict, industrial capability can matter as much as the size of the standing force.
New Forms of Warfare
At the same time, the nature of warfare itself is shifting. Recent conflicts have demonstrated the growing importance of relatively low-cost systems such as drones, loitering munitions, and unmanned maritime platforms. These systems can be produced in large numbers and deployed quickly. They can damage high-value assets, disrupt operations, and force defenders to expend far more expensive resources to respond. This changes the economics of warfare: it is no longer just about building the most advanced platforms, but also about fielding systems that are scalable, adaptable, and replaceable.
Traditional military assets—ships, aircraft, submarines—remain essential. But a force built primarily around a small number of highly expensive systems may be less effective in conflicts where volume, speed, and resilience matter as much as technological sophistication.
Where AI Fits
Artificial intelligence is part of this broader shift, but it is best understood as an enabler rather than a standalone solution. AI can improve targeting, process large amounts of sensor data, support logistics and maintenance, and enable more effective use of autonomous systems. It is particularly relevant in areas like counter-drone defense, where rapid detection and response are critical.
At the same time, AI does not replace the fundamentals. It does not build ships, produce munitions, or eliminate the need for trained personnel and sound strategic judgment. Its value lies in making systems faster, more adaptive, and more efficient—but it operates within the constraints of the broader defense system.
What This Means for Budget Debates
A balanced-budget mindset does not automatically mean “cut defense first” or “protect defense at all costs.” It means asking better questions.
The first question is strategic: What role is the United States actually trying to play? A country that wants to defend only the homeland can spend much less than a country that wants to deter China, reassure Europe, protect sea lanes, maintain forward bases, sustain major naval and air advantages, and preserve escalation dominance.
The second question is managerial: How much of current defense spending is truly buying security? Even if a strong military is necessary, that does not mean every program, procurement decision, compensation structure, or base configuration is equally valuable.
Options to Spend More Efficiently or Spend Less Without Undermining Security
There is no painless answer, but there are ways to look for savings that are more serious than across-the-board cuts.
1. Tightening procurement and acquisition discipline can reduce waste and improve outcomes by ensuring that systems arrive on time and perform as intended. Better alignment between requirements and reality, along with faster cancellation of failing programs, can strengthen both efficiency and effectiveness.
2. Focusing spending on readiness and real capability—munitions, maintenance, logistics, and industrial capacity—can improve actual military strength more than spreading resources across lower-value priorities.
3. Reevaluating force structure is another lever, but it is fundamentally a strategic decision. A smaller global role could allow for lower spending, but only by accepting reduced presence and increased risk in key regions.
4. Managing compensation growth carefully, rather than cutting bluntly, can generate savings while still maintaining recruitment and retention. Similarly, shifting appropriate roles to civilian personnel can improve efficiency without weakening operational capability.
5. Encouraging allies to carry more of the burden can reduce U.S. costs at the margin, though the United States is likely to remain the central pillar of most alliance systems.
6. Infrastructure consolidation—closing or realigning lower-value bases—remains one of the most straightforward efficiency opportunities in theory, but one of the most difficult in practice due to political resistance.
7. Finally, shifting part of the force toward more scalable, lower-cost systems—such as drones and counter-drone capabilities—may allow the military to adapt to changing forms of warfare while controlling costs. This does not replace traditional capabilities, but it changes the balance of investment.
What Does Not Work
Across-the-board cuts often reduce high-value and low-value activities alike. They are easy politically but strategically imprecise. Pretending the world is safer than it is can produce short-term savings at the cost of longer-term risk, particularly given the range of current threats and their increasing coordination. At the same time, assuming that every additional dollar improves security overlooks the importance of execution, industrial capacity, and strategic clarity. Budget size matters, but it is not the only factor that determines outcomes.
The Bottom Line
National defense is one of the few spending areas that is both a core federal responsibility and a genuine strategic necessity. It is also one of the hardest areas for non-experts to size with confidence.
Historical ratios suggest today’s defense spending is not unusually high by wartime or Cold War standards, but it is also not at the very low levels of the brief post-Cold War peace dividend. At the same time, the current threat environment is real: China is rising, Russia remains dangerous, Iran can still disrupt a vital region, North Korea is expanding its arsenal, and adversaries are cooperating more than before.
So the serious question is not whether defense can ever be scrutinized. It can and should be. The serious question is whether we are investing enough given the current climate, and whether reforms are making the military more efficient and more effective, or simply cheaper on paper. In a balanced-budget conversation, defense should be treated neither as untouchable nor as an easy piggy bank. It should be treated as a core function that still demands discipline, prioritization, and hard choices.
Our Bias
We are open about our own bias: national defense is one of the federal government’s most fundamental responsibilities because it cannot be meaningfully delegated to families, charities, local communities, or state governments. Maintaining national security ultimately requires federal capacity, coordination, and long-term planning.
We also live in a period of rising geopolitical instability, including a historic military buildup by China and growing competition among major powers. In that environment, allowing America’s military capabilities to erode through complacency, poor planning, or chronic under-investment could carry severe long-term consequences for both national security and global stability.
At the same time, supporting a strong military does not mean ignoring efficiency, accountability, or strategy. The goal should not simply be to spend more, but to maintain the most capable, technologically advanced, and effective military possible while recognizing the fiscal tradeoffs involved.
Finally, the fact that interest payments on our debt are starting to exceed military spending is a serious red flag. It is yet another reason we call on Congress and the President to get our spending under control. Otherwise, our debt will crowd out and weaken our military strength and ability to protect our country.
What You Can Do
This is one of the most complex parts of the federal budget, and no individual citizen (including us) can fully evaluate it in detail. But that does not mean you have no role.
The most useful step is to focus on tradeoffs rather than simple answers. When leaders talk about defense, pay attention to whether their budget positions match the role they envision for the country. If they argue for a smaller military and lower spending, pay attention to whether they are being honest about the strategic risks, tradeoffs, and potential limits on America’s global capabilities and commitments.
It is also important to look beyond numbers. The key question is not just how much is spent, but whether that spending improves readiness, strengthens the industrial base and speeds up its ability to deliver, and reflects the realities of modern warfare. Asking how money translates into actual capability is often more valuable than debating totals alone.
Let your elected officials know that you understand the connection between our debt and our ability to invest in our military, and that as a voter you want them to get our debt under control so that we can remain strong.
Most importantly, stay engaged. Defense decisions play out over long time horizons, shape national security, and depend on long-term fiscal health. Citizens who understand that—and who expect leaders to confront those tradeoffs honestly—can influence the conversation in a meaningful way.