Trillions for War, Pennies for People: How Soaring Military Spending Fails Americans
Posted on December 23, 2025 by Yves Smith
Yves here. This interview with William Hartung and Ben Freeman, authors of Trillion Dollar War Machine gives a high level overview of the structural factors that have generated a military self-licking ice cream cone, and why that is so costly for the rest of America.
By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website
$1 trillion Pentagon budget is hard to grasp. For scale, it could pay for a year of U.S. public K–12 education, nearly a year of Social Security retirement benefits, or more than the entire annual budgets of most nations.
Yet President Trump proposes to spend that money on the 2026 defense budget, while millions of Americans can’t cough up the funds to see a doctor.
And what do we actually get for all that military money? Safety? Cutting-edge weapons tailored to urgent threats?
None of the above, argue William Hartung and Ben Freeman in their new book, Trillion Dollar War Machine: How Runaway Military Spending Drives America into Foreign Wars and Bankrupts Us at Home. Instead, they reveal how what we’ve built is a self-feeding racket of corruption, misaligned incentives, and grift that courts catastrophic wars overseas while eroding democracy. It’s devouring the money Americans need to survive – never mind thrive.
Thomas Jefferson warned that war is not only horribly inefficient, but it “multiplies, instead of indemnifying losses.” Looks like we’re learning that lesson the hard way.
This isn’t some abstract problem: as Hartung and Freeman caution, the system could quite literally blow us all to kingdom come. Think Kathryn Bigelow’s “House of Dynamite” was unsettling? Wait until you read this book.
Hartung and Freeman’s critique is supported by decades of research. Researchers at the Institute for New Economic Thinking (INET) have long been peeling back the layers of government spending and corporate power, confirming what the authors make clear: defense spending is rarely just about national security.
William Lazonick’s work on corporate financialization shows how public dollars often travel a one-way conveyor belt into executives’ and shareholders’ pockets through stock buybacks, soaring CEO pay, and dividends, while innovation and industrial know-how are left behind. (Boeing offers a striking illustration of this dynamic – and Trump just awarded it the F-47 contract).
INET research director Thomas Ferguson and his colleagues explain why Congress looks the other way, exposing a political system rigged to favor big investors. Ferguson has also explained the rise of “red tech,” a nexus where defense, AI, and finance collide, concentrating extraordinary tech-driven political power and reshaping both policy and the battlefield.
In Trillion Dollar War Machine, Hartung and Freeman expose how corporate greed, political graft, and outdated thinking have turned America’s military spending into a global destabilizer and a domestic drain. They track the “tech bros” racing legacy defense firms for contracts and ever-larger budgets, reveal why defense spending is a lousy job creator. Their analysis demonstrates how the system stifles innovation, with less and less transparency or oversight.
Sitting down with INET’s Lynn Parramore, they unpack not just the dollars, but the human and political costs of this fiasco— and what could happen if this runaway train isn’t stopped.
Lynn Parramore: What made you decide to write a book about how U.S. military spending works?
Ben Freeman: At the peak of the Reagan military buildup in 1985, the U.S. was spending over a hundred billion dollars less than we are now. Yet the military was twice as large by almost every metric: planes, ships, troop numbers. That drove us to ask: Why is this happening? How are we spending more every year but getting less? What’s being wasted? Why does effectiveness keeps declining?
I won’t let Reagan off the hook — there was plenty of waste back then, but today it’s worse. We’ve built an expansive, “cover-the-globe” strategy, trying to be everything, everywhere at once. We’re overstretched, inefficient, and spending over half of the military budget — 54% —on Pentagon contractors.
When you combine all these factors, a clear picture emerges — what we call the “Trillion Dollar War Machine” — showing where all this money is going and why it’s not actually making us more secure.
William Hartung: Basically, we’re asking the smaller military to undertake missions impossible: impose democracy at the barrel of a gun, reconstruct a country at the same time it’s being destroyed. We’ve had 20-year wars in Afghanistan and Iraq where the U.S. spent more and had superior technology, but that didn’t determine the outcome. Local conditions, human motivation, and factors technology can’t address were what really mattered. Those two points together are deeply troubling. The question of why that happens was a lot of what we explore.
LP: In the 1990s, Paul Wolfowitz championed the idea that the U.S. should never let a rival rise. Does it still affect military spending? Is China a real threat, or a more of scarecrow?
William Hartung: China does problematic things regionally, in its treatment of its people, and in its economic strategy to a degree, but it’s not an existential threat to the U.S. It’s not harmless – the scarecrow has guns — but much of what we’re doing is counterproductive.
We’re building aircraft carriers that could be taken out by Chinese missiles. Instead of working toward an understanding on Taiwan, which held for nearly 40 years, we’re arguing about it. In some circles, there’s a push to “beat” China, with war colleges running exercises on how to defeat it, rather than how to use diplomacy or reach a settlement. But China isn’t Iraq or Afghanistan — it’s a large, technologically capable, nuclear-armed country, many of whose capabilities haven’t even been fully deployed. There’s talk of fighting China in its own front yard, far from ours. That just doesn’t make sense.
We need a more nuanced, balanced, intelligent approach. But fear keeps the money flowing. Some push this for that reason, while others genuinely see China as a threat. But from China’s perspective, it’s impossible to tell the difference. All they see is aggressive rhetoric and military build-up. That needs to change.
China has problematic aspects, but that doesn’t justify building a new generation of nuclear weapons, more aircraft carriers, or deploying more arms to the Pacific islands. That’s exactly the wrong way to handle it.
Ben Freeman: I’d add that the military-industrial complex is a self-fulfilling system. You can’t have a trillion-dollar military budget in a peaceful world. The system needs monsters abroad, real or imagined, to justify itself. If the average American looks out and thinks, “It seems pretty peaceful, I feel safe,” then they start asking uncomfortable questions: why are we spending a trillion dollars on defense if we don’t really need it?
China’s the new boogeyman. Bill’s right — there are reasonable concerns, but today’s political discourse is far more about fear-mongering than actual reasons to expect a U.S. military clash with China.
William Hartung: At the end of the Cold War, Colin Powell famously said, “We’re running out of enemies. We are down to Fidel Castro and Kim Il Sung.” The answer was, “What about Iraq, Iran, and North Korea?” This became George W. Bush’s “axis of evil.” Yet those countries together couldn’t come close to matching the power of the Soviet Union. Iran didn’t even have missiles that could reach us. At the end of the war on terror, the focus shifted to China with a report urging increased budgets – with more than half the commission having ties to the arms industry.
It’s not that challenges don’t exist; it’s that we’re not addressing them the right way.
LP: What shifts have you seen in more recent years, especially between the first Trump administration and the current one?
Ben Freeman: What we’re seeing in Trump 2.0 is the rise of the tech bros. It started with huge support from Elon Musk during the campaign. Most people know Musk for Tesla, but SpaceX has become a major military contractor, winning more contracts seemingly every day. Musk is leading the charge, but others are quietly influential too. J.D. Vance cites Palantir co-founder Peter Thiel as a mentor — Palantir is one of the oldest defense tech companies still thriving with the Department of Defense (DoD). Then there’s Palmer Luckey at Anduril, also a big Trump supporter before he took office.
Once Trump 2.0 begins, he’s essentially paying back those favors — Musk getting a prominent role, Vance as vice president, and a surge of tech figures filling political appointee positions at the DoD. I’d say the most high-profile is Secretary of the Army Dan Driscoll, who comes straight from the venture capital tech world. He’s been one of the most vocal critics of the legacy defense contractors – known as the “primes” — and they’ve taken notes. He’s even said he wouldn’t be upset if the big primes went out of business.
The big difference between Trump 1.0 and Trump 2.0 is this defense tech takeover.
William Hartung: The tech firms are now landing real contracts. Typically, big companies would just absorb them, but if a firm is run by a billionaire, it can survive the so-called “valley of death” between pursuing a contract and actually winning it.
Smaller firms used to struggle with paperwork, while established companies leveraged plants in congressional districts to secure protection and a clear advantage. That’s shifting.
There’s a battle between the two.
Anduril has a manifesto, the “Arsenal of Democracy 2.0,” which is a pretty good takedown of the inefficiencies and problems of relying on the big five. The argument is we’re more nimble, cheaper and quicker — true, perhaps, but what are we going to use those weapons for? What’s our strategy? Are they even going to work? Do we have the technologies to evaluate them?
The key players are openly hawkish, and they want not just to sell us things, but to shape our foreign policy and our democracy. We have to put that aside and say: if you have something that helps our troops, we’ll buy it — but we won’t let you dictate foreign policy, alter our democracy, or bypass all the ways we monitor and vet your activities. The challenge is managing this new group, because they will likely make inroads and could eventually reach the top of the pyramid.
LP: You have several vivid examples of weapons programs gone wrong — cost overruns, failures to perform, safety issues, and more. Let’s talk about the F-35. Is it too big to fail at this point?
Ben Freeman: The F-35 is the epitome of how the military should not acquire weapons. We’re still buying them in quantity, even though it’s clear the F-35 isn’t the plane of the future. You have to look back at the origins of the program to see how failure was built into it. Musk actually said something along the lines of, success was never in the set of possible outcomes.
LP: Not just too big to fail but built to fail. Pretty damning.
Ben Freeman: Absolutely damning. And I think Musk is right on this. From the start, the military wanted a Swiss Army knife — a plane for everyone. We want a fighter for the Air Force, but then the Navy says, “We need a fighter-bomber that can take off and land on carriers.” Then the Marines jump in too: “We need short takeoff, vertical landing, something that can get in and out of tight spaces, even on a carrier.”
The F-35 program effectively said yes to everyone, creating a Swiss Army knife plane to meet all needs — all things to all people. But when you try to do that, you end up with this bespoke, over-engineered thing. I’m an Eagle Scout — my Swiss Army knives seemed great, but whenever I needed one specific tool, it never really worked that well. Sure, it had a knife, a saw, a magnifying glass, but they all sucked. That’s the F-35.
If you’re defending the free world, that’s not the outcome that you want. This is why we say the F-35 program was never built to succeed.
William Hartung: They promised it would revolutionize procurement —- cheaper, capable of everything. But it’s bad at all of it. It can’t carry as many bombs as other planes, can’t support troops on the ground, and struggles in dogfights. Conceived 23 years ago, it still needs constant upgrades and retrofits, and it’s in the hangar close to half the time.
LP: And yet, we can’t seem to get rid of it.
Ben Freeman: The F-35 is a racket, and everyone’s in on it — all the power players. It’s no accident that Lockheed Martin spread F-35 production across 48 states. Nearly every congressional district has jobs tied to building the plane. So when Lockheed lobbyists walk into Capitol Hill offices, they don’t hesitate to tell members exactly how many jobs the F-35 brings to their district.
It’s effectively a mafia-style system: “Support the F-35—or else.” The “or else” is that Lockheed lobbyists will remind constituents in those districts that their member of Congress is stepping out of line, threatening their jobs and local economic opportunities. What Lockheed has done is unprecedented in military procurement. Every weapons program makes a jobs argument to some extent, but never at the scale of the F-35. That’s why in Congress you see F-35 hearings where members trash the program and yell at the program manager for hours, yet when the defense budget comes up, the F-35 gets full funding every time.
William Hartung: One member said it’s like pouring money down a rat hole, but it’s too late to stop.
LP: You note that the big five defense contractors, the primes, still have an edge in Congress over the newer Silicon Valley players. Are we starting to see that balance shift?
William Hartung: It’ll take a while because the advantage of the big five is that their factories are in congressional districts. Often, even if they want to retire a program, Congress won’t let them. So for now, they’ll build in parallel —like Golden Dome — using old-school hardware but new software, and the new fighter plane having a pilotless “wingman.”
Eventually, that fight will intensify. Anduril is building a big plant in Ohio, J.D. Vance’s home state, so they’ll catch up and gain influence in Congress. Right now, they’re strong in the executive branch, while old-school contractors dominate Congress. It’s ultimately a political battle.
LP: The rise of “red tech” caught some people off guard. You note that the big five have long played both sides of the aisle, depending on who’s in power. But now red tech openly aligns with the Trump administration, backing figures like Vance. Are there new risks in this newly partisan defense industry?
Ben Freeman: I think it’s enormous. This wasn’t Trump waking up one day and saying, “Tech is grand—mea culpa, let’s bring the tech guys in.” No, this started with tech courting Trump. That money showed up during the campaign, and love him or hate him, Trump is transactional. Once the money started flowing, tech gained real prominence. If I were at one of these firms, I’d be ecstatic about the access and the shifts at the DoD that clearly benefit tech over the old guard.
What really concerns me is what comes next — starting around 2026, when there’s a real chance the House flips, the Senate flips, or possibly both. If those turn blue, what happens then? And then there’s 2028. Trump is deeply underwater right now, and there’s no clear, popular successor. So what happens if a Democrat wins the presidency and “red tech” suddenly finds itself on the outside, with all the changes it benefited from under Trump potentially drying up?
My prediction is that we’ll see the influence operation shift blue. You can already see hints of it. Anduril, for example, is lobbying aggressively, with more than 40 lobbyists on staff. Their roster is still very red, but it’s starting to shift a little blue. I expect to see the same with SpaceX and Palantir in the next few years.
William Hartung: One reason tech is all-in on Trump and Republicans right now is that they expect the level of regulation they want — not just the paperwork, but independent testing and safeguards against price gouging. If there’s a Democratic president, they’ll try to build those ties, but it’ll require some backtracking and some mea culpas. Still, they have a lot resources to influence policymakers.
LP: Innovation is often used to justify higher defense spending, but you argue that the system actually stifles innovation. Can you explain that?
Ben Freeman: My analogy is that for decades the DoD has had an autoimmune response to innovation —or to anyone who challenges the primes, innovative or not. That response shows up in a couple of ways.
One way this plays out, as Bill mentioned, is that when a smaller defense contractor starts to rise, the primes just buy it and fold it in. Another way is by stifling innovation from the inside. They game the acquisition process. The federal acquisition regulations run over 2,000 pages, so it’s no accident these firms hire hundreds of former acquisition officials to help them bid on contracts —sometimes on contracts those same officials helped write. They were insiders.
It’s a circular system that, for decades, was designed to keep newcomers out. Before Musk had any role in the Trump administration, he was running SpaceX, which had to sue its way into being allowed to bid on DoD contracts because of how noncompetitive the system was. SpaceX now handles more than 80 percent of U.S. government space payloads, but it had to sue to get there.
William Hartung: It doesn’t have to cost more money if you get rid of the old systems that aren’t necessary — aircraft carriers, heavy tanks, the huge nuclear build-up. Golden Dome isn’t going to do what’s suggested: it needs to be much smaller. If you were able to do all those things you could invest in innovation, probably at a lower budget. But if you can’t get rid of them, then the innovation money has to come on top of that. That’s sort of where we are now.
LP: How do you address the idea that defense spending creates jobs? What’s the counter argument?
William Hartung: It’s actually a terrible job creator. There are jobs, but the industry itself has acknowledged that three decades ago there were three million jobs directly building weapons, but now there’s about one million.
Other investments create more jobs. If you tie up skilled workers and engineers in weapons production, they aren’t working on climate change, public health, or building more efficient infrastructure. The result is a huge cost to the future of the economy.
The problem is that they’re entrenched. It’s not the numbers, it’s where they are. Most members of the Armed Services and Appropriations Committees have some kind of military facility in their district. For some, that’s why they joined the committee —so the money keeps flowing. It’s a political problem. It’s not so much an economic problem, because if you had the freedom to put your money where you get the most economic feedback, the weapons industry would be very low on the list. But it’s kind of their last line of defense.
Ben Freeman: The defense industry has employed a lot of people because, for decades, it has received enormous amounts of funding. What would have happened if that money had been used differently — or if we started using some of it differently now. In the president’s “Big Beautiful” bill alone, there is over $100 billion in additional funding for the DoD.
What if we invested it in other sectors, other public priorities? A large body of research shows that shifting government spending from defense to these areas produces better economic outcomes: more jobs, higher economic multipliers, and broader benefits across the U.S. The evidence is very clear, and you don’t need to be an economist to understand it.
When you think about what we build by investing in the DoD, we’re building things designed to explode. If they actually work, they’re gone. But if you build a road, businesses can use it, commerce can move. If you invest in healthcare, people are healthier and they’re more productive. These kinds of investments have economic multiplier effects that defense spending simply doesn’t have.
If we just took some of the additional money earmarked for defense and tried investing it elsewhere, we could see how much more it helps the economy.
William Hartung: The problem is that some localities have to fight hard to keep these jobs. For example, Groton, Connecticut, makes submarines, sometimes receiving a billion dollars a year. If that funding disappears with no other investment, you might have a union machinist trying to find work as a greeter at a casino, and finding out even that’s not available. There needs to be a transition plan to help these communities redirect into the broader economy and sustain themselves.
LP: Does the war machine as it’s currently structured worsen inequality in the U.S.?
William Hartung: It helps foster it, because the money that goes there doesn’t go to social programs, to job training, to other places people could get work.
The industry used to be heavily unionized. Now some companies are only about 10% unionized, and unions have accepted two-tier contracts. Some submarine workers are even looking for subsidized housing. The idea of these great, well-paid factory jobs is eroding. And because it’s precluding investment that would narrow the economic gap, it’s a contributor to the problem.
Ben Freeman: I can’t help but notice the pay gap between an average enlisted service member and defense contractor executives. Some CEOs now receive extraordinary compensation—$10 million, $20 million, even one we found at $80 million a year. Meanwhile, many service members, especially E3s and E4s starting families, face food insecurity. About one in four at that level are literally going hungry.
Your question about inequality is spot on. At the same time we have this extraordinary level of spending, there’s an absurd level of inequality in this space. How does this make sense? How is this disconnect so strong?
William Hartung: This rigid system of buying based on location means that whether you’re a hawk, a reformer, or a peacenik, the system doesn’t work. If you’re buying because of location, you can’t align it with strategy. If the strategy is to build one system and get rid of another, the system prevents that. In that way, I think everyone has an interest in changing how we make these decisions.
LP: What really concerns you when you think about your children and their safety?
William Hartung: The technology itself — if it’s used without a human in the loop — may make leaders more inclined to use force. We’re not going to lose troops, but it will do damage on the other side, which could make war more likely. If this technology were used to control nuclear weapons, the chances of failure would be higher, because complex software can fail. And then you combine that with the outlooks of some of the captains of the industry, who are much more aggressive.
Some of them even believe democracy is obsolete: let’s fix it with tech. There’s this urge to use unproven technology to solve almost anything. Alex Karp, the president of Palantir, has a book called The Technological Republic, where he argues that we’ve become a nation of slackers, just gaming and watching reality TV, and that we need a unifying national mission. His idea is a Manhattan Project for the military applications of AI. I would think a great country would want a more expansive, nourishing mission — better education, a healthier population, more creativity, more unity — not just building another widget or gadget.
Ben Freeman: Defense is one of the biggest drivers of the national debt because it’s one of the largest line items in the federal budget. We’re now adding more than a trillion dollars a year — more than the entire DoD budget — and we’ve reached the point where debt service, the interest payments alone, exceeds the DoD’s entire budget.
We’re spending on defense like drunken sailors, and the national debt keeps soaring. There comes a point — something we’ve seen in societies around the world — where countries spend themselves into oblivion by devoting too much of their resources to the military. The Soviet Union is a classic example. Inevitably, there comes a point where that becomes unsustainable. That’s a generational burden that we’re going to put on our children. It just narrows our options as a nation.
https://www.nakedcapitalism.com/2025/12 ... icans.html
(While military spending may have been a factor in the demise of the Soviet Union the biggest factor was the failure of Communist Party leadership.)
