As Congress debates President Trump’s “big, beautiful bill” the members of both the House of Representative and the Senate should also have a long overdue “guns versus butter” debate. At a time when the United States spends 80 percent of federal revenue ($4 trillion) on entitlement programs and the other 20 ($880 billion) percent on debt repayment, all while borrowing $2 trillion (30 percent of federal spending) to pay for defense and other government operations, it is time to have the conversation everyone is avoiding. With China, North Korea, and Russia attempting to topple the international order built by the United States, members of Congress must finally come clean on their profligate spending and its implications for the future security of this country.
When President Donald Trump took office on January 20, 2025, he did so promising Americans he would cut the size of government and balance the federal budget. Trump doubled down on this promise during his February 7, 2025, address to a joint session of Congress.
President Trump is correct in understanding that large annual deficits hamper economic growth, drive up interest rates, and drive down the incomes of Americans. He is also correct in understanding that tax increases are not a solution, because, like deficits, they harm economic growth. With federal, state, and local governments consuming more than 35 cents of every dollar generated in America, increasing taxes stands to drive down economic growth more than it will increase federal revenue. This problem is not new.
In 2010, then–Chairman of the Joint Chiefs of Staff Admiral Michael Mullen stated, “The most significant threat to our national security is our debt.” Mullen’s comments were made when the national debt was 91 percent of GDP. Today, the national debt is 123 percent of GDP and growing. According to the World Bank, when national debt reaches 77 percent of GDP, economic growth begins to decline. These findings are similar to those of other economists.
In short, economic prosperity and military power are inextricably linked because poor countries cannot afford capable militaries, and capable militaries often protect economic interests. That mutually reinforcing relationship is harmed by excessive debt.
There is a strong consensus in the academic literature concerning the impact of debt on a nation’s economy. Importantly, 2024 was the first year when interest on the national debt was greater ($881 billion) than defense spending ($855 billion). Entitlement programs, which are comprised of transfer programs like Social Security and Medicare and welfare programs like Medicaid, Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Supplemental Security Income (SSI), and the Earned Income Tax Credit (EITC), already consume about 80 percent ($4 trillion) of federal revenue ($4.9 trillion). When interest payments ($881 billion) are added, the normal functions of government are left to be financed through public debt.
State and local governments spend an estimated 50 percent of their budgets on entitlement programs, which adds another $2 trillion to the entitlement behemoth that exists in this country. Many Americans may not know that the United States actually redistributes a greater share of its GDP (29.4 percent) than any country in the world, except France (30.1 percent).
Some may argue that increasing taxes, particularly those on high income earners, is the solution to addressing annual deficits and the need to increase defense spending. Again, the consensus in the academic literature suggests that increasing income taxes, particularly on high income earners, drives down economic growth because it drives down investment, encourages tax evasion, and drives up capital flight.
With the top one percent of income earners already paying 42.3 percent of federal income taxes and the top twenty-five percent of income earners paying about three-quarters of all income taxes, there is a relatively small number of Americans to squeeze for more taxes. Currently, the top one percent of income earners pay an average of about 26 percent of their income in federal income taxes, while the bottom half of income earners contribute 2.3 percent of all income taxes and have an effective tax rate of three percent.
With the top one percent of income earners making about twenty-two percent of all income, while paying more than forty percent of all income taxes, increasing taxes on this group is not a panacea for solving an overspending problem. High-income earners are the investors who drive economic growth. They are not the piggy bank to break when the government seeks to buy votes through entitlement spending.
Welfare and entitlement spending are responsible for draining the federal budget. Federal, state, and local governments now spend about forty percent of GDP, the highest level since the height of World War II. Chairman of the House Budget Committee, Congressman Jodey Arrington (R-TX) and former Senator Phil Gramm (R-TX), recently wrote, “Since funding for the War on Poverty ramped up in 1967, welfare payments received by the average work-age household in the bottom quintile of income recipients has risen from $7,352 in inflation adjusted 2022 dollars to $64,700 in 2022.”
In the first fifty years of the Great Society, which created the modern welfare state, American taxpayers spent over $31 trillion on welfare programs (2025 dollars) designed to “eliminate poverty,” only to see demand for handouts increase as they become more generous and expansive. There is no debate.
Some readers may have a negative reaction to an article that challenges the welfare state, but there is a simple truth that is inescapable, the United States cannot effectively counter China, North Korea, and Russia while entitlement spending is crowding out defense spending. This is a simple reality that the national security community does not seem to want to talk about. Instead, national security insiders advocate for the programs they value, all while knowing that the piggy bank is empty. This is largely the result of a desire to avoid having this very discussion.
Now, however, as the United States faces its greatest threat since 1941 as three nuclear armed adversaries seek to topple the international system built by the United States. There is a reluctance to turn off the seemingly endless supply of free money that is so useful to members of Congress in buying votes. Even conservative stalwarts like Senator Josh Hawley (R-MO), when discussing potential cuts to the single largest welfare program in the federal budget, Medicaid, said, “My position on that is, I'm against cutting Medicaid benefits, and specifically Medicaid benefits in the state of Missouri. So let's see where the House gets to on that.”
Entitlement programs doubled as a percentage of the federal budget between 1970 and 2025, while defense spending fell to half of its former share of the federal budget. The United States can only counter its nuclear peers by modernizing and expanding its nuclear forces. This requires that defense spending return to a level approaching the five percent President Trump is pushing NATO allies to spend and was the norm for the United States from 1946–1991.
That would require the defense budget increase from $847 billion to about $1.5 trillion just to spend 5 percent of GDP on defense. Absent dramatic cuts to entitlement programs and a balancing of the budget, the United States will not field conventional and nuclear forces of sufficient size and capability to effectively deter or defeat Chinese, North Korean, and/or Russian aggression.
Welfare and entitlement spending buys votes, but no nation ever grew its economy or increased its military strength because politicians redistributed the paychecks of workers. It is time for a guns versus butter debate. Without one, the United States may fade into the middling power China so desperately wants. Americans should never allow that to happen.
Dr. Adam Lowther is Vice President of Research at the National Institute for Deterrence Studies.
