In this insightful conversation, Yves speaks with William Hartung and Ben Freeman, authors of the thought-provoking book, Trillion Dollar War Machine. They delve into the structural dynamics of U.S. military spending, highlighting its impact on American society and the economy.
By Lynn Parramore, Senior Research Analyst at the Institute for New Economic Thinking. Originally published at the Institute for New Economic Thinking website
Understanding the $1 trillion Pentagon budget can be challenging. To put this in perspective, this amount could fully fund a year of public K–12 education in the U.S., cover nearly a year of Social Security benefits, or surpass the entire annual budgets of many countries.
Despite this staggering expenditure, President Trump has proposed allocating this vast sum to the defense budget for 2026, while millions of Americans lack the resources to afford healthcare.
So, what do we actually receive in return for such enormous military investments? Safety? Advanced weaponry addressing pressing threats?
According to Hartung and Freeman in their book, Trillion Dollar War Machine: How Runaway Military Spending Drives America into Foreign Wars and Bankrupts Us at Home, the reality is starkly different. They reveal a disturbing picture of a military apparatus entrenched in corruption, misguided incentives, and malfeasance that perpetuates devastating wars abroad while undermining democracy at home. This system is consuming the resources essential for the well-being of Americans.
Thomas Jefferson warned that war not only leads to inefficiency but often “multiplies instead of indemnifying losses.” We seem to be grappling with the implications of this warning in our current climate.
This issue transcends theoretical discussions; as Hartung and Freeman point out, the current state of affairs poses a real risk of catastrophe. If Kathryn Bigelow’s “House of Dynamite” felt unsettling to you, the insights from this book will be even more alarming.
Backed by extensive research, Hartung and Freeman’s analysis aligns with findings from the Institute for New Economic Thinking (INET), which has long examined the intertwining of governmental financial commitments and corporate influence. Their revelations confirm that defense spending often goes beyond national security concerns.
William Lazonick’s research on corporate financialization illustrates how public funds often flow in a one-directional path into the pockets of executives and shareholders through mechanisms like stock buybacks and soaring executive wages, while innovation and industrial capacity lag behind. The case of Boeing serves as a notable example of this phenomenon, and Trump recently awarded it the F-47 contract.
INET’s research director, Thomas Ferguson, describes why Congress often turns a blind eye, shedding light on a political environment tilted in favor of major investors. Ferguson has also discussed the emergence of “red tech,” where finance, defense, and AI intersect, leading to an extraordinary concentration of tech-driven political power that shapes policy and warfare.
In Trillion Dollar War Machine, Hartung and Freeman expose how corporate greed, political agendas, and outdated mindsets have transformed U.S. military spending into a destabilizing global force and a domestic burden. They analyze the competition between “tech bros” and established defense firms for contracts and increasing budgets, while demonstrating that defense spending is an ineffective job creator. Their findings highlight how the current system hinders innovation and suffers from a lack of transparency and oversight.
During a discussion with INET’s Lynn Parramore, they explore not only the financial implications but also the human and political costs associated with this military spending spree. They stress the urgent need to address this unsustainable trajectory.
Lynn Parramore: What motivated you to write a book about the intricacies of U.S. military spending?
Ben Freeman: In 1985, amid the peak of Reagan’s military build-up, the U.S. budget for defense was over $100 billion less than what it is today. Yet, we had almost double the military size by various metrics: aircraft, ships, personnel. This disparity prompted our investigation: Why are we spending increasingly more but receiving less in return? Where is the waste occurring? Why is our effectiveness dwindling?
I hold Reagan accountable for some of that waste back then, but currently, the situation is worse. We’ve developed an expansive, global strategy attempting to be present and active everywhere, leading to greater overstretch and inefficiency. Notably, 54% of the military budget is consumed by Pentagon contractors.
Piecing together these factors forms a coherent narrative — what we term the “Trillion Dollar War Machine” — illuminating the flow of funds and why they fail to enhance our security.
William Hartung: Fundamentally, we’re assigning a smaller military to tackle impossible tasks: trying to instill democracy via force and rebuilding nations while they’re being dismantled. After two decades in Afghanistan and Iraq, despite superior spending and technology, the outcomes didn’t favor us. The primary determinants were local circumstances, human motives, and aspects technology simply cannot rectify. These two points raise serious concerns and warrant examination.
LP: In the 1990s, Paul Wolfowitz promoted the notion that the U.S. should never allow a rival to ascend. Does this philosophy still influence military spending today? Is China a legitimate threat, or merely a fabricated scarecrow?
William Hartung: While China engages in concerning regional activities and has questionable human rights practices, it does not present an existential threat to the U.S. It is not benign — the “scarecrow” does have weaponry — yet much of our response has proven counterproductive.
For instance, we’re investing in aircraft carriers that are vulnerable to Chinese missiles. Instead of reaching a consensus on Taiwan, a fragile status quo has emerged. There’s a prevailing attitude within certain circles determined to “beat” China, focusing on military exercises rather than working towards diplomatic resolutions. However, China is not Iraq or Afghanistan; it’s a large, technologically advanced, nuclear-armed state with capabilities not fully deployed. The notion of engaging China miles from our shores is nonsensical.
A more nuanced, balanced approach is necessary. Nonetheless, fear continues to drive funding. While some advocate for this approach for those reasons, others genuinely perceive China as a threat. From China’s viewpoint, however, this heightened militarization and hostile rhetoric remain evident. This dynamic must change.
While China does exhibit problematic behaviors, that does not warrant the development of a new generation of nuclear weapons, more aircraft carriers, or increased arms deployment to the Pacific nations. That’s simply not the correct response.
Ben Freeman: The military-industrial complex operates as a self-perpetuating entity. A trillion-dollar military budget cannot exist in a peaceful context. To justify itself, the system needs both real and conjured threats abroad. If the average American perceives tranquility and feels secure, they might start questioning why we allocate such vast resources to defense when it seems unnecessary.
China has become the latest boogeyman. As Bill mentioned, reasonable concerns exist, but the current political dialogue heavily leans on fear rather than the legitimate likelihood of a military conflict with China.
William Hartung: At the conclusion of the Cold War, Colin Powell stated we were “running out of adversaries,” with only Fidel Castro and Kim Il Sung remaining. The answer, perhaps, lay in Iraq, Iran, and North Korea. This trio collectively lacked the power to rival the Soviet Union. Iran didn’t even possess missiles capable of reaching us. In the aftermath of the war on terror, China has emerged as the focus, prompting calls for increased military budgets — notably from a commission where over half its members had ties to the arms industry.
While challenges indeed exist, our approach to addressing them is misguided.
LP: Have you noticed any changes in recent years, particularly between the first and second Trump administrations?
Ben Freeman: During Trump 2.0, we’ve seen the emergence of “tech bros.” This began with substantial support for Elon Musk during the campaign. While Musk is known for Tesla, his firm SpaceX has rapidly become a major military contractor, winning contracts almost daily. Musk is leading the charge, but others, such as J.D. Vance, are also influential; Vance cites Palantir co-founder Peter Thiel as a mentor — a longstanding defense tech company thriving with the Department of Defense (DoD). There’s also Palmer Luckey at Anduril, who was an early supporter of Trump prior to his presidency.
With the onset of Trump 2.0, he’s effectively returning favors — like giving Musk a prominent position, nominating Vance for vice president, and appointing numerous tech figures to key roles within the DoD. One of the most visible is Secretary of the Army Dan Driscoll, who hails directly from the venture capital world. Driscoll has been a vocal critic of legacy defense contractors, and he’s indicated that he wouldn’t mind if leading firms went out of business.
The most striking difference between the two Trump administrations is the influence of defense technology firms.
William Hartung: Tech companies are now securing genuine contracts. Traditionally, major corporations would assimilate smaller firms, but a billionaire-led startup can span the gap from pursuing a contract to obtaining it more easily.
Smaller firms historically struggled with bureaucracy, while established companies leveraged their physical presence in congressional districts for advantages. This dynamic is changing.
Currently, there’s a rivalry brewing between these factions.
Anduril has introduced a manifesto, “Arsenal of Democracy 2.0,” effectively critiquing the inefficiencies associated with relying on major defense contractors. Their claim is that they offer adaptability, lower costs, and speed — which may be true, but we must ask: what ultimately are these weapons intended for? What is our strategy? Can these technologies perform as claimed?
The key players exhibit a hawkish stance; they not only wish to sell us products but also aim to shape our foreign policy and influence our democracy. We must assert that while we’re willing to purchase beneficial tools for our servicemen, we won’t allow you to dictate our foreign policy or sidestep existing oversight mechanisms. Managing this new breed will be challenging, as they are poised to gain influence and potentially rise to dominant positions.
LP: You provide several compelling examples of failed weapons programs, including cost overruns and safety concerns. Let’s discuss the F-35. Is it now too substantial to fail?
Ben Freeman: The F-35 epitomizes how the military should not acquire weaponry. Despite the fact that we continue to purchase them, it’s crystal clear that the F-35 is not the aircraft of the future. The origins of the program reveal how failures were woven into its fabric. Musk remarked that success was never an anticipated outcome.
LP: Not only too big to fail but perhaps designed to fail. Quite a damning assessment.
Ben Freeman: Indeed. Musk’s observations are entirely accurate. From the outset, the military sought a multi-functional aircraft — a “Swiss Army knife” of planes. The Air Force desired a fighter jet, while the Navy required a fighter-bomber for carrier operations. Soon, the Marines demanded short takeoff and vertical landing attributes. Consequently, the F-35 became an overly-engineered conglomerate of specifications tailored for everyone. As an Eagle Scout, I found my own Swiss Army knives quirky but ineffective, often failing to live up to anyone’s specific needs. That’s precisely the dilemma with the F-35.
When it comes to defending our interests globally, that’s not the outcome we should expect. This exemplifies why we argue that the F-35 program was inherently flawed from the beginning.
William Hartung: It was promised as a revolutionary leap in procurement — cheaper and universally capable. Yet, it falls short on all fronts. It can’t carry as much ordnance as other aircraft, struggles to support ground troops, and faces challenges in aerial combat. Conceived 23 years ago, it remains in production for constant upgrades and repairs, spending nearly half its time grounded.
LP: Yet, we can’t seem to overcome it.
Ben Freeman: The F-35 operates like a cartel, with all the power players complicit. Lockheed Martin has strategically distributed F-35 production across 48 states, ensuring job ties across nearly every congressional district. As a result, when Lockheed lobbyists engage with Congress, they articulate precisely how many jobs the F-35 generates for constituents.
This approach resembles a mafia-like pressure mechanism: “Support the F-35 or else.” The “or else” entails the threat from lobbyists to constituents should their member of Congress stray from supporting the program, jeopardizing local employment and economic opportunities. Lockheed’s tactic has set a precedent in military procurement. While every weapons program highlights job creation, none approach the scale of the F-35. Therefore, even during congressional hearings where its flaws are criticized, it consistently receives full funding in defense budget discussions.
William Hartung: One member remarked that supporting the F-35 is like pouring money down a rat hole, but by now, it’s too late to change course.
LP: You’ve mentioned that the primary five defense contractors maintain a substantial edge in Congress compared to newer Silicon Valley entrants. Are we observing a shift in this balance?
William Hartung: This shift will take time because the major contractors possess factories located in congressional districts. Often, Congress will intervene against any attempts to retire a program, hence existing programs will likely coexist—like Golden Dome—relying on traditional hardware integrated with modern software, with the potential for a pilot-less “wingman.”
In the long run, competitive dynamics will escalate. Anduril is establishing a significant facility in Ohio, J.D. Vance’s home state, potentially enabling them to gain traction in Congress. Presently, they wield influence within the executive branch, while traditional firms command allegiance in Congress. This represents a political contest.
LP: The rise of “red tech” has surprised many. Historically, major contractors played both sides of the aisle, lining up behind whichever party held power. However, now red tech openly champions Trump and supports figures like Vance. Are new risks emerging in this increasingly partisan defense industry?
Ben Freeman: Indeed, this is a significant concern. This situation didn’t spontaneously arise after Trump decided to embrace technology; it originated with tech companies courting Trump. Financial contributions surfaced during his campaign, and regardless of one’s opinion on him, Trump operates transactionally. With this influx of investment, tech companies have gained significant access and influence within the DoD, tilting favor towards technological solutions over traditional firms.
What truly worries me is the future. By 2026, there’s a plausible risk of a political shift in the House, Senate, or both. If these turn Democratic, what will that signify for red tech? Further, as we approach 2028, Trump’s favorability is sagging, and no clear successor is evident. If a Democrat emerges victorious, what will happen to red tech and the advantages they’ve accrued under Trump’s administration?
I anticipate a shifting influence operation toward a more blue alignment. We’re already observing shifts; for instance, Anduril is ramping up lobbying efforts, boasting a staff of over 40 lobbyists. Their current affiliations lean heavily Republican, yet signs of a Democratic shift are emerging. Expect similar trends for SpaceX and Palantir in the coming years.
William Hartung: Currently, the tech sector’s alignment with Trump and the GOP arises from their expectations around regulation — not merely paperwork, but also measures like independent assessments and protections against price surges. Under a Democratic president, these firms would work to cultivate relationships while likely making some concessions and adjustments. However, given their resources, they will still hold considerable sway over policymakers.
LP: Innovation is frequently cited as a justification for increased defense spending, yet you argue the system stifles innovation—can you elaborate?
Ben Freeman: My analogy suggests the DoD has been operating with an autoimmune reaction against innovation for decades, especially toward those challenging the status quo, whether they are new entrants or incumbents. This manifests in a few ways.
First, as Bill referenced, emerging defense contractors often find themselves acquired and subsumed by larger entities. Additionally, established firms stifle innovation internally by manipulating the acquisition process. With acquisition regulations spanning over 2,000 pages, it’s not surprising that these firms hire numerous former acquisition officials who help them navigate the bidding process, sometimes on contracts they initially formulated.
This circular system was engineered to impede newcomers for decades. Before Musk’s involvement in Trump’s administration, he was spearheading SpaceX, which had to legally challenge its exclusion from bidding for DoD contracts due to an anti-competitive environment. Today, SpaceX manages over 80% of U.S. government space payloads, a feat achieved through litigation.
William Hartung: It’s feasible to avoid escalating costs by eliminating outdated systems — such as aircraft carriers and the extensive nuclear arsenal. While the Golden Dome concept needs a more modest approach, if we could streamline the outdated systems, we could allocate resources to foster innovation without excessive budget increases. Currently, however, retaining those systems necessitates additional funding for innovation.
LP: When responding to the claim that military spending generates jobs, what is your counterargument?
William Hartung: In truth, it’s a poor job creator. Yes, the industry does create jobs, yet it has acknowledged that in former years, there were three million positions linked directly to weapons production, while that number has dwindled to one million today.
Alternative investments yield greater employment. By tying skilled workers and engineers to weapon manufacturing, we deprive critical sectors like climate change, public health, and infrastructure development of human resources. This creates significant long-term economic costs.
The core issue lies in entrenched interests. Members of the Armed Services and Appropriations Committees often consider military facilities within their districts as a priority. For some, this alignment with military committee goals was a strategic choice to secure continuous funding. This is more a political than an economic dilemma because, given the freedom of choice, allocating resources where they yield positive economic returns would not favor the weapons industry. Yet, this remains their ultimate bastion of defense.
Ben Freeman: The defense sector has indeed employed many individuals, largely due to sustained funding over the years. What if we redirected that money or allocated it differently? In the president’s recent “Big Beautiful” bill, over $100 billion was earmarked for the DoD.
If we invested that in other sectors or public services, extensive research indicates we’d see superior economic outcomes: more job creation, higher economic returns, and broader public benefits. This evidence is unequivocal and doesn’t require extensive economic training to comprehend.
When considering our outputs from DoD investments, they often revolve around so-called “explosive” creations. If they fulfill their purpose, they cease to exist. Conversely, infrastructure developments like roads facilitate commerce, while investments in healthcare improve productivity. These types of investments lead to broader economic advantages that defense spending lacks.
If we merely reallocated additional defense funding towards other priorities, we could witness a far more substantial positive impact on the economy.
William Hartung: Certain regions rely heavily on defense funding. For instance, Groton, Connecticut has a submarine manufacturing facility that draws in about a billion dollars annually. Should that financial flow diminish without supplementary investment, individuals, such as unionized machinists, may struggle to find alternative employment opportunities, potentially resorting to low-paying work like greeter positions at casinos. Therefore, a transition strategy will be imperative to redirect these communities toward a more diverse economy.
LP: Does the existing structure of our war machine exacerbate inequality within the U.S.?
William Hartung: It certainly contributes to inequality, as funds allocated for defense are stripped from social programs, job creation initiatives, and other critical resources.
Historically, the defense industry boasted robust unionization rates, but now some companies report union membership as low as 10%, with unions accepting problematic two-tier contracts. Some submarine workers are now even seeking subsidized housing. The notion of well-paying manufacturing jobs has become increasingly rare, and because these funds negate investments that could help bridge the economic divide, they play a role in exacerbating inequality.
Ben Freeman: The disparity between average enlisted personnel and executive compensation in defense contracting is glaring. Several CEOs earn astronomical salaries — $10 million, $20 million, and even one at $80 million annually — while many service members, particularly those in junior ranks (E3s and E4s), are grappling with food insecurity. Around one in four in that demographic are literally going hungry.
Your inquiry about inequality is quite pertinent. While military spending escalates, the chasm in wealth remains strikingly vast. How do we rationalize this disparity? What accounts for such pronounced disconnect?
William Hartung: This rigid procurement system predicated on geographical location inhibits strategic alignment. When purchases are localized, we cannot optimize decisions based on actual strategy. Regardless of one’s stance — hawkish, reformist, or pacifist — this system fails to function effectively. Hence, there exists mutual interest in reforming our decision-making processes.
LP: What genuinely unnerves you regarding your children’s safety?
William Hartung: The inherent nature of technology — particularly if deployed without human oversight — could encourage leaders to resort to military force. By minimizing troop losses, the potential for collateral damage against adversaries heightens the likelihood of conflict. Should such technology govern nuclear capabilities, the risk of mishaps raises significantly, given the complexity of software systems. Compounding this are the tendencies of certain industry leaders who view democracy as obsolete, advocating for tech-driven solutions instead. There exists a pronounced ambition to deploy untested technology in resolving critical issues. For instance, Alex Karp of Palantir articulates a viewpoint in his book The Technological Republic, suggesting our society has become complacent, and advocates for a mission centered on military applications of AI. A truly great nation should aspire to cultivate broader objectives: improving education, advancing public health, enhancing creativity, and fostering unity, rather than simply churning out the latest gadgets.
Ben Freeman: The defense sector constitutes a significant driver of the national debt, being one of the largest expenditure categories in the federal budget. We’re currently adding over a trillion dollars annually, surpassing even the total DoD budget. Consequently, interest payments alone on the debt now exceed the DoD’s entire budget.
Our military spending resembles the actions of drunken sailors, leading to a surging national debt. Eventually, a tipping point arises — as evidenced by other societies — where excessive military investment spirals into havoc. The Soviet Union exemplifies this downfall. Ultimately, this trend becomes unsustainable and creates a generational burden for our children, significantly constraining our national choices.
