As the National Defense Authorization Act (NDAA) makes its way through Congress, with the Senate set to vote on it later today, it’s important for the public to be made aware of its waste. Such examples include the Golden Dome, the F‑35, and the F‑47. Each weapon and program in this legislation should have clear national security objectives, though many of the weapons in this defense authorization fail at this. 

Yet critics of the NDAA should note what is not included in its current draft. Congress has put forth no proposals to address the sources of the waste and corruption within the defense industry. One source of this waste is the revolving doors between the Pentagon, defense contractors, and Congress.

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The American Revolution was not merely a tax revolt over consent; it was a rebellion against a system of taxation that was punitive, discriminatory, and enriching special interests. Many popular accounts of taxation and the American Founding focus on the consent of the governed, focusing narrowly on the Declaration of Independence’s grievance, “For imposing Taxes on us without our Consent.” 

Our chapter in the new book, A History of Repeated Injuries, argues that the standard understanding of taxes at the founding glosses over a richer story with implications for fiscal systems today. If English taxes hadn’t been discriminatory, a revolt over taxation without consent might never have happened. 

Far from a revolt over taxes being too high, the colonists’ Tea Party was a protest against a targeted tax cut. By exempting the British East India Company from taxes on tea, Parliament undercut domestic sellers to create a tax-subsidized monopoly. The colonists revolted, throwing the company’s tea into the harbor. The Boston Tea Party was more a protest against a corporate bailout than a broadly burdensome fiscal system. 

In 1763, the average British citizen paid about 26 shillings a year in taxes. The average New England colonist paid about one shilling, and many understood that taxes would have to rise if the independent colonies were to fund their own defense. In addition to other grievances, we rebelled over the way taxes were imposed, not the size of the bill. 

War debts forced the young states to raise domestic taxes to pay bondholders, and it was widely understood that government debt enriched the wealthy urban elites who held the bonds. The taxes that funded repayment, meanwhile, fell disproportionately on poorer rural farmers. The result was resentment and repeated violent rebellion. Yet the protesters went out of their way to make clear they were objecting to the inequities of the tax design, not the principle of raising revenue in general. 

This is not a uniquely American conclusion. A recent empirical assessment of the French Revolution found that unrest was concentrated on the high-tax side of France’s internal fiscal borders and was strongest where fiscal disparities were largest. The authors conclude that the discontent that toppled the monarchy “was fueled not only by tax levels but also by how inequitable the system appeared.” 

Similar tensions played out in debates between anti-Federalists and the Federalist supporters of the new Constitution, which included language intended to ensure uniform treatment under the law, including tax law. The widely held concern that taxes could become oppressive, in both magnitude and design, led to constitutional safeguards. Unfortunately, these protections were insufficient to keep the anti-Federalists’ warnings of an increasingly intrusive federal fiscal system from materializing with the introduction of the Sixteenth Amendment and the modern income tax. 

Two hundred and fifty years ago, the Founders taught us something simple: a tax system earns consent when it treats people equally, and it invites discontent when it doesn’t. We’ve drifted a long way from that standard. Today’s tax code is a sprawling instrument of privilege and punishment. Just look at the two most recent large tax bills passed by Congress. The Inflation Reduction Act included a trillion dollars in energy subsidies for politically connected industries, and the One Big Beautiful Bill Act added a dozen new carve-outs that reward important political constituencies at the expense of everyone else. 

The challenge today is not simply to lower taxes but to design a system that is transparent, neutral, broad-based, and resistant to political manipulation. That system is a flat consumption tax. 

The annual process to provide the nation’s defense budget, the Fiscal Year 2027 (FY27) National Defense Authorization Act (NDAA), is well underway on Capitol Hill. The Armed Services Committees in both the House and Senate have put their pencils down, and legislation from both chambers is expected to be the focus of debate after the Fourth of July. This year’s price tag? Approximately $1.15 trillion. 

A recent report from the Committee for a Responsible Federal Budget estimates that, if passed, this would be an approximately 67% increase from last year’s base funding levels. This year’s defense budget comes alongside separate discussions of providing additional funds to the Pentagon via an Iran war emergency supplemental and a third reconciliation funding package, both major asks of the Trump administration. 

To promote the massive spending request to members, the chairman of the House Armed Services Committee released a fact sheet early in the process, pitching the FY27 NDAA as the key to rebuilding the US defense industrial base. While in our view the sales pitch is a bit overstated, the chairman’s summary fairly points out that the United States faces systemic and structural challenges that contribute to a defense industrial base bogged down by supply chain challenges, extremely long acquisition timelines, and regulatory barriers to entry. Yet, the chairman’s pitch fails to demonstrate how this year’s legislation gets at the root causes of such problems, which have compounded over time and cannot be solved simply by more spending. Moreover, Congress itself stymies the positive impact it could have by refusing to exercise fiscal responsibility in reducing expansive and expensive US security commitments that are out of step with the narrow set of priorities articulated in the Trump administration’s National Defense Strategy. 

A Lack of Strategy

The FY27 NDAA lacks alignment with America’s overall strategic direction. Currently, US defense commitments outstretch our capabilities. The Trump administration’s National Defense Strategy (NDS) confronted decades of failed strategic doctrine and flipped the script from overextension to prioritization. The NDS narrowed the nation’s core defense interests down to four priorities: defending the US homeland, deterring China along the First Island Chain, increasing burden sharing with US allies and partners, and reviving the US industrial defense. 

Ideally, the nation’s defense budget should largely align with the strategic priorities identified in the National Defense Strategy and reduce spending in non-priority areas. However, in practice, Congress is a hindrance to such strategic logic in two ways. First, prioritization has never been a strong suit for Congress, where special interests and pet projects abound. The proposed FY27 NDAA, for example, still includes funding for things like the Baltic Security Initiative in Europe and counter-ISIS train and equip programs in the Middle East, which do not incentivize greater burden sharing. Second, Congress refuses to live in strategic reality and give any credence to evidence that the United States is overcommitted globally. For example, the proposed budget continues significant limitations imposed last year on the Pentagon’s ability to reduce US defense commitments by reducing posture in Europe or certain segments of the Indo-Pacific. 

The power of the purse and the stewardship of taxpayer dollars are massive constitutional responsibilities, and to execute them willfully blind to the realities of scarcity and tradeoffs is a dangerous operating posture. 

High-Cost Programs

Spending more is the easy way of avoiding confrontation with systemic issues that arise in the procurement of high-value, high-cost weapons systems. Yet, these are the reforms, alongside strategic alignment, which are desperately needed. Take the F‑35 program and the modernization of the ground-based leg of the nuclear triad known as the Sentinel program as two prominent examples. Both have raised numerous oversight concerns on cost overruns, budget accuracy, timeliness at various stages, and the expected final product, and sustainability over each program’s lifecycle. Additionally, overregulation is another major factor minimizing competition in the defense industry and stymying the agility the defense industrial base so desperately needs. These are not problems that arose from a lack of cash. Rather, such issues require a Congress willing to put parochial political special interests aside, delve deep under the hood of our costliest programs, and make tough reforms to both advance the development of necessary US weaponry and balance fiscal responsibility. 

The Spending Problem 

Lack of clarity on how the federal government will pay for this “historic” defense budget is also a major elephant in Capitol Hill backrooms. Adjusting for inflation, the United States will spend more on defense than it did at the heights of World War II, the Vietnam War, and the Reagan defense buildup in this year’s proposed defense budget. Amid skyrocketing national debt and increasing domestic costs, it’s unclear how the United States can afford this hike in defense spending. 

The Trump administration also identified “supercharging” the American economy as a central element of its sales pitch for a $1.5 trillion defense budget. Let’s pull back the curtain on this. Unless the federal government raises taxes or interest rates, this drastic increase in defense spending would place upward pressure on inflation. Such inflationary pressure couldn’t come at a worse time, when Americans face serious challenges with affordability. Spending more money on defense also diverts funds and skilled workers from domestic spending and savings programs, which are more financially beneficial to the US economy, to the US industrial base, and to the American people. 

Compared to sectors like healthcare, infrastructure, and domestic manufacturing, the defense industry creates fewer succeeding jobs, as it is heavily specialized work. For every dollar spent on infrastructure, for instance, over $1.5 in GDP is created, whereas every dollar spent on defense creates $0.6 to $1.2 of GDP. Taken together, these dynamics mean the priority shouldn’t be simply ballooning the defense budget. Rather, the more fiscally responsible path would be to right-size the topline and focus on structural reforms to reduce costs. 

Process Problems

Finally, one political party shouldn’t have unilateral say over the entirety of our nation’s defense budget. Yet, this is exactly what is being proposed by the Trump administration and Republican leaders in both houses of Congress, in using the process known as reconciliation to pass a significant portion of defense spending. The Founders gave Congress the power of the purse, but certainly not with the intent that the majority party rig the entire process from start to finish and box out the minority. A durable defense budget, one that includes many of the structural reforms we discuss in this piece, demands a strong political consensus. Yes, that means bipartisan support. Such critical decisions about the nation’s security, made with eyes wide open to strategic reality, should be largely apolitical. Moreover, the budget process itself should prioritize preserving the Founders’ intent for a balance between majority and minority and the respective roles of the House and the Senate over quick political gains. 

Conclusion

As it stands, the FY27 NDAA will largely preserve a wasteful and broken defense industrial base. But it is important to acknowledge that this does not have to remain the status quo. Throwing more money at the defense industrial base may ostensibly seem like an easy solution, but a facade won’t solve deeper structural flaws. Congress should take more time to critically evaluate the decision to spend over a trillion dollars on defense, make a greater attempt at serious structural reforms, and follow a regular order process for the defense budget to produce a strong political consensus. 

On June 24, the White House requested $87.6 billion in emergency supplemental funding. Most of the request—some $72 billion—is ostensibly related to the war in Iran. But a significant share has nothing to do with the war, ranging from $11 billion in agricultural subsidies to $1 billion to modernize New York City’s Penn Station. Legislators should not reward the administration for prosecuting an expensive war of aggression against Congress’s will. Congress should reject the request; short of that, it should demand dollar-for-dollar offsets for any new spending.

What’s in the Supplemental Funding Request?

Because Congress has already finalized its FY2026 appropriations, the administration has turned to an emergency supplemental. Such requests traditionally receive expedited consideration and less scrutiny. To prevent abuse, emergency spending is supposed to meet a five-part AND test, meaning that an emergency designation must be:

1. necessary (essential or vital, not merely useful or beneficial);
2. sudden (coming into being quickly, not building up over time);
3. urgent (requiring immediate action);
4. unforeseen; and
5. not permanent.

Yet, Congress routinely ignores this test, abuses this emergency spending process, includes non-emergency spending requests, and adds trillions of dollars to the public debt using the “emergency” label. This latest emergency request is more of the same. Table 1 breaks down the White House’s $87.6 billion request into four buckets: the war in Iran, farm subsidies, Ebola response, and government pork.

The war in Iran claims the largest share of spending, with the Department of Defense alone receiving a whopping $67 billion. As my colleague Benjamin Giltner explains, at least a quarter of the supplemental would finance ongoing operations, adding to “the roughly $113 billion this war has already cost.” The administration also requests $21 billion to replenish depleted munitions; $1.2 billion for unspecified “administration priorities”; and $12 billion for classified programs. It is doubtful that all of these qualify as emergencies. 

Another $2 billion goes to the Coast Guard for border security, only tangentially related to the war. And the request omits any funds for repairs to damaged bases—a cost that would push the price tag higher still. Congress should be skeptical of approving emergency designations for many of these line items. America has a long history of military overspending and irresponsible wartime budgeting.

The second bucket is farm subsidies (Table 3). Congress routinely uses “emergency” supplementals to pile on new farm aid. This time around, the administration wants $10 billion in economic assistance for row and specialty crops planted this year, plus $1.1 billion for producers, largely in Florida, hit by last winter’s storms. Neither qualifies as an emergency. Crops follow a predictable annual schedule, weather losses are insurable, and this kind of subsidy is already a permanent fixture in the budget. The federal government already spends $26 billion each year on farm subsidies, and that spending is on the rise, before considering one-off supplemental plus-ups like those proposed by the administration. Besides, this is farm policy that belongs in the farm bill or annual appropriations, not a war supplemental.

The third bucket is international disease response, prompted by the Ebola outbreak in Uganda and the Democratic Republic of the Congo (see Table 4). Arguably, it meets the sudden, unforeseen, and non-permanent prongs of the test. Yet whether it is necessary or urgent is far from clear. By the CDC’s own assessment, the risk of spread is “very low,” and even if it reaches US shores, the risk of community spread is “also low.” It thus seems premature to spend $1.4 billion here, especially when the federal government already spends more than $12 billion a year on global health funding across several budget accounts.

The final bucket is classic pork: local subsidies and parochial priorities that didn’t make the cut in regular appropriations (see Table 5). For example, the administration requests $500 million for the National Park Service to renovate the Tidal Basin Seawall and World War II Memorial in DC. That is not a necessary, sudden, urgent, or unforeseen use of funds by any stretch. Neither is the full $1 billion the administration wants for expedited Penn Station modernization, nor the $600 million ask for elevator and energy upgrades in federal buildings. Nor the $1 billion to raise benefits for pensioners affected by General Motors’ 2009 bankruptcy. None of this merits the emergency label or new deficit spending.

Absent offsets, every dollar of this supplemental would be deficit-financed. And borrowing is not free: $87.6 billion borrowed in FY2026 would add $38 billion in interest through 2036. That pushes the supplemental’s true price tag closer to $126 billion.

More War Spending Is Hard to Justify

Strip away the pork, the farm subsidies, and the Ebola money, and the core of this request is hard to justify. Base discretionary defense spending already approaches $1 trillion a year, and last year’s reconciliation law—the One Big Beautiful Bill Act—added more than $150 billion on top. The military is not starved for resources. Any case for more military spending that rests on threats elsewhere, such as replenishing munitions for a future fight with China, is really a case for prioritizing within the existing budget. If replenishing munitions is a genuine long-term national priority, then lawmakers can fund it within the regular budget with offsets.

Worse, if Congress reliably covers the costs of every conflict on an emergency basis, it cheapens the decision to start one, at least in how the executive branch makes decisions. In effect, Congress would be rewarding the administration for launching a pointless, costly war, with a train station and a pension bailout thrown in for good measure.

Reject It, or Offset It

Congress should reject this request. Most of it does not merit the emergency label, and America cannot afford $126 billion in new borrowing amid $2 trillion deficits. If legislators insist on passing some version of it, they should strip every line item that is not a genuine emergency and offset the rest dollar-for-dollar. No offsets, no deal.

The author would like to thank Eleanor Barrett for her assistance with this piece.

Senator Elizabeth Warren (D‑MA), alongside Sens. Tammy Duckworth (D‑IL) and Richard Blumenthal (D‑CT), sent a letter to President Donald Trump, warning that raising Social Security’s full retirement age from 67 to 69 would cut retirees’ monthly benefits by 17 to 35 percent.

There’s just one problem: the study her letter cites doesn’t support those numbers.

The letter’s key source is a piece by Kyle Ross of the Center for American Progress (CAP), which estimates benefit reductions of roughly 12.5 to 14.3 percent—not 17 to 35 percent. That’s a big difference. Raising Social Security’s eligibility ages is a rational policy response for a program that provides unsustainable benefits to an aging population that lives longer, healthier lives. Misrepresenting the policy’s effects gets in the way of an honest debate.

The Study Warren Cites Contradicts Her Claim

Ross analyzed the effects of gradually raising the full retirement age (FRA) from 67 to 69 between 2027 and 2034. The proposal wouldn’t change the earliest eligibility age (EEA) of 62.

Under current law, claiming Social Security benefits between 62 and 67 reduces monthly benefits relative to what a retiree would receive by waiting. The earlier one retires, the higher the early retirement penalty, with a maximum reduction of 30 percent at age 62. Conversely, retiring after 67 increases benefits by up to 24 percent for those who wait until 70.

Raising only the full retirement age to 67 would reduce monthly benefits at any claiming age between 62 and 70 by increasing early retirement penalties or reducing late retirement credits. CAP’s Kyle Ross summarized these effects in the table below for a median-wage retiree.

Ross’s monthly benefit cut estimates, shown in the “Percentage cut” column, range from 12.5 to 14.3 percent, depending on claiming age. That means even the lower bound of the 17–35 percent range presented in Warren’s letter exceeds the maximum cut estimated in the very study she cites.

So, Where Do Warren’s Numbers Come From?

One possible explanation for these exaggerated figures is that the staff behind the estimates confused early retirement penalties (the column in Ross’s table called ‘Retirement penalty/​credit’) with benefit cuts. Yet that’s unlikely since the 17–35 percent figures don’t appear anywhere in those columns.

A more likely explanation is that the staff behind the letter made a math error.

The letter also expresses the benefit cut range in corresponding dollar terms, $345 to $741 per month. These figures appear in Ross’s analysis.

Here’s what appears to have happened.

Ross calculated those dollar reductions relative to a median worker’s projected Social Security benefit in 2034. Warren’s letter appears to divide those same dollar amounts by today’s average Social Security benefit instead.¹

That’s an apples-to-oranges comparison. Using a smaller benefit amount as the denominator makes the percentage reductions look much larger than they actually are.

If that’s the calculation, the math explains the 17–35 percent figures. It doesn’t justify them.

Should Congress Raise the Retirement Age?

Whether Congress should raise Social Security’s retirement age is a separate question. Reasonable people can disagree. But that debate should begin with accurate numbers.

The case for gradually raising the retirement age is straightforward.

Americans are living longer than when Social Security was created, and, importantly, they’re spending more of those extra years in good health, enabling them to work longer. At the same time, the workers paying for Social Security benefits have declined in numbers compared to the seniors who receive benefits, such that allowing the benefit duration to perpetually increase by maintaining a low retirement age as longevity increases makes the program’s benefits consistently more expensive.

Since Social Security’s first benefit payout in 1940, life expectancy at age 65 has increased by 6.5 years for men and 7.1 years for women. Crucially, a recent study by Liran Einav (Stanford University) and Amy Finkelstein (Massachusetts Institute of Technology) finds that the longevity gains since the 1990s consist entirely of additional healthy years, suggesting that older Americans aren’t merely living longer but also remaining able to work longer.

Yet the full retirement age has increased by only two years, from 65 to 67. As a result, the average expected duration of benefit collection has grown by roughly 4.5 years for men and 5.1 years for women, as retirees are collecting benefits for that much longer.

Gradually raising the retirement age would better align Social Security with longer life expectancies, rather than asking younger workers to finance seniors’ ever-longer retirements through higher taxes or additional borrowing.

The Congressional Budget Office (CBO) has analyzed the same proposal as CAP—gradually raising the FRA from 67 to 69 by 2034. This change wouldn’t close Social Security’s funding gap, but it would be a meaningful step toward this objective.

The program’s long-term shortfall would decline by 24 percent, and Social Security spending as a share of GDP would fall by half a percentage point, from 5.9 percent in 2054 to 5.4 percent.

Notably, CBO finds that because lower earners are more likely to claim disability benefits, which are unaffected by changes to Social Security’s full retirement age, they would experience the smallest reduction in lifetime benefits relative to lifetime earnings if the eligibility age were increased. For workers born in the 1980s, lifetime benefits would fall by about 6 percent for the lowest earners, compared with 8 percent for middle earners and 9 percent for the highest earners (see chart below).

Senator Warren’s letter warns against raising the retirement age, but it relies on figures that contradict the research she cites. The actual benefit reductions from a well-designed retirement-age increase are modest, and when weighed against Social Security’s deteriorating finances, rising longevity, and the availability of disability protections for those who cannot work longer, the case for change is strong. 

With only six years from when the program threatens all beneficiaries with automatic benefit cuts, policymakers owe the public an honest discussion of both the costs of reform and the costs of doing nothing.

1. The dollar reductions cited in the letter ($345 and $741) appear in Ross’s table and are calculated relative to projected monthly benefits for a median-wage retiree in 2034 ($2,683 at age 62 and $5,745 at age 70). The letter also cites Social Security’s Monthly Statistical Snapshot (February 2026), which reports an average retired-worker benefit of $2,076 per month. Dividing Ross’s dollar figures by that current average benefit yields 16.6 percent ($345 ÷ $2,076) and 35.7 percent ($741 ÷ $2,076), closely matching the letter’s claimed range of 17–35 percent. Because Ross’s dollar reductions are calculated relative to projected 2034 benefits rather than today’s average benefit, this comparison uses different baselines and overstates the percentage reductions.

The Wall Street Journal recently published my op-ed on how Congress could fix Trump Accounts so they’d actually be a useful investment vehicle.

My reform idea is straightforward: let parents deduct their contributions to Trump Accounts, so the investments are actually shielded from the tax code’s double tax. 

You can read the full piece here. 

I end the op-ed by arguing that Congress should also relax the lock-up rules and penalties that apply to Trump Accounts and instead allow the savings to roll into a more flexible Universal Savings Account at age 18, rather than a retirement-focused IRA. 

However, part of my argument was left on the cutting-room floor. The $1,000 government subsidy is the root of the Trump Account’s complexity. Once you start handing out other people’s money, Congress attaches strings. That’s not a bad impulse on its own, but the problem is that the strings attach to personal contributions as well, not just the government deposit. It’s the resulting lock-up rules and tax penalties for non-authorized access that make the accounts less useful. It is also the root of the confused tax treatment that makes Trump Accounts the least tax-advantaged savings account available to families.

Beyond making the accounts functionally useless outside the government transfer, the subsidy also fails to meet most of the other goals its proponents claim for it. 

For example, it is unlikely to mint a new generation of capitalists who come to see the benefits of markets by sharing in their growth. It’s a good story, but there’s not much evidence to back it up. As I detail in my recent report, in the US and around the world, the growth of private retirement savings is not associated with rising conviction in markets. If anything, the opposite is true. 

It is also not free money. The government is borrowing at increasingly high interest rates, betting that stock market returns will compensate. This shifts market risk onto taxpayers and adds to the already large fiscal pressures facing the US government. And those risks are unlikely to stay small. Trump Accounts currently cost about $3.5 billion a year. Once the accounts exist, every future Congress faces incentives to increase deposit sizes, add new types of matching incentives, and expand eligibility. 

Kill the handout, and the Trump Account structure can be easily simplified. No seed money means no lock-up to protect it, and no penalties to enforce the lock-up.

Government subsidies are neither a way to inoculate American youth against socialism nor a magic arbitrage machine whereby Washington borrows ad infinitum, invests the gains, and leaves everyone better off. There is no free lunch. Congress should focus on lowering taxes and simplifying the rules that keep people from saving their own money, not on redistributing everyone else’s. 

You can read my full Cato policy analysis on Trump Accounts here. 

Supporters of federal spending make it sound simple: the government designs expert programs, raises money from taxes, and steers it to individuals, businesses, and nonprofit groups to solve problems in society.

Our new study, Federal Government Spending Is a Leaky Bucket, describes why this view is far too optimistic. Every step in raising and spending money is undermined by design errors, bureaucratic inefficiencies, and behavioral responses that result in most programs generating more costs than benefits. 

The study’s name borrows from economist Arthur Okun, who famously likened welfare programs to a leaky bucket. 

We argue that the government bucket is even leakier than Okun described and that his lessons apply to all federal programs—whether spending on welfare, defense, infrastructure, or health care. 

Our study provides a framework to understand why most federal spending undermines the economy and why most activities should be left to the states and the private sector. It details the many ways policymakers—carrying their program buckets—are leaking resources all over, making us worse off.