Where Does the Federal Government Spend Money?
Key Takeaways
- Mandatory spending, including Social Security and Medicare, dominates federal outlays, accounting for over 65% of total annual expenditures.
- Interest payments on the national debt have reached historic levels, creating additional budget pressure.
- At $908 billion, defense spending remains the largest discretionary budget item, dwarfing other discretionary spending categories.
The federal budget reflects our nation's priorities and challenges. In 2024, total federal spending reached $6.94 trillion, with significant portions allocated to essential programs, defense, and interest payments.
2024 Federal Budget Allocation
America's roughly $7 trillion budget reveals stark fiscal priorities. Mandatory spending—Social Security and Medicare—commands the lion's share, while discretionary spending remains perpetually squeezed. Defense spending, at $908 billion, dwarfs other discretionary items.
Federal Outlays Over Time
The long-term trajectory of federal spending tells a story of expanding spending, entitlements and mounting interest costs. As mandatory programs, like Social Security and Medicare, swell with an aging and increasingly dependent population, discretionary spending's share of GDP has remained remarkably constant—a testament to fiscal inertia rather than restraint.
Federal Government Outlays
Annual data 1940-2024, (2024 dollars)
Federal Government Spending Comparison
Drag the year markers above to modify the years in the pie charts and tables below
1940 Summary
2024 Summary
Interest on Federal Debt
The cost of America's borrowing has come due. Due to rising interest rates, interest payments on the national debt have surged, consuming an ever-larger share of tax revenues.
Interest on Debt
Quarterly data (1947-2025)
Average Interest Rate on Federal Debt
This chart shows the average interest rate the U.S. Treasury pays on all its interest-bearing debt, based on monthly Treasury data. It reflects the blended cost of borrowing across different securities.
Average Interest Rate
Monthly data (2001–2025)
Foreign Aid and Intervention
The United States provides significant foreign aid to countries around the world. The latest complete dataset from ForeignAssistance.gov put total obligations at $79 billion in fiscal year 2023, or approximately 1% of federal spending in 2023.