Explainer | Spending
Where does the federal government’s money go?
Every major spending category in FY2026, ranked — from Social Security’s $1.53 trillion to interest’s $1.02 trillion.
Key takeaways
- Total federal spending (outlays) in FY2026: $6.81 trillion.
- The five biggest categories — Social Security, net interest, Medicare, health, and defense — account for roughly three-quarters of all spending.
- Net interest ($1.02T) is now the second-largest budget item: the cost of past borrowing, paid before anything else.
Methodology. Figures are fiscal-year-to-date outlays by budget function from the U.S. Treasury’s Monthly Treasury Statement, Table 9, for FY2026 through August 31, 2026 (the latest published month). Negative values are offsetting receipts — money flowing back in. Rounded to the nearest billion.
The full ranking
| Category | FY2026 outlays |
|---|---|
| Social Security | $1,526B |
| Net interest | $1,017B |
| Medicare | $979B |
| Health (incl. Medicaid) | $926B |
| National defense | $876B |
| Income security | $645B |
| Veterans benefits and services | $396B |
| Transportation | $126B |
| Administration of justice | $99B |
| Education, training, employment, and social services | $92B |
| Community and regional development | $57B |
| Natural resources and environment | $52B |
| Agriculture | $51B |
| International affairs | $45B |
| General science, space, and technology | $36B |
| General government | $25B |
| Energy | $18B |
| Commerce and housing credit | −$10B |
| Undistributed offsetting receipts | −$146B |
| Total outlays | $6,810B |
Source: U.S. Department of the Treasury, Monthly Treasury Statement, Table 9, August 2026. Totals may not sum exactly due to rounding.
What the ranking reveals
Entitlements dominate. Social Security, Medicare, and health programs (largely Medicaid) together total about $3.43 trillion — just over half of everything the government spends. These are driven by eligibility rules and demographics, not annual appropriations.
Interest is the fastest riser. At $1.02 trillion, net interest now exceeds both Medicare and national defense. A decade ago it was roughly half this size. Interest must be paid no matter what Congress funds — it is the least flexible dollar in the budget.
Defense is large but not the largest. National defense at $876 billion is the fifth category, about 13% of spending — a smaller share than at most points in the postwar era.
Everything else is small by comparison. All remaining categories — transportation, justice, education, science, agriculture, foreign affairs, and more — combine for roughly $700 billion, about a tenth of the budget. This is why proposals to balance the budget by trimming these programs alone rarely add up.
Mandatory vs. discretionary
Budget wonks divide spending into mandatory (set by permanent law: Social Security, Medicare, Medicaid, interest) and discretionary (set each year by Congress: defense, education, science, and most agency budgets). Roughly two-thirds of the budget is mandatory or interest — it happens automatically unless Congress changes the underlying laws.
Sources
- U.S. Department of the Treasury, Monthly Treasury Statement, Table 9 — outlays by function, FY2026 through August 2026 (fiscaldata.treasury.gov)
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