Ever look at the news and wonder, "Where does all the government money go?" If so, you’re not alone. Government spending might sound complicated, but it makes a big difference in our daily lives. Whether you realize it or not, the federal budget shapes many of the things and services we count on like social security, schools, highways, and even your local playground. That’s why it’s important to understand how these decisions are made and why money gets spent the way it does.
When you know where your tax dollars are going, you can see what our leaders care about and the priorities they’re setting for our nation. Funding choices can change the quality of schools, the safety of roads, or the support families get when they’re struggling.
These spending choices affect you, your family and your community in big and small ways, so you deserve to know the truth. With the facts, you’ll be better prepared to ask questions, join the conversation, and make your own opinions heard. Information on spending percentages comes from the Peter G. Peterson Foundation, USAFacts, and the Committee for a Responsible Federal Budget.
The Three Buckets
The government doesn’t just spend its money all in one place. Instead, it divides spending into three main buckets: mandatory spending, discretionary spending, and net interest. In 2024, the government spent about $6.8 trillion. Yep, that’s trillion with a “T.”
Each bucket serves a different purpose. Some things the government pays for are automatic, like bills on autopay, while others change every year. And just like if you put money for pizza, books, and rent in different envelopes at home, each bucket covers its own category of needs.
Mandatory Spending: The Non-Negotiables
Mandatory spending is like your family’s rent or car payment. These are the bills you can’t skip. The government has committed to these through laws, and it spends the most in this bucket. In 2024, nearly 60% of all spending—around $4.1 trillion—was mandatory.
These are programs that keep running no matter what, because people count on them. Social Security, Medicare, and Medicaid are the largest, but there are also things like retirement plans for government workers and veteran benefits tucked in here, too.
Social Security
Social Security is the biggest program in the budget, accounting for 36% of all mandatory spending. It helps people who are retired, have disabilities, or have lost a family member who worked. Millions rely on these monthly checks to make ends meet.
Because the population is getting older, more people will need Social Security in the coming years. This creates pressure on the budget since the program is so big and essential for so many households coast to coast.
Medicare and Medicaid
Medicare covers health care costs mostly for those 65 and older. It serves as the older generation’s main help with doctor bills and hospital fees. It makes up 22% of mandatory spending, which is a big chunk!
Medicaid is for people with lower incomes, plus some children and pregnant women. Together, Medicare and Medicaid make up the government’s healthcare promise to millions of Americans. As healthcare costs rise, these programs also need more funding.
Other Mandatory Spending
There’s more in the mandatory bucket than just Social Security and health programs. The government also has to pay for veteran benefits, income security for families in need, and retirement programs for public workers.
This spending often doesn’t make headlines, but it covers important support systems. Whether it’s a veteran who served the country or a family needing extra help, this bit of spending supports lives every day.
SNAP (Supplemental Nutritional Assistance Program) is a mandatory program that has made headlines recently after the Trump administration cut off funding due to the 2025 government shutdown. In 2024, SNAP accounted for 1.5% of federal spending. The program provides essentially grocery store debit cards for low-income families and serves 1 in 8 Americans.
Discretionary Spending: Where Choices Happen
Now, let’s talk about the “choice” bucket. Discretionary spending is the stuff Congress and the President decide on each year. About 27% of the budget—$1.8 trillion—goes here. Unlike the autopilot of mandatory money, these funds are debated and voted on.
This is where lawmakers have the most arguments over what’s important. Should more money go to education, fixing roads, clean energy, or maybe science and space exploration? Each year, these choices can shift.
Defense Spending
Almost half of discretionary dollars (47%) go to defense and protecting the nation. That covers everything from soldier paychecks and training to big-ticket items like tanks, planes, and ships. It also pays for new military tech and helps keep bases running smoothly around the world.
National security is always a big topic in Washington, so the military’s budget is usually protected. Still, every dollar spent here is one less for other needs like education, community programs, or research.
Non-Defense Spending
The other half of discretionary funds covers a huge range of stuff that mostly centers around building our communities. We’re talking roads and bridges, veteran healthcare, schools, scientific discoveries, and protecting the environment. Programs like NASA, the EPA, and support for colleges all get their slice here.
This is the part of the pie that can change the most from year to year. When lawmakers make trade-offs, these are the categories where increases or cuts usually happen, which can impact communities and families directly.
Net Interest: Paying the Country’s Debt
The last bucket is for net interest. This is the money the government spends to pay interest on its debt. It’s a bit like paying interest on your credit card each month. In 2024, this took up 13% of the total budget at $881 billion, and it’s only expected to keep growing.
As of October 2025, the national debt was at $38 trillion, a record high. Every time the government borrows money to pay for things it can’t afford now, that debt grows. The more debt we owe, the more we pay in interest. This leaves less money for other priorities like healthcare and infrastructure.
The Debt Challenge
Here’s the tricky part: the government has been spending more than it collects in taxes. That’s why the national debt keeps getting bigger. This isn’t just a future problem anymore; the budget squeeze real today.
As mandatory programs and interest payments go up, there’s less space in the budget for everything else. It means some programs you care about might get less funding in the future or taxes might have to go up. That’s a real tough spot.
Why Should You Care?
Knowing how government spending works helps you understand what’s happening in your country. When there’s a big news story about the federal budget, you’ll have the basics down and see why big decisions get made the way they do.
Not to mention, this stuff matters for your future. Budget choices affect your school, your roads, your family’s healthcare, and even the jobs in your town. So next time someone asks, “Where does all that money go?” you’ve got the answers!
