They're not saying that the US spends $35T on defense, they are saying that the budget is so complex that the aggregate value of internal transactions (i.e. budget allocation flowing down to sub-departments) is $35T. They use this complexity to claim (without evidence) that some money must be being skimmed.

Not a fan of the amount the US spends on defense, but I'm also not a fan of arguments that make claims without any proof.