The Real Defense Spending Deadbeats: Spain or the US Congress? | American Enterprise Institute
As Congress takes its August recess, these are trying times for defense. With so many moving budgetary parts, one can be forgiven for confusion about what is actually going on. There is Trumpian rhetoric of $1.5 trillion in new defense spending split into mandatory and discretionary tranches, Reconciliation 3.0 and 4.0, an Iran supplemental, the NDAA, traditional defense appropriations bills, continuing resolutions (CR) that are clean or contain anomalies, and of course the overall threat of a government shutdown.
Realistically, the likeliest outcome in this Congress is a CR, and depending on an election that brings the democrats back to power, perhaps a full-year one. This would reflect a drastic reduction in America’s ability to meet its national security commitments. Ironically, it would also mean that the US and that historical NATO spending shirker, Spain, are on a collision course to spend the same share on defense as measured by percentage of GDP. As President Trump called for Spain’s expulsion from NATO over its lack of security spending, perhaps this is part of a freeloading congressional plan to expel ourselves from our alliances.
But aren’t we on the cusp of the biggest defense budget in history? Well, no really. The Republican Congress is failing to deliver and is rapidly running out of time to do so. Recognizing that and making sense of all of the various pieces of the budgetary puzzle are the first steps in having a real defense debate when Congress returns in September.
One must give President Trump credit for setting a spending baseline for America and its allies. NATO (including the US) is committed to a significant increase in defense spending that is also being replicated in Asia. This is a profound achievement that finally meets President Eisenhower’s goal of effective allied spending burden sharing. Still, Presidents Putin and Xi, Kim Jong Un, and the Iranian Revolutionary Guard have also done their share by acting like caricature Bond villains, scaring US allies into opening their wallets.
The NATO commitment of 5% of GDP to be spent on defense and national security is an extraordinary number and a true stretch goal for most nations — even for the U.S. The White House Economic Assumptions forecast US GDP in 2027 to stand at $34.22 trillion, with 5% of that equating to $1.71 trillion.
The Trump Administration proposed $1.5 trillion for defense in 2027, to be divided between $1.15 trillion in discretionary and $350 billion in mandatory spending. Even that would still be $200 billion, or 12% short of our NATO obligation. Regardless, the Trump number and the proposed use of mandatory spending have thrown progressives, democrats, republican deficit hawks, and traditional appropriators into a tizzy. Progressives and mainstream democrats (like Spain) want to spend more on the welfare state, not national defense. Deficit hawks, when they oppose defense increases, still can’t get their head around the fact that defense only constitutes 12% of overall federal spending and is not where the deficit really came from. Appropriators sense power slipping from their hands by proposals to move ever more of federal spending to mandatory accounts.
From these subgroups the votes for meeting our NATO defense commitments simply aren’t there in the Senate and likely not in the House either. The appropriations process has collapsed. A supplemental needed to backfill weapons used in Iran has become a political non-starter. Reconciliation options have been paired down to $60 billion from $350 billion by the House with prospects in the Senate dimmed by an inability of Republicans to agree among themselves to get enough votes to use the only budget mechanism that can avoid an isolationist democratic filibuster.
Which leaves a CR. Versions have now passed both the Senate and the House so the prospect of a government shutdown before the election should be averted when Congress reconvenes. Any CR though would only fund defense to start FY27 at $838 billion which equals 2.4% of GDP. Spain to its credit is now going the other way and has raised defense spending from 1.1% to 2.1% with some arguing it has already hit the 2.4% threshold. Despite the Spanish government’s rejection of the NATO 5% commitment to protect its welfare state, one could envision it spending even more on defense after July’s invasion of Ceuta by illegal migrants.
It is beginning to become obvious that the US is not on the cusp of the largest defense budget ever but rather in a downward spiral to achieving the spending levels of our so-called “deadbeat” allies. This raises the question of who the real deadbeats are. Congress’ inability to make hard choices that support national security is becoming an international disgrace. There is enough bipartisan blame to be had for all, but continued inaction will have significant global ramifications.
