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It’s time we ditch the two percent (or any percent) of GDP metric for allied defense spending and focus on what really matters—capability, capacity, readiness, and interoperability. In the end, it’s not about how much of our allies’ economic output is directed to defense, and this metric does little to incentivize the results we want to see.
The OCO budget has been taken advantage of to skirt defense spending limits and to fund base budget activities that do not actually constitute war funding. However, moving all of OCO’s enduring costs into the base budget for the final two years of the Budget Control Act caps may not be politically expedient for passing a budget agreement for FY 2020 and FY 2021.
The National Defense Strategy calls for “modernization of key capabilities through sustained, predictable budgets,” yet the unclassified summary and FY 2019 budget request fail to show how the Department of Defense will fund such a priority in the face of long-term, strategic competition with China and Russia.
Discussion over transatlantic security spending has increasingly focused on whether NATO members are spending 2% of their GDP on defense and the merits of 2% as a metric for assessing burden sharing. In addition to analyzing current NATO metrics, this report examines several alternatives that provide a broader understanding of collective security contributions and could improve the rigor of security spending analysis.
The official 2 percent threshold, while mandated at the 2014 Wales Summit, has long been understood as an unofficial spending target for NATO members. According to 2017 estimates illustrated in the graphic, only four of the 28 NATO member states meet the 2 percent spending level while 15 are expected to meet it by 2024..