Tax Americana

or, OPM - Global Peace Edition

America's national debt continues to balloon, and neither party seems particularly serious about doing anything to change that trend. While it's proper to look forward in terms of remedies, the past being "sunk costs," keeping the past in mind can inform our decisions going forward.

Donald Trump produced a decidedly mixed bag of policies and ideas, both in his first candidacy and in his term, and I offered my criticisms. I offered had my praises, and one of them was his scolding the nations of Europe for decades of under-spending on defense. Long reliant on "Pax Americana," aka American taxpayers footing the bill for keeping forces hostile to Europe at bay, most NATO nations have not funded their militaries to the 2% of GDP guideline in the NATO charter.

This trends back to well before the fall of the Iron Curtain (1989) and the end of the Cold War (1991).

It's only since the advent of Putin's aggression toward the West, and the invasion of Ukraine, that European defense spending has been on the upswing. Yet even now, with Putin continuing his destructive mania against Ukraine and rattling sabers against other nations, many Western European nations aren't meeting their expectations.

Germany, in particular, bears calling out. The prime enabler of Putin's aggression via suicidal domestic energy policy (seriously - shutting down nuclear plants so they can be even more firmly stuck on the Russian natural gas teat - how [redacted] [redacted] can you be?), they are just this year getting to the 2% threshold.

With, of course much gnashing of teeth. As the WSJ reports, Europeans found it easy to let their militaries atrophy in order to fund their social welfare states, but are finding it much harder to flip the script in order to restore what should have never been left to rot. As Germany assists Ukraine's effort against Russia (an effort that, I will note again, was made necessary by Germany's stupidity), one report says that:

At the current pace of rearmament, it would take Germany 100 years to return its artillery howitzer stockpiles to their 2004 levels.

It's bad enough that America has spent more on Ukraine aid than Europe, despite Putin being a much bigger threat to Europe. It's bad enough that decades of "Tax Americana" are never going to be repaid by the beneficiaries. It's disgraceful that Germany et al haven't stepped up to the degree they should.

Both Trump and Harris have spoken about expecting NATO's delinquents to make good. Trump has even called for the NATO guideline to be raised to 3%, to more closely mirror America's defense spending (which is currently at historical lows).

I'm not holding my breath. There is no chance that either of our next Presidents will let Ukraine flounder if the European citizenry decides it will continue to expect Other People's Money LINK to keep them safe.

What have we gotten for our Pax Americana?

Since the end of the cold war, America has spent $17.1T, which translates to about 3.8% of total GDP across that time span. If we had spent 2%, as NATO calls for, we'd have spent $8.9T, or $8.2T less. That's about a quarter of the $35T national debt that currently saddles America. By contrast, the EU's total national debt is a bit over $13T, or about 40% of ours. If America's overage had instead been funded by European taxpayers, America's national debt would be $26T, and Europe's $22T.

Given that America's economy is roughly the same size as the EU's, it really feels like American taxpayers have been taken for quite the ride by the Europeans.

That ride will never be paid for. There is no circumstance where Europe repays the trillions the US has contributed to her defense, to keeping global peace that has abetted European prosperity, and that helped break the back of the Soviet economy in the 1980s.

Nor will it be paid for going forward. With militarists in both major parties, and a general sense that America will fund the Ukraine war no matter what Europe does, European leadership can continue to lag in defense spending. Germany's 2025 budget actually cuts Ukraine support by €4B, half this year's spending.

The perpetual response to this fleecing of American taxpayers is inevitably "if not us, then who?"

What happens, however, when the chickens come home to roost? When America can no longer afford to continue funding Pax Americana. Already, defense spending is at its lowest point since WWII.

With the massive domestic spending that's promised by Kamala Harris and the unlikelihood of Trump cutting much from current spending levels, and with the massive entitlement funding gap that no one wants to do anything about, the end of Pax Americana is not "if," but "when." China is going to "claim" Taiwan at some point, Putin is more apt to destroy Russia's economy and future than cease his maniacal pursuit of Ukraine, Israel's effort to destroy Hamas continues to be supported by US dollars, the Houthis continue to harass international shipping in the Red Sea, and more.

I will be called an isolationist for raising an eyebrow at this continued outpouring of American dollars to (often misguided and often futile) foreign adventures. I will retort, quoting someone lost to the vagaries of my memory, that an isolationist is someone who wants to invade one fewer country than you do, that neocons never met a foreign war they didn't like, and that, had we not gone to the effort and expense of kicking Saddam out of Kuwait, and instead simply said "Middle East, you deal with it," the world might look very different today. Europe might have not faced the massive Middle East refugee influx. Iran may not have been able to achieve its current level of muscle-flex. Heck, 9/11 might not have happened. And, we might be the better part of $7T (the cost of the Global War on Terror) less in debt.

Yes, this is all looking backward, and alternate history is a fraught exercise. But, it is the definition of insanity to do the same thing and expect different results. How can NATO's European nations be coaxed into spending what they should on their defense?

I don't know.