Trump Can Turn America’s Defense Welfare into a Profit Center

This article appeared on American Conservative on March 14, 2019.
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The largest welfare system in the world today is run by the Pentagon. Americans subsidize the defenses of many countries, plenty of which are very rich. In fact, most of the U.S. “defense” budget devoted to power projection is really protecting other nations—and making America less safe.

The obvious solution is to stop protecting countries able to defend themselves. However, President Donald Trump tends to look at everything, including foreign policy, through a profit and loss lens. According to Bloomberg, the administration is now considering a “Cost Plus 50” initiative, under which nations would be expected to pay the full basing cost of any U.S. troops stationed within their borders plus at least a 50 percent supplement. The surcharge would run higher for wealthier states.

Recent negotiations with South Korea over host nation support were unusually contentious because Washington demanded a large payment increase. A compromise was reached, but the process was a harbinger of more difficult financing battles to come.

Bloomberg’s report has set off the usual frenzy. Those who believe America should fill its globe-spanning empire with foreign military facilities were aghast. Argued Douglas Lute, former U.S. ambassador to NATO, about those bases, “we maintain them because they’re in our interest.”

Perhaps that was true during the Cold War, when Washington had reason to shield allied states as they recovered from World War II. But today those overseas military facilities number some 800, and they only encourage adventurism. Better for Washington to negotiate emergency base access for crises, while relying on friends and allies to solve their regions’ mundane problems. Americans have no reason to base troops in Europe to defend, say, Montenegro.

British journalist Edward Lucas, whose nation has long benefited from U.S. military subsidies, insists that “NATO is not an American protection racket.” But neither should it be a welfare program. Prosperous and populous European nations see little reason to worry about problems that they assume America will rush in to solve. Several Europeans governments have increased outlays a bit in recent years, but they are starting off small and seem more interested in placating Washington than building serious militaries. Even nations with relatively powerful armed forces lag far behind both America and their own potential.

Lucas contends that the regions hosting our bases are vital to the United States. If so, why isn’t America vital to those lands? Why aren’t the Europeans sending manpower and materiel to protect the U.S. from attack? To safeguard trade with America? To ensure that North America does not fall under enemy control? Why is the U.S. the only nation on earth expected to protect itself along with everyone else?

Ironically, the terrorist attacks of 9/11 demonstrated that Washington was ill-equipped to guard even its own citizens. The Department of Defense did not live up to its name. So Congress created the Department of Homeland Security to deal with actual threats to America—mostly from domestic terrorists, not foreign militaries.

That left the Pentagon as the de facto Department of Offense, intended to fight on behalf of other nations around the globe. Most of America’s wars and threatened wars—breaking up Serbia, imposing regime change on Haiti, invading Iraq to find nonexistent nuclear weapons, nation-building in Afghanistan, aiding rebels in Libya, helping the Saudi royals kill Yemeni insurgents and civilians—had nothing to do with Americans’ safety, territory, or liberty. Guarding a European continent, which has 10 times the economy and three times the population of Russia, and South Korea, which far outranges its northern antagonist, do no more for U.S. security.

The answer is to make the Department of Defense live up to its name. Safeguard the U.S. Protect Americans. Treat alliances as tools to achieve security, not provide charity. Don’t wander the globe in search of monsters to destroy, as John Quincy Adams warned against. Recognize that social engineering abroad, attempting to transcend history, geography, religion, ethnicity, culture, and ideology, is exceedingly difficult.

But if Uncle Sam proves unable to stop itself, if Washington policymakers continue to care more about retaining power than serving the American people, better at least to make defense dependents pay. Exacting a price would have the additional benefit of encouraging countries to do more on their own. Washington’s defense services would be less in demand if they were not free.

But what to charge? Basing costs don’t matter much. The biggest expense is creating and supplying additional units. Defense guarantees require force structure. Stationing people and equipment overseas is secondary.

Moreover, every country’s military requirements are different. Is defense conventional or does it include nuclear? How distant is the security client? How many and how powerful are its potential adversaries? Does the dependent have other allies? Is the country unstable or does it face particularly unstable enemies? The system should provide multiple charges and surcharges.

The administration might establish a standard baseline for normal defense services. The fee: one percent of GDP. A few countries would be eligible for cut-rate defense: Canada and Mexico, along with, say, Luxembourg. What foreign nation would attack the first two with America on their borders? And what army could get to Luxembourg? Would it even bother to do so? For these dependents, charge a half percent of GDP.

Some nations are greater security risks because they have globe-spanning interests. France and the United Kingdom still live their colonial pasts. Paris is frequently messing around in Africa and the Middle East. London worries about protecting such historical artifacts as Gibraltar and the Falkland Islands. In these cases, the Trump administration should add another percent to its defense fee.

Extensive trading nations face greater maritime threats even if they attempt to avoid political complications. Germany and Japan are obvious candidates (so too is China, though it is unlikely to seek America’s defense aid!). The Gulf nations also qualify—even Saudi Arabia’s military is mostly for show and Riyadh has little naval capacity to safeguard oil shipments. Washington should impose a 1 percent surcharge on such countries.

Also warranting a special add-on are allies entangled in ongoing military confrontations. Obvious examples are South Korea (versus North Korea, at least until peace truly reigns there), Saudi Arabia (with Iran and Yemen), the Baltic states and Poland (against Russia), Georgia and Ukraine (same, assuming Washington’s political relationship turns into a military guarantee), and Japan (versus China). An extra 1 or perhaps even 2 percent should be added to their defense bills.

Countries expecting to rest easy beneath America’s “nuclear umbrella”—that is, to watch the U.S. sacrifice a city or two to protect them from nuclear attack—are receiving a particularly valuable benefit. Japan and South Korea are obvious examples, up against North Korea and China, both nuclear powers. Most members of Europe—minus France and the UK, which have their own nuclear deterrents—also technically qualify, though the most likely nuclear targets probably are in the east, including Germany, Poland, and some of the other countries nearest Russia. This service certainly warrants an added 1 percent, which could be increased if the risks of conflict appear to be on the rise.

Additionally, a 1 percent surcharge should be added for nations that fail to hit NATO’s (admittedly arbitrary) 2 percent GDP standard for military outlays. That would be most of Europe, Japan, and some other laggards.

Rather like the airlines, Washington could constantly hit up its friends coming and going with new defense fees. Europe alone could end up paying around $400 billion—and that would be just a start. There is a good chance that the money collected would cover the Pentagon’s cost of operations. Americans would still be at risk around the world, just like today, but at least they wouldn’t be paying for the privilege of protecting rich friends and allies.

Still, despite the obvious merits to the administration’s idea, it would be better if the U.S. simply laid down its burden of acting as the world’s beat cop, welfare worker, and social engineer. Washington should defend Americans—their land, liberties, people, and prosperity. Other nations should be expected to do the same for themselves.

Doug Bandow

Doug Bandow is a senior fellow at the Cato Institute and a former special assistant to President Ronald Reagan. He is the author of Foreign Follies: America’s New Global Empire.