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NATO spending pledge—federal government faces lose-lose situation

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From the Fraser Institute

By Grady Munro and Jake Fuss

for Canada to meet the target and maintain it through 2026/27, it must increase defence spending by $57.1 billion

During his recent visit to Poland, when asked about Canada’s responsibility to NATO, Prime Minister Trudeau acknowledged that “there is still more to do.” Indeed, at the Vilnius Summit last summer, the 31 member countries of NATO, which includes Canada, once again pledged to spend a minimum of 2 per cent of their gross domestic product (GDP) on defence. Unfortunately, with no plan to reach this benchmark, the Trudeau government is in a lose-lose situation—accumulate billions more in debt or further disappoint its allies.

According to NATO, the 2 per cent minimum pledge will ensure the alliance’s military readiness and improve the credibility of the organization.

Yet Canada (a founding member of NATO) has failed to reach this target every year since first making this pledge in 2006. In 2022, the latest year of available spending data, Canada’s defence spending measured 1.29 per cent of GDP—fifth-lowest in NATO and well short of the 2 per cent target. And much of Canada’s recent progress towards the spending target is due to a 2017 change in NATO’s definition of “defence spending.” Consequently, Canada has been branded a “military free-rider.”

Although most NATO countries haven’t reached the spending benchmark either, this is changing as the war in Ukraine continues. Seven members spent more than 2 per cent of GDP in 2022, and it’s estimated that 11 members will meet the target in 2023. With more members fulfilling their pledge, Canada likely will fall further behind it allies without higher defence spending. Yet according to the Parliamentary Budget Officer, for Canada to meet the target and maintain it through 2026/27, it must increase defence spending by $57.1 billion.

Unfortunately, due to the Trudeau government’s record-high spending, Ottawa is in a weak fiscal position. From 2014/15 to 2023/24, the federal government increased per-person program spending from $9,064 to $11,395 (adjusted for inflation), primarily by borrowing. As a result, the government has racked up substantial debt and projects more borrowing in the coming years, with no balanced budget in sight.

Without a plan to restrain spending in other areas to accommodate a $57.1 billion increase in defence spending, the government would have to rely on debt to meet the 2 per cent target. This would significantly increase future deficits. In 2023/24 alone, the deficit would increase from $40.0 billion to $55.5 billion. The next several years would also see deficits increase by no less than $13.0 billion. In total, from 2023/24 to 2026/27, cumulative budget deficits would increase from $143.8 billion to $200.9 billion. Such an increase would substantially weaken an already shaky fiscal position.

Despite this, it’s unlikely the Trudeau government would rework its spending to avoid such debt accumulation. Since 2014/15, the majority of spending increases have gone towards expanding or implementing new programs such as the Canada Child Benefit or $10-a-day daycare, rather than core government functions such as defence or justice.

In fact, the government increasingly treats defence as an area to find additional savings. It recently cut the defence budget by $210 million, and it’s rumoured additional cuts of $1 billion are on the way. Clearly, spending on new programs takes precedent for this government, leaving Canada in arrears on its NATO commitment.

If the Trudeau government intends to uphold its recent defence spending pledge, but is unwilling to change its priorities, then Canadians will likely see Ottawa’s mountain of government debt grow even higher. But should the government again fall short of the NATO target, Canada’s reputation among its allies will continue to deteriorate.

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Top Brass Is On The Run Ahead Of Trump’s Return

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From the Daily Caller News Foundation

By Morgan Murphy

With less than a month to go before President-elect Donald Trump takes office, the top brass are already running for cover. This week the Army’s chief of staff, Gen. Randy George, pledged to cut approximately a dozen general officers from the U.S. Army.

It is a start.

But given the Army is authorized 219 general officers, cutting just 12 is using a scalpel when a machete is in order. At present, the ratio of officers to enlisted personnel stands at an all-time high. During World War II, we had one general for every 6,000 troops. Today, we have one for every 1,600.

Right now, the United States has 1.3 million active-duty service members according to the Defense Manpower Data Center. Of those, 885 are flag officers (fun fact: you get your own flag when you make general or admiral, hence the term “flag officer” and “flagship”). In the reserve world, the ratio is even worse. There are 925 general and flag officers and a total reserve force of just 760,499 personnel. That is a flag for every 674 enlisted troops.

The hallways at the Pentagon are filled with a constellation of stars and the legions of staffers who support them. I’ve worked in both the Office of the Secretary of Defense and the Joint Chiefs of Staff. Starting around 2011, the Joint Staff began to surge in scope and power. Though the chairman of the Joint Chiefs is not in the chain of command and simply serves as an advisor to the president, there are a staggering 4,409 people working for the Joint Staff, including 1,400 civilians with an average salary of $196,800 (yes, you read that correctly). The Joint Staff budget for 2025 is estimated by the Department of Defense’s comptroller to be $1.3 billion.

In contrast, the Secretary of Defense — the civilian in charge of running our nation’s military — has a staff of 2,646 civilians and uniformed personnel. The disparity between the two staffs threatens the longstanding American principle of civilian control of the military.

Just look at what happens when civilians in the White House or the Senate dare question the ranks of America’s general class. “Politicizing the military!” critics cry, as if the Commander-in-Chief has no right to question the judgement of generals who botched the withdrawal from Afghanistan, bought into the woke ideology of diversity, equity and inclusion (DEI) or oversaw over-budget and behind-schedule weapons systems. Introducing accountability to the general class is not politicizing our nation’s military — it is called leadership.

What most Americans don’t understand is that our top brass is already very political. On any given day in our nation’s Capitol, a casual visitor is likely to run into multiple generals and admirals visiting our elected representatives and their staff. Ostensibly, these “briefs” are about various strategic threats and weapons systems — but everyone on the Hill knows our military leaders are also jockeying for their next assignment or promotion. It’s classic politics

The country witnessed this firsthand with now-retired Gen. Mark Milley. Most Americans were put off by what they saw. Milley brazenly played the Washington spin game, bragging in a Senate Armed Services hearing that he had interviewed with Bob Woodward and a host of other Washington, D.C. reporters.

Woodward later admitted in an interview with CNN that he was flabbergasted by Milley, recalling the chairman hadn’t just said “[Trump] is a problem or we can’t trust him,” but took it to the point of saying, “he is a danger to the country. He is the most dangerous person I know.” Woodward said that Milley’s attitude felt like an assignment editor ordering him, “Do something about this.”

Think on that a moment — an active-duty four star general spoke on the record, disparaging the Commander-in-Chief. Not only did it show rank insubordination and a breach of Uniform Code of Military Justice Article 88, but Milley’s actions represented a grave threat against the Constitution and civilian oversight of the military.

How will it play out now that Trump has returned? Old political hands know that what goes around comes around. Milley’s ham-handed political meddling may very well pave the way for a massive reorganization of flag officers similar to Gen. George C. Marshall’s “plucking board” of 1940. Marshall forced 500 colonels into retirement saying, “You give a good leader very little and he will succeed; you give mediocrity a great deal and they will fail.”

Marshall’s efforts to reorient the War Department to a meritocracy proved prescient when the United States entered World War II less than two years later.

Perhaps it’s time for another plucking board to remind the military brass that it is their civilian bosses who sit at the top of the U.S. chain of command.

Morgan Murphy is military thought leader, former press secretary to the Secretary of Defense and national security advisor in the U.S. Senate.

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Canada among NATO members that could face penalties for lack of military spending

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From the Daily Caller News Foundation

By J.D. Foster

Trump should insist on these measures and order that unless they are carried out the United States will not participate in NATO. If Canada is allowed entry to the Brussels headquarters, then United States representatives would stay out.

Steps Trump Could Take To Get NATO Free Riders Off America’s Back

In thinking about NATO, one has to ask: “How stupid do they think we are?”

The “they,” of course, are many of the other NATO members, and the answer is they think we are as stupid as we have been for the last quarter century. As President-elect Donald Trump observed in his NBC interview, NATO “takes advantage of the U.S.”

Canada is among the “they.” In November, The Economist reported that Canada spends about 1.3% of GDP on defense. The ridiculously low NATO minimum is 2%. Not to worry, though, Premier Justin Trudeau promises Canada will hit 2% — by 2032.

quarter of NATO’s 32 members fall short of the 2% minimum. The con goes like this: We are short now, but we will get there eventually. Trust us, wink, wink.

The United States has put up with this nonsense from some members since the collapse of the Soviet Union. That is how stupid we have been.

Trump once threatened to pull the United States out of NATO, then he suggested the United States might not come to the defense of a NATO member like Canada. Naturally, free-riding NATO members grumbled.

In another context, former Army Lt. Gen. Russell Honore famously outlined the first step in how the United States should approach NATO: Don’t get stuck on stupid.

NATO is a coalition of mutual defense. Members who contribute little to the mutual defense are useless. Any country not spending its 2% of GDP on defense by mid-year 2025 should see its membership suspended immediately.

What does suspended mean? Consequences. Its military should not be permitted to participate in any NATO planning or exercises. And its offices at NATO headquarters and all other NATO facilities should be shuttered and its citizens banned until such time as their membership returns to good standing. And, of course, the famous Article V assuring mutual defense would be suspended.

Further, Trump should insist on these measures and order that unless they are carried out the United States will not participate in NATO. If Canada is allowed entry to the Brussels headquarters, then United States representatives would stay out.

Nor should he stop there. The 2% threshold would be fine in a world at peace with no enemies lurking. That does not describe the world today. Trump should declare the threshold for avoiding membership suspension will be 2.5% in 2026 and 3% by 2028 – not 2030 as some suggest.

The purpose is not to destroy NATO, but to force NATO to be relevant. America needs strong defense partners who pull their weight, not defense welfare queens. If NATO’s members cannot abide by these terms, then it is time to move on and let NATO go the way of the League of Nations.

Trump may need to take the lead in creating a new coalition of those willing to defend Western values. As he did in rewriting the former U.S.-Mexico-Canada trade agreement, it may be time to replace a defective arrangement with a much better one.

This still leaves the problem of free riders. Take Belgium, for example, another security free rider. Suppose a new defense coalition arises including the United States and Poland and others bordering Russia. Hiding behind the coalition’s protection, Belgium could just quit all defense spending to focus on making chocolates.

This won’t do. The members of the new defense coalition must also agree to impose a tariff regime on the security free riders to help pay for the defense provided.

The best solution is for NATO to rise to our mutual security challenges. If NATO can’t do this, then other arrangements will be needed. But it is time to move on from stupid.

J.D. Foster is the former chief economist at the Office of Management and Budget and former chief economist and senior vice president at the U.S. Chamber of Commerce. He now resides in relative freedom in the hills of Idaho.

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