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

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.”

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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.

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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 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.

23 Comments (Open | Close)

23 Comments To "Trump Can Turn America’s Defense Welfare Into a Profit Center"

#1 Comment By Alex On March 13, 2019 @ 10:29 pm

I do not think there ever has been a study what kind of a military we need. How many troops, how many plains, tanks, etc. Why bother? As of now, Pentagon is a black hole.

#2 Comment By Kouros On March 14, 2019 @ 12:13 am

“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.”

Amen!

What US is doing now is global asset forfeiture. Nobody is really in need of the American protection and if push comes to shove, everyone would like the Yankees to go home..

#3 Comment By S On March 14, 2019 @ 5:34 am

This will be the end of the US empire which has survived so far by disguising its objectives to the common folk of the vassal states as ‘security’ or ‘freedom’ or the like. The author is now proposing overt tributes. This is agoing to the stage of overt empire where there is really no pretence any more.

Without the US empire creating new enemies for its vassal states (Russia for the EU and North Korea for the Koreans and Japanese), there would be no reason for them to be ‘protected’.

As can be seen from Okinawa or the EU foreign policy, it doesn’t matter whether it is the US or the Chinese or any other empire- vassal states and their people have no say.

#4 Comment By Brad F On March 14, 2019 @ 8:25 am

In other words, a plan to monetize the American empire.

Newsflash! Us foreigners don’t actually want America to defend our countries. We let you do it because we can’t stop you. Indeed, you can’t stop yourselves. You are addicted to your own military spending.

Here’s an alternative plan. America checks itself into rehab, brings its troops home, and cuts military spending to (much) less than 2%. Then you can make America great again by dealing with your issues. Like a normal country.

#5 Comment By JeffK On March 14, 2019 @ 8:49 am

“The largest welfare system in the world today is run by the Pentagon.”

I have been saying this for years! Having been a consultant on at least 3 large projects where the DOD was involved, I can only say that if Americans knew how much money the Military Industrial Complex wastes they would insist the military budget be cut drastically.

Cutting the military’s budget, while insisting they accomplish the same goals, is the only way to force some level of efficiency into the whole mess. But that will never happen because it’s easier to cut social and entitlement programs.

American cannot afford to spend close to $1T on the military every year (adding in the cost of the VA and all of the black/off budget programs). But we do it anyway because it’s borrowed money.

Incredibly irresponsible. Someday the bill will have to be paid. The only question is “Who will pay it”. Not the elites with millions in the bank and brokerage accounts, that’s for sure. Politicians will look for the working class to pick up the tab, like they always do. We shall see if the big scam will work again.

#6 Comment By Conor Hanley On March 14, 2019 @ 9:12 am

I’m all for this, the higher the better. Perhaps the empire will finally get it and send Americans packing.

Win win for everyone, perhaps the US won’t go bankrupt and everyone else can sleep easier.

#7 Comment By Curt On March 14, 2019 @ 10:02 am

Cost Plus 50 seeks to solve the inherent freerider problem in an alliance with an offshore-balancer like the US is to the rimland states of Eurasia. However, it’s not so simple. The rimland states know that if they were to fall under control of the heartland states, then the security of the US would be seriously impinged. So it is the rimland states who actually have the leverage, not the offshore-balancer (US). This has been the basics of the security architecture the US has built upon since 1945. Current weapons technology does change the situation quite a bit since war has changed to be almost bloodless, and is instead fought in economic, cyber, and space – which means that the old security envelope of containing the heartland by ringing the rimland with alliances is no longer as useful.

#8 Comment By bgone On March 14, 2019 @ 11:30 am

Bandow: US military for hire, for profit!

Constitution? Defense? Principles? The Buck Stops Here.

#9 Comment By david On March 14, 2019 @ 12:39 pm

Incredibly superficial analysis by the author and some commentators. The proponents do NOT even try to think one single step ahead to analyze the pros and cons of the suggestion. For instance:

1. If the scheme is highly successful, it will further entrench and even enlarge US military presence in foreign countries – isn’t this the biggest complaint we have here?
2. The reputation cost to the US military in the foreigners’ (both friends, competitors and enemy’s) eyes.
3. The effects, supports and morale on the ordinary Americans and soldiers for the US military.
4. etc.

It is not even worth my time to list all the relevant points that need further pondering. But the author, simplistic as usual, just skip directly into a conclusion that he likes.

It is so ill-advised that he could not even get a up vote from a person like me who strongly support his main idea (of non-intervention in foreign countries).

#10 Comment By hooly On March 14, 2019 @ 12:52 pm

Yikes! The USA is not Rome it seems, but rather Athens with its own Delian League, demanding cash for ‘protection’. And we all know the sad, pathetic outcome of this little Athenian empire. Perhaps China will play the part of Spart?

#11 Comment By Myron Hudson On March 14, 2019 @ 1:56 pm

It can be argued that we’re not defending other countries, we’re stationing ourselves in other countries and picking fights with their neighbors. Our tendency to invent or inflate threats is part of this.

We’re addicted to war. It addles our thinking. Hence these suggestions to monetize our empire, as Brad F points out. Of course it makes sense to a war addict to finance their addiction that way.

#12 Comment By One Guy On March 14, 2019 @ 2:43 pm

I have no problem with turning our military into a profit center. But should it be attempted by a con man who couldn’t even turn a casino (a CASINO!!) into a profit center?

#13 Comment By Sean On March 14, 2019 @ 3:13 pm

America is the only nation to attack Canada. See the irony in demanding tribute?

Cuba wants you out of Gitmo; you won’t leave. More irony.

When Saudi Arabia realized Mecca and Medina were garrisoned by American troops because GWB lied his way in, they tried to send you packing…it took years for you to comply.

I’m sure I’m missing lots more head-shakers.

#14 Comment By Kent On March 14, 2019 @ 3:39 pm

I’ve got a better idea. Have Trump demand that each nation hosting US bases is required to put the cost + 50 to a vote of said nations general population.

We will have all of our troops home by Christmas! Then cut the DOD’s budget to zero.

#15 Comment By Sid Finster On March 14, 2019 @ 4:23 pm

Oh, that’s just ducky! Let’s expand the one thing that Americans have that they can make others buy, a *global* *protection* *racket*, before the Russians and Chinese beat us to it!

No wonder everyone hates us, and will rejoice on the day that we are gone.

#16 Comment By Doom Incarnate On March 14, 2019 @ 5:04 pm

Why should the U.S. even bother?

Just demand the weregeld or else threaten destruction of the non-U.S. country.

Sheesh.

What kind of ridiculous nonsense is this?

TAC sure has gone downhill. I’m glad I’ve mostly left it behind.

Honestly.

#17 Comment By Patrick Rodgers On March 14, 2019 @ 6:12 pm

What needed to be done, but wasn’t was a top to bottom streamlining of the Military Machine before throwing huge sums of money at it. They could start at the Pentagon and eliminate at leas a third of the Admiral/General paper pushers who do nothing. Then, do the same for the various branches of the military with zero based budgeting making them justify every expenditure. Again, reducing top management, eliminating mismanagement and corruption. At least a third of the DOD Budget could be cut and not touch National Security.

#18 Comment By Whine Merchant On March 14, 2019 @ 6:20 pm

This misses two of the big drivers for the current military-industrial-IT complex:
1 – politically acceptable socialism for big companies. Like the former USSR hiring people to push buttons in automated elevators so everyone had a job, the Pentagon budget circulates tax dollars to many down-stream suppliers and big investors, as well as providing employment. [Subsidised agriculture uses a similar model on a smaller scale].
2 – direct and indirect employment for over one million citizens who may otherwise be on the streets.

#19 Comment By George Taylor On March 14, 2019 @ 7:59 pm

Team Merica World Police in conjunction with USA’s military industrial complex is already morally bankrupt. Turning the USA into a mercenary force seems like a plot straight out of the last season of Game of Thrones. Cersei Lannister’s hiring of Golden Company to fight her battles. Additionally we have the issue of turning American forces into trip wires. Putting troops into the Baltic’s, sailing destroyers in the Black Sea, all of sudden were obligated in war that other than a few neocon’s most of America would not want. The only way I think this is a good idea is if we price ourselves out of the market and it gives us a rational to disengage from the primary defense of these countries.

#20 Comment By PRD On March 14, 2019 @ 9:29 pm

This plan is not only without any merit, it is ludicrous. It has all the hallmarks of some MBA thinking every problem can be solved by applying business principles without any understanding of the scope or underlying causes of the problem. Even worse it shows just how lacking in real leadership Washington has become to even think this plan will really solve the problem.

#21 Comment By Stumble On March 14, 2019 @ 11:14 pm

Oh please. What is never addressed here is that the rest of the world has simply decided that there is no need for such a large military budget.

Europe nominally needs to spend enough to defend itself against Russia. But the entire Russian military budget is $69b (2016). Compared to $55b by France, $48b by England, and $41b by Germany. Presuming that those three spend their military budgets roughly as well as Russia, why exactly do they need to spend more? Under any reasonable situation where Russia threatens Germany the rest of Western Europe is going to step in.

The question isn’t why do other developed countries spend so little, but why do we spend so much?

#22 Comment By Kasoy On March 14, 2019 @ 11:57 pm

Let us face the harsh TRUTH. American taxpayers are subsidizing the US military industrial complex. Defense contractors & suppliers are making huge profits from defense agreements between the US & other nations.

This is the REAL motive why America supports the defense of foreign nations like rich countries Japan, Korea, Germany, KSA.

The US should simply stop protecting these countries which can very easily purchase or even manufacture their own weapons & defense systems. What we need is a defense cooperation between allied countries where the foreign country pays 100% of all defense costs. During joint exercises, the US only pays for its own troops, equipment, & transports etc. Bases facilities, personnel, & major defense/offense weapons & transport in these countries should be reduced to the bare minimum sufficient to launch support to the host country in case of emergencies. All expenses incurred by US bases must be paid for by the host countries.

As for the military industrial complex, they will deal with foreign government directly as to sale of defense systems with oversight from US government.

#23 Comment By K Squared On March 16, 2019 @ 3:23 am

It already is a profit center…..fot the Military-Industrial Complex. Has been for a long time, as a matter of fact. And it doesn’t even trickle down.