At the Munich Security Conference on Feb. 14, U.S. Vice President JD Vance delivered a speech criticizing European leaders for retreating from their shared fundamental values, particularly concerning free speech and immigration policies.
He highlighted issues such as Britain’s shockingly progressive abortion laws, Romania’s blatant cancellation of the results of a national election, and Europe’s dangerously lax policy on migration, primarily from radical Islam countries, pointing out that these internal capitulations on democracy constituted the core threat to Europe rather than external challenges such as those coming from Russia and China.
German Defense Minister Boris Pistorius responded strongly to Vance’s remarks, describing them as “unacceptable.” He emphasized that Vance’s comparison of parts of Europe to authoritarian regimes was inappropriate, asserting that such statements undermined European democracy.
Vance’s speech was met with stone silence, whereas many in the audience clapped when Pistorius spoke. That different reaction was mirrored in the sentiments in most European media afterward, which, in turn, can be fairly said to reflect those among the European people.
To put it plainly, Europe dislikes U.S. President Donald Trump or his vice president. There are, of course, many reasons for that, such as differences in geopolitical concerns, cultural attitudes, dominant ideology, and personal styles, etc. However, an economic reason, not subtle at all, is often deliberately overlooked in the European media: Trump’s insistence on NATO countries spending more on defense is fiscally damaging enough to bust the European welfare state.
To see how serious that is, let us look at Germany as an example and do a couple of simple calculations. All figures are rounded and refer to the year 2022.
That year, 9.6 million (11.6 percent) of the total German population of 83 million were considered “poor.” Being “poor” is defined by the Organization for Economic Cooperation and Development (OECD) as having an annual household income that is 60 percent of the median. Germany’s median household income was 22,000 euros, and 60 percent of that was 13,200 euros. Among its “poor,” the average income was 11,880 euros.
So, to lift an average “poor” German up to the threshold, the cash subsidy needed was 1,320 euros (13,200 euros – 11,880 euros = 1,320 euros).
The total amount needed to lift all 9.6 million Germans out of poverty would have been 12.67 billion euros. Germany’s GDP was 4.8 trillion euros, so 12.67 billion euros was 0.26 percent of its GDP.
Germany’s 2022 government budget took up 49.1 percent of its GDP, so 0.26 percent was peanuts, right? Wrong.
Even a rich country like Germany had insurmountable difficulty spending a little more to eradicate “poverty”—the disgrace, the cardinal sin, of any welfare state. That is because the budget of a democratic country is always a tight equilibrium point of myriads of conflicting interests, and the contests leading to that equilibrium are hard and zero-sum by definition. Even a 0.1 percent of GDP—some 5 billion euros—to be spent one way or another would entail huge and complicated parliamentary battles fought tooth and nail by stakeholders and their lobbyists.
But now, along comes Trump, who wants Germany to spend 5 percent of GDP on defense, which would have been 3.5 percentage points above its actual 2022 level. What would have to give if that must come to pass? Say, if the country slashed all unemployment benefits (1.1 percent of GDP); eliminated all money for higher education (another 1.1 percent); zeroed out all public order and safety expenditures—money for police, fire department, law enforcement, border control, emergency services, and judicial functions (0.8 percent); and squashed all spending on environmental protection and energy subsidies (0.5 percent). Then, the reductions would add up to 3.5 percent of its GDP.
Seen from a different angle, one can say the following: long before Trump was first elected to be president in 2016, a good part of the German welfare state had been subsidized by the United States in the form of the security umbrella provided to Germany, among others, which has enabled it to spend just 1 to 1.5 percent on defense while allowing Germans to enjoy all those hardship subsidies, clean air, community support, etc., as well as to meet the needs of the 1.2 million immigrants that then-Chancellor of Germany Angela Merkel accepted in 2015 when she famously said “Wir schaffen das!” (We can handle that!). If that security umbrella is taken away, the German welfare state will immediately face a tsunami and a quake. So for Germany, so for all other countries in Europe.
For the Europeans—or at least their politicians and top officials who understand budgets—Trump’s demand for their countries to spend that much more on defense was like him saying to them, “Forget your welfare state!” Facing this systemic existential danger, it is not difficult to see why Europeans hate him so. And they may also feel quite justified—Uncle Sam shouldn’t be so mean!
