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In an interview with The Sun in England, President Donald Trump baderted that "the GDP since I took power has doubled and tripled".
Trump's false badertion supported his argument that the United States is baduming a growing share of NATO's burden because the country's GDP is growing rapidly, making its contribution to defense even more unfair compared to the United States. other allies of NATO.
In addition to the claim of GDP being wildly out, its entire premise is tangled. For starters, rising GDP has no effect on the country's defense spending.
Before revealing all this, here are Trump's comments, first at a press conference in Brussels after the NATO summit:
July 12 : Now, the United States, depending on how you calculate it, was at 4.2% and I said, "It's unfair." And we have by far the largest GDP, especially since we've increased it so much since a thing called the election. Our GDP has increased significantly. And so, the fact that our GDP has gone very high means that we are paying even more, which is very unfair.
And then in The Sun :
Trump, July 13 : And yet, the United States pays 4.2 p. 100 – the actual number is not 3,5 – that is 4,2 p. 100 of a much larger GDP. In fact, GDP since I took over has doubled and tripled.
As we have already explained, Trump routinely equates NATO direct and indirect expenditures with claims – as he did at the press conference, the United States "pay 90% of NATO". According to direct costs, the United States currently pays about 22% of NATO's "major budgets" funded by all members of the alliance according to a cost-sharing formula. which takes into account the gross national income of each country. According to our calculations, this amounts to about 590 million US dollars maximum
In addition to direct contributions to NATO's operating budget, NATO members accepted in 2006 to try to spend at least 2% their gross domestic product on their own defense expenditure. In 2014 they again agreed to target this standard by 2024.
This did not happen, at least not yet. In July, NATO said only five countries would respect this directive in 2018: the United States, Greece, Britain, Estonia and Latvia. on the definition of defense spending, not 4.2 percent as the president said. As we recently wrote, the Bipartisan Budget Act of 2018, a two – year budget agreement that Trump promulgated on February 9, establishes the national defense budget authority at $ 700 billion in 2018 and 716. billion in 2019. Defense spending should have totaled about $ 776 billion in 2017 (and even more in 2018) for the United States to have spent even 4% of its GDP on defense.
Trump argued that the unfairness of US contributions to NATO has increased since he took office because "GDP since I took over has doubled and tripled ". It's ridiculously wrong.
According to the Bureau of Economic Analysis, US GDP rose from $ 18.6 trillion in 2016 to $ 19.4 trillion in 2017. And that was nearly $ 20 trillion in the first quarter of this year. It is increasing, but it would be necessary to compare current GDP to GDP in early 2000 to say that it had doubled; and in 1992 to say that he had tripled.
Even if the president actually meant that the percentage growth of real GDP had doubled or tripled – which is not what he said – he would still be wrong.
in our latest update of Trump's Numbers, the economy grew 2.3% during the first full year of Trump, better than real GDP growth of 1, 5% recorded in 2016. But GDP growth fluctuates The best years under Obama, for example, were 2.9% real growth in 2015, 2.6% in 2014, 2.2% in 2012 and 2.5% in 2010.
So the percentage of growth has not doubled, or tripled, from 2016 to 2017.
The economy has seen annual growth of 2.0 % in the first three months of this year, according to the most recent official estimate of the Bureau of Economic Analysis. The first official estimate for the second quarter of 2018 will not be released until July 27. However, the forecasts "GDP Now" produced by the Federal Reserve Bank of Atlanta on July 11 projected that the growth rate of the second quarter will reach 3.9%.
By way of comparison, here is how US GDP growth of 2.3% in 2017 compared to the next five largest economies NATO: Germany, 2.2%; United Kingdom, 1.8%; France, 1.8%; Italy, 1.5 per cent; Trump mentions GDP as a percentage of the country's defense spending and argues that our growing GDP would increase the inequity between what the US spends on defense compared to other NATO allies. But the defense budget is not tied to GDP. In fact, if GDP increased and defense spending remained unchanged, the amount spent by the United States on defense as a percentage of GDP would fall.
Since direct contributions to NATO are based on a sharing formula Given the factors that affect each country's gross national income, the growing GDP of the United States could have an impact on their direct cost obligations for NATO. But rising GDP would not increase the percentage of GDP spent by the United States for its defense.
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