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By Max Frost

One of Trumpโ€™s favorite stories โ€“ย he repeats it constantly in press conferences and at campaign events โ€“ plays out like this:

The NATO leaders are sitting around a table and Trump says to them they have to pay more for defense. As Trump has told it,โ€œโ€˜Everybodyโ€™s gonna pay.โ€™ They said, โ€˜Well, if we donโ€™t pay, are you still going to protect us?โ€™ I said, โ€˜Absolutely not.โ€™โ€

He ends the story, โ€œYou never saw more money pour in!โ€โ€‹

Heโ€™s repeated that story every year since 2017. Heโ€™s doing it again now, having reiterated in recent weeks that the US would not defend NATO members who didnโ€™t spend enough.

The question of whether NATO members spend enough has a surprising degree of agreement: When Trump said NATO wasnโ€™t paying its fair share, even CNNโ€™s fact-checker wrote, โ€œWe canโ€™t verify whether the United States is getting โ€˜ripped off,โ€™ but itโ€™s clear that most NATO member countries are not spending what the allianceโ€™s official guidelines require. Trumpโ€™s statement is true.โ€

When Trump first entered politics, only three NATO countries โ€“ including the US โ€“ย hit the 2% of GDP minimum defense spend. Today, 23 of 31 do, but politicians across Europe and the US still say thatโ€™s not enough. Trump wants the countries to spend 5% of GDP on defense.ย 

European governments spend far more than Americaโ€™s โ€“ just not on defense. So what do they spend their money on instead? And what will it take for them to hit Trumpโ€™s new 5% target?

Thatโ€™s the subject of todayโ€™s deep-dive.ย 

In 2012, German Leader Angela Merkel noticed a tension at the heart of Europe: Despite having just 7% of the worldโ€™s population and 25% of its economy, it accounted for up to 50% of its welfare spending.ย 

To protect that way of life, Merkel said, โ€œAll of us have to stop spending more than we earn.โ€

In total, the US federal government spends around 20% of GDP. The average EU government spends that amount on social protection โ€“ย jobless benefits, paid family leave, etc. โ€“ย alone.ย 

This leads to tangible differences in how Europeans and Americans live.

Take retirement and pensions:

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Editorโ€™s Note

Thanks for reading! Weโ€™d love to hear from you, especially our readers in Europe. Can European countries ratchet up defense spending without dealing a blow to the welfare system? What are your priorities for your countryโ€™s national budget? Let us know by replying to this email.

Catching up on our reports? Here are the latest:

A lot of emails to yesterdayโ€™s story on the blood plasma business in the US. We loved reading your replies โ€” weโ€™re sharing a handful below.

Elizabeth wrote:

โ

Your story caught my eye as I was introduced to plasma selling a few years ago.ย  Itโ€™s a very well known source of income for teachers.ย  Iโ€™m not talking rural/low income areas, rather very middle class, successful school districts where teachers are still so underpaid after doing all the extras like coaching and Drivers-Ed, with two parents teaching, who still need to supplement their income to get ahead.ย  I was shocked to learn they both donate regularly as a way to pay for their vacations and for supplies the schools do not provide.ย ย 

Jerry wrote:

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Wow! This story hit home with me. Iโ€™m a regular blood and/or plasma donor in Virginia and all I ever got was a free T-shirt. I donate at the American Red Cross Blood Donation Center and was under the impression all of my plasma was used locally for patients in need. What Iโ€™d like to know now is the economics of this business. Does the Red Cross sell my plasma to a hospital? Is the patient's insurance or Medicare/Medicaid billed for something I donated freely? Does the American Red Cross sell any overseas? If this is a $20B industry, who is profiting?

Please do a Part Two to this story!

And Luke wrote:

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I did this throughout college, in a similarly depressed area - Toledo. I mostly blew the cash on beer and thankfully wasn't in as desperate of a position as many of the people there. I think its an easy way to make a few bucks, lay down and listen to a podcast/watch netflix & get paid, but it definitley feels a little dystopian. It'd be cool if the gov't could make these foreign companies pay a little more for the literal blood of the American people.ย ย 

Thatโ€™s all, see you back here tomorrow.

โ€“Max and Max

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