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Canada unlikely to meet NATO commitments without significant debt accumulation

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5 minute read

From the Fraser Institute

By Grady Munro and Jake Fuss

At this year’s NATO summit, held in Washington, D.C., Canada will undoubtedly face renewed pressure by our allies to increase defence spending to reach the alliance’s spending target of two per cent of gross domestic product (GDP)—a target that is increasingly viewed as the bare minimum. Despite recent increases to defence spending, the Trudeau government has yet to chart a course that gets Canada to two per cent, and it will be hard-pressed to do so without accumulating significantly more debt than what is already planned.

The days are long gone where Canada was simply one of many NATO members that failed to meet the alliance’s defence spending target, and we are now one of only eight countries that spends less than two per cent of GDP on defence. Indeed, NATO estimates we will spend 1.37 per cent of GDP on defence in 2024. Worse still, Canada is the only country that has not articulated a plan to reach that target by the end of the decade.

It is because of this that Canada has faced mounting pressure from our allies to release a plan that gets us to two per cent of GDP—with a recent example being a bipartisan letter sent to Prime Minister Trudeau from 23 U.S. senators, urging him to make good on our commitment.

In the face of this pressure, the Trudeau government recently released an updated defence policy, which commits an additional $8.1 billion over the next five years and $73.0 billion over the next 20 years, towards national defence. As a result of these new commitments it’s expected that Canada will spend 1.76 per cent of GDP on defence by 2029/30, which gets us closer to the NATO target but still ultimately falls short.

The problem facing the federal government is that, due to its own failures to responsibly manage the nation’s finances, Canada is currently in a weak fiscal position from which to increase defence spending.

During its time in office, the Trudeau government has demonstrated a complete lack of discipline regarding federal spending and debt accumulation. From 2015/16 to 2024/25, annual federal program spending (total spending minus debt charges) is expected to have increased nominally by $210 billion (76.7 per cent), which has resulted in ten consecutive budgetary deficits. These deficits have contributed to a $986.9 billion (89.4 per cent) increase in federal gross debt during the Trudeau government’s tenure.

It’s worth noting that the large majority of federal spending increases have gone towards programs and services other than national defence. Of the $210 billion in new annual spending since 2015, just 8.1 per cent ($17.1 billion) went to the defence budget.

Based on the latest federal budget, Canadians can expect much of the same fiscal mismanagement in the years to come. Indeed, over the next four years the Trudeau government plans to run deficits averaging $29.1 billion and accumulate an additional $400.1 billion in gross debt.

Due to the poor state of federal finances, the Trudeau government has little to no fiscal room with which to increase defence spending—unless of course, it chooses to fund new spending entirely using debt or cut spending in other areas. The government has already chosen the former to pay for its recent defence spending increases, given cumulative deficits from 2024/25 to 2027/28 are $44.7 billion higher in Budget 2024 than in Budget 2023, but continued debt accumulation comes at a cost to Canadians—largely in the form of high and increasing debt interest costs.

Despite recent increases, the Trudeau government still has yet to chart a course to spend two per cent of GDP on defence. But due to the government’s poor fiscal discipline, it will be hard-pressed to reach the target without significant debt accumulation.

armed forces

Trump rebuilds the ranks: Army crushes 2025 recruitment goal early

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Quick Hit:

The Army has already exceeded its 2025 recruiting goal of 61,000 troops—four months ahead of schedule—as the Trump administration’s rollback of woke policies draws thousands back to military service.

Key Details:

  • The Army’s 2025 recruiting goal was 61,000—higher than last year’s 55,000—and has already been met with more than four months remaining in the fiscal year. Officials report a 56% increase in average daily enlistment rates over last year.

  • Army Secretary Daniel Driscoll thanked Trump and Hegseth, saying their “decisive leadership” and “putting soldiers first” contributed to the record-breaking numbers.

  • Hegseth has aggressively pushed to eliminate leftist cultural initiatives in the military, including moves to administratively separate transgender troops and rename a Navy ship previously dedicated to gay rights icon Harvey Milk.

Diving Deeper:

The U.S. Army has reached a major milestone ahead of schedule—signing up 61,000 new recruits in fiscal year 2025, effectively smashing its annual goal months before the September 30th deadline. The achievement marks a dramatic shift after years of underperformance and is being touted as a vindication of the Trump administration’s efforts to reorient the military away from progressive social engineering and back toward warfighting readiness.

In a Wall Street Journal op-ed Tuesday, Army Secretary Daniel Driscoll praised the recruiting corps, attributing their success to both boots-on-the-ground determination and high-level support. “I’m incredibly proud of our U.S. Army recruiters and drill sergeants,” he said. “Their colossal efforts and dedication to duty helped the U.S. Army accomplish our FY25 annual recruiting goal a full four months ahead of schedule.” Driscoll continued, “I want to thank the commander in chief, President Trump, and Secretary of Defense Hegseth for their decisive leadership and support.”

The Army’s target of 61,000 recruits was a notable jump from last year’s 55,000 goal. Officials say that as of this month, daily enlistment figures are tracking 56% higher than the previous year.

Driving the increase, many believe, is the sweeping overhaul of military culture underway under Defense Secretary Pete Hegseth. Hegseth has made no secret of his intent to steer the armed forces away from what he calls “woke and weak” policies. That includes the Pentagon’s past focus on gender identity politics, climate initiatives, and mandatory diversity training—priorities Hegseth sees as incompatible with combat readiness.

“We are leaving wokeness and weakness behind,” Hegseth declared during remarks last month at the Special Operations Forces Week convention in Tampa. “No more pronouns, no more climate change obsession, no more emergency vaccine mandates. No more dudes in dresses. We’re done with that s***.”

Hegseth emphasized a military rooted in “lethality, meritocracy, accountability, standards and readiness,” and added pointedly, “Our combat formations don’t need to look like Harvard University—they need to look like killers.”

In line with that shift, Hegseth also this week ordered the Navy to remove Harvey Milk’s name from a replenishment ship. The vessel had been named in honor of Milk, a gay rights activist and former Navy officer who was elected to the San Francisco Board of Supervisors in 1977 before being assassinated a year later.

The directive aligns with what Hegseth calls “warrior culture” and the broader mission to reflect Trump administration priorities across the military’s assets and institutions. The Pentagon has yet to confirm a new name for the USNS Harvey Milk, and a spokesperson said reviews are ongoing.

The Army is set to mark its 250th anniversary on June 14th—a symbolic moment, officials say, as it reclaims its footing and begins to rebuild the force from a position of strength.

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armed forces

New Trump-Pentagon ad resets mission: end wokeness, win wars

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Quick Hit:

The Pentagon released a dramatic new ad Sunday featuring President Trump and Defense Secretary Pete Hegseth, highlighting the end of woke policies in the military and a renewed focus on strength, discipline, and warfighting.

Key Details:

  • The ad, titled Peace through Strength, features intense training and combat scenes, underscored by speeches from Trump and Hegseth.

  • “No more distraction, no more electric tanks, no more gender confusion, no more climate change worship,” Hegseth proclaims, signaling a sharp pivot from recent Pentagon policies.

  • Trump promises that under his leadership, U.S. military success will be defined “not only by the battles we win, but also by the wars we end,” calling for peace built on American strength.

Diving Deeper:

The Pentagon launched a forceful new recruitment and branding campaign over Memorial Day weekend, spotlighting the military’s return to fundamentals under the leadership of Defense Secretary Pete Hegseth and President Donald Trump. The minute-long ad, titled Peace through Strength, premiered Sunday at the Coca-Cola 600 NASCAR event and was simultaneously posted to the Department of Defense’s social media accounts.

Using fast-paced training footage and dramatic music, the ad showcases troops in battlefield simulations and highlights a no-nonsense message from the Trump administration. Hegseth opens with a clear declaration: “No more distraction, no more electric tanks, no more gender confusion, no more climate change worship. We are laser-focused on our mission of warfighting.”

The video includes remarks from Trump affirming his vision for a military built on discipline and deterrence. “Through our power and might, we will lead the world to peace,” he says. “Our friends will respect us. Our enemies will fear us. And the whole world will admire the unrivaled greatness of the United States military.”

The ad was produced using previously recorded training footage, according to a Pentagon spokesperson who spoke to The New York Post.

Hegseth also makes a direct appeal to America’s youth, praising “incredible” young men and women “giving up the best years of their lives” to defend the country. He closes the ad with a quote that underscores the values behind the mission: “We don’t fight because we hate what’s in front of us. We fight because we love what’s behind us.”

The backdrop to the ad is a recruiting crisis that had plagued the military under Biden. In fiscal year 2022, the U.S. Army fell short by roughly 25% of its enlistment target. Similar gaps were recorded across other branches in 2023, with both the Navy and Air Force reporting thousands fewer recruits than needed.

Reversing that trend has been a key objective for Hegseth. He has made it clear that returning to a warrior culture—and scrapping the distractions of social experimentation—is central to solving the problem.

The ad’s release comes just days after the House passed the One Big Beautiful Bill Act, which adds $150 billion in new military funding. That package includes investments in shipbuilding, defense modernization, and Trump’s space-based Golden Dome missile defense initiative.

Together, the new ad and the legislation serve as a one-two punch from the Trump administration, signaling a full-spectrum push to rebuild, rearm, and reinspire the U.S. Armed Forces.

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