Interesting Agenda piece on the topic like over a week ago:
• Video Link
There's long term issues and commitments. But in the immediate term, I'd argue that we probably need about $500-700M on various personnel initiatives to improve recruiting and retention. This means everything from higher housing allowances (which boost are quality of life without increasing pension liabilities), improving dependent healthcare and daycare, improving support for training establishments to get recruits through quickly, etc.
We need to increase spending on equipment and R&D by about $1.9B/yr to get out of the quadrant of shame.
So basically I'm looking for an annual increase of $2.5-3B immediately (or at least ramping over the next 2 years) that will stop this "death spiral" talk. That takes us to 1.4-1.5% of GDP. Not 2%. But it does improve things a fair bit and should take a ton of heat off from allies.
For immediate spending, they can simply increase some of the existing contracts. Few more P-8s. Few more F-35s. Few more Reapers. In the long run there are areas where we have a real advantage that we could leverage (which keeps more defence spending at home). Surveillance of and from space is one such area. Modeling and simulation is another. Build some high tech training facilities and get the rest of NATO to train here. Etc. We're doing alright in AI. Maybe we should hard on AI and cyber too. There's nothing that says we have to provide infantry battalions. NATO would be quite happy if a Five Eyes country showed up with a Cyber battalion and a full space surveillance constellation.
Should be noted too that Ukraine support counts towards NATO targets. We could spend billions immediately buying weapons and ammo for Ukraine and that would win us a lot of credit with allies and help a cause that we ostensibly care about.