The way I see it, "defence" is a public good: everyone benefits from it even if they don't pay for it. As such, marginal investment in it doesn't offer a marginal return for any individual nation, and lots of nations pretty much free ride on American defence spending. American military and diplomatic resources makes peaceful trading in Asia (for example) possible; if America were to slash spending and return to "normal" levels, it would have to pivot away from Asia, allowing China to control trade in Asia. That's bad for business, not just for America, but also for basically every European and Asian nation, since all trade with Asia is now dependent on the benevolence of China. If China says "I don't want Taiwan trading with Germany any more", then Taiwan doesn't get to trade with Germany any more. Who's going to say no? How many ships is Germany going to send to the South China Sea? America's outsize military and diplomatic presence in Asia guarantees the political and economic freedom of nations in Asia, which in turn guarantees European trade with Asia.
So most European nations free ride on American military spending and diplomacy. This isn't really fair; all nations that benefit from the relative peace of the past 50 years should pay their fair share. When we look at typical public goods, such as the fire service, road signs, and so on, we find that the best way to pay for them is through taxes: everyone is assumed to benefit from them, and thus everyone must pay for them. So translating this into the language of international relations, the equivalent of a "tax" would be a commitment, via treaty, for each nation to spend a certain % of their GDP on defence. It just so happens that NATO treaties have this, and set it at 2%. This is a pretty sensible means of sharing the cost and burden of defence between everyone who benefits from it, in proportion to their ability to pay.
So spending 2% of GDP on defence, and being able to assist America in policing the world's trade routes, really does have a positive return, when looked at holistically. Individually, we could cut defence spending, and free ride on American defence spending, but (a) that's not really fair, (b) we've signed a pretty important treaty committing us to a certain level of spending, and (c) if we don't have America "on side", we may find that America starts to cut us off, and look for ways of excluding us (i.e. Europe) from the benefits of peaceful trade routes. We might find, in 50 years, that America becomes as insular as us, and only guarantees its own trade. This will force us to look after ourselves, which will no doubt cost a whole lot more than 2% of our GDP.
Flying Pig, you're suggesting that we don't need to spend as much on our military and nuclear deterrent, because the US will always have our back. What makes you so sure of that? What do we offer the US, that makes it worthwhile for the US to underwrite our sovereignty? The answer of course is that we are one of the few countries that actually sticks to the spending commitments in NATO treaties. We're one of the few countries that can actually help America police world trade routes, put belligerent countries back in their place, beat up commies, and so on. We're one of the few countries with the diplomatic and intelligence resources to broker deals, gather intel, and cojole unfriendly nations into playing by our rules. Put simply, we're one of the few nations that can actually help the US protect its interests overseas. In return, we get to benefit from peaceful free trade, and US protection from foreign threats to our own interests. That's the deal we've made, tacitly, with the US.
I'm not a militaristic person at all, but it's clear to me that there are real, tangible benefits to military spending, beyond simply protecting our borders from foreign invasions.
