President William Lai’s (賴清德) proposal of a US$40 billion defense supplemental budget is welcome news in Washington and among Taiwan’s supporters. It is also a critical test, seen outside of Taiwan as almost must-pass legislation. Many in US President Donald Trump’s administration and elsewhere believe that Taiwan has not been carrying the full weight of its self-defense responsibilities. The good news is that Taiwan is taking steps to fix that to reassure allies and deter the Chinese Communist Party.
However, failure to pass the defense supplemental in the Legislative Yuan, controlled by the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party, would be an enormous setback for Taiwan.
Until the past couple of years, Taiwan had for several decades not spent the appropriate amount on its defense, nor had it spent enough on soft power. While Taiwan is a prosperous, high-income economy, similar in terms of economic size to Switzerland and the Netherlands, its investment in diplomacy and soft power, including foreign assistance, remains only a small fraction of what Switzerland and the Netherlands spend.
On hard military power, as of last year, Israel spent 8.8 percent of its GDP on defense, Poland spent 4.1 percent and is committed to reaching 5 percent next year, and Estonia spent 3.4 percent with plans to raise it to more than 5 percent. By comparison, Taiwan has allocated about 2 percent of its GDP per year over the past 20 years, with a steady growth rate. Lai’s US$40 billion budget proposal would raise Taiwan’s commitment to 5 percent by 2030.
Taiwan has many friends in Washington: in the think tank community, the advocacy community and in the US Congress. Because of those relationships, there has been a reluctance to criticize Taiwan vocally. Now, we are at a moment of truth. Trump has publicly called for Taiwan to dramatically increase its defense spending to 10 percent of GDP.
Trump administration leaders, such as US Under Secretary of Defense for Policy Elbridge Colby, have echoed that sentiment, saying Taiwan “should be dramatically increasing its defense capabilities focused on denying an invasion and riding out a blockade.”
Taiwan must do more. Even with the proposed US$40 billion, defense spending as a percentage of GDP would remain well below 10 percent. The supplementary budget is a good down payment, but far from sufficient.
The contested US$40 billion defense package is critical, but opposition parties do not appear to be treating the issue with the necessary sense of urgency. KMT Chairwoman Cheng Li-wun (鄭麗文) dismissed Lai’s proposal as “playing with fire” and “an investment in war.”
Procedural obstruction in the KMT-led legislature has already delayed key defense deliberations at a time when delay itself is dangerous. The opposition has raised concerns about debt ceilings and social spending trade-offs, creating a legislative logjam over defense funding.
In the past few months, procedural maneuvers and sometimes physical obstruction have blocked defense-related deliberation, even staging near-legislative shutdowns over issues far less consequential than Taiwan’s survival.
There are varying perspectives within the opposition, but the legislative impasse is clear. The situation echoes the difficulty within former US president George W. Bush’s administration, when KMT legislators blocked funding for P-3C anti-submarine warfare aircraft and PAC-3 missile defense systems. Twenty years ago, Taiwan could afford such hesitation. Today, it cannot.
Failure to pass this funding would put at risk not just Taiwan’s own national security, but also the willingness of the US and other allies to support Taiwan in a crisis. There are many discussions in Washington over so-called strategic ambiguity, meaning the US lacks certainty over whether it would come to Taiwan’s defense or not. The willingness to even consider supporting Taiwan under any circumstance would drop dangerously low if Taiwan does not pass this budget.
This is not December 1995, when the US had aircraft carriers pass through the Taiwan Strait. The Chinese military is far stronger and far more dangerous, and the appetite for foreign interventions in the US is far lower. If Taiwan does not follow through on this defense investment spending, it could put at risk entire security guarantees from its allies. No one might say it aloud, but it would be understood in every capital.
This is the moment for Taiwan’s friends to make it clear to members of the Legislative Yuan — especially to members of the KMT, such as caucus whip Fu Kun-chi (傅?萁), Legislator and Foreign Affairs and National Defense Committee chairwoman Ma Wen-chun (馬文君); Legislative Speaker Han Kuo-yu (韓國瑜); and Legislator Weng Hsiao-ling (翁曉玲) of the Procedure Committee — that neglecting defense spending cannot be tolerated. Timing is crucial. The legislature will soon recess for the holidays, and then for several months.
Failing to pass this defense supplemental would be extremely dangerous, sending a signal of weakness to China. The enthusiasm of Taiwan’s allies would drop considerably. The US$40 billion bill is not just a budget item; it is a litmus test for Taiwan and a signal to its allies. Taiwan’s friends want Taipei to succeed, but friends cannot be more serious about Taiwan’s defense than the nation’s own political leadership.
Daniel F. Runde is the author of The American Imperative: Reclaiming Global Leadership Through Soft Power.
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