2% is excessive today, and the level shouldn't have been set there. That may have made sense back in the 1970s and 1980s, when we were facing off against a powerful Warsaw Pact with massive military spending of its own. But the world has changed dramatically.
For example, in 1974, the US spent less than $80 billion on our military, compared to over $90 billion for the USSR and about $105 billion for the Warsaw Pact. To ensure against Soviet aggression in our allied nations, the rest of NATO had to spend a lot.... and they did, bringing the total NATO spending up to around $120 billion, which was enough to deter any aggression. But look at the situation today. Some of the Warsaw Pact is in NATO now, and Russia is essentially isolated from any international assistance. What does it take to deter their aggression today? The IISS puts their spending at just $65.6 billion, compared to $598 billion for the US alone.
To give you a sense for just how little that current Russian spending is, if Russia were to go to war with France and Italy, at their current spending levels, without the help of any other European ally, France and Italy would STILL hold a spending advantage in that war. Throw in Germany, and those three would outspend Russia by over 60%. If NATO went to war with Russia, and for some reason the US and the UK sat it out, NATO would have nearly a 4-to-1 military spending advantage.
Here's another way to look at it. Do you know how much of their GDPs just the continental European members of NATO would have to spend to have total military spending equal to Russia's? 0.6%. That's it. With 1.2%, they'd DOUBLE Russia's spending. Yet, for some reason, we think they should be spending 2%. 1% is a more sensible target.