Because they can.
Only three European NATO members spend more than 2% of their GDP on defence, far less than what the US spends. NATO has commited to increasing their defence spending and there has been a small boost in recent years. Well, a really small one, as all European members of NATO increased their spending from 1,44% in 2016 of GDP to 1,46% in 2017. United States spends 3,57%.
European wing of NATO is often described as a midget, when compared to United States, not only when measured by amount of money invested, but also when capabilities are compared. That leads to dissatisfaction from American partners, who think Europeans are free riding, and to pressure for increased spending.
Yet, the real question is, why would Europeans spend more? With what they’ve got, they are perfectly capable of defending themselves from whatever threats may arise, except from US invasion or Russian nuclear attack. Americans are allies and Russians really don’t have an interest in using nuclear weapons on Austria or Denmark. The Turks, even with their second largest military inside NATO, are not preparing for an invasion, that would lead them to the gates of Vienna and Chinese are far away. Real danger comes from rouge nations shooting missiles into Europe and terrorism, not conventional warfare.
A Belgian soldier on the streets of Brussels. Terrorism is a much bigger threat to Europeans, than a conventional attack by some foreign power.
But let us imagine, Russia would really contemplate a conventional attack on European members of NATO. Even if one describes them as dwarfs, they are anything but. Russia is no Soviet Union with their allies, which would at the height of cold war been able to use 100 divisions against a much smaller force of Western Europeans. Now NATO borders have shifted to the East, Russian forces are smaller and in reality they are outnumbered. Europeans also have a much bigger economic power and larger population and in a conventional war would sooner or later gain the upper hand. The most Russians could do, is seize Baltic states and move into Poland, but then the front would stabilize and quite probably the movement would reverse.
In such a situation, why would Europeans spend more for their defence? If you think about it, even Russians are decreasing their defence spending. The real work to be done, is maintaining existing alliances, that all members would really come to the aid of others, if they were to be attacked. The real work is in common structures, in this case transcending NATO, so there are less duplicated capabilities and therefore less wasting of resources.
There is always the question, if European states have traded too much of their independence for their alliance with United States. A weaker military means less strenght in bilateral relations, but, it is to be argued, much more important is the inability of Europeans to speak with one voice. It must also be noted, that European countries mostly like the arangement in which they follow American lead and there are only few, that have any foreign policy interests far away from their borders. Is it rational, to pay insane amounts of money, which could be spend in other fields, just to play the role of world policeman? Why would Belgium or Portugal do that?
As long as the system of alliances betwen Europeans and American stays the same, there is no real need for radicaly increased defence spending on the side of Europeans. That could change, if Donald Trump wrecks that system and forces the Europeans to become stronger compared to Americans, but even then that could come in the shape of diplomatic realingments and economic warfare, not increasing of number of modern tanks and airplanes.