Again, I think Merkel is the baddie here.
Germany should spend 2% of GDP on its own defence. But it is avoiding doing so to fund other things it prefers to spend its money on. Like its welfare system.
No reason for the US to fill the gap. Germany doesn't need a large army, but it can pay more for its own defence. So demanding an increase is fair enough. Maybe Germany can support an additional 20,000 German soldiers in order to allow the 35,000 military personnel the US pays for to be reduced to 15,000.
If Germany pays more of its own costs, the US will pay less and can repatriate some of its own income to build bridges, and so on.