The $75 Billion Question

In the twilight years between uneasy peace and total war, few questions weigh more heavily on the minds of U.S. planners than this one: how much money can the U.S. spend in peacetime for its defense without stifling its economy? This week the National Planning Association, a non-political group of business, labor, agricultural and professional leaders, came up with its own answer: nearly $75 billion a year.

Basing its study on current estimates, which call for a whittling down of defense spending from this year's $53 billion to $42 billion in 1956, the association's staff measured the effect of three bigger, hypothetical budget programs in 1956:

1) A $52 billion defense budget "would not interfere with further business expansion and would not prevent a continuing increase in the standard of living. Some tax reduction would still be possible before 1956 . . ."

2) A $62 billion defense budget "would permit a continuing increase in investment and at least a moderate increase in the standard of living. It would require that taxes be continued at 1953 rates."

3) A $75 billion defense budget "would leave enough resources only for small increases in investments and in the standard of living. It would require an increase in taxes. This program brings us close to the issue of 'guns or butter'--the point where taxes might no longer be adequate to prevent inflation and, therefore, where comprehensive controls of materials, prices and wages might be necessary."

The group's conclusion: a decision toward defense spending of between $70 billion and $75 billion should rest on "clear military and political strategic needs . . . and not on the basis of assumed economic limits that are not present."

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