President Carter's new budget promises to intensify in the 1980s that oldest of all budgetary debates: should it be guns or butter?
His budget would commit the nation to a major buildup of its military machine, at a cost of a cool $1 trillion in the next five years.
To deal with what he called the "uncertain and sometimes hostile world we live in," Carter not only for a substantial increase in the Pentagon's budget and new money for fiscal 1981, but for new obligational authority of $1.032 trillion from 1981 through 1985.
And these amounts were set before the Soviet invasion of Afghanistan, which means that they may grow through supplemental requests.
In terms of actual spending -- as distinguished from authority to spend -- the president set out a whopping five-year total for defense of $934.6 billion, 73 percent over the $540.2 billion actually expended during the five preceding fiscal years.
In fiscal 1985, according to the budget document, defense spending will be almost exactly $100 billion higher than "would be needed simply to maintain the 1980 level in real terms."
Where will that extra $100 billion for defense come from?
Clearly, some will come from pinching civilian programs.
Proposed restraint in civilian programs is not so strong in fiscal years 1982 and 1983 as in the upcoming fiscal year 1981, but the rate of expansion is nonetheless slowed down.
If nonmilitary programs were to have increased in the next five years at the same rate as in the last five, they would have cost about $47 billion more by 1985 than Carter has budgeted.
And since all the defense increase won't come from non-defense restraint, some will necessarily come from less generous tax reductions in the next five years than might otherwise have been in store.Like hidden tax increases in this year's budget, tax cuts that may be foregone are an unpublicized price for the military buildup.
By fiscal 1985, the president said, the steady growth of defense outlays, an annual increase of 4 percent, even after taking inflation into account -- the defense budget will hit a record $230 billion, an increase of $83 billion, or 57 percent in the level of the Pentagon budget over fiscal 1981.
All other parts of the budget also would rise, but by only 46.5 percent. This pattern almost exactly reverses the relationships of increases in the civilian and military budget totals of the prior five years. From 1976 through 1980, the military budget increased only 45 percent, while the non-military proportion was boosted 56 percent.
In sum, as Carter said: "The long decline in real spending for defense that began in 1969 has been reversed." So has Carter's campaign posture of 1976, when he pledged to reduce defense spending.
As a percentage of total budget outlays, defense spending is projected to reach 25.4 percent in 1985, up from the 23.7 percent level of the Vietnam war year of 1967.
OMB Director James T. McIntyre and other budget bureau officials, however, said that the budget projections were "frozen" before the Soviet invasion of Afghanistan. Any heating up of the Cold War, officials elaborated, would be met by a shift within existing defense totals and later by requests for supplemental spending authority.
Thus, it is clear that defense spending is on a sharp and rising trajectory:
The big buildup outlined in Carter's new budget would seem to be the minimum prospect, assuming that nothing further goes wrong in that "uncertain and sometimes hostile world" to which the president referred.
A big defense increase would plainly affect the economy as well.
Joseph A. Pechman, research director of the Brookings Institution, predicted that the "revved-up" defense spending program would be a new inflationary force, assuring that the generally predicted mild recession for 1980 will not happen.
Some economists hold that military expenditures result in an extra inflationary dimension because they create purchasing power without an equivalent amount for consumption goods for individuals to buy.
Pechman thinks that view can be overstated. But he and others agree that the kind of materials and manpower needed in a defense buildup are already in short supply, and that the projected expansion therefore will put additional pressure on prices and wages.
Although the president moved to mitigate the economic effects of the rise in defense spending by squeezing back civilian programs for fiscal 1981, the longer-term budget scenario over the next few years can only worsen the inflationary outlook, according to some economists.
For example, while total nondefense spending in constant (1972) dollars actually declines from $215.6 billion in fiscal 1980 to $213.5 billion in fiscal 1981, it then jumps to $220 billion in fiscal 1982 and to $232.2 billion in fiscal 1983, largely representing the expected introduction of national health insurance.
Over the same period (1980 to 1983) the defense budget in real terms increases from $70.7 to $80 billion. In a single year, 1982 to 1983, the overall increases in real total outlays will be $15.7 billion, the biggest year-to-year increase since 1974, when the country was coming out of a recession.
And what if the world situation deteriorates, and additional big defense spending increases are layered onto the ones promised in this budget? In that case, higher taxes, further cuts in civilian spending, and the whole panoly of economic controls that goes with a war-equivalent situation could be in the making.