During the two decades from 1960 to 1979, the share of this nation's wealth devoted to defense spending shrunk from 9.1 percent of the gross national product to about 5 percent.
More than $100 billion annually that would have been spent on military men and arms was given over in recent years to social welfare, including food stamps, Medicare and Medicaid and large increases in Social Security benefits.
Now President Reagan, as President Carter had begun to do more modestly, has reversed this trend. Reagan has greatly increased defense spending while trying to restrain funding of domestic social programs. This requires an enormous shift of government resources during a deep recession and has helped increase huge federal budget deficits.
But it has also injected more federal money into the domestic industrial economy and provided more jobs in defense plants and the military services. Unlike the cost of fighting the Vietnam war, Reagan's defense buildup has not yet fueled inflation, because the economy is so depressed.
Although the proportion of GNP devoted to defense spending during the last two decades declined dramatically, military spending continued to increase steadily in dollar amounts and fell by only 4.6 percent in real terms after adjustment for inflation.
Now, Reagan, who argues that standing still during that period has left the United States dangerously behind the Soviet Union, wants to spend about $1.6 trillion in his defense buildup over the next five years.
The political and economic debate has been less about whether the nation needs a stronger defense than about how big the buildup should be. Some of Reagan's critics argue that defenses can be sufficiently strengthened while spending about $250 billion less than that between now and 1987.
National security is a complex, ephemeral concept nearly impossible to measure in concrete terms. What share of national output should go to defense? How much is national security enhanced by the last $1 billion or $10 billion spent on the military in a given year? What should the nation be willing to give up to gain that extra increment of protection?
Answers to these questions are difficult and may never be known explicitly as the debate proceeds about how much to increase military spending -- whether to boost it by 9 percent a year more than the inflation rate, as Reagan wants, or by only 3 percent, as some critics urge.
The difference between the two is $250 billion over five years, a sizable amount even in the $3.1 trillion U.S. economy.
That $250 billion is equal to about 2 1/2 times the amount that will be invested this year in new homes and apartment houses, and equal to nearly three-fourths of all new business investment in 1982. It would be more than enough to complete the interstate highway system, fix every deteriorating bridge and repair every crumbling road. It could pay for the bulk of the Medicare program.
If the money were not spent, federal budget deficits could be trimmed substantially, helping to achieve lower interest rates and a more balanced economic recovery. But then the recovery might be slower with unemployment rates staying high longer.
The Reagan administration, with or without the full defense program, is counting on such a slow recovery that the economy could still be operating well below what Martin Feldstein, chairman of the Council of Economic Advisers, calls the "inflation threshold" during the five-year defense buildup.
Feldstein and other administration officials say the gross national product, adjusted for inflation, should not rise by more than about 4 percent to keep inflation from rising again. By Feldstein's calculation, this would reduce the unemployment rate by only about half a percentage point a year.
Even under these conditions, some analysts, such as George F. Brown, who produces Data Resources Inc.'s Defense Economics Research Report, believe the defense buildup is likely to generate inflationary pressures. "Certainly through 1985, the evidence is overwhelming that the resources to support the buildup will be available," Brown said.
Beyond that point, however, the ability of key industrial sectors to cope with the high level of defense buying will depend on investments that must be made soon in those industries. At the moment, industry executives are not making the investments because they are not convinced the government will follow through on current administration plans.
"They have gone through a 20-year period in which the third, fourth and fifth year of five-year defense plans never materialized," Brown said. "Now they are uncertain whether Congress will force Defense Secretary Caspar W. Weinberger to revert to his old role of 'Cap the Knife.' "
Murray L. Weidenbaum, chairman of the Council of Economic Advisers until last August, also has questioned whether adequate attention is being paid to economic consequences of so speedy a military buildup.
In a speech last month, Weidenbaum, again a professor at Washington University in St. Louis, said: "Official projections of future military outlays, in real terms, have risen successively during the last two years from 5 percent to 7 percent to 9 percent or more per annum. There seems to be little justification offered of the economic feasibility of this sharply upward movement.
"Without prejudging the results, intensive analysis should be given to the military budget, comparable to the tough-minded attitude quite properly taken toward many civilian spending activities of the federal government."
Even though the "economic feasibility" of the buildup depends on the amount of slack in the economy and on how rapidly particular industries will have to expand production, none of those factors, nor the likely future course of inflation, seems to have had much to do with the administration's defense planning.
The Council of Economic Advisers' annual report last February noted that outlays for research and development and procurement of major weapon systems were supposed to "grow at an estimated rate of 16 percent annually between 1981 and 1987. This exceeds the 14 percent annual rate of increase that occurred during the three peak years of the Vietnam buildup."
Such rapid growth of demand for the output of a few industries, such as communications equipment and aircraft, could mean that Defense Department and private buyers pay higher prices, the report said.
In addition, the rapid buildup "may produce delays in the delivery of military goods," it continued. "Delivery timetables that seem realistic today may in some cases become obsolete as producers try to accommodate the defense buildup and vigorous expansion in civilian investment at the same time. A third effect may be some temporary crowding out of private investment."
As far as deficits are concerned, Feldstein has used the changes in defense spending as a share of GNP over the last 20 years to argue that the military buildup is not a major factor in rising federal budget deficits. Currently, the administration estimates the fiscal 1984 deficit at about $185 billion.
"In 1960, long before the Vietnam war, the United States was spending 9.1 percent of GNP on defense, nearly 50 percent higher than the 6.2 percent share of GNP spent on defense in 1982," Feldstein said in a recent speech. "If defense spending today accounted for as large a share of GNP as it did in 1960 or even 1970, the deficit would be significantly larger than it is today . . . .
"I do not want to minimize the share of defense in the national budget nor to imply that defense spending does not require careful scrutiny to find ways in which existing costs can be reduced," he added. "But I do want to emphasize that, viewed in the perspective of the past two decades, the current and projected levels of defense outlays are not responsible for our budget deficits.
"The real reason for large and persistent budget deficits has been the rapid growth of non-defense spending" that has gone from 9.5 percent of GNP in 1960 to 17.9 percent in 1982, Feldstein argued.
He believes budget deficits can do considerable economic harm, primarily by raising interest rates, increasing the nation's trade deficit and absorbing funds otherwise available to private businesses for investment.
But he is not prepared, publicly at least, to address whether the defense buildup should be slowed. "As an economist, I don't have any specific view about that part of the budget," he recently told reporters.
However, most economists, like Feldstein, believe that budget deficits should be brought down to make available more money for private investment. Many of them believe that if the only way to do so is to stretch out the defense buildup, then that should be done.
With Congress beginning to balk at making further cuts in non-defense programs and Reagan unwilling to consider raising taxes, defense cuts may be one of the few ways to make inroads on the deficit.
At the moment, defense spending is serving as a major prop for an economy that even the president noted recently, in an aside before a radio broadcast, is in a "hell of a mess." In two or three years, the prop could turn into an economic burden depending on how the recovery proceeds.
Whatever the larger economic impact, the fundamental reality will not change: using an increasing share of national resources for national security means giving up something else.