Policy Planning Staff Files
Memorandum by the Deputy Chief of the Division of Estimates, Bureau of the Budget (Schaub) to the Executive Secretary of the National Security Council (Lay)
Comments of the Bureau of the Budget [on NSC 68]
1. what, specifically, does the paper mean?
Military
a. Do we anticipate that Russia will strike in 1954 and we should prepare to mobilize by that date?
If so, do we prepare the country and organize all of our resources to meet that contingency? This would require wartime controls in [Page 299] this country and be tantamount to notifying Russia that we intended to press war in the near future. Would this force Russia to retreat from the satellite countries and other areas of influence, or would it force them to take direct military action on them? Is this the kind of national policy which we want to present to the world? What relative emphasis do we place on the abilities of our allies and the rest of the free world?
b. Do we anticipate that Russia will be sufficiently capable of successfully attacking the U.S. by 1954 to require us to have a program for complete preparation for defending the U.S. and successfully striking back and delaying Russian advances to permit our mobilization and the maintenance of advance positions in Europe, Africa, the Near East and other strategic areas?
If so, do we prepare the country to accept limited controls and increased taxation? What would be the effect on our relations with Russia? Our allies? The rest of the world? To what extent do we rely on the abilities of our allies and the rest of the free world?
c. Do we estimate that Russia’s strength is increasing to a point which is dangerous to our security and that the U.S. should improve its own defense and attack capabilities and those of our allies in order to keep pace with Russia’s increasing strength?
This would probably mean a rounding out and firming up of our military structure and could probably be done without domestic controls and would probably not create a much greater fiscal and economic problem than now exists.
d. Do we want to change the trend towards economy at the expense of national security programs and present a firmer and stronger military posture accompanied by a more intensive program for approaching our international problems?
General
- 1.
- (Page 321) What is the “sharp disparity between our actual military strength and our commitments”? What are our commitments?
- 2.
- Do we have a so-called “war plan” or “mobilization plan”? If not, what is being done to develop one? Is such planning being related to the potential strength being planned for our allies? How is such planning being related to peacetime forces and equipment, current procurement and training programs and war reserve materiel? Are industrial production facilities being related to planned requirements?
- 3.
- At what point do we intend to use military force to protect our “basic values”? (Page 122) What authority, short of a declaration of war, do we have for using force? Should our resources go to assist [Page 300] the preparation of our allies and other “fringe” countries as a first priority? Do we move ahead building forces in allied countries without regard to their ability to maintain them on a continuing basis, thus requiring our assistance indefinitely?
- 4.
- If our danger is from Soviet influence on vulnerable segments of society—generally large masses of subjugated, uneducated peoples—what is our program to reach these masses and prevent Soviet influence? How do you promise them and insure for them a chance for freedom and improvement?
Our policies in the past have armed our enemies. How do we insure against this in the future?
2. political and psychological
a. NSC 68 emphasizes “the present polarization of power” to an extent which underemphasizes the fact that, while the two “poles” (U.S. and U.S.S.R.) are each possessed of great power, each is dangerous to the other only to the extent that it can attract and keep allies.
Would not an all-out program for civil defense and military defense of this country with all that it entails in stirring up public opinion and support tend to defeat our objectives with our allies?
This would appear to be an important weakness of NSC 68.
b. Throughout NSC 68 appear such statements as “The idea of freedom is the most contagious idea in history, more contagious than the idea of submission to authority.”; “The greatest vulnerability of the Kremlin lies in the basic nature of its relations with the Soviet people.”; and “The Kremlin’s relations with its satellites and their peoples is likewise a vulnerability.”
These statements reach toward the core of the problem dealt with by NSC 68, yet reference to policies and programs in the ideological war or war for men’s minds are subordinated to programs of material strength; in fact, the only program dealt with in any detail is the military program.
NSC 68 deals with this problem as being one involving “the free world” and “the slave world”. While it is true that the USSR and its satellites constitute something properly called a slave world, it is not true that the U.S. and its friends constitute a free world. Are the Indo-Chinese free? Can the peoples of the Philippines be said to be free under the corrupt Quirino government? Moreover, what of the vast number of peoples who are in neither the U.S. nor the USSR camp, and for whom we are contesting? By and large, by our standards, they are not free. This free world vs. slave world treatment obscures one of the most difficult problems we face—the fact that many peoples are attracted to Communism because their governments are [Page 301] despotic or corrupt or both. And they are not going to become the friends of a major power simply because of that power’s military strength. Rather, their friendship is to be had at the price of support of moves which will improve or, failing that, replace their present governments.
Finally, the point which is touched upon in NSC 68 and then lost sight of in preoccupation with the USSR itself, is that were it not for the recent successes and possible further successes of the Russian-controlled international Communist movement we would have small reason to fear the imperialism of the USSR. To illustrate: The U.S. is stronger militarily and economically in relation to the USSR than was the case just before World War II. We hardly gave Russia a second thought then. What makes for the difference today? A most important difference is that today many peoples are striving actively to better themselves economically and politically and have thus accepted or are in danger of accepting the leadership of the Communist movement.
Just what types of political and psychological actions have we proposed to meet this situation?
c. NSC 68 is based on the assumption that the military power of the USSR and its satellites is increasing in relation to that of the U.S. and its allies. In view of the vast preponderance of U.S. and allied assets in every respect except that of manpower that assumption needs more documentation than is contained in NSC 68. In particular no attention seems to have been given to the question of the possible drain which recent developments may have placed on Soviet military strength. Tightening of controls at home and in particular in the satellites would tie down military manpower and equipment. The furnishing of military technicians to China in any number would constitute an important drain on the USSR whose supply is relatively limited. Put another way, it is hard to accept a conclusion that the USSR is approaching a straight-out military superiority over us when, for example, (1) our Air Force is vastly superior qualitatively, is greatly superior numerically in the bombers, trained crews and other facilities necessary for offensive warfare; (2) our supply of fission bombs is much greater than that of the USSR, as is our thermonuclear potential; (3) our Navy is so much stronger than that of the USSR that they should not be mentioned in the same breath; (4) the economic health and military potential of our allies is, with our help, growing daily; and (5) while we have treaties of alliance with and are furnishing arms to countries bordering the USSR, the USSR has none with countries within thousands of miles of us.
[Page 302]Supplementary Budget Comments on NSC 68
These comments are directed primarily at the non-military aspects of the document. There is an inadequate definition of objectives and means, and a failure to assess—or to make possible an assessment of—the implications of the proposed courses of action. It is not enough to say that objectives should be adopted and then their implementation spelled out, since the objectives are so general that they cannot be given meaningful content except in more substantive terms.
discussion of “the underlying conflict”
This section of the paper lays an unsound basis for the document as a whole. The neat dichotomy between “freedom” and “slavery” is not a realistic description either of the situation today or of the alternatives as they appear to present themselves to large areas of the world. There are diverse types and degrees of freedom and slavery, and it is doubtful that the extent of hegemony of the United States or even the extent of national independence is considered the predominant measure by many peoples.
To classify as “free” all those peoples whose governments oppose Russia, or we seek to have oppose Russia, is a travesty on the word. Freedom as we know it is a highly developed concept, frequently of little meaning and less use in dealing with backward or disorganized peoples. The most potent weapon of the Russians outside of Eastern Europe has been and is revolt against social and economic as well as political inequities. To think of freedom in primarily political terms is itself grossly inadequate. But to imply—as this report seems to do, despite occasional references of a broader nature—that its most important meaning today is the simple ability to preserve national existence, is a highly dangerous matter. An upsurge of unadulterated nationalism might for the time being lessen or remove the military threat of Russia, but it would over time tend to accentuate the subtle undermining of our own system and guarantee the eventual loss of the cold war through the proliferation and subsidization of unstable little tyrants.
The gravest error of NSC 68 is that it vastly underplays the role of economic and social change as a factor in “the underlying conflict”. Tyranny is not new or strange, even on the Russian scale and manner; nor is it unusual for tyranny to ride the crest of swelling social and economic pressures, as the Russians are successfully doing in many parts of the world. The test of survival for an established civilization is its ability, not only to defend itself in a military sense, but also to handle these pressures by removing or alleviating the causes—a most difficult task of adjustment since it frequently requires [Page 303] removal of ruling groups or injury to vested interests. One might generalize that the degree of underlying success in the cold war to date has been in direct ratio to the success in adjusting social and economic structures to the twentieth century wave of economic egalitarianism—even though the methods have frequently been inept and have violated our concepts of a desirable and efficient economic system.
These adjustments are not being made in many of the critical areas of the world today. We are being increasingly forced into associations which are exceedingly strange for a people of our heritage and ideals. It can be persuasively argued that there is no alternative course. If so, we should not be blind to the gaping weakness which is forced upon us, which will grow rather than decline as time passes, and of which above all others the Russians, with their talents for subversion, are able to take advantage. This is a major dilemma of American foreign policy, and deals with a subject much more difficult than making guns. In many countries today, for example, there is a simple test question: Is there no way to attain thorough-going land reform except through Communist revolution? It is highly doubtful that we are actually so handicapped in our choice of friends or limited in our influence on policies. At any rate, we will never make use of our opportunities as long as the issue is submerged, as it is in NSC 68. Indeed, we seem today to be exerting decisive influence in the wrong direction in some places, such as Western Germany.
The above comments do not detract from the seriousness of the military situation, nor necessarily weaken the case for increasing and re-orienting our military strength and for assisting other countries to defend themselves. But unless we are prepared to undertake extensive military occupation, we cannot win the cold war by a predominant reliance on military force even if combined with large-scale dollar assistance. Nor is it sufficient to add preachments of the concepts of democracy in terms too sophisticated for understanding or too remote from the particular issues foremost in the minds of the peoples. Only as we develop methods for capitalizing on the emerging social pressures can we beat the Russians at their most dangerous game and safely take advantage of a rising tide of nationalism.
A revealing commentary on NSC 68 is that it does not basically clarify or utilize the Chinese experience in the discussion of issues and risks, nor does it point toward a course of action which can effectively deal with probable repetitions of that experience in the future. There is no follow-through on the social and economic schisms which today provide the basic groundswell for disorder and weakness, which make our task so difficult, and for which we have not developed guidelines and techniques adequate to cope with the vicious “ideological pretensions” and methods of the Communists. A revolutionary movement [Page 304] taking advantage, however cynically, of real elements of dissatisfaction cannot be stopped by the threat of force alone.
discussion of economic factors
Lacking any indication of the magnitude of the proposed increase in security expenditures, it is impossible to assess the economic impact of this document and the economic risks which it might involve. There is no doubt that a larger share of resources could be devoted to security purposes, but such a course is not without its cost under any circumstances, and the extent of diversion is crucial to an analysis of consequences.
The comparison of the present situation with that of the peak of World War II is misleading. Apart from statistical difficulties in computing GNP in wartime on a basis comparable to peacetime, the effort achieved in 1944 was possible only under wartime conditions, with widespread controls, heavy deterioration in many types of capital assets, and bulging inflationary pressure subject to only short-range restraints. Under a total war effort the U.S. might, in time and barring internal destruction, exceed its World War II performance, but this effort would not be sustained for a long period and is hardly relevant to the task of a long drawn-out cold war.
Unless the risks of war are considered sufficiently grave to require moving now toward large-scale mobilization, determination of the size of our military posture should be heavily influenced by its sustainability over an indefinite period and by a balancing of the military risks with the risks to our society and to the prospects for economic growth. Expansion of military expenditures involves an economic cost, particularly if sustained for a substantial period, and it also involves a cost in terms of the psychology and orientation of bur society. This is always true, and temporary factors such as unemployment should not be permitted to obscure the issue.
At the moment there are some 3½ million unemployed and certain industries are operating below capacity. However, at present levels of activity there are signs of inflationary pressure, particularly in heavy industries and construction. It would be difficult to conclude categorically that under current conditions substantial further armament demands could be placed upon durable goods industries without requiring a diversion from present civilian purposes either through inflation or through taxes or direct controls. The result might be little or no net increase in total output depending upon the methods used. It is thus necessary to assess the impact of increased security expenditures on specific sectors of the economy as well as in terms of aggregates.
[Page 305]More importantly, over a period of time, it is neither necessary nor desirable to regard military expenditures per se as a method of maintaining high employment. Large and growing military expenditures not only would divert resources from the civilian purposes to which they should be put but also would have more subtle effects on our economic system. Higher taxes, if necessary, would have a proportionately dampening effect on incentives and on the dynamic nature of the economy, without any offsetting productive impact from the expenditures. The rate of private investment might be slowed down unless special measures or controls were undertaken. There would be a continuing tendency to reduce public expenditures for developmental purposes which are highly desirable for the continual strengthening of our economy.
The document gives figures indicating a much higher investment rate in Russia than in the U.S. at the present time. Aside from doubts as to the feasibility of constructing estimates for Russia which are comparable with U.S. statistics, it is generally agreed that the present rate of investment in the U.S. is itself still abnormally high for our economic system. It is true that much of it is for luxury or other purposes with a low security priority. If it is proposed to alter significantly this situation, the implications of attempting to re-direct the flow of investment should be frankly faced. At some point, direct controls on a continuing basis may become necessary if inflationary pressure in some areas is not to be restrained by methods which create unemployment in others.
The implications of higher military expenditures are of course mainly a matter of degree. It cannot be said that at any point such expenditures are “too high”. They must be sufficient to meet minimum requirements for the security of the Nation. But security rests in economic as well as military strength, and due consideration should be given to the tendency for military expenditures to reduce the potential rate of economic growth, and at an advanced stage to require measures which may seriously impair the functioning of our system.
In the immediate situation and outlook, it seems probable that a moderate increase in security expenditures, partially or wholly offset by the prospective decline in ECA, can be undertaken without serious economic consequences. As the document points out, the potential growth in the economy can permit some increase while still permitting a rise in the civilian sector. However, this would not be without cost in preventing either an otherwise possible tax decrease or an increase in productive programs.
The document, however, is subject to criticism for inconsistency in proposing that higher security expenditures be counteracted by increased [Page 306] taxes and a curtailment of domestic programs. This seems hardly a program for stimulating economic growth. It is suggested as a general guideline that any security program which requires either a significant increase in the tax base or the curtailment of domestic programs which have an investment or developmental effect, should be considered as raising serious questions on the economic side.
No course of action is without risks, but the risks in the proposed course are not adequately considered. The type of military program seemingly implied on pp. 54–553 most certainly raises serious questions. This is even more true of the document as a whole which appears basically, despite general statements in other directions, to point down the road of principal reliance on military force which can only grow in its demands over time, as well as scarcely fail to lose the cold war.