An end to the war would be good, not bad, for American business. War is, as we would say in business, a low-yield operation. —Louis B. Lundborg, Chairman, Bank of America
THE myth that capitalism thrives on war has never been more fallacious. While the Nixon Administration battles war-induced inflation, corporate profits are tumbling and unemployment runs high. Urgent civilian needs are being shunted aside to satisfy the demands of military budgets. Businessmen are virtually unanimous in their conviction that peace would be bullish, and they were generally cheered by last week's withdrawal from Cambodia. But they have begun to realize two disquieting facts. First, the real costs of war in Viet Nam and of the nation's total defense effort are far greater than anything reflected in the military budget. And though military spending is declining, the U.S. will have to bear a heavy financial burden from the Viet Nam War long after the shooting stops.
The military budget for fiscal 1971, which began last week, stands at $71.8 billion, but that is only the beginning. Nondefense segments of the federal budget are laced with costs that are basically military. By conservative estimates, these allocations in the new budget come to $20 billion, raising the annual cost of defense to $91.8 billion. Arthur Burns, chairman of the Federal Reserve Board, makes a much higher calculation; he figures that the tangential military costs lift defense spending to more than $106 billion.
Debts from Deficits. The Atomic Energy Commission, the Selective Service Commission and other agencies spend an estimated $1.6 billion a year for defense-related projects. At least one-half of the $3.4 billion allocated for space programs can be considered defense-connected. The Agency for International Development spends roughly $950 million of its $1.9 billion budget to help the U.S. meet its military commitments around the world, including $474 million in AID funds for Viet Nam.
Much of the Coast Guard's budget of $625 million and the U.S. Information Agency's $189 million are really defense spending. About $50 million in aid to impacted school areas is a consequence of the crowding caused by military families. Federal highway overpasses have been built to expensive heights to accommodate tank carriers, and roads have been extended to pass close to military bases. Advocates of subsidies for shipping, airlines and oil often win their case by arguing that federal handouts are needed for reasons of defense.
A major item is the public debt, which has risen from $323 billion to $373 billion since 1965. largely because of the deficits caused by the Viet Nam War. Interest payments on this debt for fiscal 1971 are expected to reach $ 19 billion, of which $11 billion can be traced to the costs of Viet Nam and past wars. The interest paid on the debt from World War II has amounted to about $200 billion so far.