Text 15657, 82 rader
Skriven 2005-09-23 14:19:50 av Alan Hess
Ärende: Guns or butter?
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washingtonpost.com
Choose: Guns or Butter

By Richard Cohen
Thursday, September 22, 2005; A25

On Aug. 3, 1967, President Lyndon B. Johnson sent a message to Congress in
which he said that the United States could not continue to fight a war in
Vietnam and at the same time continue his Great Society programs without, among
other things, raising taxes. George Bush ought to read that message. It was
titled "The Hard and Inescapable Facts."

For Bush, facts are neither hard nor inescapable. He believes in "magical math"
-- a firm understanding that somehow, in some way, something will happen to
make everything come out right in the end. This is the economics practiced by
the dreamy who think that today's credit card purchase will never come due.
This, in a nutshell, is the financial blueprint for the United States of
America.

For Johnson, the realization that bills come due came too late. Early on he
said, "We can continue the Great Society while we fight in Vietnam," but he
sensed -- canny pol that he was -- that the American people would pay for the
former but not, if they had to choose, the latter. When Johnson finally had to
ask for a tax increase, he was on his way out as president. Less than a year
after delivering his message about hard facts, he had to face the hardest one
himself: He announced he would not seek reelection.

Bush, having won a second term, cannot seek reelection and so he may never
become politically accountable for his mismanagement of the nation's finances.
As Johnson initially attempted, Bush is telling the American people they can
have both guns and butter -- two for the price of one. In Bush's case, "guns"
is the war in Iraq (and Afghanistan) and the "butter" is domestic programs such
as enriched Medicare along with the war on terrorism, which Bush himself has
characterized as virtually endless. In his case, though, he has not only
refused to raise taxes, he has actually lowered them. LBJ could only marvel.

Ever since the war in Iraq went from resplendent victory ("Mission
Accomplished") to the ugly quagmire it has become (almost 2,000 American dead),
commentators have been making comparisons to Vietnam. I myself have done that
-- and I think certain commonalities exist and are troublesome. Usually, these
comparisons focus on military or political matters, but Robert D. Hormats, a
former assistant secretary of state and now a vice chairman of Goldman Sachs
International, has found what may be a more apt comparison. Initially, both
wars were financed on the cheap because interest rates were low.

Hormats is finishing a book, "The Price of Liberty," on how America paid for
its wars, starting with the Revolution and concluding with Iraq. Most wars
forced the government to revise its budgetary and tax priorities. In other
words, cut spending and increase taxes. Not so Vietnam -- not for a long while,
anyway. LBJ ultimately hit the fiscal wall, and when he did so, Americans had
to decide whether Vietnam was worth the bucks. His political position worsened.

Bush has been luckier. He came into office -- as he did life itself -- with a
huge surplus. He spent it. He now has a huge deficit. The Federal Reserve is
increasingly concerned about inflation and this week raised interest rates for
the 11th consecutive time since June 2004. Sooner or later, Americans are going
to have to make hard choices -- guns or butter. Not surprisingly, they
overwhelmingly tell pollsters they'd choose butter. When asked by a CNN/USA
Today/Gallup poll how they'd prefer to finance the (at least) $200 billion
Hurricane Katrina relief effort, only 6 percent proposed cutting domestic
spending and just 15 percent supported increasing the deficit. A majority -- 54
percent -- chose "cut spending for the war in Iraq."

The curse of Texas is once again upon the land -- an elective war, important
enough to fight, not important enough to pay for. Up to now, it's been
manageable if only because few have been asked to sacrifice anything for the
grand cause of . . . well, it's hard to say, isn't it? On a national scale, the
casualty rate is bearable and the financial cost has not been felt because the
money was first looted from the surplus and then borrowed. But that borrowing
will drive up interest rates, including mortgages, and it might, as happened
with Vietnam, trigger inflation that lasted longer than the war itself.
Everything is going to get more expensive and voters are going to get more
grumpy and it's all going to look like it once did to LBJ. That's not someone's
nightmare scenario. That's "the hard and inescapable facts."

cohenr@washpost.com
+ 2005 The Washington Post Company

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