Where do we get the money?

While many of the plans and programs discussed in the preceding section require nothing more than a change of mind--admittedly, not always an easy thing--others require substantial sums of money. The total might amount to a possible $30 billion, obviously an unrealistic sum in the next two or three years. Even if priorities are worked out, the question remains: where is the money to come from? Can the U.S. afford it? In managing the nation's economy, President Nixon's freedom of maneuver will be fairly circumscribed at first; he inherits from Johnson a budget that can be altered and amended but whose thrust and direction derive from past commitments and certain built-in increases, such as mandated pay raises for civil servants and the armed forces. Nor can he redirect the course of spending from the huge reservoir of obligations previously authorized by Congress (current total: $190 billion).

Even an early end to the Viet Nam war offers little immediate prospect for substantial savings. Former U.S. Budget Director Charles Schultze, now of the Brookings Institution, in Agenda for the Nation, effectively explodes the idea that the annual $29 billion that the war is now costing will be available for domestic needs. Working from an optimistic "scenario" that assumes an early end to the fighting and deactivation of some troops beginning in July, Schultze foresees no substantial reduction in military expenditures until 1971. Ordnance and munitions lines run on after any cessation of hostilities to rebuild depleted inventories. In a war like the one in Viet Nam, substantial forces are likely to remain in the field for many months and be withdrawn gradually. Meanwhile, the country has made expensive commitments to advanced-weapons systems. Some items: the conversion of 31 Polaris submarines (cost: $248 million) to carry 496 Poseidon missiles at $80 million per vessel, the first six of which are to take place this year; the beginning of procurement for components of the Sentinel and the anti-ballistic missile system, ultimately estimated at $5.5 billion; the development of the new Minuteman III to carry the MIRV (Multiple Independently-targeted Re-entry Vehicles), $4.5 billion. Schultze estimates that military expenditures will rise from the present $79 billion to something like $100 billion by 1974.

Mortgages and fiscal dividends

Yet even after this immense military mortgage is taken into account, the financial bind should begin to ease in 1971. If Nixon chooses to keep taxes at present levels--without the surtax--he will enjoy the benefit of "a fiscal dividend." This dividend is created by the automatic rise in federal revenues that accompanies the economy's growth; automatic, that is, so long as the economy does grow, for recessions have not yet become unconstitutional. If the gross national product continues to advance at a rate of an average 6-7% annually, tax revenues will increase faster than federal expenses. This will produce a dividend of $8 billion in 1971 and thereafter climb impressively to $35-$40 billion by 1974. By applying the fiscal dividend as he sees fit, Nixon will have discretionary power to fund new programs, increase old ones, reduce taxes--or indeed, some combination of these.

Against this anticipated dividend must be set a multibillion-dollar set of claims. The future military shopping list, in addition to the items above, includes a number of costly weapons systems in the development stage on which procurement decisions are pending. Initial requests from the armed forces in the 1970 budget were reported at the $100 billion figure that Schultze projects for 1974. In addition to these proposals there are potential increases in programs already authorized but underfunded. If Congress fully applied the Model Cities Program to the 130 or 140 cities involved, the annual cost could reach $4 billion or $5 billion a year. To make supplementary compensatory grants for the education of poor children wholly effective would require $3 billion. Nixon assured Henry Ford of his support for the on-the-job training administered by private industry; a three-year program for 1,500,000 hard-core unemployed would cost the Treasury $1.5 billion per year. As for reforming or replacing the welfare system, the estimates for the various income maintenance schemes that have been proposed run as high as $30 billion per year.

To make good on all these claims would obviously exhaust even the most generous fiscal dividend that Charles Schultze has projected. But the President can still find some money for key social needs. The fact is that the federal budget can stand some slimming. Not as much as Americans sometimes think is wasted--but a good deal is. Not as much as Americans sometimes suppose is going into absurd projects--though too much is. Money is being spent on programs that, by comparison with priority needs, are secondary or of relatively minor importance. Someone is always hurt when a program is cut, but given the need, both the President and Congress could buck the political pressures to trim them this year.

Risk and unpopular decisions

If he can muster support, Nixon might chop as much as $2 billion out of dubious programs. First to feel the ax should be maritime subsidies, which now cost about $500 million a year, money largely ill-spent. Also due for pruning is the farm bloc's annual harvest of $3.5 billion in subsidies, two-thirds of which goes to farmers with incomes of more than $20,000. The fact that Mississippi's Senator James Eastland's plantations receive $157,930 a year for not growing cotton -- while some of his constituents go hungry -- ought to be reproach enough. Ironically, the Agriculture Department is also spending millions to improve big-scale Southern commercial farms, thus driving Negro farm laborers out of jobs and on to Northern welfare rolls. The Government should do far more to help and retrain those laborers -- in the South -- thus saving more money and needless misery in the North. Critics have suggested that the space program could well be cut back by at least $ 1 billion -- mainly by stressing instrumented space probes rather than the spectacular manned flights with less scientific payoff. But in the afterglow of Apollo, which so lifted national spirits, such a decision might be unpopular. It also entails some risk; if the Soviet Union were to orbit a large space platform, the President would be charged with having endangered the nation's security.

The President can also take a new look at the Social Security trust funds; they pile up huge surpluses that are normally used to increase security benefits. So long as there is inflation, benefits have to be increased, but perhaps not to the full amount of the surplus. Reform of the Post Office would save at least $1.5 billion, as well as move letters faster, while another $100 million could be found by asking whether it still makes sense for the Rural Electrification Administration to subsidize rural cooperatives with 2% loans. Congress should also be shamed into cutting the $4.6 billion a year that goes for pork-barrel public-works projects. The nation owes a great deal to its veterans, but there is a question as to whether it need pay them $600 million a year for low (10-30%) disability ratings. Other savings undoubtedly could be made in other areas after a careful reassessment of priorities.

Foreign policy priorities

In the long run, however, the U.S. probably cannot effectively meet its domestic responsibilities unless it can reduce the vast military budget, which accounts for 43 -c- of all, every for in federal foreign dollar policy spent. the This is the Government's most actions difficult -- and expenses -- are in large measure dependent on the actions of others. The security of the U.S. must obviously take precedence over all other considerations. However, there is room for debate about what is essential to U.S. security.

The Viet Nam war has taught some lessons that should make the assessment somewhat easier. Washington is less likely to intervene in an unstable foreign country without much harder look at the military dimensions of the commitment. Taken to the extreme, this attitude could turn isolationism; as it is, it is probably a sign of a healthy national reevaluation. Talking about U.S. Pacific Edwin Reischauer, former Ambassador to Japan, that the U.S. adopt a "lower profile," or what the Japanese call a "low posture." None of this suggests that the U.S. should-- r could-- withdraw into a Fortress America. But it does suggest does suggest that after Viet Nam, the U.S. might get along with a somewhat smaller military establishment.

Would the Russians cooperate? Carl Kaysen, a former assistant to President Kennedy for security affairs, now director of Princeton's Institute for Advanced Study, thinks that the Russians may be just as interested in reducing their own arms burdens as is the U.S. The Soviet Union itself has enormous social needs, and could find better uses for its money than rockets and submarines. It too might consider the time propitious to sign an arms-control treaty. Even if the Russians do not respond, Kaysen argues, the U.S. might hold its missile force at present levels without endangering security. No increase in nuclear power--not even an anti-ballistic missile system--can fully protect the civilian population. The U.S. must, of course, maintain a nuclear deterrent, Kaysen concedes; the nuclear balance of terror that keeps the peace must be preserved. But if both sides build ABM missile systems, as now appears likely, though neither will have gained an iota in security, costs will have risen astronomically. The "thin" ABM system to protect the country against the Chinese is estimated at $5.5 billion, money largely wasted, in the view of military men who want a full-scale system that would add as much as $50 billion to present military expenditures. Against these ever spiraling demands must be weighed the domestic crisis, the need for unity and social peace, which are as much a factor in a nation's security as the might of arms.

President Nixon's assertion that the U.S. must negotiate from strength and maintain what he calls "an edge" on the Soviet Union has been interpreted as presaging an increase in the military budget. But he is too sophisticated not to know that "nuclear superiority" has become a meaningless concept. His own foreign-affairs adviser, Henry Kissinger, has said that there is an urgent need to analyze what is meant by power--and the balance of power--in a nuclear age. He believes that whatever balance there is between the U.S. and the Soviet Union is now regarded by the rest of the world as inflexible and precarious. Therefore the traditional uses of power have become less feasible, and the international order has become more, not less, stable. A searching and painstaking review of American security and America's place in the world must have top priority on the President's agenda.

After the Viet Nam war is resolved, the U.S. could begin restricting its Asian commitments to a few vital areas--Japan, South Korea, Formosa. One of the two divisions in South Korea could probably be brought home without increasing the danger to South Korea. Any pullback of commitments in Europe and the Middle East is far more difficult. But the U.S. could fully meet its NATO commitment with 30% of the 330,000-man force now in Europe. And the U.S. can surely encourage the best Europeans, whose total industrial output is second only to America's, to assume more responsibility. One way to do so would be to invite the Europeans to take command of the forces deployed there, thus ending the tradition of an American Commander-in-Chief.

Risk and rewards

No President is offered a simple choice in determining a nation's priorities; no budget is ever enough to take care of all those who, like Oliver Twist, ask for more. In the next 18 months, the probable area of savings--about $2 billion--is not enough to take care of the demands of the cities, of education and of welfare that could easily absorb the anticipated dividend from the end of the Viet Nam war. But to raise taxes in the interim might well impede the growth of the economy, on which the maintenance of prosperity depends, and with it the hope of improving American society. The President probably cannot lower military expenditures to the pre-Viet Nam figure of 1964 ($62.1 billion in 1969 prices), but such reductions as he can make will increase his fiscal dividend, his power to spend more on domestic needs or to lower taxes. Any substantial move in this direction would require determined leadership and entail some risks, but would also offer great rewards.

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