In an effort to defend spending $1.3 trillion on wars in Iraq and Afghanistan, the Washington Post’s hawkish columnist Charles Krauthammer writes, “During the golden Eisenhower 1950s of robust economic growth averaging 5 percent annually, defense spending was 11 percent of GDP and 60 percent of the federal budget.”
In reality, economic growth averaged only 2.9 percent a year while Eisenhower was president from 1953 to 1961. Krauthammer is erroneously crediting Ike with the ephemeral Korean War boom of 1950-51 when defense spending was much smaller (7.6 percent of GDP), but consumers emptied the shelves due to fears that rationing would return.
Real GDP growth averaged 5.2 percent from 1962 to 1968, as President Kennedy’s plan to cut marginal tax rates by 23 percent was implemented. We then switched to a mix of high tax rates and easy money, starting with surtaxes in mid-1968, and annual growth slowed to 2.6 percent from 1969 to 1982. From 1983 to 1989, after President Reagan gradually cut marginal tax rates another 23 percent by mid-1983, economic growth averaged 4.3 percent a year.
A strong economy can afford a strong military, but foreign military adventures are nevertheless an economic burden.