Guns and butter

It is said that it was William Jennings Bryan, the perpetual presidential candidate, who first made the debate of guns vs. butter a popular concept. He resigned his position in the Wilson Cabinet over the then-president’s decision to emphasize the production of munitions over the production of dairy products.

It was Herman Goering, the famous Nazi, who made a fateful choice between the two. He said, unsurprisingly: “Guns will make us powerful; butter will only make us fat.”

Lyndon Johnson tried to choose both during the 1960s. He moved forward with his Great Society programs (spending programs that rapidly increased the size and scope of the federal government) just as he moved to expand the war in Vietnam.

The result was a huge deficit, which translated in the 1970s into high inflation and low stagnant growth. The diminished power of the dollar and the crappy economy that resulted from Johnson's initial decision helped topple both Gerald Ford and Jimmy Carter.

Ronald Reagan’s Fed chairman, Paul Volcker, conquered inflation through a tough monetary policy, although Reagan himself didn’t do much to shrink the deficit. He continued high defense spending and tried to cut taxes (although many of the tax cuts were reversed in the later years of his presidency).

George W. Bush had his own tussle with guns and butter. He didn’t have any big and bold new spending programs (with the possible exception of the prescription drug bill), but in the aftermath of the Sept. 11 attacks, he did rapidly increase war spending.

The Iraq and Afghanistan conflicts cost a lot of money. President Bush refused to put that spending in his annual budget requests, basically putting the spending on the credit card. He did that because he didn’t want to raise taxes to pay for an unpopular war and he didn’t want to take the opportunity to make deep cuts in the discretionary or mandatory side of the budget ledger. He kept domestic spending basically flat (except for homeland security spending), but under Bush the budget deficit got worse.

President Obama, who faced a tough economic meltdown, decided to throw caution to the wind and start putting even more money on the credit card. He has already spent more money that we don’t have than any other president in history.

Unfortunately for the president and his liberal allies, we have just about hit the limit on the credit card.  We are going broke. And that is causing his liberal base great angst.

They don’t want us to spend more money of Afghanistan because they know that they will have to scale back their domestic spending plans. This angers them because they believe that since they have this great opportunity to ram things through a compliant Congress and a willing White House, they shouldn't waste it on a silly little war (to paraphrase).

And that is why guys like David Obey (D-Wis.), who is the chairman of the House Appropriations Committee (the congressional spending committee), and Sen. Carl Levin (D-Mich.) are floating ideas like a new tax dedicated to paying for the war. They want war-spending paid for by a new tax, not because they are suddenly fiscally responsible. They want a new war tax because they want to spend more on the domestic side of the ledger. They want more pork, more funding for ACORN, more earmarks for their campaign contributors and more money for Medicaid and welfare. They want their butter, and they want it now.

This is a classic case of the age-old debate, guns or butter. If you decide you want both, you either get higher taxes, higher inflation (coupled with slower growth) or a bankrupt nation.

The liberals want the butter. The conservatives want the guns. The president seems to want both. And that could mean some tough economic times for our future.

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