We produce herewith oxtracts from an editorial in the Financial Times of 31/10/62. Two things come out of the article: (1) that once again, warlike moves have been made by the United States' Government on the eve of a recession; and (2) that international tension :nd the danger of war is ‘good’ for the U.S. economy, or to put it another way - U.S. monopoly capitalism needs war to k»sep it going. What groater condemnation of a social system could there be? (Eds Note)
"\s far as the U.S. economy is concerned, the one certain aftormath of Cuba is a further rise in Government expenditure. This expenditure has been the most buoyant element in the economy for some time. In 1960, total foderal expend~ iture averaged $6,500m. per month; in 1961, this had risen to %7,0002, a months; and this year, even before the Cuban crisis the total looked io be creoping beyond 27,500m. This increase, which has taken place despite some t2irming in Congress of Preisent Kennedy's plans, has been a source of continvo1s worry end political sniping from the Right, and particularly from certain sections of business. Business profits, the critics have noted, are under great pressure; tut the trend towards biguer and bigger Government expenditure goes on.
"After Cuba, federal expenditures — and the budget deficit with them — aro likely to receive another push. Of the total federal budget, close to half goes on defence (our emphasis - Ed.)3 with the call up of more men, heavy troop movements and the build-up of naval operations, the 1962 defence bill is likely to exceed by a good margin its current total of $48,000m. a year. Fortunately, this will laad to no immediate political problems, since defence spending is the one
. : field where Congress often votes more, rather than less, mone than the President asks. (our omphasis — od.) But in the longer term two results could follow. First, the higher level of spending should provide an immediate boost to economic activity, and especially to companies heavily involved in the defence effort. But secondly, since it will enlarge tho already unpopular budget deficit, it may make other Government concessions — and particularly next year's promised tax cut — harder to put in effect.
"On economic grounds, the boost to business is welcome (our emphasis - Ed) For several months, U.S. business activity has been movinus on a plateau. Personal incomes, which have been one of the strongest sections cf the for the first time in September; and this was reflected in rotnil sales, which declined in September for the second month running. But since then car sales, which sag.ed at the end of the summer, have surged forward avi these contracts show them solves right through the key economic indicators. Privatec housing starts, for example have been poor but apartment building is strong@jecccesero
A rise in defence spending should thus be of come help to profits, prod— uction and consumer outlays. (our emphasis id.
aL
But it wili not halt tic fierce arguments that are going on in the Administration over the proper course of economic policy over the next few months. On the side of caution and of letting business develop under its owm steam are two powerful groups — that led by Senator Byrd, which takes exception to Government deficits, and that led by lir. Dillon, Secretary of the U.S. Treasury, who can point to the further problems posed to the dollar by the expected rise in military spending abroad. The Council of .iconomic Advisors, on the other hand, wants to get the economy moving faster; and Dr. Jacobsson, with his warnings of world deflation, is giving them powerful supporte..."