A Strong Economy Can Mean a Strong Defense

*** Burt Folsom ***

by BURT on APRIL 2, 2013

In the last hundred years, the U.S. been least safe during the 1930s (with Hitler on the rampage) and the 1970s (with the fall of Vietnam and communism on the rampage). We have been most safe in the 1940s, right after WWII, for two reasons: The U.S. had a monopoly on the atomic bomb, and we strengthened Europe against Russian aggression. We were also strong in the late 1980s, right after the fall of the Soviet Union.

The common denominator is that U.S. military strength and weakness paralleled the strength and weakness of the American economy. When we were in the Great Depression during the 1930s, we lost our ability to influence world politics. Germany and Japan didn’t take us seriously–and Japan thought a first strike at Pearl Harbor might take us out permanently.

In the 1970s, under Nixon and Carter, the U.S. had high unemployment, slow growth, and long gas lines. We lost in Vietnam, and the communists gained ground from Cambodia to Yemen to Nicaragua. Nixon and Carter tried big government–price controls, high taxes, and a new Department of Education and Department of Energy–but it all fizzled.

During our periods of strength–the 1940s and 1980s–we cut tax rates, encouraged entrepreneurs, and grew in influence in the world. For example, after World War II, we slashed the corporate excess profits tax from 90 to 37%, and we cut federal spending sharply. We fed millions of Europeans after the war, and our influence grew. In the 1980s, President Reagan supported the cutting of the top income tax rate from 70 to 28%. The U.S. grew strong economically during the 1980s, and our defense build-up helped defeat the Soviets and end the Cold War. We operated from a position of strength.

As the U.S. continues today to try to borrow and spend its way to prosperity, the world continues to get more dangerous. With threats from North Korea, problems with Iran, and what amounts to a war in Syria, the world is a very serious place.

The good news in all this is that after the dangers of the 1930s and 1970s, we followed those decades with tax rate cuts and increased fiscal responsibility, which resulted in stronger prosperity and greater influence on world affairs. Thus, U.S. weakness in the world today need not be permanent.

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