FOREIGN RELATIONS, 1950, VOLUME I


strength should, to the extent feasible, be supplemented by data
showing absolute amounts. The reason for this is that absolute figures
tend to be more helpful than percentage figures in determining quan-
titative objectives. To bring the defense expenditures of European
NAT countries up to the same proportion of national output as in
the Soviet Union, for example, would require nearly a three-fold
increase in their defense budgets.
  With the proposition that "a very rapid absolute expansion could
be realized" in total United States production of all goods and services
there is full agreement. This, in turn, would render more supportable
any given level of defense outlays. The size, composition and rate of
the expansion in total output that might be achieved with a full effort
would be one of the major considerations governing program formu-
lation under NSC 68. On them would depend the extent to which any
major new programs adopted would require a reduction in consump-
tion, the imposition of selective or general price and allocation con-
trols, cutbacks in expenditure programs other than for defense and
foreign aid, or increases in taxes.
  For these reasons the Council considers that a careful analysis of
the productive potentialities of the United States economy must be
a central feature of the analytical framework supporting program
recommendations that may be reached under NSC 68. Such an analysis
is important from the standpoint of general economic policy regard-
less of whether new programs recommended may be of large or moder-
ate dimensions.
The Policy Conclusions of NSC 68
  The basic policy conclusion reached by NSC 68 is as follows:
  "In the light of present and prospective Soviet atomic capabilities,
the action which can be taken under present programs and plans .-.0.
becomes dangerously inadequate, in both timing and scope, to accom-
plish the rapid progress toward the attainment of the United States
political, economic, and military objectives which is now imperative.
A continuation of present trends would result in a serious decline in
the strength of the free world relative to the Soviet Union and its
satellites. . ... It is imperative that this trend be reversed by a much
more rapid and concerted build-up of the actual strength of both the
United States and the other nations of the free world." (pp. 63, 64811)
  It is stated that "a comprehensive and decisive program . .. would
probably involve:
  "1. The development of an adequate political and economic frame-
work for the achievement of our long-range objectives.

   See p. 290.


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