US Spending in the Cold War

The Cold War was known as a proxy war, with no actual head to head combat between the Soviet Union and the United States. Instead the two superpowers decided conflicts in different countries such as Korea and Vietnam. Along with political conflicts, the Soviet Union and United States also had an arms race which had immense effects on both economies. For the United States, there was a cycle of spending in which America experienced mass mobilization that increased spending in the defense industry. 

After World War II, military spending hit a postwar low in 1947 at $10 billion that year due to demobilization efforts after the war. However, when the Czechoslovakian government was overtaken by the Communists, the action sparked an increase in spending. As a result of the invasion, Truman called for an appropriation bill that put 3 billion dollars into defense. In 1950, there was a looming fear that North Korea would invade South Korea and this fear persuaded Congress to increase the defense budget. The notable act that increased funding was NSC-68; it was a policy paper produced by the United States National Security Council that wanted to triple defense spending. The budget used to be 13 billion per year and NSC-68 wanted to raise that budget to 40 or 50 billion per year. 

The first rapid multi year mobilization did not occur until after the Korean War. During 1947 to 1950, annual spending never exceeded 60 billion but after 1952, the budget never fell below 143 billion. Historians suspect that without war, the increase during this time period would have been closer to the 20 percent trend through the whole Cold War instead of the 200 percent jump. From 1947-1950, the Eisenhower administration put emphasis on massive retaliation with the development of long range bombers and intercontinental ballistic missiles. Later, the Kennedy administration advocated for flexible nuclear response, but these shifts in administration didn’t change the overall defense spending, which still ranged from 134 to 163 billion dollars. Because of the Vietnam War, defense purchase reached a peak in 1968 and after withdrawal from Vietnam, spending began to decrease again. In 1978 to 1980, there was a Carter-Reagan buildup and purchase increased by 15.7 billion or 10.4 percent and between 1980 and 1987, it increased by 84.4 billion or 50.7 percent. During this nine year build up, there was an increase of 100 billion in military purchases or 66.4 percent. 

So, what has all this spending amassed. Over the period of 1948 to 1986(the Cold War Era), military purchases accumulated to a total of 6,316 billion dollars, averaging 162 billion a year. The trend equation predicts that defense purchases would increase by 2 billion each year. After the Cold War, there has been a decrease in spending, but ever since the 9/11 attack, defense purchases have gone up again.