Pressure will be on the Bush Administration to cut defense spending in tandem with domestic spending cuts. However, what we need to spend on defense has no relation whatsoever to domestic spending. Defense spending should depend on the threat to America, namely, on Soviet weapons spending.
The CIA has long estimated that the Soviet Gross National Product is a little more than half as large as America’s and their per capita output a little less than half of Americans’. Last year an economist at the Soviet State Planning Committee (Gosplan) published a report on the Soviet GNP using rubles in a Western-style format.
When a scholar at the American Enterprise Institute, Nicholas Eberstadt, translated the figures into dollars, he discovered that the Soviet economy is barely a third the size of ours and that the Soviet per capita output is only one quarter the American level. Even that estimate is probably overstated because it used the official exchange rate for the ruble, which is artificially high.
Mr. Eberstadt also looked at the Soviet economy’s growth rate. The CIA has been telling us that the Soviet economy has been growing at the low rate of two percent a year since the mid-1970s. But Mr. Eberstadt discovered that Soviet commentators now admit that the figures released by the Soviets made to adjustment for inflation because the Communists denied that inflation exists.
Last year, two Soviet economists said that the per capita output was slightly lower in the mid-1980s than it was ten years earlier. Since then, one of Gorbachev’s top advisers admitted that the Soviet national income did not grow at all between 1981 and 1985, implying a per capita decline of almost one percent a year.
So it appears that the Soviet Union is in a far, far worse condition than American experts have been telling us. When we compare the U.S.S.R.’s economic condition with its military agenda, we can see what a historic opportunity has been served up to the Bush Administration.
Most experts believe that Soviet and U.S. military expenditures are roughly comparable. CIA figures have long been estimating that Soviet military spending is 15 to 17 percent of the Soviet Gross National Product.
However, if the Soviet economy is much smaller than previously estimated, then its defense spending would have to be a much higher percentage of its GNP. The Gosplan GNP figures referred to above would indicate that Soviet defense spending is at least 25 percent of total output.
Any country that is spending 25 percent of its GNP on military weapons has its economy on a crash wartime basis. American military spending today is only 6 percent of our GNP.
Just as military spending becomes proportionately greater when we consider the true size of the Soviet economy, so also the level of trade and credits from the West becomes vastly more important. Indeed, they are so indispensable to the Soviet economy that, without them, the U.S.S.R. could not even be called a major world power.
The present economic problems of the Soviet Union offer us our greatest opportunity since the death of Stalin to advance the cause of peace in the world, to reduce tensions and nuclear arms, and to cut our own defense budget. By simply letting nature take its course, Gorbachev will be forced to reorder his priorities from weapons and aggressive adventures into food and consumer goods.
He might even be forced to respect some basic human rights. It would be one of history’s greatest lost opportunities if loans from U.S. banks make it possible for the Soviets to continue their high level of weapons spending and aggression.
An interview with George Bush published on our election day in the French journal Le Figaro showed that he understands the reality and the opportunity. “The real problem facing us at the moment,” Mr. Bush said, “is money: loans and credits. We don’t want to see untied credits being given to the Soviets at this point in time. We want to put Gorbachev in a position where he has to make hard choices and pull back from defense spending.”
An interview with George Bush published on our election day in the French journal Le Figaro showed that he understands the reality and the opportunity. “The real problem facing us at the moment,” Mr. Bush said, “is money: loans and credits. We don’t want to see untied credits being given to the Soviets at this point in time. We want to put Gorbachev in a position where he has to make hard choices and pull back from defense spending.”
Continuing, Mr. Bush said, “that is supposed to be one of the hallmarks of perestroika. If we give him enough money, without stipulating how he is to spend it, we make it possible for him to avoid making this fundamental decision. So we don’t want untied loans or credits.”
The lesson is clear. The way to cut defense spending and achieve real arms control is to stop U.S. bank loans to the Soviet Bloc. The Soviet economy is in such terrible straits that the arms-control problem will then take care of itself.
