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Guns and Butter – What Does the Phrase Guns and Butter Mean?

What Does the Phrase Guns and Butter Mean?

Guns and ButterGuns and butter generally refer to the relationship between defense spending and social programs in a federal government’s budget allocations

The phrase Guns and butter has come to summarize the dynamics involved in a federal government’s allocations to defense versus social programs when allocating limited resources.  Both segments can be vital to a country’s economy. Depending on the global security environment, defense spending may take precedence over social, particularly during wartime. War can have a significant impact on a country’s economy as well as its social evolution.

In other words, guns and butter exemplify the link between a country’s spending for defense vs civilian goods. The phrase is sometimes used to simplify the reference to national spending as a percentage of GDP. This could be interpreted as a metaphor for the trade-off between defense and civilian spending in more complex economies. Resources are limited, so countries have to select which mix of weapons vs social needs best meets their goals.  The ultimate mix is often influenced in part by possible opponents’ military spending and military stance. Because these two categories of goods require a tradeoff, a country cannot choose one without inversely affecting the other.

  • Guns – refer to security goods such as military equipment like weapons, ships, or tanks. It also includes personnel, troops, and civilian support staff.
  • Butter – represents nonsecurity goods that increase social welfare.  This segment of the economy includes schools, hospitals, parks, and roads.

America’s Guns and Butter Era

Through the years, politicians have evolved the phrase guns and butter for use in all areas of fiscal budgeting.  Particularly, where there is a substantial trade-off between defense and social. In general, politicians often use “guns or butter” arguments to state positions about national priorities that impact the nation’s economy.

Following a large tax cut passed in 1964, President Lyndon Johnson pursued an agenda that included an ambitious amount of fiscal spending. The United States’ obligations to fighting the Vietnam War increased.  This occurred even as domestic expenditure expanded under President Johnson’s Great Society programs.  The President’s social agenda was aimed at reducing minority unemployment and income disparity. Economists frequently refer to the late 1960s as the “Guns and Butter” era.  This is largely because that administration chose to pursue numerous ambitious goals at the same time.  Both the social agenda as well as the military build-up needed considerable and sustained increases in fiscal spending as well as a rising budget deficit.

The spending during the Guns and Butter era created inevitable inflationary pressures that continued through the 1960s. During the early 1960s, inflation was well-contained, with the Consumer Price Index fluctuating in a relatively tight range of 1.1% to 1.6%. With increasing fiscal commitments and money supply in the late 1960s, however, inflation accelerated. In 1966, the Consumer Price Index increased by 3.0%, and by 1969, the Consumer Price Index increased by as much as 5.8%. Similarly, in the past five years, inflation has been low and contained, comparable to the inflation rate of the early 1960s. The average year-over-year increase in the Consumer Price Index was just 1.8% from 2016 through 2020. Looking forward over the next several years, it would be unsurprising to see a CPI acceleration that rhymes with the late 1960s. (Source: forbes.com)

Guns and Butter in the U.S. Federal Budget

The United State’s federal government expects to spend $6.011 trillion in 2022.  Well over half of that amount pays for mandated benefits such as Social Security, Medicare, and Medicaid. Discretionary spending pays for everything else.  In 2022, that amount will be approximately $1.688 trillion. The U.S. Congress appropriates the necessary funds each fiscal year using the president’s budget as a starting point.  Each year the president of the United States and Congress are involved in setting the fiscal budget. The president presents his budget plan approximately one and a half years ahead of time.  This is followed by lengthy debates throughout the House and Senate on the final budget.

  • Butter – Mandatory spending is estimated at $4.018 trillion in FY 2022. This category includes entitlement programs such as Social Security, Medicare, and unemployment compensation. It also includes welfare programs such as Medicaid.
  • Guns (and everything else) – The discretionary budget for 2022 is $1.688 trillion. Much of it goes toward military spending, including Homeland Security, the Department of Veterans Affairs, and other defense-related departments. The remainder must pay for all other domestic programs. The largest of these programs are Health and Human Services, Education, and Housing and Urban Development.

Mandatory vs discretionary spending

The U.S. budget is primarily divided into two categories: mandatory and discretionary. The mandatory category is generally aligned with butter while discretionary includes defense and is associated with guns. Mandatory spending involves eligibility programs that help support the health of the nation’s citizens. In mandatory spending, the government considers programs like Social Security, Medicare, Medicaid, housing assistance, and welfare. In discretionary-defense spending, the government allocates funds to national security through the Department of Defense, State Department, and Homeland Security. For 2018 and 2019, the U.S. spent approximately 15% of the fiscal budget on defense at $623 billion and $676 billion respectively. This compared to approximately 62% for mandatory programs overall in 2019. Comprehensively, allocations to butter programs in the mandatory category generally take greater precedent in times of peace. However, defense spending can require significant increases in times of war or increased security. (Source: investopedia.com)

Guns and Butter in China

Militaries are funded by public funds diverted from other domestic purposes. Understanding the public acceptance of Chinese military strength requires an understanding of how the public reacts to the “guns-versus-butter” trade-off. However, there have been few studies on popular opinions toward military spending in China.  Nevertheless, China’s expanding military presence has alarmed many policymakers worldwide. To study the nature of public support for military spending in China, Cambridge conducted a national online survey. The study revealed that while Chinese citizens favor military spending in the abstract, their support dwindles when weighed against other domestic spending priorities.

We fielded a national online survey to investigate the nature of public support for military spending in China. Chinese citizens support military spending in the abstract, but their support diminishes when considered alongside other domestic spending priorities. We also find that public support for military spending coexists surprisingly with anti-war sentiments and a significant strain of isolationism. In addition, while the conventional wisdom suggests that nationalism moves a state towards bellicosity and war, we find that Chinese citizens with a stronger sense of national pride report stronger anti-war sentiments than other citizens. (Source: cambridge.org)

Guns and Butter in Russia

The topic of guns and butter in Russia is intriguing. The Russian government clearly understands how to build a stable macroeconomic picture.  The Kremlin consistently makes long-term investments in defense modernization and defense planning.  Further, they demonstrate a relatively good hedging strategy against an unpredictable future. However, the ruling regime appears to lack the competence and desire to implement fundamental reforms. It has effectively committed to a stable, long-term stagnation.

On the political front, Russia feels like a China understudy. On the military front, Russia, as a country that has gone through transformative military reforms and modernization, is definitely the leader and China is more the understudy. Russia’s military reforms preceded China’s reforms by quite some time. Russia’s military reform and modernization, on the whole, have been successful in restoring the armed forces as a useful instrument of national power. Arguably the only Russian institution that has been successfully reformed in recent years and come out the better for it has been the military. Comparing military power and spending is a difficult task. China does have a large military budget but so does Russia. However, Russia’s defense budget is now declining in real terms. The Russian state has chosen to steadily reduce spending both on defense and on national welfare. (Source: wilsoncenter.org)

Up Next: What Does it Mean to Boil the Ocean?

Boil the OceanTo boil the ocean is an idiomatic phrase.  An idiom is a phrase that means something different than its literal translation.  Boiling the ocean means undertaking an impossible task or project or making a job or project unnecessarily difficult. The phrase appears in business as well as in other social settings.  It can be considered to be a negative phrase in relation to how one approaches a task.

In the literal sense, boiling the ocean is impossible.  Face it, there’s too much water for boiling it to be remotely feasible. As a result, boiling the actual ocean would be an impossible task. When applied to groups or projects, the phrase can simply mean making something so broad or complicated that the objective becomes impossible. T0 boil the ocean has the additional connotation of going to extremes.  It implies the objective delves into such minute detail that a project becomes impossible.

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