quality:correction
Content and meaning

NSC 68 itself did not contain any specific cost estimates at a time when the United States was committing six to seven percent of its GNP to defense. It was evident that the limits the President had previously set on defense spending were too low. The report called for tripling defense spending to $40 or $50 billion per year from the original $13 billion set for 1950. It specified a reduction of taxes and a "reduction of Federal expenditures for purposes other than defense and foreign assistance, if necessary by the deferment of certain desirable programs", as a means for paying for it. However, several officials involved in the preparation of the study, including the future chairman of the president's Council of Economic Advisers Leon Keyserling, suggested that the massive increase in military spending could be afforded by deliberate acceptance of government deficits, which would have the added benefit of energising and stimulating parts of the American economy, as it did after 1930. Indeed, the document did note that achieving a high gross national product "might itself be aided by a build-up of the economic and military strength of the United States," and the Deputy Secretary of Defense Robert Lovett also suggested that the American economy "might benefit from the kind of build-up we are suggesting". The memorandum saw that the United States would grow exponentially with the added funding towards the military. The added funding would strengthen the current military, causing the Soviet Union to strengthen its military as well. However, since both superpowers had different economies, outcomes from this would differ greatly. They understood that the Soviet Union's output was nearly half of the United States' current output, so they assumed it was only a matter of time before the Soviet Union could not keep up. Understanding communism, they knew that the USSR was already producing at full capacity. There are four variables that determine output: consumption, investment, government expenditure, and exports. In order to increase military strength, the USSR would be forced to allocate resources from other avenues such as investment or consumption. Deprive investments and the country's economic growth would become stagnant. Deprive consumption and that would cause further civil unrest and lower the quality of life of its citizens. On the other hand, the United States did not run into the problem the Soviets did. What came from NSC-68 was an economic ideology that dominated the United States economy for the majority of the Cold War, Military Keynesianism. Economists assumed that the United States normally operated below production capacity. This assumption proved essential to the United States victory of military strength since the increase of government expenditure would place the nation at capacity. However, unlike the USSR, the United States economy would grow since it would be increasing its production.