Evil Empire 27A fascinating aspect of these budget wrangles is Forrestal’s manic
efforts to translate future-oriented geostrategic needs into precise dollar
values. Just months before his forced retirement and eventual suicide,
he confided to Walter G. Andrews:Our biggest headache at the moment, of course, is the budget. The President
has set the ceiling at 14 billion 4 against the pared down requirements that
we put in of 16 billion 9. I am frank to say, however, I have the greatest
sympathy with him because he is determined not to spend more than we
take in in taxes. He is a hard-money man if ever I saw one.Despite his grudging admiration for the stolid Truman, Forrestal’s
Wall Street background had left him at ease in a more speculative or
liquid universe; at that precise moment, he was devising accounting
gimmicks to offset near billion-dollar costs of stockpiling raw materials
as a “capital item” that could be “removed from the budget.” The im-
portant point to emphasize is the relationship between two interrelated
forms of speculation and accounting—economic and military—in which
an absolute inflation of threats tempted a final break with lingering
hard-money orthodoxies and a turn to deficit spending. Forrestal did
not live to see the breakthrough, but his work paid off.
As Acheson described it, the Korean War—the first hot war of
the Cold War era—“saved” the fledgling national security state. With
its outbreak, the dream of eternal military liquidity was realized when
Leon Keyserling, the liberal economist serving as Truman’s chairman
of the Council of Economic Advisors, argued that military expen-
ditures functioned as an economic growth engine. That theory then
underpinned NSC 68, the document that justified massive U.S. defense
outlays for the foreseeable future and which was authored by another
Forrestal protégé, Paul Nitze. By yoking dramatically increased federal