OVM,
here is a little lesson for you.
Our nation built its wealth after the civil war to just before the depression. During that time, we fought the Spanish American war and the first world war but with those two wars, the economy wasn't on a war footing. There were no restrictions during the Spanish American war but the first world war we needed the restrictions not because of a lack of material but labor.
After the start of the depression, the US government increased in size something like 10 times, which included the programs like CCC, the TVA and the other couple hundred put the people to work projects. We were spending a lot of money to keep things together and the only reason we got out of the mess was because of the second world war.
After the war, our economy changed again, we started to shift to a consumer society, leaving manufacturing to others and moving toward the spending philosophy of things.
The real problem is that a war economy only goes so far. During the second world war, we had to produce but the government kept a tight control on every dime that went to a defense supplier, where today forget that idea. We were taxed on everything we made, especially the overtime that most had been doing for the war effort. AND the other thing that is missed is the fact that FDR's spending on a lot of social programs went way way down, it was now a military spending that went up and was justified. With the added revenue from higher taxes, a close watch on defense spending and cuts in social programs (and the elimination of some of the alphabet programs of the depression), we kept the deficit and the national debt in check.
Now roll forward to 1959, we still had a high tax, we cut spending on defense and social programs and we seem to be on the right track but we had a couple recession in the 50's. Kennedy looked at the stagnated growth coming out of the recession in 57-59 and saw that lowering taxes will spur growth and that's what happened, the tax changes of 1964 took off in 1965 and it went unchecked until Johnson slowed it down by increasing taxes in 68. During that time Vietnam was gaining steam, with our new found money in the revenue projections of 1965 we got the great society programs rolling, NASA got a lot of money but it wasn't because of Vietnam war this hard push the economy forward, it was those tax breaks of '64.
What we need is real tax changes, Kennedy realized that was the only way to move forward and we need to actually do this as quickly as possible.
