Another War Would Catch the U.S. Off Guard. Just Look at History.

How would the U.S. meet its defense needs if it were drawn into another major conflict?

It isn’t hard to imagine one. Russian President Vladimir Putin warns of nuclear war as his Ukraine invasion drags into a third year; the Israel-Hamas conflict still threatens to spread across the Middle East; and nuke-backed North Korea has renounced peaceful reunification with the South.

The worst-case scenario would be an invasion of Taiwan by the People’s Republic of China, where tensions are running high.

The Center for Strategic and International Studies, a Washington think tank, has war-gamed how a Chinese amphibious assault on Taiwan might play out. The good news is that Taiwan, with the backing of the U.S. and Japan, usually repels China’s assault. But it comes at a high cost.

“The U.S. and its allies lost dozens of ships, hundreds of aircraft, and tens of thousands of servicemembers,” the CSIS writes. “The high losses damaged the U.S. global position for many years.”

The report concludes: “The U.S. needs to strengthen deterrence immediately.”

War is an expensive business. Among the consequences of the Civil War was the temporary imposition of the nation’s first income tax. World War I brought back the income tax, and this time for good.

War also tends to take people by surprise, when perhaps it shouldn’t.

“A year or so ago,” Barron’s wrote on Jan. 26, 1942, of the war then sweeping across Europe and Asia, “it all seemed remote and slightly incomprehensible.”

The Japanese attack on Pearl Harbor on Dec. 7, 1941, had changed that. An American populace that had wanted no part of a foreign war was now all-in for World War II.

“Powerful enemies must be outfought and outproduced,” President Franklin D. Roosevelt told Americans in January 1942, as he took the unprecedented step of nationalizing U.S. industry under the control of one man, Chief of War Production Donald M. Nelson. America fell in line.

“Our entire normal method of doing business is undoubtedly in for some revolutionary changes,” Barron’s wrote. “Competition in the usual sense is out for the duration. It will take wholehearted cooperation to get the job done.”

Nelson, a former Sears, Roebuck executive, “set the pace in the automobile industry by chopping off all passenger and light truck production on Feb. 1,” Barron’s wrote. “He will probably move with equal speed in other lines.”

Car makers were soon turning out planes and ships, consumer goods were repurposed for the troops, food and other essentials were rationed, and every American was enlisted in the war effort.

In aircraft alone, U.S. yearly production jumped from 5,865 in 1939 to 96,318 in 1945, totaling more than 300,000 by war’s end, tripling Germany’s output. Add in 10 battleships, 27 aircraft carriers, 41,000 artillery guns, and 88,000 tanks, and America truly became the world’s Arsenal of Democracy.

Fighting World War II was about sacrifice, and FDR gave Americans fair warning of the costs of outproducing the enemy—“taxes and bonds and bonds and taxes,” he said. And indeed, by 1945 the tax rate for the top income bracket reached a record 94%.

A couple of decades later, President Lyndon Johnson, facing his own war-based fiscal squeeze, chose differently.

“The spending demands of the Vietnam War are skyrocketing,” The Wall Street Journal reported on Dec. 21, 1965.

The military costs threatened Johnson’s signature domestic program, the Great Society, but raising taxes was unpalatable so soon after his vaunted 1964 tax cuts.

“Old magician Lyndon Johnson is working harder now than ever to pull another rabbit out of the hat,” wrote the Journal.

The rabbit never appeared. Johnson kept paying for the Great Society, while refusing to raise taxes, even as defense spending spiked from 9.5% of GDP in 1965 to 11.1% in 1967. (it was 3.7% in 2023.)

He disappeared from the stage in early 1969, leaving an unpopular war and fast-rising inflation to his successor, Richard Nixon. America would go on to lose both wars, against North Vietnam and high prices.

The mistakes of Vietnam have been rehashed for a half-century. Yet, barring some kind of nation-rallying event like Pearl Harbor, the next U.S. war seems likely to be another unpopular, distant affair that’s nevertheless important in terms of geopolitics and ally-building.

In such a case, could our politically divided nation come together the way the Greatest Generation did for World War II? And in an age of free markets and multinationals, could the nationalization of industry even be on the table? Imagine Elon Musk’s reaction to a government takeover of Tesla. (He didn’t respond to requests for comment.)

Even Roosevelt’s call for “bonds and taxes” seems far-fetched. Consider that, while fighting wars in Iraq and Afghanistan, with defense spending rising from 3.8% of GDP in 2000 to 4.7% in 2004, President George W. Bush still found a way to cut taxes.

For now, as Congress wrangles over defense-spending bills, the Department of Defense is, in the words of one official, “still, in the big scheme of things, pretty close to broke.” That’s no way to fight a war.

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