from Dave Windsor The following despatch from the Financial Times Correspondent J.D.S. Graham, dated July 3 from Washington, shows the mess that J : his Vietnam policy: ’ Johnson is in because of
"Mr. Robert McNamara, U.S. Secretary of Defence leaves for Vietnam later this week on a visit that has enormous implications for the American economy in the fiscal year which began two days ago. His first concern will be to examine in the field General Westmoreland's request for more troops, When the general was in Washington earlier this year, he is reported to have asked for five more divisions, about 150,000 men, as the optimal increase, His minimal requirement, for which he argued strongly, is said to be 70,000 more men, The latest count, made on June 24, put the U.S. troops level in Vietnam at 446,000 and, if Mr. McNamara on his return reports to President Johnson that General Westmoreland's wishes should be granted, then the American army in Vietnam will exceed the level predicted in the Budget message at the beginning of the year, What this means is that the Budget deficit for fiscal 1968, already expected to be at least $13,500n., could be swollen by another £7,500m. It is impossible to make any accurate calculations about the special cost of Vietnam - even the Pentagon itself cannot get the sums right - but this is a rough calculation, In the Budget, the Vietnam costs for 1968 were estimated at 21,900m., for a troop level averaging between 400,000 and 475,000. ‘This works out at roughly 50,000 aman. (It is already clear that Vietnam will cost more than this in the present fiscal year, even without General Westmoreland's extra troops). At $50,000 a man, General Westmoreland's minimal requirements would add $3, 500m, to the Federal deficit this year, If he received ‘ the whole five divisions, the extra cost would be $7,500m. This would ‘ take the deficit in the Budget to the unprecedented figure of $21,000m., , even assuming that the 6 per cent tax surcharge, which was proposed in January and which has been gathering dust and recrimination ever since, is enacted retroactively to July l. It is generally agreed that a deficit of this size could not be healthily financed by Treasury borrowing, there would have to be an increase in taxation, and Administration officials let it be known last week that the 6 per cent surcharge is by no means the biggest tax they are prepared to contemplate. There could be a bigger surcharge, or a general tax increase, possibly specifically labelled a war tax, Apart from the question of more troops, Mr. McNamara will be examining the conduct of the war, at a time when there seems to be no change of any significance in view. Mr. Rusk, Secretary of State, said over the week-end that he saw "no sign that Hanoi is willing to move to an honourable settlement", Another Vietnam expert, roving Ambassador Mr, Henry Cabot Lodge, was even more pessimistic, Although stressing that the war was going better for the Americans, he saw no hopeful signs for an early end to the fighting, He predicted that the allied forces would achieve "very big military results in a year or two" but he added: "I think there's going to have to be a U.S. presence there for a long time","
MAND