The reduction in United States defense spending for Southeast Asia can be expected to create a rise in the number of unemployed in this country. The exact number will, of course, depend on many variables, to include the size and rate of the reduction. It is estimated that 374,000 persons would be unemployed, resulting from an assumed $20 billion reduction in defense spending, spread over an 18 month period. Therefore, the United States must prepare for a successful transition. This must be well-timed and is essential to maintain a high level of demand. After the initial transition period it should be possible to plan for a moderate federal budget surplus in order to supplement the private savings available for private investment. The purpose of this study is to investigate what effect decrease in defense spending for Southeast Asia will have on employment and what measures should be taken to offset any decrease in employment brought about by an end to the hostilities. This is accomplished by an evaluation of the sharp increase in United States expenditures for Vietnam and the resultant increase in defense generated employment. Conversely, this is also the employment which is most likely to be affected by a reduction in defense spending.

ADA 067460 Approved for public release; Distribution is unlimited. The opinions and conclusions expressed herein are those of the student-authors and do not necessarily represent the views of the U.S. Army Command and General Staff College or any other governmental agency. (References to these studies should include the foregoing statement.)