Title: Impact of the Korean War on the economy of the United States - Wikipedia
Headings: Impact of the Korean War on the economy of the United States
Impact of the Korean War on the economy of the United States
Contents
Financing
Monetary policy
Price freeze
Military spending
Notes
References

Content: Contents
1 Financing
2 Monetary policy
3 Price freeze
4 Military spending
5 Notes
6 References
Financing
While the United States historically financed wars using a combination of direct contemporaneous taxes, debt, and money creation, with taxation comprising a relatively small fraction of expenses, the Korean War was financed mainly via taxation. This focus on taxation was significant change in economic policy, as President Harry S. Truman focused on maintaining a balanced budget. He favored pay-as-you-go taxation and Congress supported this; in 1950, the House of Representatives, in an overwhelming majority, voted 328 to 7 to raise personal income taxes, corporate income taxes, and excise taxes. Also, capital taxation reached their highest levels in the history of the U.S. during the Korean War, rising to an average of about 62%. Sin and luxury taxes, such as those on furs, jewelry, and coin-operated gambling machines were increased as well and new taxes on television and household freezers, which represented goods that used materials and manufacturing facilities that were maybe important for the war effort. Taxes were again increased under the Revenue Act of 1951. Although the Revenue Acts during the Korean War were unable to prevent a deficit in the federal budget, the deficits produced were manageable, averaging about 6.5 percent of revenues on a monthly basis during the war. Through such measures, President Truman depended mostly on taxation and a decrease in non-military expenses, rather than from borrowing from the public or money creation policies. Monetary policy
Monetary policy during the Korean War, centered around the issue of whether or not the Federal Reserve should continue its prewar policy of setting a floor under the prices of government bonds or whether it should allow prices to drop, in order to restrict money and credit growth to restrict inflation.