Early in 1965 the Joint Chiefs of Staff were pushing for special funding for the war, knowing that it would be expensive; and knowing that the more open the Johnson Administration was about funding the war, the more open it was likely to be in admitting to the nation that it was, in fact, at war. The Chiefs wanted a program which would include traditional wartime budgetary procedures — invariably meaning higher taxes — and they lost that fight in July, 1965, when President Johnson decided to go ahead and make it open-ended, without announcing how open the end was. As a result, even at that point — when one might have expected, by checking defense expenditure projections, to find an honest assessment of what the war would cost — the reverse was true. In his attempt to keep the planning for the war as secret as possible, Lyndon Johnson did not give accurate economic projections, did not ask for a necessary tax raise, and did in fact direct his own military planners to be less than candid with his own economic planners, a lack of candor so convincing that his economic advisers later felt that Defense Secretary Robert S. McNamara had seriously misled them about projections and estimates.

The reasons for Johnson's unwillingness to be straightforward about the financing were familiar. He was hoping that the worst would not come true, that it would remain a short war, and he feared that if the true economic cost of the war became publicly known, he would lose his Great Society programs. The result was that his economic planning was a living lie, and his Administration took us into economic chaos: the Great Society programs were passed but never funded on any large scale; the war itself ran into severe budgetary problems (the decision in 1968 to put a ceiling on the number of American troops in Vietnam was as much economic as political); and most important, the failure to finance the war honestly inspired a virulent inflationary spiral which helped defeat Johnson himself. Seven years after the commitment of combat troops, that inflation was still very much alive and was forcing the Nixon Administration into radical, desperate economic measures in order to restore some financial balance.

In the spring of 1965 the economy had already reached the point of overheating, and some of the President's economic advisers were worried about inflationary dangers, even without the prospect of a major war. After years of high unemployment, the level had dropped close to the target of 4 percent. Now, with a war in sight, the economic advisers were even more uneasy. Johnson and McNamara were implying that it would not be a big war, but there were already rumblings in the early fall of 1965 from people on Capitol Hill that it was likely to become a very big war. The rumbling came from men like Senator John Stennis (D., Mississippi) and Representative Mendel Rivers (D., South Carolina), who estimated that the cost for fiscal 1966, which ended in June, 1966, would be about $10 billion. The Administration was denying this, and at that time Johnson had fairly good credibility. He had claimed in the past year that he intended to cut back defense spending, and although Rivers and others contradicted him, lo and behold, the President had cut defense spending. Later it would turn out that Stennis and Rivers knew quite well what they were talking about, since they were privy to the most secret of the back-channel military messages through their close liaisons with General William Westmoreland and the Joint Chiefs of Staff. Thus they had a very good idea of what Westmoreland was asking for and what McNamara had promised him — which made it a big war. Based on this, Stennis and Rivers were claiming that the war would cost about $10 billion by the year ending in July, 1966. That figure was of course far above the estimates coming from the White House (in his July messages Johnson had talked about a projected figure of only $2 billion above the estimated Defense Department budget).