By 1950, Johnson had established a policy of faithfully following President Truman's defense economization policy, and had aggressively attempted to implement it even in the face of steadily increasing external threats posed by the Soviet Union and its allied Communist regimes. He consequently received much of the blame for the initial setbacks in Korea and the widespread reports of ill-equipped and inadequately trained U.S. forces. Johnson's failure to adequately plan for U.S. conventional force commitments, to adequately train and equip current forces, or even to budget funds for storage of surplus Army and Navy war-fighting materiel for future use in the event of conflict would prove fateful after war broke out on the Korean Peninsula.[8]
In June 1950, the lightly armed South Korean Army and its U.S. advisors found themselves under attack from North Korean aircraft and waves of well-trained infantry equipped with Soviet tanks and artillery.[8] In an initial response, Truman called for a naval blockade of North Korea, and was shocked to learn that such a blockade could only be imposed 'on paper', since the U.S. Navy no longer had the warships with which to carry out his request.[8][24]
Ordered to intervene in Korea by the President, U.S. armed forces were short of both men and equipment. Army officials recovered Sherman tanks from World War II Pacific battlefields, reconditioning them for shipment to Korea.[8] Army Ordnance officials at Fort Knox pulled down M26 Pershing tanks from display pedestals around Fort Knox in order to equip the third company of the Army's hastily formed 70th Tank Battalion.[25] Without adequate numbers of tactical fighter-bomber aircraft, the Air Force took F-51 (P-51) propeller-driven aircraft out of storage or from existing Air National Guard squadrons, and rushed them into front-line service. A shortage of spare parts and qualified maintenance personnel resulted in improvised repairs and overhauls. A Navy helicopter pilot aboard an active-duty warship recalled fixing damaged rotor blades with masking tape in the absence of spares.[26]
Army infantry reservists and new inductees called to duty to fill out understrength infantry divisions found themselves short of nearly everything needed to repel the North Korean forces: artillery, ammunition, heavy tanks, ground-support aircraft, even effective anti-tank weapons such as the M20 3.5-inch (89 mm) Super Bazooka.[27] Some Army combat units sent to Korea were supplied with wornout, 'red-lined' M-1 rifles or carbines in immediate need of Ordnance overhaul or repair.[28][29] Unlike the U.S. Army, the Soviet Union had retained its large World War II surplus arms inventories and kept them in a state of combat readiness. With this abundance of military hardware, the Soviet Union had supplied the North Korean Army over a period of several years with heavy tanks, machine guns, mortars, combat aircraft, and artillery, together with instructors to train the North Korean Army.[8][18][20][21][22][23] As a consequence, initial combat encounters by the 24th Infantry division and other Army units at the Battle of Osan with North Korean armored spearheads proved disastrous. Ironically, only the U.S. Marine Corps, whose commanders had stored and maintained their World War II surplus inventories of equipment and weapons, proved ready for deployment, though they still were understrength[30] and in need of suitable landing craft to practice amphibious operations (Johnson had transferred most of the remaining craft to the Navy and reserved them for use in training Army units).[18][31] As U.S. and South Korean forces lacked sufficient armor and artillery to repel the North Korean forces, Army and Marine Corps ground troops were instead committed to a series of costly rearguard actions as the enemy steadily progressed down the Korean peninsula, eventually encircling Pusan.[32][33]
The impact of Korea on Johnson's defense planning was glaringly evident in the Defense Department's original and supplemental budgetary requests for FY 1951. For that fiscal year, Johnson had at first supported Truman's recommendation of a $13.3 billion defense budget, but a month after the fighting in Korea started, the secretary hastily proposed a supplemental appropriation request of $10.5 billion, (an increase of 79%), bringing the total requested to $23.8 billion.[34] In making the additional request, Johnson informed a House appropriations subcommittee that "in light of the actual fighting that is now in progress, we have reached the point where the military considerations clearly outweigh the fiscal considerations."[35]
U.S. reverses in Korea and the continued priority accorded to European security resulted in rapid, substantive changes in U.S. defense policies, including a long-term expansion of the armed forces and increased emphasis on military assistance to U.S. allies. Preoccupied with public criticism of his handling of the Korean War, and wishing to deflect attention from the peacetime defense economy measures he had previously espoused, Truman decided to ask for Johnson's resignation. On September 19, 1950, Johnson resigned as Secretary of Defense, and the president quickly replaced him with General George C. Marshall.