Short answers, pulled from the story.
The guns versus butter model is an example of a production-possibility frontier in macroeconomics. It illustrates the trade-off a nation faces when allocating finite resources between defense spending (guns) and civilian welfare goods such as schools, hospitals, and roads (butter). A country cannot increase one without negatively affecting the other.
One early political use of the phrase traces to the debate over nitrate production in the United States during World War I, when the press described the dual-use mandate of the National Defense Act of 1916 as "guns and butter." The phrase became internationally known after Nazi Propaganda Minister Joseph Goebbels used it in a speech on the 17th of January 1936.
In a speech on the 17th of January 1936, Joseph Goebbels said: "We can do without butter, but, despite all our love of peace, not without arms. One cannot shoot with butter, but with guns." Hermann Goring echoed the sentiment later that summer, saying: "Guns will make us powerful; butter will only make us fat."
In his 1953 "Chance For Peace" speech, President Eisenhower calculated the social cost of military hardware in concrete terms. He stated that the cost of one modern heavy bomber equals a modern brick school in more than thirty cities, that a single fighter plane costs half a million bushels of wheat, and that one destroyer equals new homes for more than eight thousand people.
Lyndon B. Johnson's Great Society programs in the 1960s illustrate the guns versus butter trade-off directly. Johnson sought to expand welfare programs, but simultaneous involvement in the Cold War arms race and the Vietnam War strained the economy and constrained what his Great Society programs could achieve.
Researcher Alex Mintz argued in 1992 that a genuine trade-off between weapons spending and education spending in the United States developed specifically during the Reagan defense buildup. Numerous scholars had examined the model and found no such trade-off existed in the United States prior to the 1980s.