The metaphor of guns and butter is used in macro 101 to convey the tradeoffs a nation and it's economy must make. More spent on national defense means less available to spend on consumer goods at home.
Oh, would that it were just consumer goods!
Here are some additional good links on education and jobs from Mark Thoma.
The problem here is that education, much like health, can be thought of as an investment good. It's something that enables higher rates of production both in this generation and for our children and grandchildren.
There is also strong and plentiful evidence of a strong positive correlation between education and health. Correlation is not causation, you say. Well, here's a good article by a team of first rate researchers that includes one of our best economists/econometricians, James J. Heckman (Nobel laureate, 2000) credibly identifying causal links. Understand, this relationship is not occasionally observed, it is always observed and it is observed across nations as far as I can tell. And, yes, it is observed after all the obvious possible confounders are controlled.
So if one were genuinely interested in reining in health care costs, one would not support cutting education funding. In fact, one might attempt to expand it, since it would not only help to rein in health care costs over time, it would increase productivity, which would help to grow the economy out of debt.
Two much desired fiscal objectives achieved with one policy instrument.
I will also point out that if one were sincerely concerned about our children and their children, one would not cut education funding for all of the above reasons.
Now, about not extending unemployment benefits. The issue of unemployment benefits is not only an economic issue, it's an ethical issue for crying out loud. But let's just look at the economics of it. This is probably not a good time to contract the economy further by cutting unemployment benefits. So in lieu of actual jobs creation (which seems to be stalled, still, because of all that money that for all we know is still being creatively destroyed by the finance casino), wouldn't it make sense not to withdraw dollars that are helping the jobless to weather the downturn AND that are stimulating what little demand there is?
Unemployment benefits have the added benefit that they are the right thing to do. Unless of course you live in a world where it's OK to bail out investment banks and insurance companies with no real penalties for the guys who created the need for a bailout, but helping workers who are unemployed largely because of the antics of those crazy bankers, traders, raters, and insurers causes you to lie awake nights worrying about throwing good money after bad. Oh, would that it had occurred to you to worry about this earlier in the game.
We do not need people who hawk deficit reduction strategies with the style and substance of a carny barker. We need deficit falconers. Sensible, informed people. Not just policy makers and politicians, but the electorate, too. We are going to have to spend some money to get out of this hole. How we spend it will matter immensely both for us in the near term and for our children and grandchildren. Worrying about things that haven't happened (like inflation) and reducing debt by cutting the very things that in the long-run are our ticket out of this is as crazy and short-sighted as selling mortgages to people who have no hope of repaying them and buying complex securities composed of those mortgages under the assumption that if you can't see the risk, it must not be there.
We should be giving up some butter if we must. We should not give up education or health investment (or infrastructure or the environment (hello, BP). They may be the only legacies of any value that we pass on to our children and grandchildren.