On August 5, 1971, President Richard M. Nixon, Vice President Spiro T. Agnew, and Cabinet officers, including William P. Rogers, John B. Connally, Melvin R. Laird, John N. Mitchell, J. Philip Campbell, Maurice H. Stans, James D. Hodgson, John G. Veneman, George W. Romney, John A. Volpe, George P. Shultz, Robert H. Finch, Donald H. Rumsfeld, George H. W. Bush, Raymond K. Price, Jr., Herbert G. Klein, Ronald L. Ziegler, Alexander P. Butterfield, and Robert J. Dole, met in the Cabinet Room of the White House from 10:10 am to 11:55 am. The Cabinet Room taping system captured this recording, which is known as Conversation 067-011 of the White House Tapes.
Transcript (AI-Generated)This transcript was generated automatically by AI and has not been reviewed for accuracy. Do not cite this transcript as authoritative. Consult the Finding Aid above for verified information.
And they also are terribly sensitive about feeling that we're only concerned about subject A.
Subject A is Soviet, and subject B now happens to be Chinese.
Subject C is probably Western Europe.
Subject D is probably the United States.
Do you raise any other questions?
Latin America, there are people who have made attention to, and Bill has talked about how we can do something about that, and it's now time to do something about it.
We're going to start getting enough people into Latin America.
What we're doing in Latin America is that we're managing the problem.
Brazil has something called
Anyway.
Anyway.
...of the Latin American actors that we meet on the Facebook page.
Maybe he has a special problem.
South Asia, of course, is terribly difficult.
Of course, we have our friends in the ring land of Asia.
Al was over there.
Now, one of the reasons that I asked the Vice President to take this trip, Bill, very hard to encourage, is that...
It's in the order of what I used to say, of coming to base with our friends, even though they are not very good friends at the moment, because we must never date for granted.
And so, ten countries, none of them is enormously important.
We will test for it, but each one of them is very important.
We care.
We care about them.
Discussions.
Most important, in order to be treating them as if they were very important actors that we cared about, and not just going to sightsee them and so forth, they don't mind a little bit too, but going to them for substantive talks.
has an enormous amount of, an enormous amount of positive evidence.
That was the report that Bill and I got, and all of them.
He said, don't get into those papers and press them.
I believe he gets to reveal it now, and he would.
And if he would, I'm surprised by the one thing I think is very important to touch upon, that is all facts that had not occurred to you.
If you could tell us the reaction you found to the Pentagon paper.
Yes, Mr. President, thank you.
I have an interest in the time probably I have this morning.
I made some notes so I could be as brief as I can.
The trip period is 32 days.
Not including some business...
I conducted direct social functions in golf with some of the principals.
I spent over 40 hours in various substantive discussions.
I found all leaders appreciative of your sending me as a personal representative, and this served as reassurance at a time of rapid international flux for these countries.
We've always looked to the United States for understanding or assistance.
Everywhere I found American prestige and confidence in the United States policies was high.
Also, there was complete understanding of the Nixon Doctrine.
In regard for you as a world leader, I think every principal I talked to indicated that he had great confidence in your personal knowledge of the world based on so much travel and personal discussions.
There was also, as a fallout from the Nixon doctrine, a new awareness by the leaders of their responsibilities, both in a regional sense, in cooperating with each other, and their responsibility for their economic progress and their continued security.
Except for Lee Kuan Yew and Park, Vietnam did not figure significantly in the conversations.
Most leaders are confident that the Vietnam policy is correct, and are reasonably assured that it's going to succeed.
Lee is still firm in his conviction that South American presence must be maintained in Vietnam, or else there will be grave danger of a communist takeover, not necessarily occurring immediately after a departure, but sometime very shortly after it.
He said this would not trigger the successive falls of lost Cambodia, Thailand, Malaysia and Singapore.
He was a firm believer in the domino theory.
Interestingly, several themes seemingly unrelated ran through nearly all my conversations at the initiative of the people I was talking with, not at my suggestion.
First, the student problem.
The exploitation of the academic-intellectual community, which seems to have, in their judgment, turned anti-establishment all over the world.
And also they spoke of the communist exploitation of this.
Second, there was grave concern about the publication by the American media of the secret government documents.
This always came up early in the conversation at their initiative.
Third, the expansion of Soviet influence in the Mediterranean and the Indian Ocean.
There are much on the minds of these principles, those three things.
Although not of concern to everyone, two major international problems were raised by many of the countries geographically proximate to them, and I speak of the Arab-Israeli confrontation on the current East Pakistan problem.
Regarding the Arab-Israeli dispute, I was encouraged by the evident belief within the Arab world that prospects for settlement have been enhanced.
and principally because of Saddam.
Yet there also seems to be an increasing air of frustration at Israel's intransigence over the issue of withdrawal.
They seem to read the United Nations resolution very narrowly.
They forget the part that relates to Israel's security, and they say it says they ought to withdraw, and they ought to withdraw.
How do they feel about America's role and coverage in what is called the Rogers Plan on Israel?
Both Faisal and the Emir are preoccupied with that problem.
As I said, they read the UN resolution narrowly.
They feel that the United States should really exert a stronger influence on Israel.
The Bible is close to Sadat.
He just returned from a visit there, and he feels that Sadat strongly desires to reduce the Soviet presence, the Soviet influence, but is impaired by Israel's failure to withdraw.
And both of these Arab leaders...
urging a more emphatic and a stronger action on the part of the United States.
Of course, I pointed out that our policy was not to mean heavily on nations, but to be persuasive, and that we had often been accused of imperialistic attitudes in the world, and the world did not understand the kind of heavy-handed approach that they advocated.
All the Arab leaders including Assad urged a more active American diplomacy to bring about the Israeli withdrawal and support us to not sever its school of peace.
Interestingly, this view was reinforced by Haider Selassie, who maintains good relations with Israel and generally stands apart from that dispute.
Both Emperor and Prime Minister Wolde, who was a very competent man with ten years of experience there,
stress that Israel should be more flexible in peace is to be assured, and indicated the United States should put more pressure on Israel.
This is an odd place for that to come from.
In summary, there is a momentum toward a peaceful settlement, but it's heavily due to an independent on American policy.
The momentum has been fluid because of the absence of significant concessions from Tel Aviv, and the moderate Arab government's view of the present situation cannot continue indefinitely.
They feel that
The Palestinian radicals will not stand still while they are doing their best to contain them unless some progress comes from Israel.
On the East Pakistan problem, no one knew what I thought it was up to, since I got the outcome of that.
While eventual autonomy or independence for East Bengal was viewed as the most probable outcome, the road to that destination wasn't clear to anybody.
It's widely recognized that the problem can really only be solved by the Pakistanis themselves, but to some extent the green powers are expected somehow to exert the leverage needed to cause Rawalpindi to adopt more conciliatory policies.
I know there's a governor in Maharashtra who used to be our ambassador here, a very high-quality man.
He hosted India in India and Bombay.
He's the only good one.
He is the only good Indian.
And he was sort of a preacher of your expressions of sympathy.
about the refugee burden.
The Indians were really totally preoccupied with this problem for Pakistani refugees, both because of its staggering demand for human suffering and because it's impaired Indian development programs.
In Singapore, Lee Pani was particularly forceful on this issue.
He felt that continued West Pakistani repression of the East
but only destroy the Bengali moderators that brought out a nationalist movement there in the arms of communists, creating another major long-term cancer on the Asian scene.
The Korean President Park is understandably more confident after his recent election victory, and he deeply appreciated your gesture.
And the Koreans have adjusted positively to the reduction of American troops' strength, have good confidence in their abilities,
The good work of Secretary Rogers, Laird, and Ambassador Porter concerning that modernization thing has strengthened the sense of cooperation and understanding.
I found things greatly improved in Korea from my last visit.
The Israeli dispute aside, Faisal, the Emir, and Assad all understand the importance of continuing to support King Hussein.
Faisal assured that there would be continuing support for Jordan, but in Kuwait, the presence of a fairly substantial Palestinian population
has impeded the resumption of the Jordan subsidy, although I believe from the implications of what the Emir said, that he will find some way to resume assistance to the same amount.
We discussed the Federation of Kingdoms along the Persian Gulf, made so necessary by the British withdrawal.
This is rather sickening.
Faisal wants to sign in there.
He doesn't want to compromise the Iranians to have a claim just on small islands in the mouth of the Gulf, which are costing some money.
The difficulties in this situation.
South Yemen and the Chinese penetration in South Yemen is not only a concern to the Arab countries, but I found the Ethiopians had this much on their mind.
They're pretty close to it, too.
Ethiopia was very concerned about communist penetration of the Sudan.
Of course, that's been improved to some extent since I was there by the Mary's recovery.
But
The Emperor did request military advisers to have been briefed on this question, pointed out, because of our situation in Vietnam, and so in fact here he terribly assisted in other ways than militarily, he seemed to accept that.
He's still very vigorous, he is beginning to prepare the Crown Prince for succession, and he does have a very high quality cabinet, the Foreign Minister, the Prime Minister, they're all very, very active people.
Kenyatta was extremely interested.
He's heavily committed to Kenyan development, from the result of another one of the affairs with his neighbors.
Optimistic about the future of the East African community, despite the current conflict between Kansai and Uganda.
And I believe me, Mr. President, he's firmly in command there.
There's no doubt about who's running Kenyan.
But they are doing a great job in developing the safety department, I guess.
In the mood to understand the Chinese initiative, that's another of the announcements that I wrote publicly while I was in the conference.
He's worried about externally supported subversion.
He kept saying that he could kill 500,000 of my people.
He said they're sending in arms and Red Cross boxes yet.
He said the Congo will continue to vote against D. King's admission in the U.S.
We talked about the special commission of the OAU on the Africa's Arab-Israeli problem, and Mahoudou, who's been a very strong friend of the Israelis, has been asked to be chairman of that commission, which might help with the Israeli acceptance of that, since the OAU had rather condemnatory remarks about Israel in the last meeting.
The Congo economy is in slump due to the decline in world copper prices.
The blue is concerned about our decision to sell some of our industrial diamonds, which are one of his major exports.
In Spain, we had a very good reception of the excellent work that was done, including the agreement of friendship and cooperation.
left a red mark with a little there that's almost unbelievable.
And I had good meetings with General Franco, who was in one of his more acute days, and talked at great length about the world picture and about the Chinese initiative in most favorable terms.
I met with Juan Carlos, and also with the Prime Minister and the Foreign Minister there.
In Portugal I found a little
feeling that perhaps we've been paying too much attention to Spain, so my visit there was profitable.
The investor and I had some very good meetings, including one that was rather impromptu in the sense that it came at a time I was entertaining the Portuguese on the final day there, and the foreign minister
Patricio came in and unloaded quite heavily on some of his feelings that we were not doing enough proportionally as far as negotiation.
The general feeling in both of those cities was good.
As you know, Mr. President, I got to Morocco not too long after the aborted coup attempt.
I'm fairly relaxed.
I know now what he meant when he said he won't... We asked him what he was going to do.
He said he won't hear about what I'm going to do in advance, but you'll see it.
I guess that was today when he replaced his old cabinet.
But he's...
He talked at length about the Arab-Israeli thing, about the African countries along the literary, and he's positively paranoid about Libya, of course, because they recognize they should be a cool government.
Very, very enthusiastic about his diminishing tensions with Algeria and Mauritania.
And it seems that he is aware that he must liberalize, he understands that, and I think we're going to see some good projects there.
So basically that's the wrap-up on the trip.
I found it the best trip I've taken.
I really felt that we developed.
Not any special piece of important information, but quite a bit of information which can help Bill and Mel as they move in a particular area.
What's your feeling about visits by other cabinet officers in other African countries?
One thing I've noticed, Bill, is that as I receive ambassadors, they seem to come under me.
There are about 40 of these African countries that we say we don't even consider our country, and now everybody goes to Congo, and everybody goes to Canada, and everybody goes to Nigeria, and then to some places like Upper Volga, and things like that.
Well, Nigeria, of course.
Nigeria, of course.
Nigeria, nobody's been there.
You have 60 million people.
It was there.
It was there.
I think so.
It seems to me, I don't know how our relations are with Tanzania, but there's great concern about what's happening in Tanzania, and if some presence there, because that's bad, it might be a good time to let Lawrence country in.
Well, any of the members of the cabinet would like to...
Maybe one of those countries or a landowner in particular, excuse me, check the bill.
The good thing about that, Mr. President, since you bring that up, the Portuguese, of course, are very sensitive about their African situation.
The new prime minister, Caetano, is working really hard to legalize the conditions there.
He feels that they're making substantial progress not only in Angola and Mozambique, but he feels that he's getting great assistance from Malawi, which is a little country that's been very helpful in a mediated position.
And also, a voodoo sent through me a message to Caetano, indicating that he was not happy with the Portuguese.
He thought they were committed to racial equality.
They had some differences about how self-determination should come about, or even what it is, but he was willing to be of assistance with the problem of Angola.
So it would help to have more presence shown in Africa because things are developing very rapidly there, and the northern African countries have a great influence on this Mediterranean question and increasing Soviet presence there, even though they're around on the other side from the one.
They're still quite active.
Latin America...
Thank you very much.
That's why these trips were all necessary and so forth.
I've never seen one yet that didn't help, just to show that we care about this place.
President, I just had my Spanish trip, which I had to go on.
As a result of that trip, and the contacts we made, both the Minister of Transport and the Minister of Air, the Minister of Air came over here a month later,
Because of the little help we gave in another area, it didn't give away anything.
It's a $60 million order, and I'm sure Marty would like to see more of those $60 million dollars all over the place with this validation.
Well, Justin, when the thing came up in your library, the vice president mentioned the first version.
Yes.
I wonder how real it is.
How much...
I think their fear is real, but I don't think that the Soviet Union is about to beat itself doing things.
I think it's encouraging people to cause trouble.
I think we should be able to improve our relationship with Tanzania.
The Chinese have played it very cleverly.
They're not heavy-handed.
When they move into a country, they live together.
They don't tell the governments what to do.
They don't coerce them.
And that is true of both Chinese, too.
Boy, that's an actual standing ovation.
That's the actresses.
Tanzania and Zambia, both of them have a lot of Chinese communists, and they've done one hell of a job.
Now, in the case of Mobutu, he would like to take over the Congo.
He's only about a million, million and a half people, so every time you talk to him, he says he's threatened by this other Congo in Crossville.
Well, Tanzania, too.
Yes, yes.
But I don't think there's any real danger.
I think the danger in Africa comes between the blacks and the whites.
I think eventually we'll have probably warfare in the southern part of Africa.
I think the Russians are trying to serve as much trouble as they can, but they don't look at Africa as their strategic importance.
It's just another place to cause trouble and exploit their ideology.
But they're not playing a very active role.
As a matter of fact, they are just...
They are a successful map, but now they weren't in 1960 when I was there.
I mean, they were playing pretty good football in Ghana and other places, Guinea, Mali.
Now they don't have any football in Africa, because the Chinese actually are doing better.
I might say, to underscore what you said about Vice President Kip, I think this is a especially successful visit.
You never even tell by judging what the newspapers say, because if you go to countries that don't have much news value, that you haven't made much news, there are two ways to tell a successful first, what all our people who are experts say about it, and they are not inclined to be particularly friendly to this information.
And they were all very complimentary of the vice president's conversations.
And this is what they say kindly to other people.
But secondly, you can tell by what the ambassadors in these countries say.
Not only our ambassadors, but their ambassadors.
Without exception, they all were very complimentary.
And I think that the countries that the vice president visits...
very much appreciated.
The coverage was all good, and I think it's extremely worthwhile.
I might say on the Middle East, it's well to keep in mind that we are in so much better position than we were a year ago.
We have much better relations with the other countries than we had a year ago, and we have
Now, no fighting in the Middle East for a whole year, which is directly traceable to what the United States has done.
And everybody admits that.
Secondly, everybody admits that the only viable efforts that have been made in the Middle East are made by the United States.
So everyone is turning to us, and I think that the prospects for a continuation of the ceasefire, certainly this year, are good.
And I have my fingers crossed that we'll be able to maintain it all next year.
And this is the first time for a long time there's been no fighting in the Middle East, and it's because of the British policies.
I might also say that the Sudan developments couldn't be better for the United States.
The principal communists in Africa
who got the Lenin Peace Prize, and was their key figure not only in the Senate, but after he was executed for planning marriage.
And he was executed after the Soviet Union appealed to the Sadat not to carry out the executions.
So in addition to all the other countries, the principal man after was executed.
And Saddam himself played a major role in the success of the Bavarian counter-coup by committing, by arranging the Sudanese who were guiding the Suez to send back to Sudan to help the Bavarians.
Now this is all in opposition to the Soviet Union because they deliberately attempted to prevent this from happening.
So, for the first time, we had a chance to come back, and we were very active in the scenes, trying to get word to Nigeria that we were anxious to get back in there.
Sadat was very pleased with himself, and sent a private message in connection with it, saying, you can see how we can get rid of the communists.
So our position in the Middle East, I think, is considerably improved.
As a result of your discussions in Portugal, we have moved to expedite our negotiations with Portugal, and I think we can, the Department has helped on this ship, and I think we can include those, faithfully, and I will hope in the next few weeks.
I would like Bill now to give us...
You can know this is a very sensitive problem for a lot of reasons.
First, we have to deal with our good friend the Republic of China.
And they are a good friend, and they are important, and we can't do anything to let them down.
We've got to put up a strong and effective fight.
We can't just save their seats.
Because it's not only our relations with them that are involved, it's our relations with Japan and South Korea and the Philippines and other Asian countries, because they're watching to see how we treat our friend and ally long-standing.
Secondly, we want to be sure that we don't
say or do anything that jeopardizes the visit to mainland China.
But we can't be so careful in what we say that we appear not to be strongly supporting the Republic of China.
We didn't make any deal, and we can't appear to have made any deal.
Now, the action of the President's attention on this Chinese representation question is a very pragmatic decision.
We just didn't have the votes to continue the policy that we followed, and we would have lost.
The policy that the President authorized to be announced the other day is the only practical policy we can follow.
We had long discussions with all of our friends, particularly the Republic of China, for two weeks.
They fully understand our position.
Although they can't publicly say so, they admit it's the only course we can follow.
It's the course that has the best chance of success.
And by success I mean the retention of their membership in the UN.
We consult very closely with Japan, with Australia, New Zealand and the Philippines and others.
And I think everyone agrees that the course that we've set out for ourselves is a proper one under the circumstances.
Secondly, we consulted with members of the Congress without any leases, and the Conservatives were very good, except for Dominic.
There's been no criticism to speak of.
They all understood the problem.
They said, we see what you're trying to do.
They know that the Republic of China, the Republic of China, is reasonably satisfied with the policy.
And now we have to see if we can take the membership for the Republican Party.
It's not going to be easy because a lot of our friends and allies oppose us, including the United Kingdom and Canada and Italy and Belgium and others.
And they're going to vote for the expulsion of Taiwan.
So George has got his hands full to try to win this.
We want to make every possible effort to win, to save the seat for Taiwan.
We don't know whether the PRC would accept membership under those conditions or not.
We'll never know until they're faced with a decision.
But we have to make every possible effort to save the city for Taiwan.
On the other hand, we've got to be sure that we don't do it in such a way that if we lose, it looks as if it's a major defeat for the United States.
Because there's just not much support among a lot of nations for this course.
Many of the industrialized nations want to have active trade with mainland China.
They see great trade potential in that direction, and they're willing to sacrifice the small amount of trade that they foresee in their dealings with Taiwan, to the long range, to have great potential in dealing with mainland China.
And that's why the United Kingdom is out in front now.
Turkey does...
Fred, what we're doing is, the day after the policy was announced,
took the offense.
We got some 21 countries together who had traditionally sponsored our position.
We tended to kind of bog it down in legality.
How are you going to do it as a security government?
So the Secretary set the course that we're dealing with reality.
It's a sensible policy.
It's two realities in the world.
We're not trying to go into all the legalisms of how it can be done.
It's a parliamentary body.
It can do it as long as the votes are here and the policy makes sense.
This is the way it's going to be.
And I think if we can keep it on that line, we might win.
We're appealing to the British to not be strongly opposed.
We went over and talked to Mr. Vice President, too.
The Kenyan ambassador who voted, I want to call on him for the very reason that I thoroughly concur with what the secretary said, that's your trick.
Overwhelmed by a little gesture like that.
Last year they voted for the Albanian resolution speaking in Taiwan.
This year he says the president's policy may make sense.
Now whether he's just being polite because we're calling, but if we follow up, maybe we can get two votes there.
Get him against Albanian for us.
And so we're approaching it very positively.
I think Secretary's words of caution, I'm going to have to be a little restrained in what we say, so we don't follow any other big plans, but it's possible.
It's uphill.
We're not presenting it in any other direction, but I think it's a sensible policy.
Our allies are responding to it.
They see the need to have our endorsement of speaking coming in.
And I heard incidentally yesterday that the Russians were so concerned about it that they might surface a whole kind of a universality thing.
Same trouble with the German question in Korea.
But people are taking it seriously, and I think the Secretary is correct that we should not...
I don't think it would be helpful to the president, I don't think it would be helpful to our country, but it's great to have a goal that's going to start here and end sometime in October, and I think we've got a fighting chance for it.
It should occur in mid-October if it gets precedence, and it probably will.
I think we've got some public opinion work, the Secretary and I are talking about how best to do it in this country, because...
The critics are starting to surface, and they're cowed the first day, saying, well, this is just a front, and that's just a deal, it's a sell-out shot.
Well, that's wrong.
And some are saying it's a deal, it's just a block came from coming, he came from coming in, and that's wrong.
I mean, this is a, well, I'm trying to sell them on, it's real, et cetera, but it makes the UN a much more realistic place, and that's all it's about.
So it's a fantastic one, and the interest in the place has been stimulated a thousand percent by this boat.
We've got something important to do.
I'm just worried about the security comes in.
It's just such a technical matter that they might come in.
So I wouldn't want the pressure to be left, but the reaction in this country has been favorable to the position we took, and it's overwhelming.
And he's the only, there have been a couple of those like Cal, but I mean, most of the enjoyable comments, and Cal and Herkimer, all the stories have been favorable.
I also might say that, in dealing with the Republic of China, I asked them,
whether they would want us to pursue the policy that we pursued in the past, if we were willing to do it.
I said, if you're serious about it and you want us to pursue our past policy, I'll consider recommending that to the president.
They came back with the answer, no, they didn't want us to.
And then I ask, well, how do you think we should change it?
And after a lot of discussion over the period of a couple of weeks, I think they're pretty relaxed about the position we've taken.
I think they feel that we are trying to save the seat for them.
Well, under the Security Council, the Charter of the United Nations says that the Security Council's seat is not as important because it...
The veto goes with the seat.
The Security Council seat shall go to the Republic of China.
So the Republic of China, Chiang Kai-shek particularly, has used that as the basis for his legal position that he represents all the people of China.
And he has been able to say, the United Nations acknowledges that I represent all the people of China.
And that's why the United Nations is such an important issue to him, and particularly the Security Council seat.
Because he doesn't, in effect, say I am the leader of Taiwan.
I represent the Taiwanese people.
He says I am the leader of all the Chinese people.
So that the Security Council seat is a very important matter for him, juridically and in fact, his legal claim to the representation is based largely on that, if he thinks so.
Now, the people of the Republic of China will not accept membership unless they get the Security Council seat.
Because they say we're not going to become a member of the United Nations and have Chiang Kai-shek sit in the Security Council seat and pretend to represent the Chinese people.
They've convinced, after many years of controversy, they've convinced the other nations of the world that that's an unreal situation.
And the result is that we, this fall, as we change our position, the Albanian resolution, which would have required the admission of the Communist Party and the expulsion of Taiwan would have carried.
So, the Communist Party would have had a membership at the Security Council.
Now, in order to save the membership,
from the Republic of China.
It's plain and clear that the Security Council seat in the cloud houses has to go to the ERC.
We don't want to say that we're for that, because that undercuts Chiang Kai-shek's position, but he recognizes, I think, and certainly his assistants recognize, it's inevitable.
So we try to fuzz that up, we try to say that's going to be decided by the majority of nations in the United Nations.
I mentioned that in a note, since Bussie's question.
No BPO would be applicable here, because it's Bussie's opinion, and it's Bussie's question.
So, that question would be raised, but why do we, if I can just say, by vetoing their admission, we just don't, probably we'd look into that, and can't be done.
It's procedural.
The president would rule, the president's security council would rule, it's a matter of financials, it's procedural.
And then, if there would be an attempt to veto, they'd have to challenge who was in chair, and then there'd be an appeal made in the membership, and the membership would, by majority vote, was to stay in chair, so we would...
And the Republicans are trying to know something.
So what we're doing is to try to do all we can to protect their position and save their faith, and at the same time put up the best possible fight to save their membership.
Now they recognize that.
And the real question is, can we succeed?
Now if we save their membership, then the question will arise, well, God is trying to show up to claim them.
No one knows the answer to that.
It's quite possible they won't, quite possible they won't this year at least.
Because they will probably think under those circumstances they waited a year they should get Taiwan expelled.
So in fact, if we save the membership this year, pursuant to the policy we've announced, we may in fact keep the ERC out for another year or so.
It's also possible, of course, that the PRC might decide to come in.
They've never been faced with a question.
And just as Taiwan had said it would never accept membership if the PRC was there, and now it's acquiesced, I might say they've acquiesced, and this obviously has to be closely held because we promise them that we won't disclose the fact that they've agreed to stay, if we can say, in their seat for a while.
But it's possible that the PRC, under those circumstances, would decide if they've gotten a security consultation to come in.
Now, if that happened, that would be the best possible result.
That's the result that makes more sense.
Now, the legalistic resource talks about, you can argue it doesn't make sense, who represents China.
We said, put all those things aside.
This is a political body.
This isn't a legalistic body.
Russia has two countries in Russia, Ukraine and Belorussia.
And they both have votes.
It's a very different nation.
Belorussia... Belorussia, they all live in the same building.
All in the same building.
So it's a political organization.
And if they face the reality that George has suggested, they can do this.
All they have to do is admit to PRC...
They decided to give the Security Council seat to the PRC and retain the membership for the Republic of China.
It makes a lot of sense.
It would be the best solution.
It would be the best solution for the evolutionary development of the relations between the two countries, which is what has to happen.
Otherwise, the only solution would be some kind of military activity, so that the evolutionary development that might occur if they were both to invest in
and how they deal with each other.
They've been very, you know, suspected favorably if they're both members.
I hope, I hope we can win, if we can win this fight, and do it in a way that's very along the lines that we've been talking about.
It would be a tremendous victory for the United States.
That's not, it's not an easy fight.
I think there's a point to put behind, wouldn't you think so?
Yes, sir.
The reaction of being taken to this is not an abstraction.
As I pointed out yesterday, preliminary talk was incurred.
No.
No decisions or commitments are made on either side.
That's to be subject for discussion.
We have a meeting at the highest level.
And they on the one side, they know what they're going to do with regard to their alliances and friends and so forth.
The other side won't know what they're going to do.
However, it's not made into a section 1.
forecast and what will happen in terms of their meeting.
The meeting goes through much deeper significance of the problem of the mission in the UN.
The names are very intelligent people.
They don't have the information from the UN.
So, consequently, that's just, you know, a symbolic standpoint that means something to them.
coldest terms, and of course totally non-threatening terms.
Has there ever been a time when a nation was invited into the U.N. with that actually implying or indicating it would accept a membership?
This was the first of them, was it?
Oh, they've indicated now that they would.
They did it in the U.S. before they were able to secure taxes in the U.N.
They were trying to have it be changed and had it moved out of the U.S.
They have since indicated that
It would be in their ears to be in the U.S. again, not because of doing it in Taiwan, but it seems, looking at it from their viewpoint, but giving them a world forum in which to play their game against it.
There are other great partners that come in the store.
In other words, in the U.N., you know, rattle around through those places like, you wouldn't go to call them, yes, and that, and that, and that, you know.
It was just a great part of it, which they can't do in the present time.
It's much more convenient to have those nice boxes up there.
Like, you know, they've got a nice Walmart suite.
It's a nice job, actually.
It's a nice job.
In answer to the Vice President's question, you see that PRC has discussed this matter with a lot of governments and the Senate wants to join.
On the basis of Taiwan being out?
Yeah, absolutely, yeah.
In all the discussions with these countries that they've established diplomatic relations with, Italy, Belgium, Canada, all the rest of them, this is what they've said.
So no one thinks now that they don't want to join.
They want to join on their own terms, but they're interested in it.
What was going through my mind is that they're invited, and their vote is to bring them in, and they don't come in because Taiwan's not an Apple Institute in the prestige of the UN.
The first time they've invited a country to join the UN, it's repudiating and failing to join the UN.
I don't think that would be a good question.
I have a lack of support for my organization around here somehow.
This is where the whole idea is.
I think we should emphasize again that we will be having this discussion about Chinese representation in the exact form we're having it in this morning, even though the president has not decided to take a trip to China.
We discussed this at an NSC meeting about three months ago, if I remember.
We had it exposed.
We found at that point that we were going to win, lose, or question the issue we called.
So Bill said, now what do we do?
I said, well, we'll have to think about it.
Should we try to fight it and get rolled?
And then have to see if you lose an important question.
If you get rolled on that, then Taiwan is out for sure and PRC is in.
Or do we attempt to develop a different strategy whereby we recognize we're going to lose an important question, so with regard to admission, that means PRC is in.
And then find a way where we say that, well, it's not an important question to get somebody in, but it is an important question to get somebody out.
So the State Department worked up what I think is this very sensible role as a position, where, in fact, we say it takes a two-thirds vote to kick anybody out, and a majority vote to kick somebody in.
And that's great.
And that is another way it was a position that was developed, and that we were leaning very strongly to.
We didn't want to resurface it yet.
At least two months before the China initiative was undertaken.
It's difficult for Taiwan, but the world situation has changed so much.
I mean, we've had a heck of a time holding these people.
Bill held the British for two months for keeping their announcement, but the British, the Canadians, the Italians...
Mr. President, I think it's important too that we bear in mind the fact that these changes as far as the U.N. position is concerned, and the initiative as far as people can come from China, does not put us in a position where we're going to change our military assistance program or our military sales program up in the hill.
The other day I noticed in a debate there was
We had to assure the members of Congress that those programs were still just as vital as they were before.
Well, the thing that we have to have in mind there is that the United States has treaties with certain nations.
We have treaties among those nations, of course, with Taiwan, Thailand, etc.
Now, as distinguished from Vietnam, where, incidentally, we have no treaty, but as distinguished from there, with Taiwan and Thailand,
The United States to go around the world and start bringing treaties because of looking for new friends to make treaties with new friends, that would have a devastating effect.
Bill has mentioned, of course, it would have a heck of an effect.
In fact, in Asia, it would have a terrible effect on a lot of other countries around the world.
Now, so what we're doing here, we're not destroying the United States, but we say we have a treaty with Taiwan to keep a treaty.
Correct.
Mr. President, another point that I think should be
Err, hans korre is det.
I wish you well.
We'd like to go now to the economy, and I've asked John Conlon to speak to this point.
You all have had various briefings and so forth, and of course we've been greatly discussing the pressures that John has made some very, very effective statements about.
Impress the positive in the community, and all of us should have a positive positive, as well as the negative facts about the economy.
I've introduced this subject in this way from a political standpoint.
What we have to realize is that what really matters about an economy, politically, is not...
how it is, but what people say it is, and how big it is, a subject in the people's minds.
For example, in 1961, 62, and 63, all three Kennedy years, unemployment averaged over 6% a year.
No, just that 6%, exactly 6%.
6.7 in 61, 5.5 in 62, 5.7 in 63, 6%.
I've had an analysis made in the television and the newspaper commenting at that time.
It's almost impossible to find any criticism or any monthly reports with regard to the unemployment disfigures in that period of time.
Now, John Collins made a statement some time ago, and I want to study precisely what he said.
He said that the
The idea that 4% unemployment is a norm in peacetime is a myth.
That's exactly correct.
During World War II and the period a couple of years after, if you're winding it down,
Since World War II, the beginning of the Korean War, there has not been any period, any year, in which unemployment in this country has been less than 4%, or 4% or less, except in wartime, or a build-up for a war, or immediately thereafter.
The only time when we came close to ice in our year is 1955 and 1956, when it was 4.3 and 4.1.
Coming back to the three entity years, in other words, the whole period of the sections, it added 6%.
Nobody said anything about it.
The Republicans were too stupid at that time, fighting with each other to say anything about it.
And, of course, the colonists, the commentators and the rest, wanted the Kennedy administration to succeed, so they said nothing about it.
So as a result, it wasn't an issue.
Now, at the present time, we have a situation that is as serious as we believe.
I mean, it's a depression for any individual if he's out of work, even if it's 1% unemployment.
That would help with the recession at that point.
There are problems with inflation, there are problems with unemployment, and so forth.
But they have become more in the public mind for two reasons.
One, because our Republicans are so adamant
and defending our policies, except for the chair.
They tend to be stigmas, and consequently, when you get the leaders together, instead of trying to help, they're just stitching.
The other part of the matter is that
We have the first media who are now, at least the politically oriented media, totally frustrated and up the wall.
The reason is that they've been beating us over the head about Vietnam for the last year, and now it's on page 10.
They all like what we did, and I'm speaking about the fuzzy-headed liberal type media people who really don't understand it and like it for their own reasons.
They like what we did, but they're petrified at the thought that we did it, and that it might help us politically.
And so that is why you see in some of the media an enormous turning movement
in which they are joined by, of course, the Democratic leadership, and as I don't blame them, they should be doing exactly this.
They should be kicking our brains out on the economy, because they've got to have some issues, just as we Republicans should be kicking their brains out, and did in 1961, 62, 63, about unemployment.
Well, we did a little.
We had a little debate called Structural Unemployment, and the rest of them, I don't know, but I'm not going to write to them about why aren't we getting the country moving again, and all that sort of thing.
But now we come to the point.
Here's what the media, the media now, zeroes in on this question.
So what happens is that the impression in the country is that the country today is in a deep recession, or it is recovering.
It is not recovering significantly.
Now, as a matter of fact,
But we look at recovery, as John will point out.
If you just listen to his figures, I think you'll bear it off.
We look at recovery.
When you look at the upward movement, it is strong, it is wide, and it's very deep.
And it's moving upward, and the prospects are good.
But in order to get this across,
It requires on the part of the administration, a varied administration, and to the extent we can get some of our Republican congressmen and senators to stand up rather than just to bitch all the time, and to stand up with us rather than to join the other side, to stand up and say, all right, this is what they did.
They never had prosperity with peacetime.
And we are not going to have prosperity based on war.
And I just make the final point that I made in the press conference just today.
Approximately 2 million men, I've said it many times around this table, but now it's up to 2 million, are out of the armed forces or defense plans since we came into office.
Now, if those 2 million men were still in the armed forces, still in the men's plant, unacquainted would be 4.3% a day.
And we'd be having 350 casualties a day, a week, instead of 11.
Is it worth the price?
Now, that's a political argument.
You have to get political.
We've got to believe in that.
Here's your honor.
Okay.
I didn't hit the ripple then.
The ripple was much bigger.
John told us, give us a little lecture.
Well, Mr. President, in the interest of time, I know we're running out of time, and at the risk of being repetitive on some of the figures, which you all know that President has posthumously
The problem is in the proper context.
The political enemies to vote in and out of office, the so-called economic statesmen, the economic spokesmen, in the academic world and the business world, labor and others who, and particularly the press, who want to be critical.
can no longer do so in the international field, because of the very things the vice president talked about, the bills they talked about, the president talked about.
He had the rug pulled out from under him.
So they have no place to concentrate except in the economic front.
What are the facts?
Well, there happens to be some good news and some bad news.
There's no question about that.
And I think at the outset, we ought to, this month, and hereafter for that matter, treat this subject with absolute and complete terror.
No point in trying to kid ourselves because you don't kid anybody else.
They see through it.
We hurt ourselves more than if we said nothing.
So we have to recognize that we do have some problems.
But for those who, and Bob, I include some of your senators who put it on themselves to create a situation where they reflected a total lack of confidence.
In the economy, in the country, and particularly in their own party, which to me wasn't even a smart thing to do.
But they want to say that everything's gone to hell, and that's it.
Why has it?
There's 78.4 million people working in the United States today.
They're working with the highest salaries, the highest wages, everything that's in the United States.
Now, their savings are at an all-time high.
Everybody says, we're in a recession.
How the hell do you get to a recession when almost 80 million people are working at the highest salaries and wages?
Well, the greatest amount of savings they've ever had.
And they say, well, there's no commons.
Consumers have no commons.
Well, let's move the air going.
Read your morning paper.
The automobile sales this morning were almost at an all-time high in the history of the nation.
One figure that you saw reported was the second highest in the history, since 1968, the all-time high there.
Another figure that was reported was the third highest ever in the history of the United States, rather than only the 68th, I believe 65th.
Now, their spending, consumer spending, has raised $33 billion last year.
That's an all-time high.
Now, they talk a lot about the leading indicators.
Out of the last 8 months, the 12 leading indicators have been up.
They talk about, again, the fact that there's no confidence in the economy, yet, I mean, it reaches some statistics.
You're spending three thousand dollars.
The first half of this year was running at the rate of 17 and a half percent.
17 and a half percent increase compared to 3.6 percent during the comparable period of 1970.
Now, I don't say that's some slight improvement.
Now, they say, why don't you make some progress on inflation?
Well, we have cured inflation.
All the elements of inflation are still there.
But the truth of the matter is, the facts show that during the first six months of this year, we were trying to get the rate of 3.9%.
Now that's compared to last year's 5.5%.
So I submit to you, on any kind of a basis, on a percentage basis, or on an absolute basis, internal progress is being made against inflation.
Now, if you want to look at it on the reverse side, one of the most intelligent things to have, looking at your inflation factors, is the GDP newsletter.
It's running now at the rate of 4.2%.
Now, that's the lowest it's been.
That's reported on a quarterly basis.
And that's the lowest it's been in six quarters.
4.2%.
That's lower than it was in the first quarter, it's lower than it was in the quarter of last year.
So, your personal income, I said it was running at an all-time high, it's just at the rate of $870 billion, that's all.
Here it is at an all-time high, enormous figure.
Saving rate, 1968, saving rate was 6.7%.
In 1951, the third quarter was 8.4%.
Now, these colonies turn this around on us, and they say, well, this is because they've got no colonies.
They've saved it all for you.
Well, they're not saving it all.
They're spending it at an unprecedented rate.
As I just told you, the rate is 17.5%.
17.5% during the first six months.
Unprecedented rate of spending.
It's $33 billion.
Now, we do have some bad news in durable goods.
The durable goods knock down, but if this all turn around, it's probably because people are selling out their inventories.
They're not building their inventories.
Now, at some point, these tremendous retail sales have to show up in terms of new orders.
Everybody says we're keeping cool industries in a state of panic.
Great price.
It is bad.
But let me read you some figures on machine tool orders and millions of dollars.
Can you tell me where it is?
These are net new orders on machine tools.
Can you tell me where it is?
54 million.
I'll round it.
54 million.
February is 59 million.
March is 68 million.
People have dropped back to 55 million.
May is 71 million.
June is 88 million.
Now we've gone from 64 million in January to 88 million in June.
And they say, well, there's no progress, no good news anywhere.
Housing started running at an all-time high, unprecedented.
1,982,000 last month.
This stuff includes your most loans, which now makes up an enormous percentage of your loans under $20,000.
And they're running at the rate of about $462,000 on an annualized basis.
So between the two, we're running at an all-time rate of 2.5 million.
Housing starts now.
We potentially have some problems there, because of what the rate of interest is.
Because it's a sensitive thing.
The money supply, God knows it is.
If economists believe in the monetary theory, the money supply has been pouring out at an unprecedented rate.
Now, they all say that it gets their help in six to nine months' time, and the reaction to it.
But we had money to slide it in the first six months running in the record.
10.3% ties the history of this country.
And July was just as much, if not more.
George, do you remember what the figure was in July?
It's over 10.
But it's over 10.
It's about the same.
Now, so...
Almost everywhere you look, you can find plenty of things to be proud of.
And this is common.
This is not to say that you can't figure out some features of the economy and complain about them.
District rates are going back up.
And I think this is not a good sign.
Our dollars are in damn bad shape.
We ought to admit it.
We ought to blame the Germans.
We ought to blame the Japanese.
We ought to blame everybody in the world except us.
As we go around this country, just say we're going to cure it.
We're going to do something about it.
Now, in the final analysis, I think where we're caught is one, the fact that we're not speaking up.
Not enough of us are speaking up.
Not enough of us have faith.
I think the problem is basically a problem of psychology.
Many of our own friends are killers.
The business community is basically pessimistic in their talking.
Their advisors are talking to them.
Because everybody wants to be conservative.
And when you combine your friends' criticisms and their reluctance and their fears of inflation with your natural enemies, you get a cadence that you can't overcome.
I think there's a wave of pessimism sweeping the country in the last month.
I think there was a higher degree of optimism 30 days ago than there is today.
Now, I don't think you can get out and get really easy and just say it doesn't exist.
There is a lack of support.
There is a lack of support.
Very many people do it in terms of a lack of confidence.
Well, my answer to that is, and I think our spokesman ought to be saying, that the president who had the capacity, who had the understanding, who had the courage to do it,
In effect, full opportunity, you certainly have the capacity, the understanding, the courage to do whatever is necessary in the economic field.
My God, it's nothing else but at least members of the own party elected otherwise ought to have enough faith in you.
To say he's going to take whatever action's necessary.
If you don't know the damn thing.
He's being brilliant.
You ought to just take it on faith.
I don't know any other way to play games.
But apparently, none of the people want to do that.
That's about to know, Mr. President, I'll tell you.
Can I ask one question?
Sure.
John, one of the things that I see come back when we talk about the figures of personal income, savings, or anything like that, they always come back and say, you don't give us the figures that mean anything.
What about the personal income per capita?
How about the savings per capita?
The population of countries is constantly going up, so naturally these figures go up.
What's happening to them per capita?
I think one figure that's worth watching, that I've watched over the years, is real income of production workers, where you take their wage.
and you take the inflation and then average it out per worker, so it isn't some gross number, but on your payroll per worker.
Beginning in about 1965, on through most of 1970, that figure sort of
Tilly-dallying around, went up a little, went down a little, and basically it didn't change at all.
And I think that has been one of the reasons for this big frustration of what you see in collective bargaining, because wages have been going up rapidly, but they haven't been getting anywhere in terms of their real earnings.
And at many of these bargaining sessions in the last few years, the workers have come into that on the basis of a three-year contract that's expiring.
and where their real earnings were probably a little less than the three years they started that contract.
So you see that now, in the last year, particularly this year, but it started last year, we have seen a very persistent rise
in average real earnings per production worker, and that's covering some 50 million or so feet.
So it seems to me that is a figure for us to keep our eye on, and if that trend continues, I think that's an underlying thing.
of really great importance, not what is happening to their money wages, but what's happening to their real wages, and that we can take account of in place from 1967, I'm sorry, from 1966 approximately through 1968.
Well, that was very, of course, a blowout of climate change all because of the war, and significant wage increases.
And yet, American workers didn't gain at all.
They were on a treadmill.
They've been on a treadmill.
They were on a treadmill since 1969 as well.
This is the kind of thing that George is saying, and this is a very important point.
This is the first time now in five years we've finally gotten the American worker away here and off the treadmill so that his real work needs to be done to do the work, and not just his paper earnings.
I believe, I don't know what the time span is, but I'm sure after inflation and everything else, in terms of the American workers, it comes up 1.6%.
I believe that's the first step.
And it's just one of those jobs that compare that, the fact that it just hasn't happened for five years.
The reason I raised it, excuse me, I'm sorry, is because when you use these other figures, then
As soon as you're gone, somebody comes in and says they don't mean anything.
We've got good figures to use that they can't refuse.
There are some that would use insurance on some evidence.
I got you.
Mr. President, I just want to make this comment.
I don't think there's anybody else on the national scene that can deal with this problem but you.
And I have all the faith in your dealing with it that a man could possibly have.
But on the other hand, this is an area where I just don't like none.
Basically.
And the hard facts are that the men in business and companies during the 60s knew things were not sound in this country and were moving in the wrong direction, economically.
And have been concerned for years about the direction this economy has been moving in.
And also recognize that we're confronted with some very unusual developments.
You have a very fun enough day.
How do you think I am?
25% of those I won't be a salesman are going to be foreign cars.
And furthermore, there isn't a car company in this country that can compete head-on with a producer in Germany or Japan.
Even small ones.
Even small ones.
Even if they were producing the same type of cars.
Small cars, they can't compete with us.
That's exactly what I mean.
Higher, now.
The men who are making economic decisions in this country are an operating character in the finance field as well as in the field of manufacturing and employment, are convinced in the mining.
But we have a new element in the economic situation to deal with that's not being dealt with.
It's not being dealt with in this country, it's not being dealt with in any other country in the free world, and that's the cost of inflation.
And consequently, they're making their decisions on that basis.
Now, it isn't on the basis of just figures here, because hell, if you only relied on figures in running a business, you'd never succeed in any other thing, Mr. President.
You've got a feel of the intangibles, and you know where things are moving.
Now, I wouldn't be honest with you
If I didn't indicate that the man who happens to be responsible now for the housing aspect of this administration has been in the automobile business, has been in some of these other things, that the people who are making the decisions...
don't believe that we're coming to grips with the problem of inflation.
And they don't believe we're coming to grips with this cost-force situation.
And that's why these jobs exist, and that's, in my opinion, why they're going to continue to exist until we have taken meaningful action in their terms to deal with them.
I...
I...
I haven't voiced these words you're talking, and I haven't discussed them with people outside of your way.
I've said what I've had to say here.
I don't disagree with that at all.
But on the other hand, I think we're confronted with a very grave situation, and I believe that whatever decisions we make here in the next two or three months in this area, the next two months almost, are going to make or break the administration.
I think it's actually vital for you to be re-elected, both in terms of the international situation and in terms of the domestic situation.
But this economic situation can trip us up.
Because of what people think.
And I don't believe at this point, John, I just don't believe that going out and talking to those figures is going to change these basic attitudes that I think are shaping the course of this situation.
I think they're hitting us.
No, no, no.
That's very appropriate.
It's right on the mark.
Here's what I am, all that I am suggesting is this, and I want to be...
Be quite direct with all the politicians here.
It's impossible to get this across to the Republican leaders in Congress, because they have developed over it with a very few exceptions.
Mel knows sort of an attitude with it against whatever administration it's in.
I know that it's very difficult for them to sort of fight our battles.
They do a terrific job at some things.
I must say that Lockheed Pinkoo is a master stroker, and I must say that.
Able could not have taken him out of his truck, been out 60 days, and settled for what he had already settled for.
He had to go out and fire him for that.
I am not suggesting that there is not a significant problem on inflation.
I think there is also a significant problem on the way price runs.
Cost price pushes.
I would point out that our problem on inflation, of course, is not one that's simply indigenous to America.
Of the 22 countries in the OECD, I was surprised to learn that there are only three countries, little jackass countries for the most part, that have a lower rate of inflation than the United States.
Now, that shouldn't give us too much confidence.
The Japanese, the Brazilians, Germany, France, and all the rest are higher.
That's true.
The Italians, of course, they had a hell of a lot to catch up.
Now, the second point I'd like to make is that there are problems.
The second point I'd like to make, though, is this.
It is absolutely essential that we not get into the wicked.
of saying, well this administration after two and a half years has the country, has made as a country in an economic mess.
I think we've got to point out why this administration has wound down a war.
We're not killing 300 to 400 Americans a week in a war.
We've got it down to between 10 and 20, and we're getting out.
And as a result of that, we have a problem on unemployment due to the war-peace transition, period.
And so they put them in.
They'll cure unemployment.
If you want a war, they cured unemployment with Korea.
They cured unemployment with World War II.
They cured unemployment with Vietnam.
Do we want it again?
And the answer is no.
And don't ever just talk about their issues.
Always get to our issues.
So let's get that straight on unemployment.
Also let us point out that as far as unemployment is concerned, that we are going toward a goal that they never achieved.
None of them achieved it.
They didn't achieve it in the Roosevelt administration.
At the end of World War II, there was a period between 66-67 when unemployment was lower.
That was when, of course, millions were being kept in the armed services.
And just as soon as they were out, up it went to Korea.
They had to achieve high employment in peacetime.
And we're going after that, and we're going to achieve it.
As far as our unemployment is concerned, it is less than 6%.
Too high, but less than 6%.
And we believe...
Despite monthly aberrations will go down.
Because it's got to go down as your economy goes up.
Second point is, as we point out the things that are wrong, I think we've got to also keep in mind the fact that the economy is moving up sharply.
We had a 52 billion dollar increase in the GNP in the first half.
You can't have retail sales at near record highs.
You can't have infanturist relations sales at near record lows without having some, eventually, you can't continue to sell without buying eventually.
And so there will be some reaction.
The economy will move upward.
That is, however, does not get at the problem of inflation.
It also does not get at the problem of psychology.
However, I would point out that the psychological factor is very much in our hands, as well as in the hands of our opposition.
You cannot allow people to be pounded day after day after day with just the crates.
That means to be lit.
It means, actually, our friends on the Democratic side, as I said, they ought to kick our brains out.
If we settle this, then they ought to kick us about busting.
They will, or something else, they'll find something.
And that's the way the opposition should not expect that to be.
On the other hand, for Republicans, and those Democrats that support us, and there are a lot of hope for us on the economic side, to be purely defensive is nuts.
We gotta say, first, we are moving toward prosperity, high employment, peace time, something our democratic friends, with all of their efforts, never were able to achieve.
Thank God we are doing that.
I make that point at the beginning, top level every time.
Second point, I think we should then go on to say, we are concerned about innovation.
And inflation, which meant that in the five years before this administration came to office, the American working man, in spite of record wage increases, made nothing in real wages because it was eaten up.
And now, for the first six months of the year, we find the American working man and men getting off of the treadmill, beginning to gain real wages.
Why?
While we haven't made the progress against inflation, we would likely make some.
And moving the rate from 4.5 to 3.9, or if you take another number, 5.9 to 4.9, whatever it is, it's some progress, and the result is that he's beginning to gain.
Third point, this is important.
It is that we still, however, feel that unemployment is a major problem we don't care about, and that we're out to fight it.
We could kick the hell out of the Congress for getting out of here at Radio Brighton without passing the appropriation for the 150,000 jobs provided for the emergency thing.
George Mann has done his part, and they're going to sit on it.
They don't want us to have that money in August.
They don't want us to get it until about the 1st of October when it isn't going to be very important.
Because that 150,000 jobs for those network jobs, money for those network jobs,
We will help us most in the month of August with the teenagers and the rest.
But that's what these guys are up to.
So they're going to be lollygagging around all over the world.
The other part of it should be made up.
So we're fighting on the employment front.
They're still sitting on...
Provisions of HR1, whatever we may name them, other provisions, which provide 400,000 more jobs in the public service area.
Temporary jobs.
This takes care of the teenagers and the others.
This is where you're high on the line.
We also have a situation where we have, on the employment front, where we have a $43 million program, for example, for science and engineers.
We have a program for jobs for veterans.
Unemployment concerns us.
We're working on the unemployment problem, and we are getting it down.
We are going to get it down, and we're moving the economy up in other ways to get it down.
On the inflation problem, and here you come to the other thing that everybody is concerned about, and that is, why not control it?
I think the best line, and it's the line certainly that I take, is that, and despite the differences that have been mentioned between Burns, Arthur Burns, and myself, I mean, they're really matters of degree, not matters of principle.
One, I am unalderly opposed, Arthur Burns is unalderly opposed, I hope everybody around this room is unalderly opposed to the Gallaudet speech.
which is supported by the left-wing liberal democrats and some jackass republicans of permanent weighting and price controls.
You've asked for permanent weighting and price controls on America, and this country is finished.
finish as a major economic power.
They say, well, just pass it on to the top 50 companies.
Aha.
It won't work.
Permanent wage and price controls, with enforcement, with bureaucrats, with the whole 10 percent system, will cycle the demanding, dynamic quality of this economy.
It will not work, that's for sure.
Now, is there something in between?
Well, at the other end of the spectrum, there is job loss.
That we are doing.
Secretary Lager is bringing to my attention every major negotiation that is going to be coming up.
Thank God there are not too many, to be surprised.
The major ones will be brought to our attention.
We're going to call them in, we're going to do everything that we can, and where government has any stroke, we'll use that stroke to keep those things within reason.
We hope to do better in those than we were able to, for example, in the Steele thing, where the stroke was not there because Steele hadn't had a strike for 15 years.
At least we're going to do that on a specific individual basis.
That here comes to the Burns proposal and the proposal of others.
Why not a wage price for it?
It has some attraction, certainly a great deal of attraction from the standpoint of this standpoint.
John Connick's often made the point, and I made it to you here, you can't say, gee, there is no inflation, it's coming along my way.
There has been inflation.
There he is now.
We have made some progress, but we need to make more.
So that's why we're moving in on these individual settlements.
That's why the construction thing, and while we haven't done enough, George, 9 to 10 percent is a hell of a lot better than 16 percent.
That's some decrease.
18 percent.
18.
Well, whatever it is, at least some decrease.
And we hope that more will come.
And that is easy.
The wage price board, the real problem concerns us.
It is not that the immediate announcement of it would be great.
We could announce that from now on, there will be no wage increases and no price increases above 4%.
So we'll get that out of the number.
Or above 5%, maybe.
Or above 3%.
God, that's great.
How do you enforce it?
Well, the morality of the American businessmen, the morality of the American labor leaders, their hatred is to enforce it.
They will not do it.
At least that has been our experience.
Now, for a while, public pressure were doing.
So what we have to find here, George, and I think that's what you're searching for, what we are, is a way where you can move
Perhaps in this area, short of permanent wage controls, which God knows you don't want, I don't want, well, nobody wants, but which in a way, which will show the American business community and the American labor community
to a solid fact.
They either stop the wage price push, or the United States becomes a second-rate economic power.
That's what we're looking at.
So that's what we're looking at.
We're becoming non-competitive of the world because of this, and that is another reason why we're going to have a very significant meeting prior to jobs, where it's going to be the International Monetary Group on September 21st.
The production commission is coming in here and we're really going to lay it out for them as to where this thing stands and what we have to do and to see what they can do or will do on a voluntary basis.
Now, whether you go beyond that to a wage price board really depends upon whether the Congress in its hearings, us, we, and our own
The counsels are diverse in his suggestions, and he has gotten to come up with the proposal that is specific in this respect, right?
Whether they can come up with a plan which does not mean permanent wage prices, and which is enforceable without having the double-edged sword going all the way to heavy criminal penalties on labor union leaders and on business leaders who violate them.
Now, we also would like to just finally say, all these wage price decisions, there are not hundreds, there are not thousands.
As you know, George Bernard Nixon, in controlling the American economy, there are hundreds of thousands wage price decisions, predicted price decisions.
I mean, I remember an old VA, my God, what was the size of the box of cornflakes?
They had one little bitch down in the old VA that was thinking about, well, this size of cornflake, that should be that much.
And I said, that's great, you know, the cornflakes, you don't want to charge as much for that.
Otherwise, he goes to jail.
That's why it was one of the reasons it became so popular at the end.
And eventually you get to that.
The same with automobiles.
Maybe it's fake leather or good leather, and the car should be this or that you went through.
I was just in tire rage.
You ever know the differences in the qualities of recap tires?
I don't know.
Oh, I'm telling you, that's a business.
Think of all the crooked businesses.
That is one.
They control it well.
What I'm really trying to say is not to say there is no answer.
Because there is something else there.
There may be a psychological answer.
And we must...
Under no circumstances do we have the position to say everything is on the door.
It is not.
But we also have the position to say this country is on a disaster course.
It is not.
This economy is moving up.
Unemployment has finally topped out at 6.2.
It is less than 6% now.
We believe it will continue to move on a downward path through the balance of this year and into next year.
As far as inflation is concerned, that's our major concern.
That is why, and this will be the last thing that George Washington has covered very briefly, we fire on a fight to keep our budget down.
Why?
We've got a fight against the Congress that has already added five and four-tenths billion dollars to our 72 budget, and therefore has put it in imbalance insofar as it's, as a full employment or a full capacity budget is concerned.
That is why in the wage price deal, we're not sitting by.
We're going to be activists.
But on the other hand, we do not want to make a great big blow about something that will be ineffective.
But we move.
We want to move.
We want to be effective.
Because we could then have a great spurt of hopes for businessmen.
And others saying, thank God the wage price spiral is over.
And then when they fail, the frustration is alive.
So that's what we're looking at.
We're trying to find the right thing to do.
And the Secretary of State, Connolly, Schultz, McCracken, Burns, the whole group,
Is that a fair statement as to what we're discussing?
In other words, remember, we're against inflation.
We're against unemployment.
We're particularly against, however, curing unemployment through another war, or continuing it one more time.
And we therefore believe that we have a program economically that the American people, and also we're against.
I would hang this drive on.
We're against what some of our democratic presidential candidates have highly endorsed by failing to disendorse it.
The Galbraith plan for putting the American economy in a straitjack with wage and price controls forced by criminal penalties, jail sentences and so forth for every little part of the grocery store.
Mr. Bridman, why can't we turn this around in the line of what you said in your press conference yesterday?
Because you weren't summarily rejecting the idea out of hand.
When they say wage price controls, why don't we say, well, let's see what you have in mind.
But otherwise, let the Democrats send you with your statement that you're not going to be doing anything, that you'll consider anything logical.
And then let business and the labor unions beat them over the head for their bills.
Mr. President, well that's what the Secretary did.
I would urge you to read, and John Circulate, your piece, Alex Circulate, the Secretary's statement of yesterday, because it's very here in Billow City, to every member of the Cabinet, I urge you to read it before you go home for office.
It's a damn good statement, it raises exactly those points, Mr. President.
Yes, can I say a word to the legislative branch?
I'm going to suggest that if we are going to be gone, we ought to be working very hard in August, and it's a good time for the executive branch to take the offensive, as John pointed out, on trying to build up the confidence, because all of us will be out of town, there won't be any press conferences, there won't be any Republican meetings,
under my administration.
So I would hope that while we're out of town, the executive branch would recognize it would be a good time to really build up the confidence in the administration, and secondly,
when we come back in September, those who do, that some of our friends in the Senate and the House might be equipped to, in the first day, to really take the offensive on the economy, and I think it might have a double-parallel impact, because we have a lot of friends.
It's just that I say that John and I, and others, John and I particularly, have had some long talks about that.
I agree.
It appears at present time, first, that we are defending status quo.
Second, it appears...
If we are to mention state of school, then state of school isn't a hell of a shift.
So, from a defensive standpoint, point out what the facts really are.
Guard us with what the facts are.
Point out what the facts were in the previous administration.
We know there's no prosperity without war.
And put it as cold as that one, and fix the war issue, and it'll gut them.
And then third, say, as far as we're concerned, we're not only looking for prosperity without war, but we're looking for prosperity without undue price inflation.
And so we're going to fight this wage price thing.
All Americans have got to do it.
And that's, but here's our program.
They're missing links, or it's a fine simple, or it won't go.
But none of us should talk in terms of, well, everything's hunky-dory, it's going to come out, we don't give a damn.
We care very much about our employment.
So, uh,
We'll try to move along.
If you want to send a word to George on the last subject, he'll be out here.
Mr. President, this gets right down into the guts of the management of government.
And it goes right to the issue of a wage price policy.
What is our own wage policy within our own department in the way we're managing it?
I think we all know that the rate of increase in wage rates for government employees has been right out there with the construction people.
And it represents a great problem by this time.
In defense, for example, 60% of the paid defense budget is payroll of one sort or another.
Government is a very important part of the industry.
There are all sorts of reasons for it.
Rides and payroll costs.
One of them that's directly subject to managers has to do with the average grade level of the people that you're managing.
And here you see an alarming picture.
It takes a general schedule of employees.
The average grade level was running in the neighborhood of 7.4, 7.3, 7.4, like that, from the 1960s.
The 1968 calendar 68 is a 7.4.
In 1969, it jumped to 7.7.
In 1970, it jumped to 7.9.
We don't have the final figures yet, but we're thinking for 1971, the fiscal year, it will be about 8.1.
So that's a very large increase in the average grid level of your employees.
Now, it is a stunning fact that each tick of an employee
Talking across the whole government, each tenth of a point is worth $175 billion.
So in going from 7.4 to 8.1, see the cost impact of that, and what it does to the budget, but it does to your own ability to put forward the programs that you want.
We talked about this with the president as we were discussing the general budget.
And he directed us to get cracking and do something about it.
And we have developed a program to work with each department.
It's going to be a hard thing to get in control of this.
But nevertheless, it's just out of control at this point.
It's killing us on the budget.
We have a program for working with it.
And we feel that not only does this escalation in trade levels have to stop, we have to turn it around and knock it down.
And we'll have to go for that.
So this afternoon, you will get from me a memorandum that describes the background of this and sets forth the general program.
Friday at 10.30, we're asking for a meeting with your undersecretary to go over it in some detail.
And on Monday at 10.30, your administrative officers will come in and go over this and develop and start developing a plan for the various departments.
By September 15, we feel that each agency and department should be able to have a program laid out that is approvable and that can be monitored and followed to turn this great escalation down and get it going in the other direction.
And we think that we ought to at least knock a technical point off during fiscal 72 or 54.
And we want to work with you very hard.
It's going to cause some difficulties, but the way this has been going is just outrageous.
There is a great deal between departments.
Some departments don't seem to have a problem.
Others are just, it's just incredible.
H.E.W.
is incredible.
As Secretary of the G.S.
11 to 15, that's just gone wild over the last few years.
Probably is not the only part of the State Treasury Justice.
It doesn't seem to have too much of a problem.
It varies quite a lot.
But we will be in touch with you, we will be working with you, and we will be putting a lot of pressure on you.
And there are two reasons for that.
One is that there is a problem, and we can do something about it in our own way, probably.
The second reason is that the president is on my back to get this done.
So I'm going to be on your back to get this done, you can believe it.
Georgia is very tough, though, that we can get an exemption up to 10% out of this risk business.
I still got about 20,000 more people to go in if I can get an exemption.
So these guys would always knock off and still have to pay the high salary.
The defense department is one of the first questions.
I don't think it's the process of the Air Force.
It's terrible.
They get rid of all the lower people and they never touch any of the top people.
Well, that's because of the risk.
We could get a 10% infection on that, but we wouldn't.
These top guys always risk all the way down the bottom.
So what you're doing is getting rid of your bottom people all the time.
And every time you're cutting back that department...
We're ending up with these top people serving the bottom jobs.
Well, I think the answer is not to.
To get a half civil servant in there, because that gets into the top people as well as the bottom people.
Yeah, but they've been there longer under the civil service rule.
You can't fire them.
They can go down and take the 7th job when they're at 10th.
Well, if you think we have ways of getting us out of here, people come over, we'll be prepared.
We can give you a 10% discount.
I might say it varies quite a lot within the Defense Department as to how great this problem has been.
The Air Force has escalated terrifically, and the Navy seems to, at least in the past, have had a pretty good grip on it.
So it is a uniform across the server.
Well, I can tell you the difference why that is.
But let me say that in conclusion, that don't get the impression this is just those guys in Oakland, because the heat is on them, and it's expected to be done.
And as far as O-line departments are concerned, it may be a step there, but let's all set an example, and the White House staff included.
Let me also say that there is more to come.
And in terms of the, in terms of the, the whole climate situation, the problems of the climate circuits and the trees, the trees come down again and again and again to...
Not always, but of course, basically the only way you get a budget is to take out a program.
But in addition to that, it gets down to personnel.
You know, let's just say, maybe the lights are on, the lights are all out, it's personnel, and we're going to grapple with it, so that there will be no feeling when this personnel cut is announced in that way.
Do you hear about that?
No.
There will be no exceptions this time.
This is the way it's going to be.
We have to do it.
We have to find ways with the departments to work it out.
It's going to be so hard actually on the old lines.
It's going to be very hard on the new departments.
It's going to be a variety of reasons.
So, just like we say to George, when he's sitting in this chair, he has to be for, you know, posing and all these kinds of stuff.
But when he gets in that chair, he's got to be for carrying it out and talking about, of course, having in mind that that's the biggest part of it.
See you in the next one.
Be reasonable.
But you get it done.