Nixon, Shultz & Weinberger on Federal Budget and Deficit Spending

4:43:13I would hope you keep in mind this as long as you can.
4:43:18He can help you.
4:43:34As Attorney General, he can now do tremendous things.
4:43:37And people say, well, they'll criticize him for loaning.
4:43:40Bobby Kennedy spent 75% of his time or more doing things other than running the Department of Justice.
4:43:46Well, I think that if he can...
4:44:00Well, thank you, Mr. President.
4:44:01I would say this.
4:44:02You'd say being a cabinet officer is a pain in the ass.
4:44:05I'd say being a cabinet officer in the Nixon administration is a great honor to be here.
4:44:10People realize that the capitals get detention and so forth, and they have some courage to drive on that.
4:44:20Well, I think he does do.
4:44:21No question about that.
4:44:46He's with Scott.
4:44:47Yeah, he's with Scott.
4:44:48As good as the other incident.
4:44:49Finally, the reaction of the president.
4:44:52The reason is, we're talking to you, we're talking to you, and eating with friends.
4:44:56Excellent.
4:44:57Just excellent.
4:44:58Well, good.
4:44:58Well, he needs to be getting something to write about.
4:45:01Now, again, it doesn't speak to you as an effective president.
4:45:04I don't see a question.
4:45:05Do you know it?
4:45:08The door is checked.
4:45:10It's sitting over there in the back.
4:45:30The only way I'll check is if the sport coat is in the yoke.
4:45:35But the yoke is not there.
4:45:42I'm going to go check the yoke.
4:45:45What did you check?
4:45:48It might be in the sport coat.
4:45:50I wore the sport coat yesterday.
4:45:53Yeah, it might be there.
4:46:05you might check it there but you heard it checked over here in the office
4:48:31Well, I think 6.3 is at least in a technical sense a better figure in the sense that
4:49:00that outlays at 6% unemployment are higher than outlays at 4% because you pay around $3 billion of unemployment compensation that you wouldn't pay otherwise.
4:49:13So I've customarily people compute what you might call full employment outlays, which tend to be a little less for that reason.
4:49:23And one can argue whether or not we should use that gimmick, but it helps us quite a lot in making this thing come out right, and it is professionally, technically right, and it's sort of a clearly sensible thing.
4:49:40I mean, it appeals to people.
4:49:44Well, we would round that to 35, if you take an even number.
4:49:51Now that, we could, here is sort of the dimension of choice that you have.
4:49:56That figure represents two things.
4:49:59One, this outlay management we've gone in for, that you and I, we've discussed, that puts into 72 and keeps away from 73 so that we have our 73 picture looking better.
4:50:13And second, our desire to keep, push spending hard in fiscal 72
4:50:20six months of this year and at a rate that can be sustained through the balance of the year.
4:50:28And we have been on the back very hard of the Defense Department to get their rate of spending up and the other departments.
4:50:36And so those two things represent that figure, if you were to instruct us.
4:50:42We could very easily turn that $234,000 into $229,000 by making everybody hold down their spending and by reversing these outlay management things, although it would show up in 73.
4:50:56$229,000 was your figure at this time last year that you set up.
4:51:02There's a lot of stipulated expenses in there, and there should be some of those.
4:51:10Well, I think from an economic standpoint, you can argue that now is the time to push.
4:51:20I mean, leaving the politics out of it, now is the time to push to get the economy up.
4:51:27And then when it gets up, to start growing back.
4:51:31I think it's better to have a better-looking budget in 73 than in 72.
4:51:34Yeah.
4:51:35That's why we moved it all into 72.
4:51:48Because the Johnson gas in 1968 was like 24.6 million.
4:51:54Anyway, this is clearly the largest status event we've ever had, although in percentage terms, I'm not so sure that's right.
4:52:12It's the largest economy we've ever had, and everything is bigger.
4:52:28Well, those budget messages for you over the weekend, and we're bearing down pretty heavily on that, that you took over the legacy of inflation and a set of programs, 75% of which were uncontrollable.
4:52:40And that advantage, right, and also some indication of the downward pressures that have been exerted, and that this is a deliberate choice to avoid unemployment when we have to control inflation and that kind of thing.
4:52:56So we're trying to correct as much of the file language as we can.
4:52:58We're going to buy it.
4:52:59This is the task report system.
4:53:32primarily because of defense.
4:53:36And inquired as to whether you want to pursue it.
4:53:41And it would require an additional 50,000 reduction in defense on the civilian employment side.
4:53:54We've achieved about 2.6%
4:53:59And 66,000 people were .
4:54:05We wanted to pursue it by requiring, we would secure the 5%, full 5% reduction if we took an additional 40,000 out of the mess, 40,000 civilian employees out of the mess, which would require risks and could not be done through .
4:54:21And that would be the amount necessary.
4:54:29Well, we've taken close to it, yes, sir.
4:54:31Some we've gone a bit above, but we've had trouble with AGW and with Treasury, where we had a position back for the economic stabilization program.
4:54:41We didn't achieve it.
4:54:43And with AGW, they had 36,000, 3,000.
4:54:52Why did they add it?
4:54:53Well, they thought they needed to reduce backlogs in Social Security, and some were added because of supplementals that were passed by Congress.
4:55:04But we gave them a $98,000 goal, and they're at $102,500 now.
4:55:11That's a reduction, however, from the reduction that there would have been, which was 110,000.
4:55:15They're in the, they're in the, they did, we did achieve it by a percent.
4:55:19What about the, what do you think?
4:55:24Well, I think we could get this kind of reduction.
4:55:26I think we could, we will undoubtedly have some, some sharp reductions.
4:55:35closing any bases until after November.
4:55:38We could achieve this by getting some reductions in employment on some of those bases.
4:55:42I don't think we would interfere with the domestic – with the domestic strength of the country at all by doing it.
4:55:51But we could get this between now and next year, but it would be a wrench, and it would involve 40,000 positions.
4:55:58That's the difference practically that we are missing the 5 percent point.
4:56:04And the only importance of it, this is my impression, is that we have to print in the budget the civilian employment of the government.
4:56:11And it will show that we have met this goal that you've set for us.
4:56:14What kind of reaction to that?
4:56:16Violent?
4:56:17Yes, sir.
4:56:18Quite strong.
4:56:21I guess not violent, but I should say quite strong.
4:56:28Mr. Packard, Dave asked me to hold the figure confidential between him and Moot and others until he got to the very selection.
4:56:37He was afraid if we showed how much reduction we wanted, they would get cut even further by time, and I agreed with that.
4:56:44And as a result, they didn't start on the reductions necessary.
4:56:49And now they're at the point where they tell us that if we want to achieve the 5%, we have to get 40,000 drunk and more.
4:56:57And these are all civilian employees, and we are looking for employment, not unemployment.
4:57:01But I know, I know.
4:57:02I think that this one here at Gold, that's my problem.
4:57:05All right.
4:57:06How about 20,000 out of the Pentagon?
4:57:10How many do you have in the Pentagon right now?
4:57:12I do not have the time to check it.
4:57:15I would guess they've got... Well, I don't know.
4:57:17Physically in the Pentagon?
4:57:19I just don't know.
4:57:20I guess that they have over half an area.
4:57:23How many in the Pentagon?
4:57:24Not in the Pentagon.
4:57:26No.
4:57:27Physically in the Pentagon, I don't...
4:57:30In Washington, D.C.
4:57:31In the Washington, D.C. area, what do you got?
4:57:40The total defense base against which we were working was 1,062,000.
4:57:44That's the total defense base, and we got to 28,000 if they refuse, and we need 40 more.
4:57:50Those are the total magnitudes.
4:57:53Within Washington, D.C., I don't know.
4:58:03I want Washington, D.C. squeezed like hell.
4:58:20We've just got to do that.
4:58:21We've just got to do that.
4:58:22Stop that question.
4:58:23We're running over the people of the Pentagon.
4:58:26We're running over the people.
4:58:28And tell those goddamn people that if you get rid of a few of them, you can all sue kids' characters and stenographers and any...
4:58:40Christmas is over, and that's one place they can squeeze.
4:58:44All right.
4:58:44We'll see what we can get right here within the Washington area.
4:58:47In the Washington area.
4:58:48In the Washington area, I want mostly out of here, and insist that that be the case.
4:58:55All right.
4:58:56Tell you what, we'll set up a figure.
4:58:58Well, rather than 40.
4:59:01And, uh, and, uh, I don't have to read it fully.
4:59:07I'll cut it in half.
4:59:09So the figure of 20, no, of 25, of which 10, no, of which half, uh, what's that half figure?
4:59:26All right, well, let's make it 22,000.
4:59:29Let's make it 22,000 of which have, you know, part of the Commonwealth of Washington, D.C. now.
4:59:42Let's just set that as a goal.
4:59:45And let's start getting this damn city into shape.
4:59:50The last zero to one in Washington, D.C.
4:59:54last sentence uh makes the point which i don't think he's making that this will require the full cooperation of the secretary and he will personally have to direct the cutback uh should i advise you just about the conversation this morning so they're cutting back and so basically by
5:00:35It's a good thing to do, Mr. President.
5:00:37He makes his case, not so much on whether or not he can find those people and get rid of them without hurting the armed forces, but on the basis of the economy.
5:00:45Our $11,000 in the Pentagon, he marketed to Arthur Burns and others.
5:00:49Our $11,000 in the Pentagon, I know he's put it out, he's put it out, $800,000, $300,000.
5:00:55$11,000 in the Pentagon and $11,000 in the rest of the country.
5:01:04the rest of the concrete words.
5:01:16It is to be spread on a general basis.
5:01:19Everybody is to take equally around the country.
5:01:38one 80, one briefcase carrier.
5:01:40You said you have one briefcase carrier for every dog and chicken that come around the country.
5:01:44Fair enough?
5:01:45Sounds very reasonable.
5:01:47I mean, it's probably like every briefcase carrier as well as every chicken.
5:01:50We have two nannies put around here.
5:01:53There's a second thing to me.
5:01:55There's always 80 running around.
5:02:06Unless you show me a man with a deputy, I'll show you somebody who can do much of a job.
5:02:13Unless the deputy is doing something in his own right.
5:02:21Probably they could find places where the area had very high employment, likewise in DC.
5:02:28And you could say it is the first in the place that high employment areas are those
5:02:39I don't want to see any except in Washington, D.C.
5:02:46I don't want to see any one area where there's more.
5:03:04Well, this is a lot of .
5:03:06Even that, I mean, it wouldn't even be the full thousand, because some of this can be accomplished by attrition.
5:03:13Not all of it can, but some of it can.
5:03:15So I think this is quite a reasonable .
5:03:21Washington, D.C. Washington, D.C.
5:03:46Tell them to go to the Bureau of Indian Affairs.
5:03:49I know, I know, I know.
5:03:51They don't count on it.
5:03:54The, uh...
5:03:56I don't know.
5:03:57Here we go.
5:04:35The statistical world, there's a feeling that you have many numbers about the population.
5:04:46You don't analyze it.
5:04:48by age and by sex.
5:04:51Just for openers, you don't begin to understand what the meaning of the statistic is.
5:04:59So there's a famous table on WPA workers titled, WPA Workers Broken Down by Age and Sex.
5:05:21and he couldn't comfort him at all.
5:05:24Finally, he quieted down and said, that's what happened.
5:05:27He said, my Indian died.
5:05:31One of the boys he heard of.
5:05:54The rapper's name was very good last night.
5:05:56I particularly enjoyed that portion where you were talking to him about how inconceivable it would have been if the Russians and the Chinese were cooperating with the political advantage.
5:06:08It was a very important thing to have in mind.
5:06:14Well, of course, it's a great thing.
5:06:17It's something to question about.
5:06:18Yeah.
5:06:18You're laying in the water now.

Nixon, Shultz & Weinberger on Federal Budget and Deficit Spending

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Nixon Library Finding Aid

Also recorded on January 3, 1972

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