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Conversation: 706-005

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Start Date: 11-Apr-1972 3:06 PM

End Date: 11-Apr-1972 5:05 PM

Participants:

Nixon, Richard M. (President)Peterson, Peter G.Ehrlichman, John D.Flanigan, Peter M.Cole, Kenneth R., Jr.Bull, Stephen B.Sanchez, ManoloBurns, Arthur F.Shultz, George P.Connally, John B.Malek, Frederic V.

Recording Device: Oval Office

Full Tape Conversation Start Time: 03:14:58

Full Tape Conversation End Time: 05:13:53

706a.mp3

706b.mp3

706c.mp3

NARA Description:

On April 11, 1972, President Richard M. Nixon, Peter G. Peterson, John D. Ehrlichman, Peter M. Flanigan, Kenneth R. Cole, Jr., Stephen B. Bull, Manolo Sanchez, Arthur F. Burns, George P. Shultz, John B. Connally, and Frederic V. Malek met in the Oval Office of the White House from 3:06 pm to 5:05 pm. The Oval Office taping system captured this recording, which is known as Conversation 706-005 of the White House Tapes.

Nixon Library Finding Aid:

Conversation No. 706-5

Date: April 11, 1972
Time: 3:06 pm - 5:05 pm
Location: Oval Office

The President met with Peter G. Peterson, John D. Ehrlichman, Peter M. Flanigan, Kenneth R.
Cole, Jr. and Stephen B. Bull; the White House photographer was present at the beginning of the
meeting.

     Greetings

     John B. Connally
          -Forthcoming meeting with the President
               -Delay

Bull left at an unknown time before 3:48 pm.

     Commerce Department
        -Undersecretary
                                             37

                          NIXON PRESIDENTIAL MATERIALS STAFF

                                     Tape Subject Log
                                       (rev. 10/06)
                                                               Conv. No. 706-5 (cont.)


                -James T. Lynn

     Economy
         -Foreign trade
              -Commercial attaches
                    -Legislation before Congress

Manolo Sanchez entered at an unknown time after 3:06 pm.

     Refreshment

Sanchez left at an unknown time before 3:48 pm.

     Economic issues
         -Commercial attaches
               -Problems with pending legislation
               -Foreign trade
                     -Foreign Service officers
                          -Indoctrination on economic issues
               -State Department
                     -Lack of leadership on economic issues
                          -Undersecretaries
                          -Textiles
                          -Agriculture
         -Foreign trade
               -Leadership
               -Attaches

     US-Soviet Union relations
         -Henry A. Kissinger
         -Flanigan
         -Trade
               -Linkage
               -Soviet needs
               -Commercial deals
                    -Raw materials
                    -Capital demands
                          -Oil and gas
                          -Scope
                          -Return
               -Soviet debts
                                        38

                     NIXON PRESIDENTIAL MATERIALS STAFF

                                Tape Subject Log
                                  (rev. 10/06)
                                                                  Conv. No. 706-5 (cont.)


          -Gradual increase
                -Export-Import [Ex-Im]
                -Most favored nation status [MFN]
          -Raw materials
                -Aleksei N. Kosygin
                -US credits
                -Soviet gains
          -Resources
                -Capital demands of Soviets
          -Anatoliy F. Dobrynin
                -Conversations with Peterson
          -Peterson's meeting with Soviet Trade Minister, Nikolay S. Patolichev
                -Arrangements
                -Ex-Im and MFN status
                -Talks
          -Issues
                -Ex-Im agreements
                -Credits
                -MFN status
                      -1972 election
                      -Congress

Foreign trade
     -Poland
     -Yugoslavia and Rumania
           -US attitudes
           -Kissinger
     -Poland
           -The President's forthcoming trip
     -Poland, Yugoslavia and Rumania
           -Visits to US
     -Eastern European nations
           -Contacts with US
     -Soviet trade
           -Peterson memorandum
                 -Recommendations
           -Donald McI. Kendall
           -Benefits to US
                 -US businessmen
                       -Sales
           -Credit and investment guarantees
                                       39

                    NIXON PRESIDENTIAL MATERIALS STAFF

                               Tape Subject Log
                                 (rev. 10/06)
                                                         Conv. No. 706-5 (cont.)



Energy
     -Flanigan
     -Ehrlichman
     -Problems
           -Long-range view
           -Politics

Economy
    -Maritime Administration
         -Andrew E. Gibson
               -Study of imports
                    -Maritime implications
    -Energy
         -Oil imports
               -Percentage
               -Maritime fleet
                    -Projected size
                    -Supertankers
                          -Japanese
                          -Economic advantages
                          -Dock facilities
                                -Political problems
                                      -Delaware
                          -Problems
                                -Subsidies
               -Domestic problems
                    -Incentives
                    -Environment
               -Supertankers
                    -Ports of call
                          -Canada and the Bahamas
                    -Docking problems
                    -Japan
                          -Australia
               -Recommendations
                    -George P. Shultz
                          -Budget problems
                    -Investment areas
                          -Welfare
                          -Hard and soft goods
                                       40

                    NIXON PRESIDENTIAL MATERIALS STAFF

                               Tape Subject Log
                                 (rev. 10/06)
                                                         Conv. No. 706-5 (cont.)


     -Investments
          -Welfare
          -Summer youth programs
          -Maurice H. Stans
          -Day care centers
          -Office of Economic Opportunity [OEO]
          -Democratic political pressures
          -Conflicts between business and welfare
          -Energy
                -Supertankers
                     -Shultz
                     -Docking problem
                          -Pacific Northwest
                                -Local resistance
                          -Maine
                          -Gulf states
                                -Louisiana and Texas
                                -Off-shore leasing

Energy
     -Alaska
     -Political problems
           -Environment
           -Costs to consumers
           -Domestic ownership
           -Petersons' job
                 -Budget
                       -Shultz
                 -Monitoring issue
                       -Cole
                 -Business representation
           -Environment
                 -1972 election
     -Public awareness
           -Increase
                 -Publicity
                       -Business community
           -Rogers C. B. Morton
                 -Testimony
                       -News summary
                 -Power shortages
                                         41

                     NIXON PRESIDENTIAL MATERIALS STAFF

                                 Tape Subject Log
                                   (rev. 10/06)
                                                                   Conv. No. 706-5 (cont.)


                 -Gibson
           -Power stations
                 -Construction
                       -Objections
                             -Compared with Vietnam War
           -Peterson's role
                 -1972 election
                 -Stans
                 -Links to liberals

Foreign trade
     -US competitiveness
           -Information gathering
           -Steel output
                 -Japanese
           -Japanese
                 -Strategic industries
                       -Studies
                             -Machine tools, steel
                             -Depreciation, write-offs
           -Study program
                 -Commerce Department
                       -Connally
                 -Depreciation policies
                 -Strategic industries
                       -Foreign government support
                       -US tax reform bill
                             -Congress
                             -Connally
                                  -1969 talk with the President at San Clemente
                                  -Cattle
           -Reform
                 -Connally's role
                 -Study program
                 -Depreciation policies
                       -Problems
                             -Housing
                             -ADR
                                  -Investment tax credit
           -German and Japanese policies
                 -Successes
                                       42

                    NIXON PRESIDENTIAL MATERIALS STAFF

                               Tape Subject Log
                                 (rev. 10/06)
                                                                Conv. No. 706-5 (cont.)


          -New jobs
               -Speech
               -Publicity for reform
          -Study for Congress
               -Investment tax credit
               -Japanese
               -Responsiveness
          -Tax reforms
               -Criticism
                     -Rich compared to poor
               -Jobs
               -Treasury conservatism
                     -Internal Revenue Service [IRS]
                     -Peterson's meeting with Connally
               -Tax lawyers

Technology
    -Industrial technology
         -Study by Commerce Department
                -Patents
                      -US government ownership
                            -Commercial production
                      -Review of policies
                            -Costs
                                  -Research and development [R&D]
                      -Nonexclusive provisions
         -Patent policies
                -State of the Union address
                -Incentives for technology
                      -Cost sharing
                -Government patents
                      -Commercial production
                      -Government R&D
                            -Roadblocks
                      -William M. Magruder
    -Commerce Department
         -Aggressiveness
                -Salesmanship
                      -1972 election
                      -Business
                      -Jobs
                                        43

                     NIXON PRESIDENTIAL MATERIALS STAFF

                                Tape Subject Log
                                  (rev. 10/06)
                                                                Conv. No. 706-5 (cont.)


                     -Prices
                     -Job creation
                     -R&D
                     -Emphasis on jobs
                           -Environment
                     -Necessity to sell
                           -Ehrlichman, Charles W. Colson and H. R. (“Bob”) Haldeman
                     -Image of business
                           -Administration's image
                                 -International Telephone and Telegraph [ITT]

Environment
     -National Industrial Pollution group
          -Comments
                -Growth
                      -Club of Rome study
                -Quality of life programs
                      -Costs
                            -Office of Management and Budget [OMB]
                            -Health, welfare, mass transit
          -Long-range costs
                -Source of funds
                -Projections
                -Economic growth
                -Zero-growth advocates

Economy
    -Productivity Commission
         -Shultz
         -I[lworth] W[ilbur] Abel and Leonard Woodcock
               -Membership
         -Popular appeal
         -Advertising Council
               -Identification of the President with campaign
         -Cost-wage push
               -Range of problems
                     -Germany and France
    -Productivity
         -The President’s August 15, 1971 statement
         -Popular appeal
         -International problem
                                   44

                NIXON PRESIDENTIAL MATERIALS STAFF

                           Tape Subject Log
                             (rev. 10/06)
                                                           Conv. No. 706-5 (cont.)


     -Bargaining system
           -Phase II
           -Businessmen's doubts
                 -Strikes
                       -Costs
     -Strikers
           -Benefits
     -Food chains
           -Meeting with Connally
     -Bargaining system
           -Reform
           -Post-election changes
           -Shultz's ideas
           -Dangers
                 -Pre-election attacks against labor
-Minority economic development
     -Appeal to voters
     -Political appeal
           -"Bridge to dignity"
     -Problems
           -Peterson’s speeches
                 -Chicago
                 -New York
           -Lack of knowledge in public
                 -Bold steps
                       -Prominent blacks to sell program
                             -Stars
                             -Athletes
     -Dinner
           -New York
     -Inner cities
           -Deterioration
           -Economic stimulation
           -Unknown person's suggestion
                 -Focus on business
                       -1969 campaign theme
           -[Forename unknown] Messig [sp?]
                 -Stans
-Productivity
     -Peterson's recommendations
           -Advertising Council
                                              45

                           NIXON PRESIDENTIAL MATERIALS STAFF

                                      Tape Subject Log
                                        (rev. 10/06)
                                                                       Conv. No. 706-5 (cont.)


                 -Wage-cost push
                 -Pre-election actions
                 -Peterson's meeting with Connally
                       -Date and location

Connally, Arthur F. Burns, Shultz and Frederic V. Malek entered at 3:48 pm.

     Greetings

     Connally
         -Health

     Economy
         -Connally's meeting with Peterson
              -International competition
              -Productivity
         -Environment

Peterson, Ehrlichman, Flanigan and Cole left at 3:49 pm.

     [General conversation]

     Federal Reserve Board [FRB]
          -Vacancy
               -Number
                     -Sherman J. Maisel
                     -Andrew F. Brimmer
                          -Ambassadorship
                               -Removal
                               -Black ambassadors
                                     -Position security
                                           -Election
                               -Rogers
                                     -United Nations [UN]
                                           -Secretary General
                               -Confirmation
                               -European post
                               -African post

     Jerome H. Holland
          -Background
                                        46

                     NIXON PRESIDENTIAL MATERIALS STAFF

                                Tape Subject Log
                                  (rev. 10/06)
                                                                 Conv. No. 706-5 (cont.)


            -College
                 -Football
      -Tenure
      -Post
      -Future

FRB
      -Vacancy
           -Candidates
                 -Names
           -Districts and regions
                 -California
      -Candidates
           -List
           -Jeffrey M. Bucher
           -Ward C. Krebs
           -Bucher and Krebs
                 -Origins
                 -Age
           -Selection
                 -Criteria
                       -Compared with Supreme Court
                             -Age of justices
                                   -Lewis F. Powell, Jr.
                             -William H. Rehnquist
                                   -Youth
                       -Length of term
                       -Age
                             -Compared with Supreme Court justices
                                   -Earl Warren
                                   -Warren E. Burger
                                   -Harry A. Blackmun
                                   -Powell
           -Bucher
                 -Aspirations
                       -Short-term
                             -Banking job
                 -Experience on board
           -Krebs
                 -Duration of term
           -Criteria
                            47

         NIXON PRESIDENTIAL MATERIALS STAFF

                     Tape Subject Log
                       (rev. 10/06)
                                                    Conv. No. 706-5 (cont.)


     -Banking background
-Krebs
     -Experience in banking
-Bucher
     -Youth
-Requirements
     -Judgment
     -Maturity
     -Longevity
           -Bucher
                 -Other positions in second term
-Krebs
-Bucher
     -Longevity on board
     -Burns's influence
-[John E. Sheehan]
-Bucher
     -Potential
-Krebs
     -Interview with Burns
           -Compared with Bucher
-Bucher
     -Harry J. Volk
     -Asa V. Call and Charles D. (“Tex”) Thornton
     -United California Bank
     -Bank of America
     -Security First National Bnak
     -United California Bank
-Volk
     -Prudential Insurance Company
     -Robert H. Volk
-Burns's preference
     -Ernest C. Arbuckle
           -David Packard's work
           -Background
                 -Stanford University
           -Present position
           -Krebs
-Candidate selection
     -E. Penn James's and Malek's work
     -Brimmer case
                                               48

                           NIXON PRESIDENTIAL MATERIALS STAFF

                                       Tape Subject Log
                                         (rev. 10/06)
                                                                       Conv. No. 706-5 (cont.)


                 -James L. Robertson
                       -Possible resignation
                 -Robert C. Holland
                       -Position on board
                             -Political affiliations
                             -Respect in banking world
                             -Appointment
                       -Replacement for Robertson
                             -Pension
                                   -Rules
                             -Age
           -Robertson
                 -Meeting with the President
                       -Sheehan's swearing-in
                 -Possible retirement
                 -Populism
                       -Support for small banks
           -Appointments
                 -Future make-up
           -Candidates
                 -Krebs
                 -Bucher
                       -Youth
                       -Work with Burns
                             -Compatibility
                                   -The President’s talk with Burger
           -Conflicts within board
                 -Number of dissents
           -Alfred Hayes
                 -Work with Burns
                       -Hayes's staff
           -Candidates for vacancy
                 -Names
                 -Criteria

Malek left at 4:13 pm.

     Budget
         -Information for the President
               -Money supply and interest rates
               -Wage and prices
                                        49

                      NIXON PRESIDENTIAL MATERIALS STAFF

                                Tape Subject Log
                                  (rev. 10/06)
                                                           Conv. No. 706-5 (cont.)


     -Deficit
          -Decrease

Environment
     -Commerce Department study
           -Peterson
     -Costs
           -Quality of life programs
                 -Relation to economic growth
     -Population
           -World
                 -Daniel P. (“Pat”) Moynihan
           -US
           -Stabilization
     -The President's meeting with Peterson
     -Oil imports
           -US needs
           -Supertankers
                 -Docking facilities
                       -Local resistance
                       -Texas
     -Quality of life programs
           -Family assistance
           -Day care centers
           -Costs
                 -Budget
           -Environmental field
                 -Regulatory activity
           -Proposition in California
                 -Loss of jobs if passed
                       -Edgar F. Kaiser
                             -Steel plants
           -Peterson
           -Political implications
           -Need for economic growth

Economy
    -Welfare programs
         -Family Assistance Program [FAP]
         -Education and health programs
         -Summer youth programs
                                             50

                           NIXON PRESIDENTIAL MATERIALS STAFF

                                     Tape Subject Log
                                       (rev. 10/06)
                                                                      Conv. No. 706-5 (cont.)


                -FRB
                -Peterson
                      -Charles H. Percy
                      -Change of attitude
                            -Stans
           -National Association of Businessmen [NAB]
                -Optimism
           -The President's meeting with Gordon E. Metcalf and John D. Harper
                -Prices and stocks
                      -Rate

Burns and Shultz left at 4:20 pm.

     Connally
         -Health
              -Illness
                    -Gen. Walter R. Tkach


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BEGIN WITHDRAWN ITEM NO. 9
[Personal Returnable]
[Duration: 3m 40s ]


END WITHDRAWN ITEM NO. 9

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     Connally's schedule
         -Trip to Texas
                -Stansville [?]
                -Dinner honoring Texas Supreme Court Chief Justice
                     -Speech
         -Time off

Manolo Sanchez entered at an unknown time after 4:20 pm.

     Refreshment
                                              51

                            NIXON PRESIDENTIAL MATERIALS STAFF

                                     Tape Subject Log
                                       (rev. 10/06)
                                                                 Conv. No. 706-5 (cont.)


          -Tea
                 -Effects
                 -Type

Sanchez left at an unknown time before 4:46 pm.

     Connally
         -Reports
               -World situation
         -Trip to Camp David
               -Idanell B. (“Nellie”) Connally
               -The President's Canadian speech
               -Transportation
               -Rest
                     -Camp David
                     -Golf
         -Work ethic
               -Speech
         -Health


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BEGIN WITHDRAWN ITEM NO. 11
[Personal Returnable]
[Duration: 1m 1s ]


END WITHDRAWN ITEM NO. 11

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          -Work ethic

     The President's schedule
          -Vietnam
                -Reports
                      -News summary
          -Critical decisions
                -Conversation with Haldeman
                                            52

                         NIXON PRESIDENTIAL MATERIALS STAFF

                                    Tape Subject Log
                                      (rev. 10/06)
                                                                   Conv. No. 706-5 (cont.)



    Vietnam
         -Kissinger
         -Air Force
         -Naval gunfire
         -North Vietnamese offensive
               -Victory
                    -Impact on Soviet Summit
                          -Cancellation
                    -Impact on foreign policy
                    -India, Middle East and Europe
                          -Soviet Union

    Treaty on biological warfare
         -Effect
               -Great power restraint
                    -The President's remarks at signing ceremony
         -Arms control
               -Great powers restraint
               -Soviet's views on Summit
                    -Dobrynin

    Vietnam
         -Navy
               -Fleet
               -Shelling of roads in North Vietnam
         -B-52 strikes
         -Polls
         -Critics
               -Edward M. Kennedy
         -Foreign policy


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BEGIN WITHDRAWN ITEM NO. 13
[Personal returnable]
[Duration: 24s ]


END WITHDRAWN ITEM NO. 13
                                             53

                         NIXON PRESIDENTIAL MATERIALS STAFF

                                     Tape Subject Log
                                       (rev. 10/06)
                                                                        Conv. No. 706-5 (cont.)



*****************************************************************


    Economy
        -Interest rates
              -Burns's policies
        -Burns's work
              -Interest rates
              -Money supply
              -European problems
                    -Paul A. Volcker's meetings
                    -Press conferences
        -The President's Canadian trip
              -Trade negotiations
              -Great Lakes agreement
              -The President's speech draft
                    -Connally's review
              -Pierre E. Trudeau
                    -Reelection
              -Quebec
                    -Separatism
              -Trudeau
                    -Reelection campaign
              -Connally's speech in Chicago to national broadcasters
                    -Reaction
                    -Business leaders
                    -Location
                          -Continental Plaza Hotel
                    -Tourist Bureau
                    -Dallas and Houston
                    -Format
                    -Agenda
                          -Foreign policy, taxes, loopholes, productivity
        -Taxes
              -Loopholes
                    -Definition
              -Major reforms
                    -Republican initiatives
                          -Eisenhower and the President
                    -Democratic interests
                                         54

                      NIXON PRESIDENTIAL MATERIALS STAFF

                                 Tape Subject Log
                                   (rev. 10/06)
                                                                  Conv. No. 706-5 (cont.)


                        -George C. Wallace
             -Loopholes
                  -Creation of jobs
                  -Home mortgage interests
                        -Abolition
                              -Opposition
                        -Purpose of loophole
                  -Municipal bonds
                        -Support of cities
                        -Abolition
                              -Failures
                  -Charitable contributions
                        -Abolition
                              -Impact
                  -Capital gains
                        -Dow-Jones Industrial Average
                  -Depletion allowance
                        -Energy crisis
                        -Abolition
                              -Disadvantages
                  -Casualty losses
                  -Estate taxes
                  -Peterson
                        -US competitive position
                              -Depreciation allowance
                                    -Japanese and West German example
                        -Change of position
                              -Support for loopholes


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BEGIN WITHDRAWN ITEM NO. 15
[Personal returnable]
[Duration: 6m 11s ]


END WITHDRAWN ITEM NO. 15

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                                         55

                     NIXON PRESIDENTIAL MATERIALS STAFF

                                 Tape Subject Log
                                   (rev. 10/06)
                                                          Conv. No. 706-5 (cont.)



                -ITT case
                     -Relations with ITT
                -Vance Hartke

Taxation
     -Overwithholding
          -News summary
          -Agents of Internal Revenue Service [IRS]
          -Correction of problem
                -Timing
          -Public campaign
                -W-4 exemptions
                -Mailings
                -Shultz
     -Tax returns
          -IRS aid to average taxpayer
                -Publicity
                      -Announcement of task force
     -IRS agents
          -Number
                -Customs Bureau in Florida
                      -Agents
                            -Sufficient number for job
          -Number for searches
                -Financing problems
     -Customs Bureau
          -Agents
                -Increase
                -Port officers
                -Value of inspections
                      -Specific case
                            -[Recent heroin seizure]
          -Budget and personnel cuts
     -Customs
     -IRS
          -Agents
                -Help for returns
                      -Political benefits
                      -Personnel available
          -Returns
                                        56

                     NIXON PRESIDENTIAL MATERIALS STAFF

                                Tape Subject Log
                                  (rev. 10/06)
                                                               Conv. No. 706-5 (cont.)


                -Johnnie M. Walters
                -Survey of small professional preparers
                     -H&R Block
                     -Fraudulency rate
                     -Costs of delinquency

ITT case
     -Edmund S. Muskie charge
         -Corporate taxes
         -Validity of claim

Economic policies
    -Food prices
         -Administration's actions
               -Albert E. Sindlinger poll
                      -Support
               -Offensive stance
                      -Sindlinger's conversation with Colson
         -Administration statements
               -Wholesale price index
                      -Graham Purcell's hearings
                      -News coverage
                            -Administration's image
         -Farmers
         -Middlemen
               -Retailers
                      -Safeway
                      -Need for discussions
                      -Profits
         -Actions before election
               -Freeze on food prices
                      -Effect
                      -Risks
                            -Farm vote
                      -Packers and producers
    -Current state of economy
         -Unemployment
               -Level
               -Figures
         -State in October
         -Inflation
                                                 57

                          NIXON PRESIDENTIAL MATERIALS STAFF

                                      Tape Subject Log
                                        (rev. 10/06)
                                                               Conv. No. 706-5 (cont.)


                    -Agitation of issue
                          -Housewives
                                -Networks
                    -Public statements
                          -Frequency
                          -Connally
                          -White House staffers
                                -Marina von N. Whitman
              -Mood of nation
                    -Florida
                    -Youth
                          -Tricia Nixon Cox's assessment
                                -Harvard University
                                -Nostalgia
                                -Stability and leadership
                    -Kennedy and Muskie
                          -Lack of support
          -Unemployment
              -Figures
                    -Analysis
                          -Youth
                          -New workers
                          -Creation of jobs
              -Positive perspective
                    -Social changes
                          -Wives and youth
                                -Entrance into labor force
              -Job seekers

Bull entered at an unknown time after 4:20 pm.

     The President's meeting with Kissinger

Bull left at an unknown time before 5:05 pm.

     Vietnam
          -North Vietnamese offensive
               -Aggression
                    -Analysis
                    -Compared with Laos and Cambodia
                    -US public reaction
                                              58

                          NIXON PRESIDENTIAL MATERIALS STAFF

                                      Tape Subject Log
                                        (rev. 10/06)
                                                               Conv. No. 706-5 (cont.)


                          -Bombing of North Vietnam
                          -US troops
                -Hanoi and Haiphong
                -Bombing of other cities and railroads
                -US countermeasures
                     -US choices
                     -Consequences of failure
                          -Credibility of foreign policy

The President and Connally left at 5:05 pm.