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Conversation: 852-015

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Start Date: 7-Feb-1973 3:15 PM

End Date: 7-Feb-1973 5:11 PM

Participants:

Nixon, Richard M. (President)Shultz, George P.Ehrlichman, John D.Bull, Stephen B.Sanchez, Manolo[Unknown person(s)]Mills, Wilbur D.

Recording Device: Oval Office

852-015a.mp3

852-015b.mp3

NARA Description:

On February 7, 1973, President Richard M. Nixon, George P. Shultz, John D. Ehrlichman, Stephen B. Bull, Manolo Sanchez, unknown person(s), and Wilbur D. Mills met in the Oval Office of the White House from 3:15 pm to 5:11 pm. The Oval Office taping system captured this recording, which is known as Conversation 852-015 of the White House Tapes.

Nixon Library Finding Aid:

Conversation No. 852-15

Date: February 7, 1973
Time: 3:15 pm-5:11 pm
Location: Oval Office

The President met with George P. Shultz and John D. Ehrlichman.

       Legislation

       Tax policy
              -Commitments
                     -Property taxes
                     -Tax credits
                             -Private schools
              -Simplified forms
              -Tax reform
                     -Political advantage for administration
                             -Criticism
                             -Budget
                             -Wilbur D. Mills
                             -Russell B. Long
                     -Congressional and public’s support
                     -Proposals
                             -List
                             -Compared to major goal strategy
                     -Mills
                             -Reactions to proposals
                                      -42-

             NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                Tape Subject Log
                                 (rev. Mar.-09)
                                                    Conversation No. 852-15 (cont’d)


                -Shultz’s caution
         -Tax reform proposals
                -Consultation with Congress
                -Commitments
                -Cooperation with Congress
                       -Candidates

Foreign trade
       -Important aspects
              -Taxes
       -Burke-Hartke bill
              -Taxable foreign earnings
              -American foreign investment
              -John B. Connally's assessment
              -Shultz’s and Ehrlichman’s assessments
              -Union support
                      -George Meany
                             -New York Newspaper Guild
                             -Conversation with Shultz
                                     -Trade legislation
                                     -Jobs
                      -Businessmen council meeting
              -Oil industry
                      -Exploration abroad incentive
                             -Losses
                                     -Early exploration
                                     -Deductible
                             -Income
                                     -Tax
                                             -Loss to US
       -Taxes

Energy
         -Imports
                -Shultz's report
         -Connally
         -Independent oil operators
                -Opposition
                                              -43-

                  NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                      Tape Subject Log
                                       (rev. Mar.-09)
                                                               Conversation No. 852-15 (cont’d)


                     -Oil prices
             -Incentives for domestic production
             -Oil Policy Committee
                     -William E. Simon
                             -Chairman
                     -Restructuring
                     -Imports
                             -Necessity
                     -Restrictions
                             -Preferred market
                             -Bargaining tool
                                     -Mohammed Reza Pahlavi [Shah of Iran]
                                     -[Faisal, King of Saudi Arabia] Malik Faisal ibn Abd al-Aziz
al-Saud
             -Oil study
                     -Shultz's staff
                     -Political considerations
                             -Earlier delays
                             -Senators
                                     -Clifford P. Hansen
                     -Quotas and tariffs
                             -Differences
                             -Long
                                     -Meeting with President
                                     -Oil and gas interests
                                             -Family
                                     -Meeting with Golda Meir
                                     -Restrictions on Arab oil
                                             -Domestic oil producers
                                                     -National security
                     -Tariffs
                             -Domestic incentives
                             -Reform
                                     -Liberalization
                                     -Experimental process

      Tax reform proposal
             -Capital gains
                                      -44-

           NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                               Tape Subject Log
                                (rev. Mar.-09)
                                                       Conversation No. 852-15 (cont’d)


               -Minimum tax
               -Changes
               -Capital losses
       -Exploration for oil
               -Tax breaks
       -Drilling costs and depreciation allowance benefits
               -Difficulties
       -Drilling incentives
               -Dry holes
       -Energy message
               -Trade bill
               -Foreign tax bill
               -Tax reform package
                       -Hearings
                       -Politics
       -Oil companies
               -Dry holes
                       -Appearance of loophole
               -Energy plan
                       -Tandem with tax plan
       -Trade energy packages
               -California
       -Presentation to Congress
               -Integration of packages

Congressional relations
      -Energy policy
              -Bipartisan leaders
              -Publicity
              -Meeting with President
                      -Scheduling
      -Trade policy
              -Bipartisan presentation
                      -California
              -Message
              -Devaluation announcement
                      -Timing
                      -Consultation with Congress
                                               -45-

                   NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                      Tape Subject Log
                                       (rev. Mar.-09)
                                                            Conversation No. 852-15 (cont’d)


                                   -Recess
                                   -Difficulties
                                   -Telephone calls from White House staff
                            -Timing
                                   -Trade bill announcement
                            -President's return to Washington
                                   -Meeting with Henry A. Kissinger
                     -Leaders' meeting
                            -Radio speech
                            -Support for President

       Energy policy
             -Connally's attendance
             -Comprehensive paper
             -Peter M. Flanigan
             -Option paper
                     -Decisions
                     -Charles J. DiBona
                            -Analysis
                            -National security
                            -Oil imports

Stephen B. Bull entered at an unknown time after 3:15 pm.

       Wilbur D. Mills
              -Arrival for meeting

Bull left at an unknown time before 3:44 pm.

       Energy policy
             -DiBona’s analysis
                     -National security
                            -Oil reserves
                                    -Arab oil
                                    -Conservation
                     -Contrast with Long’s view
             -Oil study
                     -Levels of domestic production
                                             -46-

                   NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                     Tape Subject Log
                                      (rev. Mar.-09)
                                                             Conversation No. 852-15 (cont’d)


                            -Bargaining position
                     -Exploration
                            -Long
                            -Prices

       Energy paper
             -Nuclear power
                    -Breeder reactor
                            -Soviet prototype
                    -Time before production
                    -Budget
             -Breeder reactor
                    -President's conversation with Dr. Edward Teller
                    -Feasibility
                    -Theoretical stage
                    -Soviet Union
                    -France
                            -Prototypes
                    -Scientific community involvement
                            -Consensus
                    -Dr. H. Guyford Stever
                            -Carnegie Mellon University
                    -Dr. Edward E. David, Jr.
                            -Involvement
                    -Connally
             -Connally's views
             -Deregulation of gas prices
             -Exploration
                    -Price incentives
                    -Continental shelf
                            -Leases
                    -Deep water ports
             -Tankers
                    -Connally

Mills and the White House photographer [?] entered at 3:44 pm.

       Greetings
                                                -47-

                     NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                          Tape Subject Log
                                           (rev. Mar.-09)
                                                              Conversation No. 852-15 (cont’d)



       Seating
               -Edward R. G. Heath
               -[Hussein, King of Jordan] Hussein ibn Talal
               -Mills
       Mill’s appreciation
               -Photograph [?]
               -First Family

       [Photograph session]

Ehrlichman and the White House photographer [?] left at 3:44 pm.

       Congressional relations
             -Legislation
                     -Mill’s vote
                             -Farmers
             -President’s trip to Arkansas
                     -Searcy, Arkansas
                     -Harding College [?]
                     -University of Arkansas
                             -Little Rock
                     -Hendrix College
                             -Mill’s alma mater
                             -Arthur F. Burns
                             -School of Social Sciences
                                     -Curriculum
                                     -Mill’s interest
                                     -Liberalism
                                     -Compared to social services
                                     -Sociologists

       Stennis
                 -President's visit
                 -Chances of survival
                 -President's telephone call
                        -Tricia Nixon Cox
                 -Recovery
                                     -48-

            NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                              Tape Subject Log
                               (rev. Mar.-09)
                                                        Conversation No. 852-15 (cont’d)


                -Gen. Walter R. Tkach
        -Appearance
                -Hand-shaking
        -Doctor's comments
                -Physical condition
                       -Compared to James O. Eastland
                       -Liver
        -Habits
                -Compared with Eastland
                       -John J. Flynt, Jr. [?]

Economic legislation
      -Arkansas farmers
              -Price supports [?]
      -Mills's knowledge
              -John W. Byrnes
              -[Herman T. Schneebli] [?]
                      -Leadership
      -Meetings with President and Shultz
              -Tax problems

Tax proposals
       -Discussions with President
       -Legislation
       -Tax reform
       -Energy
              -Oil, natural gas

Trade
        -International monetary situation
        -Mill’s interest
        -Public posture of administration
                -Markets
        -Mills's work
        -Administration's work
        -Most favored nation [MFN] status
                -Soviet Union
                -Albania [?]
                                       -49-

            NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                Tape Subject Log
                                 (rev. Mar.-09)
                                                           Conversation No. 852-15 (cont’d)


                      -Jews
               -Votes in House of Representatives
               -1948 United Nations [UN] agreement on emigration
                      -Soviet Union

Soviet Union
       -Israel
       -Jewish emigration
               -Administration's negotiations
       -Jews
               -Mills’s attendance at Philadelphia event
               -Fund raising

Trade
        -Bipartisan meeting
                -Scheduling
                -Trade package
        -Shultz's meeting with Mills
                -Mills's schedule
                        -Byrnes's visit
        -Protectionism
                -Burke-Hartke bill
                -Administration's opposition
        -Balance of payments
        -MFN status
                -Bargaining position
                        -Compared to unilateral action

International monetary situation
        -Shultz
        -Consultation with Congress
        -Balance of payments, trade deficit
        -Need for surprise
        -Great Britain
                -Currency flow
                -Dual arrangement
        -Balance of payments
                                              -50-

                   NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                      Tape Subject Log
                                       (rev. Mar.-09)
                                                             Conversation No. 852-15 (cont’d)


Manolo Sanchez entered at an unknown time after 3:44 pm.

       Refreshments

Sanchez left at an unknown time before 5:11 pm.

       International monetary situation
               -President's program
               -Conversations with Burns
                       -Publicity
               -Surcharges
                       -Amounts
                       -Balance of payments
                       -Imports
               -Inflation
                       -Wages
                       -Compared to rates in France

       Trade package
              -Bipartisan meeting
                      -Scheduling
                      -Preliminary work
              -Administration's approach
                      -US jobs
                      -Flooding of US market
                              -Japan
              -Bipartisan meeting
              -Message to Congress
              -Shultz’s role
                      -Meeting with Mills
                              -Scheduling
                      -Mill’s schedule
                              -Speaking engagements
                                     -New Orleans
                                             -Car dealers
                                     -Little Rock
                                             -Broadcasters
                                               -51-

                    NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                       Tape Subject Log
                                        (rev. Mar.-09)
                                                             Conversation No. 852-15 (cont’d)


       George S. McGovern

       International monetary situation
               -Shultz’s telephone call to Mills
               -Prompt action

Manolo Sanchez entered at an unknown time after 3:44 pm.

       Cigarettes
              -Smoking
              -Allergy

       Refreshments
              -Iced tea

Sanchez left at an unknown time before 5:11 pm.

       Trade proposals
              -Mills's speech
                      -Economy
                              -Future
                              -International problems
                              -Conference
              -International conferences
                      -Number of countries
                      -Value
              -Dealings with individual nations
              -Big five nations
                      -US, Great Britain, France, Germany, Japan
                      -Discussions over trade, money, defense
                              -Defense expenditure
                              -Link
                      -Trade arrangements
                      -Great Britain
                              -Separate issues
                              -Heath

       Tax policy
                                             -52-

                  NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                      Tape Subject Log
                                       (rev. Mar.-09)
                                                               Conversation No. 852-15 (cont’d)


             -Shultz
                       -Testimony

      Trade proposals
             -International Monetary Fund [IMF] speech
             -Negotiating authority for President
                     -Tariffs

Unknown person entered at an unknown time after 3:34 pm.

      Photograph [?]

Unknown person left at an unknown time before 5:11 pm.

      Trade negotiations
             -Balance of payments emergency
                     -President's authority to declare
                             -Surcharge
                                     -1971 surcharge
                                     -Bargaining chip
             -Japan
                     -Possible import surcharge in legislation
                             -Effects
             -Balance of trade deficit, payments
                     -Leaders' meeting
                     -Bargaining
                             -Japan
                             -Europe
                             -Bipartisan clout
             -Authority for President to restrict imports
                     -Inflation
                     -Selected items
                             -Beef, cattle
                             -Fear of flooding markets
                                     -Japan
                                     -Safeguards
                                             -Choices for President
                             -Tariff commission
                                    -53-

           NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                             Tape Subject Log
                              (rev. Mar.-09)
                                                    Conversation No. 852-15 (cont’d)


                     -Compared to radio, television [TV]
      -Protectionism
             -Burke-Hartke bill
             -Sentiment
                     -Balance of trade deficit
      -World trade
             -Concerns
             -Labor unions
                     -Job safeguards
                     -Adjustment assistance
                     -Shultz’s discussions
                     -George Meany
      -Trade bill
             -Safeguards for jobs
             -Unemployment compensation bill
                     -Federal standards
                     -Congressional support
                     -Standards
-                            -States
                                     -New York compared to Arkansas
                             -Ways and Means Committee
                                     -Social Security Act
                             -State legislatures
                                     -Arkansas
                                             -Governor
      -Income maintenance
             -Imports
                     -Resulting loss of jobs

Labor issues
       -Jobs
       -Vested pensions rights
       -Ways and Means Committee
              -Appropriations Committee
       -Education and Labor Committee
       -Contractors with government
              -Defense, National Aeronautics and Space Administration [NASA]
              -Employees
                                      -54-

            NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                               Tape Subject Log
                                (rev. Mar.-09)
                                                     Conversation No. 852-15 (cont’d)


                      -Length of employment
                      -Pension rights
        -Pension funds
               -Pooling
               -Employer payments
               -Mobility of work force
               -Construction industry
               -Contractors
        -Trade bill
        -Pension bill
               -Employment termination
                       -Guarantees
               -Labor unions
        -Pensions
               -Expense
               -[David] [?] Leonard
               -Meany
               -Government supervised pension fund
               -Standards
               -Social Security buffer

Trade
        -Possible legislation
               -MFN status
               -Developing countries
        -Japan
        -Europe
        -Latin America
               -Special treatment
                        -State Department
               -Africa
                        -Common market
               -Commonwealth
        -Great Britain, France
               -Special deals with former colonies
                        -Mediterranean
        -Latin America
               -US special deals
                                         -55-

            NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                  Tape Subject Log
                                   (rev. Mar.-09)
                                                       Conversation No. 852-15 (cont’d)


                         -Formulas
               -Brazil
                         -Gold reserves
                         -Political system

Philippines
       -Ferdinand E. Marcos's government
       -Internal situation
       -US Support for Marcos
               -Necessity

Foreign policy
       -Dealings with other nations
       -Internal affairs
               -Genocide

Trade
        -Congress
        -Modification of President's authority to negotiate
                -Trade barriers
        -Tariffs
                -Desirability
        -International monetary situation
                -Undervaluation of dollar
        -Tax policy
        -Congressional relations
                -Japan
                -Leaders' meeting
                -Consultations
                -Pressures
                -Mills's role
                        -Agreement with administration
                -Working together
                -Long
                        -Welfare reform meeting with President
                -Bipartisan strategy
                        -Tax policy
                                -Difficulties
                                    -56-

           NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                             Tape Subject Log
                              (rev. Mar.-09)
                                                   Conversation No. 852-15 (cont’d)


                    -Demagogues
                    -Labor leaders
                    -Business leaders
                    -Mills’s role

Congressional relations
      -Consensus
              -Lyndon B. Johnson
              -Role of President
      -Tax reform
              -Disagreements
      -Trade
              -Jacob K. Javits
                      -New York constituents
                      -Free trade
              -Consultation
                      -Bipartisan leaders
                      -Shultz’s role
                              -Requesting support
                              -Advice from Congress
      -Mills
              -Nomination for Presidency as Democrat
      -Fred Barkley
              -Mills’s friend
              -President of Union Oil
              -Testimony on fuel shortages
              -John O. Pastore
              -Silvio O. Conte
      -Bipartisan meetings
              -Taxes
              -Trade
              -Energy
                      -Shultz
                      -Ways and Means Committee
                              -Quotas
                              -Imports
                      -Long
                              -Ehrlichman
                                    -57-

           NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                             Tape Subject Log
                              (rev. Mar.-09)
                                                   Conversation No. 852-15 (cont’d)


                                  -Oil interests

Energy policy
      -Kerr-Mills
      -Federal Power Commission
              -Gas
      -Arkansas
              -Gas shortages
              -Atlantic Richfield Company [ARCO] gas field in Oklahoma and Texas
                      -W. R. (“Witt”) Stevens
                      -Federal Power Commission
                              -Request for pipeline
                              -Chairman
                              -Responsiveness
                              -Report from staff
              -Study in administration
                      -Shultz, Ehrlichman
                              -DiBona
                              -Simon
                              -Flanigan
                              -Rogers C. B. Morton
              -Importance of problem
              -Francis Case
              -Oil interests
                      -Fred Barkley
              -Oil prices
                      -Arabs
                      -Bargaining leverage
                              -Long
              -Intrastate gas
                      -Price control
                      -Compared with interstate gas
              -Meetings with Shultz, Ehrlichman and Connally [?]
              -Mills’s recommendation
                      -Campaign contributions

Tax policy
       -Tax angles
                                -58-

    NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                        Tape Subject Log
                         (rev. Mar.-09)
                                                 Conversation No. 852-15 (cont’d)


        -Trade aspects
        -Energy problem
-General tax message
        -Energy, trade messages
-Mills’s schedule
        -Paul A. Volcker [?]
                -Bailout
                -Public witnesses
-President's views
        -Tax reform
        -Commitments
-Credit for private schools
        -Congressional action
        -President's problems
                -President's political commitments
        -Catholics
                -John F. Kennedy
        -Dual school system
-Property tax relief for elderly
        -Burden
        -New England
-President's political commitments
-Checklist on tax reform
-Tax reform
        -Important areas
                -Investment income
                        -Amount
                        -Tax rate
                -Capital gains
                        -Changes
                                -Nelson A. Rockefeller
                        -Depreciation
                                -Conversion
                        -Rate structure
                        -Wall Street
                                -Reactions
                                -Speculation
                                        -Taxation
                                                 -59-

                   NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                       Tape Subject Log
                                        (rev. Mar.-09)
                                                           Conversation No. 852-15 (cont’d)


              -Capital gains
                     -Amount
                     -Beneficiaries
                     -Sale of homes
                             -Exclusions
                             -Mills's views on reform
                             -Capital gains reinvestment

Bull entered at an unknown time after 3:44 pm.

       President's schedule

Bull left at an unknown time before 5:11 pm.

       Tax policy
              -Capital gains
                      -Payments over years
                      -Political appeal
                              -Conservatives
              -Estate taxes
                      -Rates
              -Charity contributions
                      -State taxes
                      -Capital gains
                              -Labor
                      -Inherited assets
                              -Market value
              -Inequities in tax structure
              -Mortgage deductions
              -Charity deductions
                      -President's support
                      -Hendrix College
                      -Whittier College
              -Tax relief
                      -Gasoline tax
                      -Middle incomes
                              -Silent Majority
                              -Meany
                                       -60-

            NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                               Tape Subject Log
                                (rev. Mar.-09)
                                                  Conversation No. 852-15 (cont’d)


                      -Protests
       -Poverty level income
       -Minimum wage
              -Subsistence level
                      -Whittier, California
                      -Little Rock
                      -Welfare reform
              -Annual income

Unemployment
     -Young people
     -Breadwinners
            -Compared with late 1960s
            -Women
            -Youth
            -Meany
     -Beginner's wage rate
            -US, Soviet Union
     -Minimum wage
            -Unemployment rates
            -Meany
            -Labor market
            -Peter J. Brennan

Great Depression
       -Unemployment
              -Percentage calculation
                     -Welfare recipients
                     -Social Security

Tax policy
       -Credit for private schools
       -Property tax relief for elderly
       -Simplification
       -Energy, trade
       -President's checklist from Shultz
       -Shultz's conversation with Mills
               -Areas of agreement
                                               -61-

                   NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                      Tape Subject Log
                                       (rev. Mar.-09)
                                                            Conversation No. 852-15 (cont’d)


              -Inequities
              -Incentives
              -Equity
                      -Problems
                             -Conflict with national objectives
                                     -Charity
                                     -Social objectives
                                     -Employment of women
                                     -Energy
              -Tax reform
                      -President’s law school
                      -Charles Lown’s [?] comments
                             -Social purpose
                                     -Charles Lown’s [?] comments

Stephen Bull entered at an unknown time after 3:44 pm.

       Alice Roosevelt Longworth

Bull left at an unknown time before 5:11 pm.

       President’s schedule
              -Ronald L. Ziegler’s telephone call
                      -Longworth
                            -Illness

       Congressional relations
             -Consultations between Shultz and Mills
                     -Energy
                     -Trade
                     -Tax
                     -Another meeting

       Tax policy
              -Mills’s commitment
                      -Single taxpayers
                             -Numbers
                             -Importance
                                            -62-

                    NIXON PRESIDENTIAL LIBRARY AND MUSEUM

                                     Tape Subject Log
                                      (rev. Mar.-09)
                                                             Conversation No. 852-15 (cont’d)


                          -Burden of taxation
                                  -Compared to families
                     -Women's longevity
               -Unknown woman's support for President

       President’s schedule
              -Future meetings with Mills and Shultz
                      -Camp David

       Franklin D. Roosevelt
              -Meeting with Winston S. Churchill, Josef V. Stalin, Chiang Kai-shek
                     -Seating arrangements

Shultz and Mills left at 5:11 pm.