On June 9, 1971, President Richard M. Nixon and George P. Shultz talked on the telephone from 4:04 pm to 4:17 pm. The White House Telephone taping system captured this recording, which is known as Conversation 004-099 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 Do not cite this transcript as authoritative.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.
Hello.
Yes, sir.
Hi, George.
I wondered if our friend Friedman, did he give you any report after his dinner with Arthur?
No, I hadn't.
I saw him, but in a meeting.
I went over to the Federal Reserve's consultants meeting, and it lasted all morning long.
I didn't get a chance to talk with him individually.
I'll check with him later on in the day.
I imagine he's on his way back to Chicago now.
I'll try to get him on the phone there.
Well, it was good to see him.
I think my reaction was certainly the same as yours, that he might just give Arthur exactly the wrong push at this moment, and I think he might have too much of an effect.
What do you think?
Well, as you pointed out, he was basically saying things that Arthur agreed with, which makes it extra persuasive.
In the meeting this morning, Milton's advice to the Fed was that they should follow something on the order of about a 4% policy for a while.
That's good.
That 2% was sort of what was called for theoretically, but it would cause too much of a wrench, and they shouldn't go that far.
Now, all of the other...
There were a lot of other consultants around, Paul Samuelson and the group that basically follows that, and they were all complimenting the Fed on being so expansive and suggesting that they stay with it and just let it rip.
Yeah, yeah.
So what is your feeling?
Your feeling is for, or I don't know, I'm inclined not to get Arthur ever to think in terms of going as far.
I'm not quite as disturbed about the interest rate situation.
I mean, that six months up and then to take a bang next time, I just as soon have that luxury for a while.
Of what?
Of keeping it down?
Yeah.
Yeah.
My own feeling is that...
this roughly six percent path is what they said was the right policy and they ought to go to that and stay on it if they can yeah and and just not try to correct not try to be too precise about correcting the this bulge that has been there for about three months yeah and the worst thing in the world would be another
three or four weeks of downward movement, actual downward movement in the money supply, which they gave us in April, and which I think affected the economy.
We had things going pretty well, and then it slowed a bit.
And I think probably that had at least something to do with it.
So that's my own personal view.
As among administration people, that is Connolly, McCracken,
and company.
At this point, I tend to be on the more moderate side.
They're all would like to see things expand more.
Well, actually, George, let me, first point, when do you think we ought to do a quadriad?
Well, I think that any time now, that would be useful to do.
They're about ready.
Maybe early next week or
Early next week, all right.
Or later this week or any time at all.
I think that the experience has a note into you wanting to come and meet with you alone and report on the international monetary developments.
Well, I'll see you.
My suggestion when I was asked about it was that we have a quadriad meeting sometime very soon and try and substitute that.
Yeah.
so that you get the benefit of John's views and Paul's and the others who have been over at that meeting.
All right, fine.
I've got Holloman here now, and I'll tell him to set up a quadratus at a time that's convenient.
Do you think any time you'll be ready then?
Well, sure.
I think that we could do it tomorrow.
Let me ask you this.
With regard to the situation generally,
Friedman, I must say, he thinks there's an awful lot of steam in the boiler, doesn't he?
Yes, he does.
Of course, I think that...
that he is not as ambitious about what should happen to the economy this year as we are.
Well, he doesn't have that political fire burning on his tail.
He also is not taking into account what the Congress may do that will be very, very foolish unless we do a little bit more.
That's the other problem, George.
You see, our real thing is if we were God,
or a dictator, without having to go to the Congress, then maybe we ought to just keep it at a certain level and let her go up next year.
But we're not acting in any vacuum.
Yeah, that's certainly true.
The Congress, as far as our budget is concerned, and that's another thing that Samuelson and company were all saying, we need a more expensive budget.
And I just can't believe that they understand how expansive it is.
And the Congress is adding to it daily.
We had this action on the military pest today.
Unbelievable.
That'll trim down a lot, of course, when they get to the House.
Well, I'm not so sure, Mr. President.
You don't think so?
The House, of course, voted roughly a similar amount.
there are differences in the composition of the amount, so that it may be that it'll come down some, but my guess is it'll be up there pretty well.
And I was suggesting to Ron Ziegler this morning, he was asking about how, at least I would suggest he comment on that, that one thing we have to be careful about is that you're having supported and promoted the volunteer idea
that we don't get maneuvered into being against that somehow or other by virtue of our position on this money and that we talk about what we wanted and our approach was to increase it 50% raise this year and another big one next year but let's see what the 50% raise does to us as far as
as recruiting patterns are concerned and then yeah move on the thing about this pay raise isn't it basically too much in the higher brackets well the house part was yeah and the senate uh the the ballot action yeah uh was more in line with the um gates commission report yeah so it's considerably better insofar as the distribution is concerned than the house i see and so one of the things we're doing is getting up some material for clark mcgregor
to use with the conference committee to try to be sure that we get the Gates Commission-type structure in it in the conference.
Right.
But anyway, going back to the budget part, there's the military pay thing.
The education appropriation will be coming down probably $400 million to $500 million over your budget, and that's on the base of about a $4.5 billion appropriation.
Our intelligence out of the Ag Appropriation Committee is that
they're talking about 700 over and I think that they're going to be a whole series of these and one of the reasons I was pressing Bob this morning that that we ought to have a fairly thorough go-round on the budget and the economic situation very soon
so that we can get the whole picture in front of us for you to make your decisions on how we want to go on the accelerated public works, the public service employment, and all these other things.
Well, there's no question about the directions.
I mean, there's no question about the leaning.
The main problem I see is it's really a question of whether the increases affect jobs or whether they affect just...
And that's I know is a gray area, but whether they just affect Goosing up what we've already got and blowing it up.
I must say it's a and We may just have to face up to it George.
I don't know if we do well, there's tremendous pressure and to Just let let her rip on the budget.
Yeah the One of the things that I fear is that let's suppose that next year.
I
We have a real boom going on, and I think we're almost certain to have that myself, that unemployment has come down, that is clear in the campaign, but that we also have, A, two big deficits back-to-back on the order of 20 to 25 billion, and a definitely renewed inflation.
Now, I think that people are going to tie the deficits to the inflation.
The question is, who's responsible for those deficits?
Well, as a matter of fact, it'll be a fair game, because when we were running in 68, we tied the inflation, the incipient inflation, to the deficits.
Yeah, but we didn't produce that deficit.
I know, but we blame them, so we've got to expect them to blame us.
On the other hand, the deficit's going to be created, a hell of a lot of it is going to be created by the Congress.
But we've got to make that case.
That's right, and
That's really my point here, that we have to... Now is the time to be laying the groundwork for making that case to the extent it can be made and recognizing that when all is said and done, the people undoubtedly, they'll hold the president responsible for whatever it is that happens.
What about this?
You mean, are you ready for this meeting yet?
Or this is earlier than the one you want to do at San Clemente then?
Well, it would be...
It would be a somewhat abbreviated version of like the one we had in San Clemente the last July.
You wouldn't have the whole damn cabinet in this, though, would you?
Oh, no, no.
We'd just have the John and some others, and I should think we also ought to add perhaps John Mitchell and John Connolly.
to this uh i see but uh then we would go on in san clemente i understand we'll have some time probably available in the july eight or so oh yes yes and really we're planning hard on the fiscal 73 budget yeah the way we did last year yeah we're planning that of course
All right, fine.
Bob said that he had this in mind.
He's trying to work out some time.
All right.
Can I get you on one other thing while you're on the phone?
Yeah, sure.
You remember a month or so ago, I brought up with you Murray Stans' request for a mid-decennial census.
Yep.
No.
I don't think we want it, but, Naur, you think maybe we should because it might provide jobs?
No, sir.
It wouldn't provide any immediate jobs at all.
It wouldn't.
It would come in some years from now.
What the hell's the purpose of it, then?
Well, it would give more...
I recommend it against it, and that's what you decide.
Naur is appealing that now, and he said he insists on getting a presidential statement about it or a review.
The...
we transmitted the decision to him yeah yeah and uh i believe that a certain amount can be accomplished by a much less expensive kind of sample survey approach he rejects that and he wants it all or nothing all right fine that he gets nothing he's he he has to testify tomorrow and i'm going to call him and give him a reading we either he either has to do that we're not going to go uh didn't you say it cost how much it would cost altogether
Around $200 million.
No, the answer is hell no.
No, no, no, no.
No, sir.
Under no circumstances, we just haven't got that kind of money.
And we've got to stop on something.
And if he wants to come in with a smaller one, fine, but we just can't do it.
All right.
Just say that I'm going to have to veto some education bill, a lot of others, and I just don't see doing this.
Tell them I just don't think it will be consistent with the pattern that we're going to have to do on some of the congressional overspending for us to go down and ask for $200 million more for the census.
I just feel that.
Okay.
I agree with that.
I'll stick to it.
Okay, sir.
Bye.