Nixon phone call with Shultz on Economic Stabilization Act

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Hello, Mr. President.

George, I thought we'd better talk on the phone because I've got Marcel here.

Yes, sir.

A couple others, so go right ahead.

What I wanted to get from you is a reading on the Economic Stabilization Act.

Right.

The situation is that we have a conference report that has some undesirable features in it from our standpoint and from the standpoint of the business community particularly.

We feel that we could work with the bill, although it does have some serious drawbacks.

And our question is whether or not to oppose it in the House.

Jerry is very upset about it and is ready to lead a charge to defeat the conference report and send it back to conference with instructions.

He is, I think, partly, part of his upsetness is that Patman and the other Democrats on the conference committee, nine of them... Caved.

Well, they not only caved, they just flagrantly said they had no use for what the House did.

So they didn't begin to try to represent their own body.

I'd fight it.

On the other hand, if we fight it, we may wind up with no bill.

And...

The Senate is acting on it probably about now.

The position we've taken there is that let's try to get it amended in the Senate.

That's sort of a free shot, although we did get rent controls out in the conference.

We have none of the substantive coverage things that we were concerned about in the bill.

So from many standpoints, it's

It is not bad.

Just to give you an idea of the kinds of things that people are objecting to, I'd classify them as follows.

There is given to you an authority to allocate petroleum products.

Now, that's just an authority.

You don't have to do a thing with it.

The oil industry people are quite upset about it.

I don't mind that.

I don't think that represents a problem.

No problem.

I won't.

I'm not going to exercise any responsibility.

There is a definition of substandard earnings.

which cannot be, where you can't exert controls.

That is, it exempts those making less than $3.50 per hour.

The problem with that is that in the health services and food areas where we're making our biggest effort to control, that would exempt 80% of the employees, and that means that you might as well give up in those areas.

So that represents a problem.

We can probably sort of work around that, but it really undermines badly the wage stabilization effort, but that's another.

Then there is the business of saying that nothing in this act would allow you to use it as an authority to withhold funds.

I don't see that that has any special

applicability here, because there isn't anything in the Act that would bear on that.

It has a certain precedent aspect to it for other pieces of legislation that's bad.

It doesn't really have much operative content here.

What the business community is up the wall about, Bryce Harlow and all those fellows, is a requirement that cost and profit information be disclosed as it comes into the Cost of Living Council.

when we're examining a above-guideline price increase.

And while this was modified to exempt trade secrets, the business people feel that it could provide information for competitors, particularly foreign competitors, which is undesirable.

It must be noted that no more information is required than the SEC would require in a registration statement, but that's a lot of information to be

putting forward and they're upset about that.

Then we have a requirement for hearings any time there is an adverse wage determination.

Just to give an idea, John Dunlop in administering in the construction industry last year set back about 1,400 wage determinations.

there is potential for a lot of activity in that area and a lot of hearings.

Again, I think that it's a manageable problem, although not a desirable one.

What does Jerry think?

He can win the vote?

Well, he thinks he has a good chance.

Now, he's basing that on these big victories that we had a couple of days ago in the House, which is astonishing.

I don't know.

This is a more reasonable posture than things to freeze prices as of last year and all that kind of stuff.

So I don't know whether he can win it or not, but he sure wants to try.

From our standpoint, I think what we have to weigh is this is probably manageable just barely from our standpoint.

It still gives us a chance to

continue the wage and price effort it extends the act for a year you have would you be able to under this freeze you would you would be able to freeze all you couldn't freeze wages under 350 an hour you could freeze everything else yeah so you you still retain pretty broad authority but um

But there are some restrictions.

And I think that we're, of course, coming right up to the end.

If they were to, the Senate will vote.

Then the House has only an up or down choice on the conference report, because there's no conference left once the Senate votes.

It's been discharged.

So they would have to, in effect, construct another conference based on instructions.

and expect that the conferees would work during the recess and on April 30th when the house comes back they would act on Patman.

My guess is would not be willing to work during the recess.

He is not in sympathy with what his own body wants and he would be tough to handle.

So it's quite possible we might wind up without anything.

It's also possible

that the Senate might put rent controls back in.

They voted for them, and Sparkman and Tower led the charge to... Oh, they might put them back in?

That's always a possibility.

Well, if they do, I'll veto it.

Don't you think?

I just think rent controls are a disaster.

I agree with you completely.

We made a major victory in getting that out.

Yeah, so now they're going to try to put it back in, maybe.

We know that this afternoon.

We'll know what the Senate does this afternoon.

The Senate has to go to conference again.

We are making an effort to try to get it cleaned up a little in the Senate, but I don't have much expectation that that'll succeed.

And our real question is whether or not to give a green light to Jerry in the House.

As far as we're concerned, the business community will probably run with this anyway because they don't like this disclosure business.

Yeah.

Well, on balance, George,

We really probably need the authority.

I think we do, yes.

My instinct is to say we better not take a chance.

We better not take the risk.

That's what I think.

Okay, sir.

I think we just won't take the risk and do the best we can and then get around it every damn way we can.

You know, these various provisions, reporting and all that sort of thing.

Right.

I mean, we don't have to, I mean, our enforcing, do we have to enforce all that that toughly?

Well, um...

I think we can work within this.

It's a little disappointing.

Yeah, very disappointing, particularly after the action of two days ago.

But we were home free, didn't we?

We were in great shape.

Well, anyway.

If we had gotten the Senate to take the House bill, which we tried, we would have been in wonderful shape.

They wouldn't have taken it.

Incidentally, I thought that was a terrific achievement that you and Henry announced on your behalf or that you

talked about this morning on the MFN, and I'm just appalled at Scoop Jackson.

I just could hardly believe it in my head.

And of course, Javits and Ribicoff, you expect it from them.

They're professional Jews, but Jackson, of course, he's catering to that community.

But it was unbelievable.

Unbelievable, wasn't it?

It was.

I just could hardly believe it.

And thank God for Mike Mansfield and you and some of the others.

Yeah.

Well, I've got a, as you know, I'm putting it right on there.

And I put a hell of a burden on those fellows.

If this summit doesn't come off, they get the blame.

And that's no such small comfort.

But if I were... That's what's at stake, George, really.

I think it really is at stake.

If I were a member of the Jewish community and concerned about that, I'm concerned about it, although I'm not Jewish.

I know, I know.

If you were in Jackson's possession, for example, speaking for a big Jewish constituency, you'd be concerned, too, because basically the country wasn't going to like it.

The country's going to turn on the people of there.

Peace has been made hostage to the immigration soldiers, particularly after we've had this kind of an agreement.

Yeah.

Well, anyway, I think, George, we better live with the damn thing.

Fair enough.

Okay.

That'd be your recommendation, wouldn't it?

That's my recommendation.

Dunlop, what's he think?

Stein?

He thinks we probably, and Stein thinks we probably better try to live with this.

This is the best we're going to get.

Okay, George.

Thank you.

Okay, sir.

Thank you.

Nixon phone call with Shultz on Economic Stabilization Act

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Nixon Library Finding Aid

Also recorded on April 18, 1973

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