Conversation 039-141

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Hello?

Yes, sir.

John, with regard to your meetings tomorrow and the next day, I think we have come to the point now that we don't face just basically an economic problem, but we face basically it isn't just political, it isn't Watergate and all the rest, but when you see a 2% increase in the wholesale price index, and that isn't just food, it's other things too, that...

you just have to move dramatically.

And if you feel that way, I mean, you know, we all know George, according to Al, was saying that he's had calls from labor leaders and business leaders, don't do it, and this and that.

But on the other hand, they're all looking at it from their selfish standpoints.

And how do you feel?

Well, I think, Mr. Project, we're going to have to go all the way.

Frankly,

I'm going to try to sell them tomorrow on the idea of—and I hope we can do it tomorrow because there's no point prolonging it.

It ought to go on.

Your wholesale commodities and the industrial makes up of the wholesale price index are up 17 percent.

I know.

And hell, you know, it's even more than food.

I want to back off from just the freezing of the food.

Yes, I know.

And you have to go to a freeze or you have to go back to phase two where everything is under mandatory controls.

Yes, well, the point is— I guess you can start—it's easier to just freeze it.

What I had in mind was to freeze for sixty days and then

in announcing that to say we expect the Congress in that 60 days to act on this, this, this, this, and this, you see.

But in that same period, starting the day we freeze, we get together what we're going to do after the freeze and have it in place and do it.

I think what you're going to have to do then, in the phase two, and just keep phase two on, just don't ever talk about lifting phase two, the mandatory controls that follows the freeze, except on an industry-by-industry basis.

Now,

That's really what we should have done this time instead of doing the blanket release in phase three.

That's right.

We went too far.

Yes, we did, I think, in looking at it now.

And, of course, we got the prosperity we wanted.

And now we've got a hell of a boom going, and it's an inflationary boom.

And, frankly, it's not going to stop, I don't think.

It's really feeding itself now.

It's feeding itself now.

And it's going to be—I think June and July, if you don't act now, it's going to be damn bad.

So I'm prepared.

I've just kicked the thing around.

And, hell, I just don't—well, first, I don't think you're going to be comfortable with anything else.

And I think if we're going to do it, let's do it.

And that means if we have to move in the international field, let's do that, too.

That's right.

And I would even go so far now, Mr. President, and say that—

If you're going to do it, let's seriously think about putting on a surcharge, tax surcharge of about 10 percent and exempt everybody that makes under, not makes under, but has below an 8,000 adjusted gross income and put the tax on corporations and individuals.

And then you're going to wind up with a hell of a budget surplus, about $8 million.

And so you'll have that fiscal restraint.

And if you don't need it, well, then you can always let up on it.

But we probably ought to restrain consumer credit as well, because I think we've got a hell of a boom going, very frankly.

And I think it's very strong and it's very deep.

I've just been talking to people in industry, the chemical industry is operating at capacity.

They tell me that they're going to start rationing newsprint again.

Boy, you know, the mills are.

They just can't supply enough.

I talked to some of my friends on the West Coast last night, and they just say their costs, their people are coming in on—that's a big outfit, Rick.

It does almost $3 billion a year in business.

And they just say that people are coming in and say, well, we've got to have more money.

We've got to have a 20 percent increase in appropriations for this job you told us to do.

Our costs are up.

And, you know, we're just grinding in because everybody's price increase is somebody else's cost.

That's right.

And I just don't know how we can piecemeal it now.

We've been a month trying to figure out some way to piecemeal it, and I don't believe we can.

And I'm afraid it's going to be inadequate.

And very frankly, I don't think anybody can say with certainty what you ought to do, Mr. President.

Some will tell you one thing, some another.

But I come down on the side of if you have to make a mistake—

do it on the side of doing too much instead of too little.

That's my feeling, too.

You can't risk.

You've got to do more.

You can't risk doing too little.

You have the other problem, too, which you can bring to their attention.

That's right.

That the Congress is down there ready to slap it on you anyway, and you're going to get something a hell of a lot worse.

And labor can't get mad, and nobody else can get mad.

You can say to labor, well, hey, go up and talk to your friends that voted 33 to nothing.

That's right.

To put on a freeze.

You control them.

I don't.

They're your senators.

Yes.

And another thing, too, is that I think there's got to be something in this thing, though, that puts some control on the profit thing, too.

What do you think?

Oh, yeah.

We absolutely have to control profits.

Oh, hell yes.

Yeah.

You've got to control profits.

It's got to be across the board.

We've got to control profits.

Right.

And we can probably relax.

You know, there are a lot of things I've got to have some help on, some figures, but I would say that on price increases, hell, I just restrict them to—well, obviously you have your freeze, and when you get out of the freeze, I just restrict price increases one and a half percent.

That's all.

And let labor maybe go to six.

Because labor has been hurt more than— That's right.

That's right, because they've had this 50 percent increase in food prices, which affects their members.

Well, if you can, John, if you would—

them in that direction.

I would appreciate it.

Well, it's going to take some tilting.

I know.

But I'll—well, I'm going to try to sell it tomorrow.

I just don't know any other way to do it.

Right.

We, George and I, and Peter were talking about it this afternoon.

We've tried to piecemeal this thing, and I don't feel good about it.

Like I told you last night, we haven't given you anything really that you could look at in terms of acceptable options.

There are a hell of a lot of reasons why you oughtn't to have a freeze ever, but we're beyond that point.

We don't have a freeze society.

We don't have prices determined by competitive forces now.

What I have in mind, too, is that when you go up—when are you going up tomorrow morning?

Oh, no, we're going to work here tomorrow, and I guess we won't go up until Saturday, but we'll try to get it settled tomorrow.

I think it should be settled tomorrow, and then get the—

I've got to make a little talk on this and I've got to get that to me fairly fast so that I can get it in my mind and so forth.

Well, I don't know that I can sell it, but I'm going to try now because I've just—as far as I'm concerned, I've— We've been around the track.

Yeah, we really have.

And we just haven't produced anything.

And frankly, we've got to produce something here for you damn quick because all these rumors are circulating who's for what and who's against who and all this damn business.

I understand Ash has come around to this point of view at this point.

Has he?

I think we can, you know, I think George and them will come around.

I really do.

The point is, they never presented the 60-day thing in any positive way that I could even consider it.

I know it.

But I need to have it presented in a positive way and the way that what follows afterwards.

And we go that way.

That's the way I think we've got to do.

All right.

Okay.

All right, sir.

Thanks, John.

Have a good trip.

Okay.

All right, sir.

Bye.