Conversation 075-004

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You are the vice president.

You are the 40 times they like to have a press picture.

Which side are you going to come in on?

They want to see you as a guest, so they're going to see your back door.

You're the moderator here, so I'll...

I leave it to your judgment, Mr. President.

Mr. DeAndre Cicero and Mr. Walker was in the process of explaining some of the actions to the trees and the school teachers.

The governor wants to talk about it.

I don't know whether he's satisfied the governor with it.

I was probably a little bit.

All right, we want to get to the next question.

You may be satisfied with the governor, but you haven't satisfied the school team.

That's a tough one.

The co-head of the governor, Ronald Brown, I have a question, Mr. Walker.

Am I correct in assuming that if a teacher had a contract with services beginning September 1st, but could have elated the opportunity to have received a 12-month salary beginning July 1st,

That's correct.

You've answered the question.

It could have worked well.

One point that I would like to say is that

Next, when I was just being impressed in the office when you both arrived, and one question you wrote was, well, could you tell us what you're thinking about phase two?

And I said, well, no, not until we've heard all the other people make their presentations, because actually one of the purposes of these sessions, especially the one we have with you tomorrow, we're meeting with the bipartisan groups of congressmen and senators, is to get views with regard to what should fall.

But I did say this so that you would know.

I said first, not only is there going to be a phase two, but second, that I mentioned the American people overpowering the support of

The present wage price freeze.

Second, that the American people want a follow-on.

A follow-on that will be effective.

And that we are going to have.

Third, that will require, in order for it to be effective, two things.

Three things.

One, it's going to require support of the American people.

That I think we have.

Second, it's going to require cooperation of business and labor.

That we're working to get.

And, of course, that depends on what kind of person.

But third, and this is a point we should all keep in mind, it must have teeth in it.

Now, by teeth, I won't spell that out, except to say that jogging without teeth will not work at wage, price, and service.

So, this was a point that I made, and I didn't want you to see it in the papers tomorrow without my tongue right here.

Now, how is this all related to this problem?

But it relates to this problem, because one of the things we are getting here in the money is the problem of our deferring the government pay rate.

And the question is, well, how do we defer the government pay rate for six months if we are doing this in the federal government?

and the breeze is only 90 days, is that fair?

And the answer is, not fair, unless there is a follow-on program on which there will be restraint.

So I want you to know that I can't tell you that all waves are going to be frozen for 90 days more, but there will be a follow-on program that will be restrained.

That would be a very significant error, and that's

So, when you talk to your teachers and others, I think you've got to, they must have the assurance that they aren't going to be the only ones that are, I say, quote, sacrificing.

They must not do it.

If they do, they've got a real need.

And so, the purpose here is to have a program.

That's what we're working for.

I want to ask a broader question, President.

A contract, an annual contract, executed for X number of dollars, payable in installments.

This is a type of contract we execute with most of those in the higher education spectrum.

Title on that, that contract may have been executed as early as March.

Call me for, let's say, an effective day, July 1, or an employment period.

July 1 is June 30th.

For some surgeons to be distributed or made available in equal installments or unequal installments in case of an event.

When do they start to go to inspect?

July 1?

You tell me.

Well, the date of the effective date of when they can first legally demand payment under the contract.

That contract...

I like that it would be an important contract as of July 1.

It sounds to me like they would start it through in July 1.

The execution date of the contract doesn't matter.

Do you understand?

Ten years ago or six months ago.

They continually start it through in July 1, and as you described it, it sounded like July 1, if so there is a pay increase.

But if it's a normal college professor's contract that starts on September 15 or something like that, you know it was executed several months ago.

No, it wasn't.

I understand.

But it never was executed.

And because of the difficulties of... Well, was there a strike or something?

No strike at all.

It was just a case of putting in the final form.

But the major terms were all agreed to.

Particularly the wage terms were all agreed to.

But it was not executed when the freeze came in.

We never did execute it because of it.

Well, I'll turn to you first now.

There are two points here.

If you reached an agreement...

Before the freeze, the communication workers at AT&T reached an agreement on August 14th.

They had signed these papers, or had ratified the contract, but they reached an agreement that is allowed.

If you have some bargaining that hangs over into the freeze period, like the New York sanitation workers, the dock workers, they can negotiate a settlement.

For a retroactive lump sum increase back to July 1, which is the August 15th date, then the rate drops back to the last.

That's the next question.

I think it would be wise if Secretary Walker is going to be available in these specific cases now that the President is here.

to return to our basic function.

Mr. President, we had deferred hearing from the special chair until you arrived, because I really wanted to hear it personally.

We have with us the representatives from the officers of the Governor's Conference, the U.S. Conference of Mayors, the National League of Cities, the National Association of Counties, and the National Legislative Council.

So we've covered the gamut pretty well with state and local government.

So the gentleman now, if he doesn't appear, I'm sure he'd like to have your views about Phase 2 and about particular concerns you might have about how it's to be implemented and the like.

So those who want to comment at this point, I think this would be a good time to do that.

Bill Connor.

Vice President, we spoke this morning in your meeting with the Vice President concerning the fact that

Newspaper accounts at least have suggested, and your earlier remarks suggested, that the waste price matters will be the subject of advice from industry, labor, and the government.

But we too are purveyors of services and large hirers of labor, and I think that states and counties and cities need to be a part of that team advising the government in this matter, because we have a very large stake

and whether our prices for services, where our wages come up.

You're absolutely correct, but actually this meeting is for the purpose, one, of getting advice now, and second, I would trust you to have a continuous dialogue with respect.

One of the things we have to bear in mind is that we,

As we look at what causes inflation, among the causes that may be considered, the so-called wage price push as one cause, and cons to argue under, and let's assume for the moment it is, any business man, which is, the wage price push is a major cause, but the demand falls on it.

Well, then when you look at government, and particularly, rather than the federal government, we've had very sharp increases in federal pay raises.

Pay raises, all of you know, we've been trying to compete in local areas over the last, what's that figure, George?

It's about 21%.

Over the past two years, federal workers have received a 21% increase in wages.

Now, that's at the rate of 10.5% a year.

Now, let's look at local and state governments.

Local and state governments have an enormous impact on the wage-luxury situation.

Let's compare local and state governments.

Look at you as a business.

Let's compare you with steel.

Let's compare you with automotive.

We can compare you with anything else, but you're bigger.

I mean, as an employer of services.

Now, when you take, for example, and I only take this because it's more on the papers, but you take the situation in New York City.

When you see an enormously escalating wage scale in New York City, you know, for everything, sanity, or the station workers, the firemen, the police, and the rest,

That has, of course, an effect on the CBI cost of living prices in XDRC.

It also has an effect throughout the country, and so does with you.

So what I'm doing here is to get this perspective to say that

The decisions made by state and local governments will be very important in terms of making any

continue wage-price restraints effective.

I'm not suggesting there's not going to be any movement upwards.

You can't go back and tell teachers you're going to be frozen forever.

You can't go back and tell your workers, look, you're in an equitable position.

You're not going to go up.

We know all those things.

But on the other hand, I think we all have to face this together, that you can't just say, well, what about, why don't we get Jordan Media to do something?

Or why don't we get Ben Simmons to do something?

Why don't we do this this summer?

We have to realize we all have problems in dealing with our own decisions.

Mr. President, I think what Bill Conner had in mind was just what you were referring to about the second point you made, the continuing input as developments occur and possibly to find a proper mechanical device for the cost of living council to have this...

That was at all times.

I don't know how else it could be done, and I suppose it's something that Secretary Connolly might want to consider if there's going to be a continuing body of review that is developmental through the years.

Well, I think we could, but it's not decided now.

But we have to use an adjustment to the works as well.

There are various possible things.

We've had quite a little discussion in the Productivity Commission of the

problem of productivity in government, federal, state and local.

That is a kind of a representative group except for some reason we don't have

That's one step we can take now.

That's a low revenue panel of the highest quality.

Why don't we start that at this meeting now?

Let's have representatives of the state.

And local government, all that.

Because, you know, we in government tend to not realize that productivity in government is terribly important.

And frankly, as I go around Washington to see people, you know, sitting around and so forth, I say, gee, this must be the most unproductive problem with that.

place in the world in terms of increasing productivity.

You must think the same as some of your stakeholders.

Yet, when you think of the 4,000 people that run this wage price freeze, all of them are currently in the government.

All of them are taking this on as an additional duty.

Well, that's really quite an achievement, so you have to give them credit, too, in order for when they're good.

But I think we ought to have them on the program.

And also, I think it's on top, Mr. Vice President,

He would welcome the opportunity to have a, being a former governor, and who is an advocate, extremely sensitive to the state and local government.

As you noticed in the meeting, he's always brought this up, to have something worked out.

So, shall we set up a procedure whereby we can...

I'd like to do that if you recommend it.

You knew that?

Good.

You make the recommendations, work it out with Governor Conley, and it will be done.

The three group representatives will give you input to the vice president.

Of course, that's the primary responsibility here.

It will be done.

It's good.

Governor, I want to say, Mr. President, that I'm here as a sort of remembrance of the past.

There's no better job than a media pest.

I told the Vice President that I was somewhat reluctant to accept him.

Because of, well, I've got a lack of knowledge in this particular field, you know, it's kind of, well, I felt like I could be on fairly even ground.

I can even say, yes, you could have been on Vietnam or somewhere else.

Of course, everybody else could have been on Vietnam.

I've had my legs hit you at the time, U.S. News.

But this is so terribly different from anything that any of us have ever experienced.

Well, we're all on the same boat, actually, in a sense.

I was just thinking, in phase two, if there was any weakness in phase one, and I'm sure you see why, it was the 90 days.

But the fact that it was the 90 days, and does it have to be...

Phase 2 is determined 100 days.

It doesn't have to be said that it's for 9 days.

No, let me lay down the rest immediately.

Phase 2 will not have a terminal date on it.

We're not thinking in terms of a terminal date at this point.

That'd be it, Mr. Director.

I think that's right.

It's a possibility to be considered, but nobody has ever thought that was the terminal date of the order of those numbers that you suggest.

You could say what I just talked about.

In other words, phase 2, if you thought about 90 days or something like that, it just wouldn't be worth setting it up.

And therefore, phase 2 will, for the reason that it will be run longer, and possibly the depth of it,

Therefore, it has to have the procedures for more flexibility.

That's the other point.

You can have a freeze for 90 days and have what all of you know are the inequities.

People will take it for 90 days.

But if someone says, why don't you earn it for six months?

They were broken down, because in the end people affected teachers.

If you deferred wages to teachers, they would obviously need to get them.

So 90 days is as long as we thought it could take.

Maybe it could be longer, but we don't think so.

But as far as phase 2 is concerned, that's why it is a much more complicated situation.

It requires a long period, and therefore procedures for it there in that case.

My part is that I think that anything that you do is to be successful.

Of course, it has to close as many loopholes as possible.

That's the reason why I brought out any kind of an exploration team.

It's all the guardhouse lawyers that we used to talk about the post-modernism until that time, and how you could, and to the surplus, and to the so-and-so.

And then when you plan on it,

The ground has come.

You may face a terrible situation when all of this is released like a broken tank.

The other thing is... Well, let me ask you this.

Would you recommend, for where you said it would be better, because this is a question for the collector, it would be better to have phase two...

without an express terminal date on it.

In other words, you might, if you had a terminal date in mind, you might have it with an announcement.

How many would agree with that proposition?

How many of you would?

The problem that we have in

...preparation of our budgets.

We don't know whether we can provide X number of dollars in future pay increases, but this will be available July 1st.

We started our budget preparations, they're underway now, so not knowing whether there will be...

...guidelines, or phrases, or percentage increases that we had hoped to get, and we had the unfortunate position of giving our teachers only small rates this year, with a big promise for next year, and that's election year.

Well, they have their elections.

I'm not really concerned, Mr. President, but I'm very rude to that question.

The question has become really important to know whether you've got to raise $50 million in tax money to get visas, a $1,000-a-year raise, or whether it's going to be held at 4% or 6%.

Your suggestion that what we do in this field...

I have some salutary effects in terms of my little floor.

Decelerating the enormous increase that are going up in your state modes of salary.

Yes, sir, but if you just say that we're not going to put any time on the next freeze or the next phase, then it completely ties our hands from a legislative standpoint.

Well, I have to disagree with my colleague both at the same time, so that's a healthy disagreement.

We're all trying to purchase and help others.

This bus will always have to be blown.

We're still going to have to make decisions, don't you understand?

Don't you watch this video, Jack?

Yes, yes.

And you will make your decision.

I'm trying to figure out how to make it work.

Well, John's got a stock, and we're all going to have a product.

I think we just have to cope with that stock, with what we have.

And then, when...

Local government has a special problem there.

Not only do they have a city problem, the state government has a budget problem.

but customarily, counties and cities are only about to fix their money once a year, and their tax rate once a year, and you've got to live with it for 12 months.

When do counties and cities change?

All of them.

All of them?

All of them.

Well, the price-president's vote.

A lot of them have moved to the fiscal year.

So they wouldn't do it until the middle of the year.

Most of them.

Let me give you a little demonstration from Delaware.

We sat on the first of June,

sewer rates, double sewer rates, for our county, effective January 1 of 1972.

Now, as Walker says, they are caught.

And yet, if we come up $2 million shorter than the $20 million budget, we have no way to replace it, because we can't increase the taxes until the next year.

They're not permitted to adjust them by state statute.

So I think this might be characteristic of many cities.

This is a good reason why we need that kind of person available and details.

Mr. President, on that line, you've got a question for the federal government, and that is,

Many cities, as opposed to having property tax rates or income tax, what have you, are paying most of their revenues now for user charges, service charges, or somehow trying to get some equity that way, being boxed in by state statutes otherwise.

It seems to me that if in the wage price freeze, local governments or counties or maybe even states

are frozen into a position of little bankruptcy simply because their revenue side is going to be impossible to achieve.

Then we have a really rather violent disruption of the whole process.

And, of course, because you're due to the charges to be frozen, yes.

And I think we have to have, in order to obtain the integrity of our local governments,

There's some very strong upward possibilities of scratching around almost everywhere we can to make the revenue side work out.

The expense side can be pretty well frozen in by what has occurred, perhaps by the flexibility of the regulations, although we're inclined to feel maybe local governments, state governments will differ in the bank and private industry.

But even after we've done that, still, if we have, let's say, civil sores,

for catastrophe of that sort, we need a lot of money to pay the police force.

This might be characteristic of many cities.

This is a good reason why we need that kind of person available in detail.

Mr. President, on that line, you've got to talk about a question of federalism, and that is,

Many cities, as opposed to having property tax rates or income tax, what have you, are taking most of their revenues now from user charges, service charges, or somehow trying to get some equity that way, being boxed in by state statutes otherwise.

It seems to me that if in the wage price freeze, local governments or counties or maybe even states

are frozen into a position of little bankruptcy, simply because their revenue side is going to be impossible to achieve.

Then we have a really rather violent disruption of the whole process.

And, of course, we're... Because you're due to the charges to be frozen?

Yes.

And I think we have to have, in order to obtain the integrity of our local governments,

There are some very strong upward possibilities of scratching around almost everywhere we can to make the revenue side work out.

The expense side can be pretty well frozen in by what has occurred, perhaps by the flexibility of regulatory regulations, although we're inclined to feel maybe local governments, state governments, will take it to the bank.

But even after we've done that, still, if we have, let's say, a civil storm,

For the catastrophe of that story, we need a lot of money to pay the police force, or the environmental control agency decides that our river is badly polluted, and we have to do something about it immediately.

There's not going to be any chance, and the credibility of government all the way through suffers very badly.

When the federal government mandates this, or something for our own health and safety, we have to perform functions.

I'm hopeful that phase two will offer, based in terms of the intergovernmental relationship problem, some way of our being able, if we were willing, to take the political risk to raise money to finance our governments without being restricted.

You know, one thing that this dialogue brings to mind

As I said, I had the same feeling as I had talked to business leaders and related business leaders, and that, of course, to the re-agriculture movement.

When you hear the infinite complexity of these problems, it shows you why we cannot, and should not, assume we should have a permanent system of waste and price control.

We must, we must, I think Warren has made a good point in the sense that we must have something to do at this time.

Just say, well, we're going to go 90 days, we can be sure of that.

But if you talk about, in our country, a permanent system of wage and price controls, we're just going to get ourselves wowed up in a mass of bureaucracy that's going to sustainfully create a drive of this economy in every way.

I hadn't even occurred to me, for example, that a user charge would be... Could you have a percentage increase of horizon, which would be flexible, higher and lower incomes, more retirement for the second place?

and at least be able to move forward to some kind of a percentage increase both in debt and in wages.

I have the same problem with the selling of funds.

In order to have our public funds, we have to be able to justify the income that we can sell those funds.

Mr. President, if I may comment on that, I might as well suggest that they consider a net minimum exemption

In South Carolina, we in South Carolina, it wasn't set up on regular incomes.

To give you the example, unfortunately, it's not something we're proud of, but in South Carolina, getting half of our state employees make less than $6,000 a year.

These are the people that frankly should have no problems with.

They're actually below the poverty level, or almost at the poverty level.

We've got labor difficulties.

We have a choice of hospitals trying to avoid other such incidents.

And if we could say exempt wages might not be practical below $6,000 or $5,000, it wouldn't be practical.

I don't know.

It may not be possible.

I want to say that I support you all the way through.

I think the people of Amharic are very concerned about this, and I hope that you will continue to report the rightness in this area.

I just say that if we go around this table and talk, I know that we are consumed with the idea that we've got to have more money, we've got to pay more wages.

We can't have our case needed, too.

Now, if you send me to this point, I believe, I'd like to suggest that if you go into the area of some guidelines in this issue,

Let's say, let's take a 3, 4, or 5% average increase, cost of living increase.

Maybe it could be done in this area.

Establishing a man that makes $6,000 a year, a 5% increase in wages isn't very much.

But when you take a $20,000 a year man or a $60,000 a year man and say 5% of that is his cost of living increase, then that's not true.

Somewhere there is a base that is arbitrary with economists, I'm sure, as to what does it cost you to live.

Maybe we could work something like that in this area.

In addition, I'd like to say among economists...

I'm just a businessman, but I would think that you've heard it before, a freeze on interest rates for a cop of some kind, certainly a corporate profits and possibly dividends, and I think that we're all ready to make some sacrifices, and the only problem I see, and I'm very happy to hear you say that phase two will have an indefinite trigger, would also caution you, Mr. President, I am afraid,

that your announcement the other day, that the freeze would go off at the end of 90 days, has been taken by a large segment of our society, that, boy, the lid's going to be off now, and I better go in for as big a raise as I possibly can, so they don't put it on once again.

After listening to you today, I thought before you were indicating that while the freeze, which was described to us earlier as a 90-day freeze,

Obvious action that you had to take, but the freeze will end, but that does not mean that you're going to throw the lid off prices and wages, and I'm afraid that in certain segments of our economy, you're stable and stable that way.

Mr. President, could they discuss your so-called experts on this?

I'm worried about one group.

The request he had, I think it discussed that question of, I know you're tired of hearing, of the possibility of freezing problems.

Jim believes this, and he makes a good case, it's repugnant to me, but if it's necessary, you know, Lord, I would just...

I know they've advised you to look at the face on that particular.

I know that it would be very inviting for me to hear it from somebody that knows the answers to this.

Let me take a wire.

Because I think having you talk about profits rather than charter property as an expert might be more useful.

Especially if it's a political problem, not an economic problem.

Now, let's first look at political problems.

Look, all you folks know very well that politicians are going to be any more popular than getting the big man.

In other words, you know, you get the profits from the good and you get the rich guys.

That's what we need.

And we are being aware of this.

So when we are being campaigned, they went over all this.

And I said, well, I think that's all the profits.

I guess it's a good way to dispute that.

First, with regard to profits, when you have a freeze and later face to a restraint on prices, profits are to that extent controlled.

The only way you get more profits under those circumstances is to increase production.

Now, if you increase production, what happens?

If you increase production and make more profits, what does that lead to?

Well, that leads to more jobs, which is what you want.

It also means that every dollar in more profits, 50 cents of that goes to the federal government for the purpose of allowing us to pay for economy sharing, for welfare reform, for all the other things we have to do, even though 50% of every other part of our profits goes to the federal government.

The, the, the, if you, and this gets back really to what some of you, all of you will remember, all of us at least, remember what we were doing, the excess profits tax.

In fact, how hard it was to get rid of it.

We had to get rid of it after the war, because an excess profits tax,

has the effect of first contributing to inefficiency, and second, it has the effect of discouraging growth in the economy.

Now let's come to the other point.

What about profits?

Here again, I'm not suggesting any views, but I think it's public.

What about the, are they too high?

We find that, as Senator Connolly pointed out in his testimony, the ways and means to connect to that, profits as the chair of the American GNP are the lowest they've been since 1938 in the United States.

Now, don't cry any tears over General Motors.

A lot of them make a bloody money.

The point is, that...

In order for the United States to become, again, more competitive in the world, rather than cutting profits, we've got to have more, so that we can plow back into the companies of this country what is necessary to get the new equipment, and, frankly, get out to the place so we can compete with the Japanese, with the only modern people in the world, and the Germans, and all the rest.

So I come back to this proposition, that...

We have two problems here.

We have the problem of increasing employment and reducing unemployment.

We have the problem also of checking inflation.

Now, as far as the employment side is concerned, there isn't any question that putting some sort of a lid on profits would have exactly the opposite effect of what we would want.

It would depress the economy.

It would cycle its growth rather than encourage it.

From the standpoint of the inflation side, putting a lid on prices does the trick.

In other words, prices handle the inflation side.

You look at the profit thing on the ground, possibly of the, in other words, you can look at it in terms of taxes.

Now, since, you know, we had a comprehensive tax reform, which was the result of the actions of both parties in the House, that's in 1969.

From 1969 to 1973, just to get it perspective, that tax reform provides $34 billion of relief to individuals, most of it in the lower income ranks.

It provides one billion dollars for these corporations.

What I'm getting at is this, that I speak again politically.

From a political standpoint, I know there would be many more popular, and we need to go out and root around and say, let's live up to the problems of these corporations and not let them make a problem out of the back of others or second nations.

On the other hand, I know, as I sit here, that if that were done, it would mean that we would not have what we need in terms of more growth, more jobs, and America becoming more competitive in a world in which we either are going to be more competitive or have to build a wall around ourselves, which I think is worse.

So that's the reason I had to make this decision.

I think it would explain that.

I'd just like to ask another question along the same lines.

Sure.

The regulations with respect to depreciation.

Depreciation.

Depreciation in all matters of the Senate and the Congress.

Yeah.

I know experts in these matters, and I'm not proposing any experts, but I know the answers to them.

If we have unused capacity of about 25%,

Wouldn't it be a better push for the economy if instead of having both the accelerated depreciation and investment tax credit, that we made the readjustment with respect to taxes on the other side, so that we get some sum of both, rather than to, listen, I'd like that.

Well, I'm sure we'll get it.

Because you, and this is Ellen, up in Rhode Island, where you've got a lot of strong business community up there, too.

Let me get that one right straight on.

The...

How many lawyers?

All of them.

We all know what the depreciation allowance does.

The purpose of the depreciation allowance, and the fashion is to do that.

Well, that's financing for business.

It could be sometimes that any smart tax lawyer is going to find a way to get his business client to find a way to provide this and that.

On the other hand, you can't depreciate anything unless you buy something.

You've got to have something to depreciate.

Now under this capacity, the history of investment tax credit is not new with us.

We call it job development credit.

It's called investment tax credit.

John Kennedy recommended it.

He was ready to recommend it.

As a matter of fact, we should have recommended it in 1959, I think.

George Shultz, who was then advising us among the members, he wasn't on the council, but he was there.

He was a member of the council.

The late Ken Mitchell, some of you may remember him, that I pushed very hard to get us to move in.

Let's look at what the economy was.

In 1961, when President Kennedy recommended the investment tax credit,

There was more unused capacity than there is today.

Our employment was at six and seven tenths percent after 1961.

But he recommended it.

Why?

He recommended it because he knew it was a way to get out of employment.

There are two ways you can increase purchasing power on the one side, and that is to provide tax relief for consumers.

Another way, you can give incentives to those who will produce jobs.

And when you say to the corporation, look here, if you go out and buy this or that new equestrian,

You will get this kind of tax incentive.

That has an enormous effect in stimulating the economy.

It worked that way.

It wasn't passed until 62.

And the effects were not agreed until 64 and 65.

And that was not until 64 and 65 that the unemployment rate began to come down.

Now, on the unused capacity argument, let me put this in the world context.

We do have to use the test.

George Meany made this thing fun when he was here.

He makes the books very effective.

It's pretty good.

Anyway, I know some of those words too.

But anyway, George Meany was there and said that's how you use the test.

One of the reasons a lot of America's capacity is unused is its inefficient capacity.

What we need to do, and I can't emphasize too strongly, as we sit around this table, Democrats and Republicans, we have got to recognize that the United States...

Salad days are over in terms of competition in the world.

Now this doesn't mean we all run to the hills, because we're still the richest, we're still the strongest, we're still the most, in my view, the most productive people in the world, we will continue to be.

But on the other hand, we're in a race of all those that we fought after the war.

Why aren't you in the World War II?

A lot of us are.

What happened?

We helped the Germans.

We helped the Japanese.

They're our biggest competitors in the world today.

They're beating our pants on.

Why?

Because the American plant was built 25 years ago.

And theirs was destroyed.

So everything they have is new.

Many of the things we have are new, but a lot of them aren't.

You go through New England, you see a lot of old plants up there, right?

You go out through the world, you see a lot of old plants.

As a matter of fact, I think we have to go further than even this job investment credit.

I think we've got to go further on the depreciation front.

And we're looking into this.

I believe that in order for America to be able to compete, and I want her to be able to compete, with the Japanese and with the United Europe, with the British and that common market, that's going to be an enormous economic unit.

What we have to do is to encourage our businesses to refurbish, to develop, to have research and so forth, so that American goods can be sold around the world with our much higher wage scales, and be competitive, and they can be.

So, my answer out here, my vocal here, on the first one, with regard to my useful passion, yes there is.

But the fact that it's unused does not mean that it's efficient.

What we want to do is to get more efficient capacity and get it done.

The second point is that I'm convinced that that efficiency in itself would have a very stimulating effect on the economy.

Not in terms of just the fact that they buy machine fuel and so forth, which doesn't mean anything, but in terms that it makes those goods and those workplaces

more competitive in the world, which is what we need to do.

I want to see the American worker, who is the highest paid worker in the world, be able to compete with somebody who is paid less, because we have a more efficient plan.

And we will not have a more efficient plan unless people put more money into that sort of thing.

Now, we can overstate that case.

It is true, and let me say, these tax states have got to be very carefully examined.

I know a lot of smart tax lawyers, and I know a lot of business people that will find ways to use these states, and probably you know a lot about them.

But I do feel that in the long run, it's a way for America to become some pedigree.

Yes, sir?

Mr. President, there's some argument that Congress appropriates funds that you're not willing to spend at this time.

We recognize that President Johnson, you see the same criticism.

You're wondering if the unemployment situation wouldn't be so serious.

I just encourage you to release those funds at the first point.

Secondly, it means much that the unemployment situation is still very serious.

It won't add to it if we reduce federal employment by 5%.

That's nice.

Yes, yes.

Well, George, as the budget director, I'll throw that to you.

You've answered it beforehand.

I think my first point is that the amount of compounded funds has been way overstated.

They said they might put one historical point in there.

They started empowering government funds for President Jefferson.

Harry, the president since then, has done so.

It's not an excuse, it's just something the state has done.

But you know that, right?

And it's just one of those things we've got better questions about.

I think that shows the need of the questions still there, so that's the other issue.

Every governor's done the same thing.

I don't want to get into that, because he would be caught by the president's result.

Sure.

The proportion of funds that are under any destination is lower right now.

I think something like seven out of the past ten years.

If you want to think of the flow of federal funds as a big flow into a tank and then a flow out again, you have a kind of a holding operation there and you measure what's in the tank in proportion to the flow.

That proportion is low by historical standards.

I think it's important to understand why you have some of this money in the tank.

If the Navy gets an appropriation to build a new submarine,

They have a contract that takes quite a period of time to actually fill that suffering.

Say it takes three years.

We tell them, all right, go ahead and let the contract.

And they know it by us when the first payment comes through.

Then we release the funds to make that money.

The thousands of funds that we have appropriated are held in reserve.

You don't make anything by releasing more funds than you need to...

to build that shed.

It's on its own schedule, and the money goes forward.

So I think the first point is that there are, the importance of the number of funds, the amount of funds accounted has been way overstated.

Now in terms of the federal budget, we try to bring this in terms of the bite it has to hold, and the uses to which the resources the federal government provides,

Yes, are put.

And I think in terms of the stimulative effects of the budget, you have to look at the overall picture.

And here we have a picture in fiscal 1972 where we estimate the outflow of money

from the federal government will be something on the order of 27 to 28 billion dollars more than the inflow.

That is a big stimulative impact.

Now, you can rearrange that impact by spending more on this kind of thing, less on that kind of thing.

You can say that the deficit should be larger.

Some people have argued that.

Well, as a matter of fact, the governor said, there is a Basie, did you know, a congressman, Warren Heller, from your state, I said.

Warren.

Warren, I called him.

It was a great Pittsburgh football player.

Warren.

Yes, all right.

I played for Roosevelt.

Lost 25-9.

I suppose I would argue one way you could make the deficit bigger is to figure out all sorts of ways that you could release funds more rapidly on federal contracts.

But that's a different argument from the one of how much of a deficit is appropriate for these times.

You also get down to another problem, too, is to reduce...

We have an economic plan.

How much do you rely on the private sector and how much do you depend on the sector?

We believe that the amount that we have in the private sector, particularly with regard to, we have a 28 billion dollar deficit.

That's really as much as can effectively be used, and that we're going to get more out of dollars now if

We put it to the private side, to the mobile side, and we put it to the service side.

Now, I realize, too, that while government workers are all over the country, that, as you know, most of them, or the majority of them, live in Washington.

And when you refer to the unemployment problem, Washington has the lowest rate of unemployment of any city in America, two and two-tenths of a percent.

So, I mean, that and five percent of the unemployment rolls in Washington is going to be a great factor.

And it'll be down to attrition, I would say, primarily.

You know, it's a...

Mr. President, I just wanted to be sure that Mayor Beyer, who is president of the U.S. Congress, has a chance to make a statement before we adjourn tonight.

But it's certainly what I agree and part of.

You may have noticed by what you have done, or intend to do, I can agree with Dr. Hansen on this.

I see an inconsistency, Jordan, between employees explaining on one side, and I don't think this is certainly possible, on making a production goal, jobs, and so on and so forth.

I find an inconsistency with that, and the founding of the fund.

I think the highway problem illustrates today that because the most of the funds that are under any definition classified as counted are the highway funds,

It's the trust fund that makes these numbers large, and they're each year as part of the process of saying how much

of the total national resource you want to spend on what's right.

We have a big go-round, as you all know, and you participated in how much of that money ought to be released.

We do that with the Senate Committee, the Transportation Department, and so on, for highways.

And it's a very large sum of money that I think this past year, if I'm not mistaken, was $4.6 billion dollars.

And that has been up a little bit since then.

And we do have to, we've run into the fact that on the highway program, much of the highway building now is right in and around cities.

And it goes a little slower because you don't move people out of that road quite so easily as when you're doing it as a country.

So I think that on the highway side there are lots of arguments to be made there.

It does tell you how to forward from the end of that suit.

Oh, God, yes.

Mark the place of that meeting.

I understand.

Mayor Meyer, the mayor of Milwaukee, and the president of the U.S. Congress of Americans.

Mr. President, we, as you know, we were the first to join you immediately after you said that the mayor would support this.

We certainly have a mortgage in action.

We recognize that you have been patient.

In the last ten years, also we recognize the personal effect of the recession as a reduction of government revenue, which will add to the business of the market.

Now, a position, a summary of a position, which we've worked on, is a summary of a position which I have, which is a high-stakes conference on medical services.

And we will, very frankly, have some disagreement in detail in our supporting document, but we agree with these general theses.

I will find a supporting document of our several points of summary.

I'll be very brief and just simply give you time for a summary.

Your time doesn't permit here...

We are afraid of some of the effects of those policies on revenue sharing, on the point that was made earlier that the Ways and Means Committee is taking it off the calendar now.

And we spell out what we think the possible effect of permanent losses of federal revenue would mean in two areas.

To us, in our efforts, to relieve the plight of the citizens.

Now, we have a very subtle, but we think a logical argument on this, but we're not going to take the time to try to tie this together.

Point two, you've already covered it.

We feel that the new economic policy fails to utilize the contributions the public sector can make in combating the problem of a sluggish economy and high unemployment rates.

Well, we definitely applaud the value of stimulating our economy through tax policy.

As I mentioned, the permanent loss of revenue, which would affect local government, is undesirable and clear of the clear needs of local government for additional funds, which we recognize.

And we accordingly reaffirm strongly our commitment to an early enactment of a general revenue sharing program.

We believe that the Emergency Employment Act should double its size to bring about employment.

And we certainly reassert our region that any impoverished land is very much needed.

We further propose a revenue stabilization program

And that, Mr. President, summarizes our position, as I say again, in the argumentation, moving from the view of the current situation of the position of the U.S. Congress of Mayors, and will apply it on the second meeting.

Thank you.

Let me respond on two comments from the Mayor that I know have been covered earlier, and I want to say to this group, and ask for your help.

Rick?

Revenue sharing may appear to be on the back burner as far as this Congress is concerned.

It's not on the back burner as far as you're concerned.

We are for it all out.

We are pushing with everything that we have, that we would appreciate all of you being on the Congress.

After all, they're going to get through this tax country, ways and means.

It can't take more than 30 days, I hope so.

But in any event, there's some revenue sharing and all sorts of courage on the bank.

They should be ready to act on it.

And there isn't any reason why, in this session of this Congress, Reverend Sheldon should not be enacted.

I don't want to hold it out.

Don't spend the money on it.

But I can assure you, the same is true of welfare reform.

And we're going to continue to push on the welfare reform.

That, I would have to say, is a more difficult one, because it has a more, in its tenet, it has philosophical battles there that are harder to resolve.

But on both, we're going to push it, and revenue sharing, I think, has such enormous support in the country.

And among governors, and among public officials, and among mayors, the revolutionary plan being passed.

You've got to help keep the heat on, because we've got to increase the use, we've got to invest money.

We just slipped it three months, because they aren't going to pass it by October 1st.

I think the line should be the Congress should not go home until revenue sharing.

They're talking now about adjourning about the 15th of November.

Now that's just irresponsible.

The Congress should stay until Christmas and give revenue sharing to the mayors and the rest of the business.

We made Mr. Reagan so that there was no misunderstanding.

We thought that the last economic investment major position, quite so,

But there wasn't earlier.

Well, the last message clarified any misunderstandings.

I think in our visit to the Vice President today, there was a double-double reassurance on your position.

We are here to settle the arguments, and again, this is not a verbal meeting, but a very argumentative meeting at the beginning.

Where's the money coming from?

For five years we've been saying, maybe it'll have to come from highways, space, military, everything you're spending on.

Maybe it'll have to come, but it doesn't.

The country is not going to be facing afterwards number one domestic crisis.

And now we're afraid that if we have a permanent loss of revenue, that's what we're saying.

We're going to run into that argument even stronger.

And we recognize the level of the administration, I guess for the first time in history, we're going to fight for recession and fight for inflation at the same time.

And we're hopeful that the things we do will prove to be across purposes, I'm sure.

Right.

Mr. President, the state legislators, through the night of the National Legislative Conference, have supported your efforts for record-sharing, and I think it's weighed on everything from the period between before.

It's been great.

But we've also sent letters personally to our congressional desk delegations who are trying to get the 7,716 state legislators to do this.

But one thing that worries us is that we are going to be the culprits, because we're going to be raising the taxes for these governors around the table next year.

We do not have some of the discretion to urge you, and we will continue with our efforts to...

If the Congress could enact it, I'll let you know.

We support it very much.

Could I ask one thing?

If I could, you're the new chairman of the mayors and also the county officials.

Yes.

I know this is long, but go back and let your respective representatives in Congress know again of your continued interest in revenue sharing.

That is what I zero in on.

We need it.

I mean, actually, I don't mean to stress that some of you are in for it, but if you do it, all of you who are in for it, believe me, it'll help.

Do you think some of you like it?

We talked about that in our earlier meetings, and we need to be on that.

Mr. President, Tom Erickson and I, the Secretary of Commerce and the Secretary of Defense, have been ranking the legislation on the Hill, and I said, you're all the executives here for the reset.

You don't have to give anything away.

The bill was moving toward resolution.

All we've got to do is get him here, he's going again.

You don't have to say, we'll take the mills plan, or we'll take this plan, or that plan.

All we've got to do is hold off the cops.

We've been in the case for two or three minutes.

We had hope perhaps before the day was up that we would have a chance to engage in the conversation, but obviously the late hour caused him some problems.

But we're advised that he stands ready to meet us on Monday or Tuesday of next week, and we're going to be knocking on his door.

Well, he is, let me say this, you know, you all know who he is.

He's going to get the credit for this county.

He'll get it after he gets here.

Wilbur Mills is one of the most beautiful men in this country.

In terms, you all serve with him, you know, he knows taxes.

He's like Johnny Byrne, Johnny Byrne.

The two of them are really a couple of real giants in terms of an understanding of the tax system and all the rest.

And they, each of them in his way, for the philosophical reasons, is not favor driven, as we have recommended it.

On the other hand, Gordon Ellis is a very astute politician.

And I think that just keep it going.

In a way, he knows his interests, and I think he's going to... After all, it's a question that comes out.

Robert Mills, you know, is quite bent to the fact that...

The basic fundamentals of the plan were the product of a bipartisan evolution of ten years within the advisory commission on intergovernmental relations.

Some of the very people who are cool or disinterested in the plan happened to serve on the advisory commission at the time when the plan germinated and had a part in its evolution, which surprises me a lot.

And also, to get the five bars in the end, Governor Anderson, as you know, Walter Keller was the first one to suggest revenue sharing, at least in the White House one area.

And he's a strong supporter of revenue sharing.

That's one thing.

But I, as Warren Ernst pointed out, I agree with our goal here today to help you make this work.

Anyway, we can't hint to it, it doesn't really require a response, but I would hope that your experts would not ignore two or three things that, as Governor Anderson pointed out, the impoundment upon Governor Evans in Washington has, if not the highest, one of the highest unemployment rates.

He tells me personally that there's $155 million of unaccounted highway funds he could use.

I would hope that these would be recognized furthermore.

But that's one thing that hasn't been discussed here.

I come from an actually cultural state and an actually state.

We do a lot of business in the Orient.

And certainly that surtax has helped the automobile industry.

I would hope that your intelligence would tell you undoubted things that we do not have access to, but whether they are looking at retaliation.

Because if it comes to that, it's going to hurt us and it's going to hurt other agricultural states.

Tremendously.

Those points I would hope would be recognized.

And when we talk about increased productivity, we also got to, again, balance that against the unemployment.

So those in particular, if we can get away with it, Mr. President, it's great.

But if they should retaliate, or imply that they will retaliate, it's going to have a disastrous impact on the state of Illinois.

Governor, let me cover that, because all of you, to a certain extent, represent agricultural states.

We don't take Illinois.

It's considered to be a great, as it is, it's a great industrial state, but it's a huge city.

But there are 2,500,000 people who depend on agriculture in the state of Illinois, correct?

Can we get the biggest agriculture report?

Let me tell you, I think this is a very important point that you carry back to your farmers.

And frankly, 30% of the people, while they're very few farmers, they're 30% of the people who either directly or indirectly are affected by the farm reserves.

Another thing we've seen is that at these levels, you go fly over, you go to the country, you see a little light down there, you know, by the environment, you see a little cluster of the town.

Now, the agricultural exports are frankly the only bright thing in the American exporting import picture.

The reason is that American agriculture is the most productive phase of our whole economy.

As some parts of the Australian stream become uncompetitive, American agriculture is ahead of the world.

We could use anybody in the world in agriculture.

Anybody in the world.

To the great credit of the American farmers, to the great credit of the equipment manufacturers, and all the rest of the researchers, the department of agriculture, the states, the countries.

Now,

The purpose of the temporary surcharge, which we have, and also the purpose of our action on the monetary market, letting the dollar float, is not to build a wall around the United States to stop trading, but the purpose is to get a fair deal on trading, to open up markets that previously had been closed to us.

that once we get a fair deal, when other countries revalue their money so that we are not at a disadvantage, once we get a fair deal in terms of trade barriers, some of them have trade barriers that very cleverly get around the GAAP election, they call it non-tariffary in itself, once we get a fair deal, then we'll be prepared to negotiate on a certain charge of 10%.

We'll be prepared to negotiate with regard to international monetary law.

Now, how does that look to agriculture down the road?

Temporarily, you will hear, as you well pointed out and corrected, temporarily you will hear that as a result of the surcharge, if other countries are going to retaliate against the United States in action, they will pick the retaliation of American agricultural products, because we export so much, we have a $2 billion surplus, where agriculture is of concern.

On the other hand,

Long term, and by long term, that doesn't mean ten years from now, but within a reasonable time, as we negotiate with regard to our exchange rates, we negotiate with regard to the surcharge, we negotiate with regard to non-tariff barriers, and with regard to burden sharing around the world.

For the United States of America pays two-thirds of the cost of free world defense.

As we negotiate all those things, it is our purpose that the United States live in any world that is competitive, and we will trade.

Now, long term, who's going to be the major beneficiary of that?

American agriculture.

Because you can only sell abroad those things that are competitive.

And one thing that we are competitive is in agriculture.

We sell a lot more.

Soybeans, everything else that you can imagine abroad.

If they open up some market, take the Europeans.

There's some really good things that we can break through there.

So, what we have got here, Governor, what we have developed is something we haven't preached.

I know that

And through every candidate for president talking in the farm belt, Humphrey and I both said this in 1968, Jack Kennedy and I said it in 1960.

We said, what we've got to do as we go to the farm belt is to have more markets abroad for America's great surplus.

Of course you're going to have to have more markets abroad.

But the difficulty is, we have not had any negotiating

Tool.

Now we have changed the name.

We've got a stronger negotiated tool, and I can assure you that as we do negotiate with these countries abroad, and it will be difficult over a period of time, that we will have very much in mind the fact that the major, that one of the major areas where we can increase our sales abroad, where we are totally competitive, is in agriculture.

So that is the answer that we have there.

Mr. President, may I address myself?

Sure.

While I have supported you completely on your waste price rate, I have not supported your policy on agriculture.

I think probably you know, and one of the problems I think we have is communicating with the Department of Agriculture.

I'm going over there tomorrow to talk about it rather than burden you with it today.

We've talked here today about corporate profits, about more...

higher salaries for teachers and others.

A segment of our economy that's in much worse shape today than the teaching profession is agriculture, and we can talk about it.

I really think that the farmers of America today are the ones who are paying for what you have just outlined.

I think we have not done a good job.

I think probably you will concur with my position on that.

Not only do we have to look to the long-range needs of agriculture, and certainly world trade is an important part of that.

In addition to that, we need to look to the short-range needs of agriculture.

I won't go into a long dissertation on agriculture here now, because my fellow governors hear me talk about it all the time.

But I have suggested that they take agriculture to the least.

The very least he could do was to extend for 90 days the October 1st call-up of 67 and 68 corn and sorghum.

And I can't get an answer from him.

I'm going over first thing in the morning to try and get that.

And if he can't do it, all I want him to do is to say no, and he can't.

Time's a-wasting.

We've only got about 10 or 12 more days.

I think that we have got to do more for our agricultural economy, and you might have one way of doing it, and I might have another, but I hope that we can work towards that end.

Well, I know that the president has another obligation, and I know he's very interested in...

Mr. President, it seems to me that since you have made a very convincing case to me as to why we are using price control and not profit control, would it be possible for you to get off both the economic and political hook by saying that if increasing productivity or other factors make the profits get too high, you would simply lower the price on that commodity?

and use price control indirectly to control the profits in selective cases.

It seems to me that would encourage moderation.

There's our expert.

We'll let that, put that in and let it gesticate a little bit.

President, we appreciate the fact that that is something that we can do.

The best mechanics, Governor, we would like to have you submit the views to the Vice President.

Because he is a very strong advocate.

He's got it already in his head.

And you can be sure that your clues will be heard.

We've also set up this new device for the guy at this station.

With regard to this man, he will know which office to go to.

And his office is set up for him, too.

I'd like to reinforce what Governor West commented on earlier, Mr. President, in regard to phase 2 and its impact on the governments as a fairly budget.

I'd like it to be a blue ribbon committee I think is important, and I think we have to have some observations to make that it will be meaningful to the governments and to the people who have prepared this budget.

I just wanted to endorse this statement.

Mr. President.

I'd like to say that as far as we've done with federal employees, through attrition, it is working in Connecticut very well.

We're doing it for a different reason.

We're broke.

The only way I can find an increased productivity is if we have an American system of civil service and so on.

I would hope that the face to have a provision which would guard against retroactivity, which would be a tremendous whiplash if it were to happen at the end of the 90 days.

And I'd like to, while we're leaving for the state of Washington, which is a serious government, remember that Connecticut is number two in unemployment, and I'm hopeful today is two.

We have enough flexibility, and we keep in mind the fact that we, being so heavily tied to the defense industry, are in a very, very bad, bad situation as far as jobs are concerned.

The state of Washington, which is Southern California, is a

Thank you very much.

Well, gentlemen, we appreciate your time.

I know that all of you have sat around this table at work.

You know, I try to give you something to take home as a remembrance.

You had everything I've got.

On the other hand, we've got a couple of new small items.

First, I know that most of the time your wives talk about where you've been.

The White House.

But anyway...

Here's a small item that Mrs. Finch and the man have made out for a while.

It doesn't have your seal on it.

It doesn't have my name, so it's bipartisan.

And your white box is a little compact.

There's one for your wife.

Or your secretary, if you have a secretary.

Anyway, we'll get those out to you.

We don't want you to go away empty-handed, so we have made up a few little things for the day.

This is a presidential seal on a paper wing.

And you will note it is very small, and that allows me to give you some very good advice.

We all collect paper as we sit here in our offices.

Whenever the paper gets so that that little old weight won't hold it, throw away the paper.

We hope that you will remain for just a few minutes there for the president.

Thank you, sir.

Thank you.

Thanks a lot.

Thank you.

Good to see you.

I want to tell you how much I appreciate your being here, some of you on foot, short notice, and how beneficial I think it's been to us in the administration to have these viewpoints, and particularly some of the ones that surprised me.

I thought I was really versatile and knowledgeable about state and local government, but I must confess the points were raised here that had to turn to me, so I'm sure that implies...

to some of our other people who will be working in these programs.

In conclusion, I want to call on the man who provides the target of opportunity for president-running press, the White House masochist, Ron Ziegler.

I don't know if there's a good deal of precedence to this.

Talking to the Vice President and his staff, I think it would be appropriate for Governor Moore to speak briefly with the press.

Why don't you give a brief rundown on the... Because there are the press from many of your local states, your states here, we have set up an arrangement outside of the U.S. interests where...

There's microphones where you can get a report together with whoever would like to join you.

And then those who would like to help your local pressure state presses.