Nixon, Moore & Ogilvie on Phase II and Wage-price freeze

1:33:23You are the vice president.
1:33:24You are the 40 times they like to have a press picture.
1:33:28Which side are you going to come in on?
1:33:35They want to see you as a guest, so they're going to see your back door.
1:36:27You're the moderator here, so I'll...
1:36:30I leave it to your judgment, Mr. President.
1:36:34Mr. DeAndre Cicero and Mr. Walker was in the process of explaining some of the actions to the trees and the school teachers.
1:36:43The governor wants to talk about it.
1:36:45I don't know whether he's satisfied the governor with it.
1:36:49I was probably a little bit.
1:36:50All right, we want to get to the next question.
1:36:51You may be satisfied with the governor, but you haven't satisfied the school team.
1:36:55That's a tough one.
1:36:56The co-head of the governor, Ronald Brown, I have a question, Mr. Walker.
1:37:00Am 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,
1:37:18That's correct.
1:37:45You've answered the question.
1:37:47It could have worked well.
1:37:50One point that I would like to say is that
1:37:57Next, 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?
1:38:07And 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.
1:38:24But I did say this so that you would know.
1:38:28I said first, not only is there going to be a phase two, but second, that I mentioned the American people overpowering the support of
1:38:39The present wage price freeze.
1:38:42Second, that the American people want a follow-on.
1:38:45A follow-on that will be effective.
1:38:48And that we are going to have.
1:38:50Third, that will require, in order for it to be effective, two things.
1:38:55Three things.
1:38:55One, it's going to require support of the American people.
1:38:59That I think we have.
1:39:01Second, it's going to require cooperation of business and labor.
1:39:04That we're working to get.
1:39:07And, of course, that depends on what kind of person.
1:39:10But third, and this is a point we should all keep in mind, it must have teeth in it.
1:39:15Now, by teeth, I won't spell that out, except to say that jogging without teeth will not work at wage, price, and service.
1:39:23So, 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.
1:39:30Now, how is this all related to this problem?
1:39:33But 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.
1:39:44And the question is, well, how do we defer the government pay rate for six months if we are doing this in the federal government?
1:39:52and the breeze is only 90 days, is that fair?
1:39:55And the answer is, not fair, unless there is a follow-on program on which there will be restraint.
1:40:04So 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.
1:40:15That would be a very significant error, and that's
1:40:18So, 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.
1:40:30They must not do it.
1:40:31If they do, they've got a real need.
1:40:34And so, the purpose here is to have a program.
1:40:37That's what we're working for.
1:40:42I want to ask a broader question, President.
1:40:45A contract, an annual contract, executed for X number of dollars, payable in installments.
1:40:53This is a type of contract we execute with most of those in the higher education spectrum.
1:41:02Title on that, that contract may have been executed as early as March.
1:41:10Call me for, let's say, an effective day, July 1, or an employment period.
1:41:16July 1 is June 30th.
1:41:18For some surgeons to be distributed or made available in equal installments or unequal installments in case of an event.
1:41:28When do they start to go to inspect?
1:41:31July 1?
1:41:31You tell me.
1:41:33Well, the date of the effective date of when they can first legally demand payment under the contract.
1:41:37That contract...
1:41:40I like that it would be an important contract as of July 1.
1:41:43It sounds to me like they would start it through in July 1.
1:41:46The execution date of the contract doesn't matter.
1:41:48Do you understand?
1:41:48Ten years ago or six months ago.
1:41:50They continually start it through in July 1, and as you described it, it sounded like July 1, if so there is a pay increase.
1:41:57But 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.
1:42:05No, it wasn't.
1:42:06I understand.
1:42:37But it never was executed.
1:42:38And because of the difficulties of... Well, was there a strike or something?
1:42:43No strike at all.
1:42:43It was just a case of putting in the final form.
1:42:47But the major terms were all agreed to.
1:42:48Particularly the wage terms were all agreed to.
1:42:52But it was not executed when the freeze came in.
1:42:55We never did execute it because of it.
1:42:57Well, I'll turn to you first now.
1:42:58There are two points here.
1:43:00If you reached an agreement...
1:43:02Before the freeze, the communication workers at AT&T reached an agreement on August 14th.
1:43:07They had signed these papers, or had ratified the contract, but they reached an agreement that is allowed.
1:43:14If 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.
1:43:22For a retroactive lump sum increase back to July 1, which is the August 15th date, then the rate drops back to the last.
1:43:31That's the next question.
1:43:32I think it would be wise if Secretary Walker is going to be available in these specific cases now that the President is here.
1:43:40to return to our basic function.
1:43:42Mr. President, we had deferred hearing from the special chair until you arrived, because I really wanted to hear it personally.
1:43:51We 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.
1:44:03So we've covered the gamut pretty well with state and local government.
1:44:06So 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.
1:44:18So those who want to comment at this point, I think this would be a good time to do that.
1:44:24Bill Connor.
1:44:24Vice President, we spoke this morning in your meeting with the Vice President concerning the fact that
1:44:32Newspaper 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.
1:44:46But 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
1:45:01and whether our prices for services, where our wages come up.
1:45:07You'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.
1:45:22One of the things we have to bear in mind is that we,
1:45:30As 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.
1:45:55Well, then when you look at government, and particularly, rather than the federal government, we've had very sharp increases in federal pay raises.
1:46:08Pay raises, all of you know, we've been trying to compete in local areas over the last, what's that figure, George?
1:46:15It's about 21%.
1:46:18Over the past two years, federal workers have received a 21% increase in wages.
1:46:25Now, that's at the rate of 10.5% a year.
1:46:30Now, let's look at local and state governments.
1:46:32Local and state governments have an enormous impact on the wage-luxury situation.
1:46:39Let's compare local and state governments.
1:46:41Look at you as a business.
1:46:43Let's compare you with steel.
1:46:44Let's compare you with automotive.
1:46:46We can compare you with anything else, but you're bigger.
1:46:50I mean, as an employer of services.
1:46:53Now, 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.
1:47:03When 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,
1:47:13That has, of course, an effect on the CBI cost of living prices in XDRC.
1:47:25It also has an effect throughout the country, and so does with you.
1:47:31So what I'm doing here is to get this perspective to say that
1:47:39The decisions made by state and local governments will be very important in terms of making any
1:47:48continue wage-price restraints effective.
1:47:51I'm not suggesting there's not going to be any movement upwards.
1:47:55You can't go back and tell teachers you're going to be frozen forever.
1:47:59You can't go back and tell your workers, look, you're in an equitable position.
1:48:02You're not going to go up.
1:48:04We know all those things.
1:48:06But 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?
1:48:14Or why don't we get Ben Simmons to do something?
1:48:16Why don't we do this this summer?
1:48:18We have to realize we all have problems in dealing with our own decisions.
1:48:23Mr. 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...
1:48:43That was at all times.
1:48:45I 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.
1:49:00Well, I think we could, but it's not decided now.
1:49:03But we have to use an adjustment to the works as well.
1:49:06There are various possible things.
1:49:07We've had quite a little discussion in the Productivity Commission of the
1:49:12problem of productivity in government, federal, state and local.
1:49:16That is a kind of a representative group except for some reason we don't have
1:49:25That's one step we can take now.
1:49:29That's a low revenue panel of the highest quality.
1:49:33Why don't we start that at this meeting now?
1:49:37Let's have representatives of the state.
1:49:44And local government, all that.
1:49:46Because, you know, we in government tend to not realize that productivity in government is terribly important.
1:49:55And 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.
1:50:04place in the world in terms of increasing productivity.
1:50:06You must think the same as some of your stakeholders.
1:50:09Yet, when you think of the 4,000 people that run this wage price freeze, all of them are currently in the government.
1:50:16All of them are taking this on as an additional duty.
1:50:18Well, that's really quite an achievement, so you have to give them credit, too, in order for when they're good.
1:50:24But I think we ought to have them on the program.
1:50:26And also, I think it's on top, Mr. Vice President,
1:50:30He would welcome the opportunity to have a, being a former governor, and who is an advocate, extremely sensitive to the state and local government.
1:50:42As you noticed in the meeting, he's always brought this up, to have something worked out.
1:50:48So, shall we set up a procedure whereby we can...
1:50:50I'd like to do that if you recommend it.
1:50:52You knew that?
1:50:53Good.
1:50:54You make the recommendations, work it out with Governor Conley, and it will be done.
1:51:01The three group representatives will give you input to the vice president.
1:51:05Of course, that's the primary responsibility here.
1:51:08It will be done.
1:51:09It's good.
1:51:12Governor, I want to say, Mr. President, that I'm here as a sort of remembrance of the past.
1:51:24There's no better job than a media pest.
1:51:27I told the Vice President that I was somewhat reluctant to accept him.
1:51:40Because 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.
1:51:49I can even say, yes, you could have been on Vietnam or somewhere else.
1:51:53Of course, everybody else could have been on Vietnam.
1:51:58I've had my legs hit you at the time, U.S. News.
1:52:00But this is so terribly different from anything that any of us have ever experienced.
1:52:06Well, we're all on the same boat, actually, in a sense.
1:52:11I 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.
1:52:20But the fact that it was the 90 days, and does it have to be...
1:52:26Phase 2 is determined 100 days.
1:52:29It doesn't have to be said that it's for 9 days.
1:52:34No, let me lay down the rest immediately.
1:52:38Phase 2 will not have a terminal date on it.
1:52:42We're not thinking in terms of a terminal date at this point.
1:52:45That'd be it, Mr. Director.
1:52:47I think that's right.
1:52:48It'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.
1:52:57You could say what I just talked about.
1:52:59In other words, phase 2, if you thought about 90 days or something like that, it just wouldn't be worth setting it up.
1:53:07And therefore, phase 2 will, for the reason that it will be run longer, and possibly the depth of it,
1:53:17Therefore, it has to have the procedures for more flexibility.
1:53:22That's the other point.
1:53:24You can have a freeze for 90 days and have what all of you know are the inequities.
1:53:30People will take it for 90 days.
1:53:32But if someone says, why don't you earn it for six months?
1:53:35They were broken down, because in the end people affected teachers.
1:53:39If you deferred wages to teachers, they would obviously need to get them.
1:53:43So 90 days is as long as we thought it could take.
1:53:45Maybe it could be longer, but we don't think so.
1:53:50But as far as phase 2 is concerned, that's why it is a much more complicated situation.
1:53:54It requires a long period, and therefore procedures for it there in that case.
1:54:03My part is that I think that anything that you do is to be successful.
1:54:10Of course, it has to close as many loopholes as possible.
1:54:14That's the reason why I brought out any kind of an exploration team.
1:54:18It'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.
1:54:28And then when you plan on it,
1:54:31The ground has come.
1:54:33You may face a terrible situation when all of this is released like a broken tank.
1:54:40The other thing is... Well, let me ask you this.
1:54:42Would 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...
1:54:55without an express terminal date on it.
1:55:00In other words, you might, if you had a terminal date in mind, you might have it with an announcement.
1:55:05How many would agree with that proposition?
1:55:08How many of you would?
1:55:09The problem that we have in
1:55:14...preparation of our budgets.
1:55:16We don't know whether we can provide X number of dollars in future pay increases, but this will be available July 1st.
1:55:24We started our budget preparations, they're underway now, so not knowing whether there will be...
1:55:30...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.
1:55:44Well, they have their elections.
1:55:48I'm not really concerned, Mr. President, but I'm very rude to that question.
1:55:56The 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%.
1:56:09Your suggestion that what we do in this field...
1:56:13I have some salutary effects in terms of my little floor.
1:56:23Decelerating the enormous increase that are going up in your state modes of salary.
1:56:30Yes, 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.
1:56:42Well, I have to disagree with my colleague both at the same time, so that's a healthy disagreement.
1:56:50We're all trying to purchase and help others.
1:56:53This bus will always have to be blown.
1:56:56We're still going to have to make decisions, don't you understand?
1:57:02Don't you watch this video, Jack?
1:57:06Yes, yes.
1:57:06And you will make your decision.
1:57:10I'm trying to figure out how to make it work.
1:57:16Well, John's got a stock, and we're all going to have a product.
1:57:23I think we just have to cope with that stock, with what we have.
1:57:31And then, when...
1:57:35Local government has a special problem there.
1:57:38Not only do they have a city problem, the state government has a budget problem.
1:57:52but 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.
1:58:01When do counties and cities change?
1:58:04All of them.
1:58:06All of them?
1:58:06All of them.
1:58:07Well, the price-president's vote.
1:58:08A lot of them have moved to the fiscal year.
1:58:10So they wouldn't do it until the middle of the year.
1:58:14Most of them.
1:58:14Let me give you a little demonstration from Delaware.
1:58:17We sat on the first of June,
1:58:20sewer rates, double sewer rates, for our county, effective January 1 of 1972.
1:58:26Now, as Walker says, they are caught.
1:58:31And 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.
1:58:37They're not permitted to adjust them by state statute.
1:58:41So I think this might be characteristic of many cities.
1:58:44This is a good reason why we need that kind of person available and details.
1:58:53Mr. President, on that line, you've got a question for the federal government, and that is,
1:59:03Many 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.
1:59:20It seems to me that if in the wage price freeze, local governments or counties or maybe even states
1:59:30are frozen into a position of little bankruptcy simply because their revenue side is going to be impossible to achieve.
1:59:39Then we have a really rather violent disruption of the whole process.
1:59:45And, of course, because you're due to the charges to be frozen, yes.
1:59:51And I think we have to have, in order to obtain the integrity of our local governments,
1:59:57There's some very strong upward possibilities of scratching around almost everywhere we can to make the revenue side work out.
2:00:05The 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.
2:00:19But even after we've done that, still, if we have, let's say, civil sores,
2:00:24for catastrophe of that sort, we need a lot of money to pay the police force.
2:01:41This might be characteristic of many cities.
2:01:43This is a good reason why we need that kind of person available in detail.
2:01:52Mr. President, on that line, you've got to talk about a question of federalism, and that is,
2:02:02Many 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.
2:02:19It seems to me that if in the wage price freeze, local governments or counties or maybe even states
2:02:29are frozen into a position of little bankruptcy, simply because their revenue side is going to be impossible to achieve.
2:02:38Then we have a really rather violent disruption of the whole process.
2:02:44And, of course, we're... Because you're due to the charges to be frozen?
2:02:49Yes.
2:02:50And I think we have to have, in order to obtain the integrity of our local governments,
2:02:56There are some very strong upward possibilities of scratching around almost everywhere we can to make the revenue side work out.
2:03:04The 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.
2:03:18But even after we've done that, still, if we have, let's say, a civil storm,
2:03:23For 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.
2:03:34There's not going to be any chance, and the credibility of government all the way through suffers very badly.
2:03:39When the federal government mandates this, or something for our own health and safety, we have to perform functions.
2:03:46I'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.
2:04:02You know, one thing that this dialogue brings to mind
2:04:08As 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.
2:04:18When 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.
2:04:30We must, we must, I think Warren has made a good point in the sense that we must have something to do at this time.
2:04:37Just say, well, we're going to go 90 days, we can be sure of that.
2:04:42But 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.
2:05:04I 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?
2:05:26and at least be able to move forward to some kind of a percentage increase both in debt and in wages.
2:05:33I have the same problem with the selling of funds.
2:05:37In order to have our public funds, we have to be able to justify the income that we can sell those funds.
2:05:45Mr. President, if I may comment on that, I might as well suggest that they consider a net minimum exemption
2:05:54In South Carolina, we in South Carolina, it wasn't set up on regular incomes.
2:05:57To 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.
2:06:09These are the people that frankly should have no problems with.
2:06:15They're actually below the poverty level, or almost at the poverty level.
2:06:27We've got labor difficulties.
2:06:29We have a choice of hospitals trying to avoid other such incidents.
2:06:33And if we could say exempt wages might not be practical below $6,000 or $5,000, it wouldn't be practical.
2:06:43I don't know.
2:06:47It may not be possible.
2:06:50I want to say that I support you all the way through.
2:06:54I think the people of Amharic are very concerned about this, and I hope that you will continue to report the rightness in this area.
2:07:03I 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.
2:07:12We can't have our case needed, too.
2:07:14Now, 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,
2:07:23Let's say, let's take a 3, 4, or 5% average increase, cost of living increase.
2:07:31Maybe it could be done in this area.
2:07:34Establishing a man that makes $6,000 a year, a 5% increase in wages isn't very much.
2:07:42But 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.
2:07:51Somewhere there is a base that is arbitrary with economists, I'm sure, as to what does it cost you to live.
2:08:00Maybe we could work something like that in this area.
2:08:04In addition, I'd like to say among economists...
2:08:08I'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,
2:08:34that 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.
2:08:52After 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,
2:09:03Obvious 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.
2:09:18Mr. President, could they discuss your so-called experts on this?
2:09:25I'm worried about one group.
2:09:30The request he had, I think it discussed that question of, I know you're tired of hearing, of the possibility of freezing problems.
2:09:43Jim believes this, and he makes a good case, it's repugnant to me, but if it's necessary, you know, Lord, I would just...
2:09:53I know they've advised you to look at the face on that particular.
2:09:57I know that it would be very inviting for me to hear it from somebody that knows the answers to this.
2:10:06Let me take a wire.
2:10:08Because I think having you talk about profits rather than charter property as an expert might be more useful.
2:10:21Especially if it's a political problem, not an economic problem.
2:10:26Now, let's first look at political problems.
2:10:30Look, all you folks know very well that politicians are going to be any more popular than getting the big man.
2:10:39In other words, you know, you get the profits from the good and you get the rich guys.
2:10:45That's what we need.
2:10:46And we are being aware of this.
2:10:47So when we are being campaigned, they went over all this.
2:10:51And I said, well, I think that's all the profits.
2:10:54I guess it's a good way to dispute that.
2:10:59First, with regard to profits, when you have a freeze and later face to a restraint on prices, profits are to that extent controlled.
2:11:21The only way you get more profits under those circumstances is to increase production.
2:11:26Now, if you increase production, what happens?
2:11:31If you increase production and make more profits, what does that lead to?
2:11:38Well, that leads to more jobs, which is what you want.
2:11:43It 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.
2:12:04The, 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.
2:12:14In fact, how hard it was to get rid of it.
2:12:16We had to get rid of it after the war, because an excess profits tax,
2:12:23has the effect of first contributing to inefficiency, and second, it has the effect of discouraging growth in the economy.
2:12:38Now let's come to the other point.
2:12:41What about profits?
2:12:42Here again, I'm not suggesting any views, but I think it's public.
2:12:49What about the, are they too high?
2:12:55We 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.
2:13:09Now, don't cry any tears over General Motors.
2:13:11A lot of them make a bloody money.
2:13:14The point is, that...
2:13:16In 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.
2:13:42So I come back to this proposition, that...
2:13:46We have two problems here.
2:13:47We have the problem of increasing employment and reducing unemployment.
2:13:52We have the problem also of checking inflation.
2:13:56Now, 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.
2:14:09It would depress the economy.
2:14:12It would cycle its growth rather than encourage it.
2:14:16From the standpoint of the inflation side, putting a lid on prices does the trick.
2:14:24In other words, prices handle the inflation side.
2:14:28You look at the profit thing on the ground, possibly of the, in other words, you can look at it in terms of taxes.
2:14:40Now, 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.
2:14:53From 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.
2:15:05It provides one billion dollars for these corporations.
2:15:10What I'm getting at is this, that I speak again politically.
2:15:15From 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.
2:15:28On 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.
2:15:47So that's the reason I had to make this decision.
2:15:49I think it would explain that.
2:15:51I'd just like to ask another question along the same lines.
2:15:57Sure.
2:15:57The regulations with respect to depreciation.
2:16:04Depreciation.
2:16:05Depreciation in all matters of the Senate and the Congress.
2:16:12Yeah.
2:16:14I know experts in these matters, and I'm not proposing any experts, but I know the answers to them.
2:16:24If we have unused capacity of about 25%,
2:16:29Wouldn'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.
2:16:46Well, I'm sure we'll get it.
2:16:48Because you, and this is Ellen, up in Rhode Island, where you've got a lot of strong business community up there, too.
2:16:54Let me get that one right straight on.
2:17:01The...
2:17:04How many lawyers?
2:17:06All of them.
2:17:07We all know what the depreciation allowance does.
2:17:12The purpose of the depreciation allowance, and the fashion is to do that.
2:17:16Well, that's financing for business.
2:17:17It 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.
2:17:25On the other hand, you can't depreciate anything unless you buy something.
2:17:30You've got to have something to depreciate.
2:17:33Now under this capacity, the history of investment tax credit is not new with us.
2:17:41We call it job development credit.
2:17:43It's called investment tax credit.
2:17:44John Kennedy recommended it.
2:17:46He was ready to recommend it.
2:17:47As a matter of fact, we should have recommended it in 1959, I think.
2:17:51George Shultz, who was then advising us among the members, he wasn't on the council, but he was there.
2:17:58He was a member of the council.
2:18:00The late Ken Mitchell, some of you may remember him, that I pushed very hard to get us to move in.
2:18:09Let's look at what the economy was.
2:18:11In 1961, when President Kennedy recommended the investment tax credit,
2:18:19There was more unused capacity than there is today.
2:18:22Our employment was at six and seven tenths percent after 1961.
2:18:26But he recommended it.
2:18:27Why?
2:18:28He recommended it because he knew it was a way to get out of employment.
2:18:33There are two ways you can increase purchasing power on the one side, and that is to provide tax relief for consumers.
2:18:40Another way, you can give incentives to those who will produce jobs.
2:18:46And when you say to the corporation, look here, if you go out and buy this or that new equestrian,
2:18:56You will get this kind of tax incentive.
2:19:01That has an enormous effect in stimulating the economy.
2:19:05It worked that way.
2:19:06It worked that way.
2:19:08It wasn't passed until 62.
2:19:10And the effects were not agreed until 64 and 65.
2:19:12And that was not until 64 and 65 that the unemployment rate began to come down.
2:19:19Now, on the unused capacity argument, let me put this in the world context.
2:19:24We do have to use the test.
2:19:26George Meany made this thing fun when he was here.
2:19:30He makes the books very effective.
2:19:33It's pretty good.
2:19:34Anyway, I know some of those words too.
2:19:36But anyway, George Meany was there and said that's how you use the test.
2:19:47One of the reasons a lot of America's capacity is unused is its inefficient capacity.
2:19:56What 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...
2:20:08Salad days are over in terms of competition in the world.
2:20:12Now 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.
2:20:24But on the other hand, we're in a race of all those that we fought after the war.
2:20:30Why aren't you in the World War II?
2:20:32A lot of us are.
2:20:32What happened?
2:20:34We helped the Germans.
2:20:35We helped the Japanese.
2:20:37They're our biggest competitors in the world today.
2:20:39They're beating our pants on.
2:20:41Why?
2:20:42Because the American plant was built 25 years ago.
2:20:46And theirs was destroyed.
2:20:48So everything they have is new.
2:20:50Many of the things we have are new, but a lot of them aren't.
2:20:53You go through New England, you see a lot of old plants up there, right?
2:20:57You go out through the world, you see a lot of old plants.
2:21:00As a matter of fact, I think we have to go further than even this job investment credit.
2:21:06I think we've got to go further on the depreciation front.
2:21:10And we're looking into this.
2:21:11I 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.
2:21:27What 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.
2:21:44So, my answer out here, my vocal here, on the first one, with regard to my useful passion, yes there is.
2:21:50But the fact that it's unused does not mean that it's efficient.
2:21:53What we want to do is to get more efficient capacity and get it done.
2:21:58The second point is that I'm convinced that that efficiency in itself would have a very stimulating effect on the economy.
2:22:08Not 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
2:22:17more competitive in the world, which is what we need to do.
2:22:21I 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.
2:22:30And we will not have a more efficient plan unless people put more money into that sort of thing.
2:22:35Now, we can overstate that case.
2:22:38It is true, and let me say, these tax states have got to be very carefully examined.
2:22:43I 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.
2:22:53But I do feel that in the long run, it's a way for America to become some pedigree.
2:22:59Yes, sir?
2:23:00Mr. President, there's some argument that Congress appropriates funds that you're not willing to spend at this time.
2:23:03We recognize that President Johnson, you see the same criticism.
2:23:04You're wondering if the unemployment situation wouldn't be so serious.
2:23:06I just encourage you to release those funds at the first point.
2:23:07Secondly, it means much that the unemployment situation is still very serious.
2:23:09It won't add to it if we reduce federal employment by 5%.
2:23:10That's nice.
2:23:25Yes, yes.
2:23:26Well, George, as the budget director, I'll throw that to you.
2:23:29You've answered it beforehand.
2:23:31I think my first point is that the amount of compounded funds has been way overstated.
2:23:42They said they might put one historical point in there.
2:23:46They started empowering government funds for President Jefferson.
2:23:50Harry, the president since then, has done so.
2:23:52It's not an excuse, it's just something the state has done.
2:23:55But you know that, right?
2:23:56And it's just one of those things we've got better questions about.
2:23:59I think that shows the need of the questions still there, so that's the other issue.
2:24:03Every governor's done the same thing.
2:24:04I don't want to get into that, because he would be caught by the president's result.
2:24:11Sure.
2:24:12The proportion of funds that are under any destination is lower right now.
2:24:22I think something like seven out of the past ten years.
2:24:27If 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.
2:24:41That proportion is low by historical standards.
2:24:46I think it's important to understand why you have some of this money in the tank.
2:24:51If the Navy gets an appropriation to build a new submarine,
2:24:57They have a contract that takes quite a period of time to actually fill that suffering.
2:25:01Say it takes three years.
2:25:03We tell them, all right, go ahead and let the contract.
2:25:08And they know it by us when the first payment comes through.
2:25:11Then we release the funds to make that money.
2:25:15The thousands of funds that we have appropriated are held in reserve.
2:25:19You don't make anything by releasing more funds than you need to...
2:25:25to build that shed.
2:25:26It's on its own schedule, and the money goes forward.
2:25:30So 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.
2:25:41Now 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,
2:25:52Yes, are put.
2:25:54And I think in terms of the stimulative effects of the budget, you have to look at the overall picture.
2:26:01And here we have a picture in fiscal 1972 where we estimate the outflow of money
2:26:09from the federal government will be something on the order of 27 to 28 billion dollars more than the inflow.
2:26:17That is a big stimulative impact.
2:26:21Now, you can rearrange that impact by spending more on this kind of thing, less on that kind of thing.
2:26:30You can say that the deficit should be larger.
2:26:33Some people have argued that.
2:26:37Well, as a matter of fact, the governor said, there is a Basie, did you know, a congressman, Warren Heller, from your state, I said.
2:26:51Warren.
2:26:52Warren, I called him.
2:26:53It was a great Pittsburgh football player.
2:26:58Warren.
2:26:58Yes, all right.
2:26:59I played for Roosevelt.
2:27:00Lost 25-9.
2:27:08I 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.
2:27:22But that's a different argument from the one of how much of a deficit is appropriate for these times.
2:27:30You also get down to another problem, too, is to reduce...
2:27:36We have an economic plan.
2:27:37How much do you rely on the private sector and how much do you depend on the sector?
2:27:47We believe that the amount that we have in the private sector, particularly with regard to, we have a 28 billion dollar deficit.
2:27:55That's really as much as can effectively be used, and that we're going to get more out of dollars now if
2:28:06We put it to the private side, to the mobile side, and we put it to the service side.
2:28:12Now, 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.
2:28:22And 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.
2:28:29So, I mean, that and five percent of the unemployment rolls in Washington is going to be a great factor.
2:28:36And it'll be down to attrition, I would say, primarily.
2:28:40You know, it's a...
2:28:42Mr. 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.
2:28:56But it's certainly what I agree and part of.
2:29:01You may have noticed by what you have done, or intend to do, I can agree with Dr. Hansen on this.
2:29:13I 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.
2:29:26I find an inconsistency with that, and the founding of the fund.
2:29:32I 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,
2:29:57It's the trust fund that makes these numbers large, and they're each year as part of the process of saying how much
2:30:05of the total national resource you want to spend on what's right.
2:30:10We have a big go-round, as you all know, and you participated in how much of that money ought to be released.
2:30:16We do that with the Senate Committee, the Transportation Department, and so on, for highways.
2:30:21And it's a very large sum of money that I think this past year, if I'm not mistaken, was $4.6 billion dollars.
2:30:28And that has been up a little bit since then.
2:30:31And 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.
2:30:42And 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.
2:30:51So I think that on the highway side there are lots of arguments to be made there.
2:30:57It does tell you how to forward from the end of that suit.
2:31:00Oh, God, yes.
2:31:01Mark the place of that meeting.
2:31:02I understand.
2:31:02Mayor Meyer, the mayor of Milwaukee, and the president of the U.S. Congress of Americans.
2:31:07Mr. President, we, as you know, we were the first to join you immediately after you said that the mayor would support this.
2:31:19We certainly have a mortgage in action.
2:31:26We recognize that you have been patient.
2:31:45In 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.
2:32:00Now, 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.
2:32:13And we will, very frankly, have some disagreement in detail in our supporting document, but we agree with these general theses.
2:32:21I will find a supporting document of our several points of summary.
2:32:24I'll be very brief and just simply give you time for a summary.
2:32:28Your time doesn't permit here...
2:32:41We 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.
2:33:09And we spell out what we think the possible effect of permanent losses of federal revenue would mean in two areas.
2:33:18To us, in our efforts, to relieve the plight of the citizens.
2:33:23Now, 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.
2:33:35Point two, you've already covered it.
2:33:38We 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.
2:34:00Well, we definitely applaud the value of stimulating our economy through tax policy.
2:34:04As 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.
2:34:18And we accordingly reaffirm strongly our commitment to an early enactment of a general revenue sharing program.
2:34:25We believe that the Emergency Employment Act should double its size to bring about employment.
2:34:31And we certainly reassert our region that any impoverished land is very much needed.
2:34:40We further propose a revenue stabilization program
2:34:59And 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.
2:35:17Thank you.
2:35:18Let 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.
2:35:23Rick?
2:35:24Revenue sharing may appear to be on the back burner as far as this Congress is concerned.
2:35:29It's not on the back burner as far as you're concerned.
2:35:33We are for it all out.
2:35:35We are pushing with everything that we have, that we would appreciate all of you being on the Congress.
2:35:42After all, they're going to get through this tax country, ways and means.
2:35:45It can't take more than 30 days, I hope so.
2:35:49But in any event, there's some revenue sharing and all sorts of courage on the bank.
2:35:54They should be ready to act on it.
2:35:56And there isn't any reason why, in this session of this Congress, Reverend Sheldon should not be enacted.
2:36:01I don't want to hold it out.
2:36:03Don't spend the money on it.
2:36:04But I can assure you, the same is true of welfare reform.
2:36:08And we're going to continue to push on the welfare reform.
2:36:13That, 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.
2:36:27But on both, we're going to push it, and revenue sharing, I think, has such enormous support in the country.
2:36:36And among governors, and among public officials, and among mayors, the revolutionary plan being passed.
2:36:44You've got to help keep the heat on, because we've got to increase the use, we've got to invest money.
2:36:50We just slipped it three months, because they aren't going to pass it by October 1st.
2:36:55I think the line should be the Congress should not go home until revenue sharing.
2:36:59They're talking now about adjourning about the 15th of November.
2:37:03Now that's just irresponsible.
2:37:06The Congress should stay until Christmas and give revenue sharing to the mayors and the rest of the business.
2:37:13We made Mr. Reagan so that there was no misunderstanding.
2:37:19We thought that the last economic investment major position, quite so,
2:37:23But there wasn't earlier.
2:37:24Well, the last message clarified any misunderstandings.
2:37:30I think in our visit to the Vice President today, there was a double-double reassurance on your position.
2:37:37We are here to settle the arguments, and again, this is not a verbal meeting, but a very argumentative meeting at the beginning.
2:37:49Where's the money coming from?
2:37:50Where's the money coming from?
2:37:52For five years we've been saying, maybe it'll have to come from highways, space, military, everything you're spending on.
2:38:03Maybe it'll have to come, but it doesn't.
2:38:07The country is not going to be facing afterwards number one domestic crisis.
2:38:13And now we're afraid that if we have a permanent loss of revenue, that's what we're saying.
2:38:19We're going to run into that argument even stronger.
2:38:23And 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.
2:38:33And we're hopeful that the things we do will prove to be across purposes, I'm sure.
2:38:42Right.
2:38:43Mr. 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.
2:38:58It's been great.
2:38:59But we've also sent letters personally to our congressional desk delegations who are trying to get the 7,716 state legislators to do this.
2:39:05But 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.
2:39:13We do not have some of the discretion to urge you, and we will continue with our efforts to...
2:39:24If the Congress could enact it, I'll let you know.
2:39:28We support it very much.
2:39:32Could I ask one thing?
2:39:35If I could, you're the new chairman of the mayors and also the county officials.
2:39:41Yes.
2:39:43I know this is long, but go back and let your respective representatives in Congress know again of your continued interest in revenue sharing.
2:39:56That is what I zero in on.
2:39:56We need it.
2:39:57I 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.
2:40:05Do you think some of you like it?
2:40:06We talked about that in our earlier meetings, and we need to be on that.
2:40:10Mr. 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.
2:40:21You don't have to give anything away.
2:40:24The bill was moving toward resolution.
2:40:26All we've got to do is get him here, he's going again.
2:40:28You don't have to say, we'll take the mills plan, or we'll take this plan, or that plan.
2:40:33All we've got to do is hold off the cops.
2:40:36We've been in the case for two or three minutes.
2:40:44We 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.
2:40:54But 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.
2:41:01Well, he is, let me say this, you know, you all know who he is.
2:41:04He's going to get the credit for this county.
2:41:08He'll get it after he gets here.
2:41:12Wilbur Mills is one of the most beautiful men in this country.
2:41:16In terms, you all serve with him, you know, he knows taxes.
2:41:20He's like Johnny Byrne, Johnny Byrne.
2:41:22The two of them are really a couple of real giants in terms of an understanding of the tax system and all the rest.
2:41:29And they, each of them in his way, for the philosophical reasons, is not favor driven, as we have recommended it.
2:41:38On the other hand, Gordon Ellis is a very astute politician.
2:41:41And I think that just keep it going.
2:41:46In a way, he knows his interests, and I think he's going to... After all, it's a question that comes out.
2:41:54Robert Mills, you know, is quite bent to the fact that...
2:41:58The basic fundamentals of the plan were the product of a bipartisan evolution of ten years within the advisory commission on intergovernmental relations.
2:42:18Some 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.
2:42:31And 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.
2:42:41And he's a strong supporter of revenue sharing.
2:42:45That's one thing.
2:42:46But I, as Warren Ernst pointed out, I agree with our goal here today to help you make this work.
2:42:53Anyway, 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.
2:43:13He tells me personally that there's $155 million of unaccounted highway funds he could use.
2:43:19I would hope that these would be recognized furthermore.
2:43:23But that's one thing that hasn't been discussed here.
2:43:26I come from an actually cultural state and an actually state.
2:43:28We do a lot of business in the Orient.
2:43:31And certainly that surtax has helped the automobile industry.
2:43:35I would hope that your intelligence would tell you undoubted things that we do not have access to, but whether they are looking at retaliation.
2:43:45Because if it comes to that, it's going to hurt us and it's going to hurt other agricultural states.
2:43:53Tremendously.
2:43:53Those points I would hope would be recognized.
2:43:56And when we talk about increased productivity, we also got to, again, balance that against the unemployment.
2:44:05So those in particular, if we can get away with it, Mr. President, it's great.
2:44:10But if they should retaliate, or imply that they will retaliate, it's going to have a disastrous impact on the state of Illinois.
2:44:20Governor, let me cover that, because all of you, to a certain extent, represent agricultural states.
2:44:25We don't take Illinois.
2:44:27It's considered to be a great, as it is, it's a great industrial state, but it's a huge city.
2:44:32But there are 2,500,000 people who depend on agriculture in the state of Illinois, correct?
2:44:36Can we get the biggest agriculture report?
2:44:39Let me tell you, I think this is a very important point that you carry back to your farmers.
2:44:44And 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.
2:44:55Another 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.
2:45:08Now, the agricultural exports are frankly the only bright thing in the American exporting import picture.
2:45:20The reason is that American agriculture is the most productive phase of our whole economy.
2:45:29As some parts of the Australian stream become uncompetitive, American agriculture is ahead of the world.
2:45:35We could use anybody in the world in agriculture.
2:45:38Anybody in the world.
2:45:40To 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.
2:45:48Now,
2:45:49The 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.
2:46:12that 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%.
2:46:37We'll be prepared to negotiate with regard to international monetary law.
2:46:42Now, how does that look to agriculture down the road?
2:46:46Temporarily, 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.
2:47:09On the other hand,
2:47:12Long 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.
2:47:29For the United States of America pays two-thirds of the cost of free world defense.
2:47:36As we negotiate all those things, it is our purpose that the United States live in any world that is competitive, and we will trade.
2:47:45Now, long term, who's going to be the major beneficiary of that?
2:47:50American agriculture.
2:47:51Because you can only sell abroad those things that are competitive.
2:47:56And one thing that we are competitive is in agriculture.
2:48:00We sell a lot more.
2:48:01Soybeans, everything else that you can imagine abroad.
2:48:06If they open up some market, take the Europeans.
2:48:10There's some really good things that we can break through there.
2:48:14So, what we have got here, Governor, what we have developed is something we haven't preached.
2:48:19I know that
2:48:21And 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.
2:48:29We 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.
2:48:38Of course you're going to have to have more markets abroad.
2:48:43But the difficulty is, we have not had any negotiating
2:48:46Tool.
2:48:47Now we have changed the name.
2:48:50We'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.
2:49:14So that is the answer that we have there.
2:49:17Mr. President, may I address myself?
2:49:19Sure.
2:49:19While I have supported you completely on your waste price rate, I have not supported your policy on agriculture.
2:49:27I think probably you know, and one of the problems I think we have is communicating with the Department of Agriculture.
2:49:33I'm going over there tomorrow to talk about it rather than burden you with it today.
2:49:38We've talked here today about corporate profits, about more...
2:49:42higher salaries for teachers and others.
2:49:46A segment of our economy that's in much worse shape today than the teaching profession is agriculture, and we can talk about it.
2:49:53I really think that the farmers of America today are the ones who are paying for what you have just outlined.
2:50:00I think we have not done a good job.
2:50:02I think probably you will concur with my position on that.
2:50:07Not only do we have to look to the long-range needs of agriculture, and certainly world trade is an important part of that.
2:50:14In addition to that, we need to look to the short-range needs of agriculture.
2:50:17I won't go into a long dissertation on agriculture here now, because my fellow governors hear me talk about it all the time.
2:50:25But I have suggested that they take agriculture to the least.
2:50:30The very least he could do was to extend for 90 days the October 1st call-up of 67 and 68 corn and sorghum.
2:50:37And I can't get an answer from him.
2:50:40I'm going over first thing in the morning to try and get that.
2:50:43And if he can't do it, all I want him to do is to say no, and he can't.
2:50:48Time's a-wasting.
2:50:49We've only got about 10 or 12 more days.
2:50:52I 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.
2:51:11Well, I know that the president has another obligation, and I know he's very interested in...
2:51:22Mr. 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?
2:51:50and use price control indirectly to control the profits in selective cases.
2:51:55It seems to me that would encourage moderation.
2:52:00There's our expert.
2:52:01We'll let that, put that in and let it gesticate a little bit.
2:52:04President, we appreciate the fact that that is something that we can do.
2:52:14The best mechanics, Governor, we would like to have you submit the views to the Vice President.
2:52:31Because he is a very strong advocate.
2:52:35He's got it already in his head.
2:52:38And you can be sure that your clues will be heard.
2:52:43We've also set up this new device for the guy at this station.
2:52:48With regard to this man, he will know which office to go to.
2:52:52And his office is set up for him, too.
2:52:58I'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.
2:53:06I'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.
2:53:20I just wanted to endorse this statement.
2:53:25Mr. President.
2:53:27I'd like to say that as far as we've done with federal employees, through attrition, it is working in Connecticut very well.
2:53:37We're doing it for a different reason.
2:53:38We're broke.
2:53:39The only way I can find an increased productivity is if we have an American system of civil service and so on.
2:53:47I 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.
2:54:08And 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.
2:54:17We 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.
2:54:30The state of Washington, which is Southern California, is a
2:54:35Thank you very much.
2:54:42Well, gentlemen, we appreciate your time.
2:54:45I know that all of you have sat around this table at work.
2:54:49You know, I try to give you something to take home as a remembrance.
2:54:54You had everything I've got.
2:54:57On the other hand, we've got a couple of new small items.
2:55:01First, I know that most of the time your wives talk about where you've been.
2:55:07The White House.
2:55:08But anyway...
2:55:10Here's a small item that Mrs. Finch and the man have made out for a while.
2:55:17It doesn't have your seal on it.
2:55:20It doesn't have my name, so it's bipartisan.
2:55:24And your white box is a little compact.
2:55:25There's one for your wife.
2:55:28Or your secretary, if you have a secretary.
2:55:33Anyway, we'll get those out to you.
2:55:35We don't want you to go away empty-handed, so we have made up a few little things for the day.
2:55:41This is a presidential seal on a paper wing.
2:55:46And you will note it is very small, and that allows me to give you some very good advice.
2:55:54We all collect paper as we sit here in our offices.
2:55:58Whenever the paper gets so that that little old weight won't hold it, throw away the paper.
2:56:06We hope that you will remain for just a few minutes there for the president.
2:56:10Thank you, sir.
2:56:10Thank you.
2:56:11Thanks a lot.
2:56:12Thank you.
2:56:12Good to see you.
2:56:31I 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.
2:56:49I 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...
2:56:58to some of our other people who will be working in these programs.
2:57:02In conclusion, I want to call on the man who provides the target of opportunity for president-running press, the White House masochist, Ron Ziegler.
2:57:20I don't know if there's a good deal of precedence to this.
2:57:28Talking to the Vice President and his staff, I think it would be appropriate for Governor Moore to speak briefly with the press.
2:57:41Why 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...
2:57:53There's microphones where you can get a report together with whoever would like to join you.
2:58:00And then those who would like to help your local pressure state presses.

Nixon, Moore & Ogilvie on Phase II and Wage-price freeze

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Nixon Library Finding Aid

Also recorded on September 16, 1971

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