Nixon, Shultz & Agnew on Federal Budget and Inflation

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and facing very difficult choices between those vetoes that may involve legislation that could have a very great political feel to the country, and yet which, because of our budget problems, we will have to bite the bullet.

This also requires, as far as the Cabinet is concerned, looking toward a 1970-40 budget, which requires cooperation with the United States.

Thank you.

It seems that all of these budget changes are broken.

They're broken because the government grows and grows and grows.

I know that around the table.

You've all done a great job in fighting this battle.

You get down to the point that, for example, the CPI number that's going to come out tomorrow,

I would say today marks a point where in terms of the economic situation

It's sort of all coming together.

We have a gross national product increase in real terms that is just sensational.

8.9%.

I don't know how far back you have to look to find a quarter, but that did a real increase.

That's real.

On the GNP decider, it's almost like 1%.

So, and we have had a decline in unemployment.

There are all sorts of ways to seasonally adjust and calculate this in every way that I have seen to do it.

If you compare the last December's level with today's level, with that regard to what the pattern is from one month to the next, you're down about a half a percentage point.

The layoff rate in manufacturing is down to where it was in 1967, 68, 69.

Those were years.

The accession rate is very high.

People aren't being hired.

Employment is up 2.7 million from a year ago.

So after a long period of trying to implement a strategy,

It shows the importance of the strategy that has been held in the budget.

This is in spite of very large increases in the food area, the non-food commodity, no change.

So it's a very, very good day for us.

I saw even business speaks at the reserve, and they'll decline and not decline.

I don't know what's wrong with that.

Well, yeah, it's all right.

People can crew around, whether or not it went down, or it tends to point from May to June, and that's starting to look down.

But every way of adjusting it,

When you go back to the beginning of the year and come to now and say, has there been a decline in the general level of unemployment everywhere?

Justin says it's pretty much the same thing.

Yes, there has been by about the same amount.

And of course, that fits in with everything else that we know.

It's a gigantic rate of rise.

I put the information we have on the fact that layoffs are at a very low level.

Hiring is going on.

Employment is up.

So it's just got to be there.

Mr President, Mr Vice President,

Good news is that we have so much fiscal stimulus that we don't need any more.

And we have obviously had a tremendous set of results that these figures have been mentioning, and I guess all in all it is one of the very best signal days that they've had in the history of economics.

I'm a full-fledged economist now, I know that.

...deficits when we were at full employment, and we're facing one in 1974 that looks as if it could be well in excess of $20 billion full employment deficit when we're getting very close to full employment.

And so it is, I think, pretty essential that we understand that the ceiling letters that will go out this afternoon and tomorrow

and will be hand-delivered in most cases to heads of agencies, and will be in accordance with the ceiling the president has given us.

It should not be interpreted by anyone as being a typographical error.

They will be accurate, they will be low, they will be hard to beat.

We aren't going to, in the Office of Management and Budget, try to tell you precisely how to beat it.

We stand ready to help anyone who says they can't beat it.

But we do have some constructive suggestions along that line, although some people call them destructive suggestions, but we do have a real necessity.

In all seriousness, we say strictly within the guidelines the president has given us and from which we will have made up our seeming letters.

There's a lot of worry that these things can be politically bad.

None of the budget specific decisions have to be printed or will be printed until January.

There will be a lot of people who will say you can't possibly make cuts.

What are you going to cut?

I've studiously avoided trying to get into too much detail, because every time you pick out a specific program, a tremendous number of adherents pop up, and they're all for that particular program.

The simple fact of the matter is that without referring to specific programs, without referring to anything except what will happen in the form of high prices and inevitably higher taxes, and really gigantically higher taxes, that, I think, is the sort of thing that will appeal to the people.

For that reason, these cuts pretty much across the board will have to be made if we're going to avoid that kind of a high-price, high-tax result, so that we do have a very serious problem and very difficult, and we certainly don't feel that it's in any sense easy, or that it's going to be easy with about 70% of this budget that is normally classified as uncontrollable.

We will have to underfund some things.

We will have to not fund some things that a lot of people in Congress feel are tremendously vital to the national economy.

We think we've got pretty good arguments as to why a lot of them are not, and view it the way some of them have not worked over the years.

But the basic simple fact is that we aren't against just spending, or we aren't against anything new, or we aren't against people, or we aren't against...

Anything classified as designating you as compassionate and humane, the simple fact is we are for the people.

And only the president really can speak for all the people, and only the president has a constituency that is countrywide.

And only the president at this point seems to be concerned with a basic problem of higher prices and higher taxes.

So, with that kind of concern...

going into a presidential campaign, but much more important than that, going into a period when the economy now seems to be starting on a very fine path, we certainly don't want to blow anything.

We don't want to lose the political or the beneficial effects that can come from an administration and a president that is dedicated to preserving these games we've made for all the people.

We don't want to force another wave of inflation or high taxes that could literally be beyond anything any of us had an opportunity, fortunately, to see before.

So the simple point of all of this is that the consumed letters for 74 will go around.

They will be very low.

They are in complete concordance with the guidelines the President has for the overall budget.

We will be striving to achieve a bullet point of balance in 74.

We can get awfully close to actual balance, if not actual balance, in 75, if we get on this path.

We can't do any of it, 74, 75, the election, inflation, the economy, or anything, if we don't make a major start now.

And that major start does involve some attempts to offset the increases that were...

I don't interrupt you after one moment.

You know this business is quite balanced and something that all of us understand, and of course it's a way to get away from our big deficit spenders and so forth and so on.

As far as the average person is concerned, and certainly this is true of the average trucker, he said, I can't figure out how you can spend $22 million for and take in taxes and say that you're balanced.

Well, so it is.

The point that I make is that we have in mind, this is a confidence at this point, we have in mind that we would like to present a budget in 74, covered in two years' span,

So that the 75 budget is an actual balance.

74 we can't do it.

But you see, definitely we could say that, by golly, here we are.

We're finally back on course with an actual balance.

That's why these numbers that we have, that we're presenting now, are going to be deliberate, but they're pretty tough.

But if we're going to get to actual balance at a time, then we should be at actual balance, because we will have more employment.

That's also our goal at that point.

We've got to the cutting in 1974, or at least holding the line in 1974, that will enable us to balance in 1975.

If we wait until 1975, in other words, if we wait until the latter part of 1974, that will be too late.

This is our strategy, so if all of you have that in mind, what we're worried about is that 75 budget now.

But we do have to get an actual balance there.

We want one.

And I think it's proper that we agree with George.

Do you agree with that?

We can actually display that, we can actually achieve it in the budget we print in January of 73, if all of these basic problems are followed this year, not in the balance of 73, but in 74.

It's a very tough job, nobody underestimates it.

It's for probably the best cause of all, which is a good sound processor on the main team.

The gains really that have been achieved already.

It will probably require some vetoes and some very attractive sounding bills.

And for that reason, the president said we were talking about a strategy of indicating in advance some of the vetoes that would have to be given on fiscal grounds, on grounds of protecting all people from higher taxes and higher prices, so that we could try to get away from an individual unhappiness, but a single veto of the law as it was billed as attractive housing title.

And that really will all be part of the same thing, all part of the same attempt to start now,

to achieve an actual balance by 75, superman inflation, and the high taxes in between.

The issue really should be presented.

I think the inflation issue, of course, is a little harder for people to understand in terms of relating to government spending.

We should always make it, but it's a little harder to understand.

People generally think inflation is caused by the wage price question more than by fiscal policy.

F***!

Everybody in the boat in my hand could promise to keep that hat.

I kept it.

It was the biggest mistake I ever made.

Let me promise that.

I remember when Matt Lark sent it over to me at that time, he sent over the budget.

I said, we can't close that one.

He said that Mr. President is the most inefficient person in the world.

He said that he can't do it because I promised to keep him when I was in the post.

Advice.

You were there to drop that out of charge.

We all promised that.

I'll tell you, never again.

Is it any better for me to shoot you together?

Don't still answer.

Hei.

On that point, I think a lot of people do worry about political effects of cuts on a specific basis.

I think that there's a lot of political gain to be made from the kind of program the president's talking about.

And I'm sure many people are much more worried about what high taxes are going to do to them.

They have much more money, they have much more prospects of good income, and they're much more likely candidates for voting in votes, and they're much more worried about this.

And on the point the president made a moment ago on inflation,

There was a very interesting poll quite recently in which the majority of people clearly said that government itself is the greatest cause of inflation, and there's a lot to be said for that.

Teksting av Nicolai Winther

Mr. President, I think this is an accomplishment that hasn't been mentioned this morning.

It's very important.

At least I find it important as I talk to you.

And that's the court.

What you've done with the court is just recognize the clear cause of the country.

Well, I think it's a very recent accomplishment.

And here again, George, as you mentioned, it is one that we have buried in the data that we've made.

Well, they seem to be looking at our, at our, at the police that we hold down.

That's right.

They're very much against what we do in court, therefore we don't play it.

On the other hand, you go out across the country.

The country is, the people of this country are concerned about narcotics because their kids regret it.

They're concerned about safety, particularly their kids and their families.

They're concerned about law enforcement in general.

They're concerned about substance use, hijacking, crime, violence, and the rest.

And we turn that around a lot.

I think it's a very good point.

It's a very positive point that I've already mentioned a lot.

I think it's a very good point.

Well, we will adjourn this meeting as we can.

Do your best.

Teksting av Nicolai Winther

They've given two boots about the improvements right there.

Now all of a sudden, because we say we're going to take another look at it, it makes... That's a goddamn shot.

I...

Nixon, Shultz & Agnew on Federal Budget and Inflation

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Nixon Library Finding Aid

Also recorded on July 21, 1972

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