Nixon, Ehrlichman & Haig on Federal Budget and Revenue Sharing

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I bet.

Like that?

All right, sir.

Great John Connolly's.

Blue Bucket's a little big.

Well, you got anything?

I think so.

I've never seen it.

I don't know about that.

Hey.

Well, what is your bad news today, Uncle Bunchy?

Well, no, it's bad news.

It's honest.

Usual cat burger, I mean, wine burger, honest.

What are we going to do?

Take some more lunches out of the poor kid's mouths or something like that?

Take some help away from him.

Yeah.

It isn't for children.

That's the irritating thing about that.

It isn't for children.

Oh, I know.

One and a half million needy children.

I read it over and over again.

Then I read the story a little more carefully.

Then, of course, it isn't any for kids at all.

It just says they've got to be able to hold a poverty line.

It's like children went to school in Hillsborough, California, and she married them because they got a milk subsidy.

It's just absurd.

Hell, they get it in San Marino.

They shouldn't.

It's not true.

I think the best way to do it would be to first take this table and help me

Yeah, and they wanted a very kind of errands move, errands put in the provision.

The House conferees could not even consider the Mansfield amendment in confidence on the ground that it was extraneous to the House bill.

It was close, but stupid.

But nevertheless, that's a very important vote.

It is extremely important.

That's very important.

To win on that basis, because otherwise it gets closer over time.

Okay, let's go.

This table contains a lot of information about where the 72 budget stands and various possible things with respect to 73.

And as background for the total discussion, what I'd like to do is sort of run down and parallel carefully with him so that he would see what is involved.

And then he has some key questions about it.

Right.

Taking the first column, that's more or less where we stand currently in public hearing for 72.

I can see that we have the various items there, including about three billion in non-enacted presidential initiatives.

We'll see tomorrow what the revenue and deficit situation is, even if the presidential initiatives are not enacted, so that we wind up with an outlay figure of America's southern 230, which is about what we forecast.

But we still have a very large package of deficit if we have it for the fun of it.

So next column.

You won't get your emissions, so.

But we are carrying them, you know, maybe.

So your deficit might be as low as 25, that's all.

Well, I think, yeah, I think there's some railings in there.

Yeah, 25 is a reasonable number.

25 and a 6.

5 and a 6.

But that has a bearing on what we may do in 73, with various matters about late minutes.

The first column under physical 73 is sort of what you've seen in our earlier discussion, kind of the unconstrained, but in the picture where everybody... Before I said 350.

Everybody might go.

Everybody, more or less, gets what they want.

That's about how you come out.

That's the 80 billion defense and the various million things

and allows for initiatives, you know, an active presidential initiative to carry forward into fiscal 73.

And you can see, you know, Fred, before you go on that, John, at the legislative leaders' meeting this morning, Scott was putting a little sleeper in there that I'm sure you know, I don't know if Gregor knows it or not, but he and Mansfield were going to sit down and talk about what was on the plate for the rest of the time.

And obviously, Revolutionary and welfare reform are not in there, and I just want to be sure, just for the record, that Scott lets Mansfield know categorically that we damn well are not going to agree to whatever we could be.

determine, and actually they can determine without our agreeing, until they at least make an estimate.

I said we're not going to get them, probably.

When I say we're not going to get them, I'm sure.

Could I ask you, what's your evaluation of that?

Are they doing the damn thing on either one?

Well, as Mills does, if you bump over and see, it's not what was his reaction at all, it was external, but...

The voters are ready.

Completely quiet, as far as I know.

As far as what it means on the revenue sharing, we continue to battle.

The staff has told our people now that they're ready to move.

The big letter that I was looking at was the symbolic end to the revenue sharing.

Now we're ready to do something.

his way of announcing the death metal revenue share.

So that now whatever comes out is his work product.

Right.

And the staff is doing work with the public interest group staff on various alternatives.

So something may or may not come out of that.

We went through this once before.

Yeah, right.

Welfare reform.

Welfare reform long will not let our committee until next year.

Okay.

Okay, bye.

Well, he doesn't like it.

He wants more time to finagle.

And I've been on the phone with him twice.

All right.

Could I just say, basically, the big battle is to make the political issue different.

And we do get the word to all of our people to just beat the hell out of those bastards who are not being nurtured in so hard.

and all the other ones.

What happened to your proposal, John, to get together a little speech on all these domestic initiatives where these clouds have done everything?

Well, we had the speech already, and it was a question of timing.

Be there or be?

No, no.

For our people, for all kinds of other people, to start moving this line.

But, uh, and we have that time, as you know, our residents are incredibly hot.

And the vice president hit them, uh, maybe one whole speech and just blasted them out.

So we're doing some of that selectively, but the very recall, until we got by some of these armed services committees.

Now, how about a welfare reform?

Well, since your breakfast, I've been up listing a long back vote.

Will we even do the...

Yes.

We can get some welfare reform.

If we can even get them to do the experiment.

Yeah.

I mean, but I don't mean a picayunish one.

That's right.

Maybe three or four states.

Along the road with this, and so will that, Rivercroft has made a treaty with about a dozen governments.

for a very liberal welfare bill.

And this is going to have to be fought on the floor of the Senate.

And very strongly urges that this not be attended until next year.

Thank you.

That's what we need.

All right.

There's your initiative for 72.

No.

Is this 80 the figure?

No, I think that's the figure that the defense said was inadequate with that.

Well, I'd like to come back to the veto on the defense and also on these other things.

I first wanted to get this information to the minister.

Right.

Now, after your July presidential guidance and then modifying that by the tax changes in the other proceedings,

We have more or less that middle column in 73.

There we had a 75 billion defense figure.

And we had the overall total of 250.

And at Camp David, if you remember, we did move around those special weapon-sharing initiatives.

So that takes down, in that camp, the non-active presidential initiatives and slips them a little bit.

And we have the totals that you see at the bottom on the surpluses there.

The final column gives an option that would bring us full of fundamental balance.

Now, there are a great variety of ways in which we could get to that point if you want to, and I think that what we really want to do is explore those different ways and see how you would want us to move on.

As you can see,

The test budget is held at the 75 and 76 level.

The relatively uncontrollable are being down slightly.

The non-active presidential initiatives are handled in a different way.

And we do come down to a budget that is balanced for all 20 states.

Now, built into this is

possibility of around $5 billion of what might be called outlay managers.

Remember that we went up with a defense budget of $72 of $76 billion instead of $75.

And as we reported to you some time ago, seeing the 71 budget be so far out now, we moved $1 billion of outlays into 71 just at the end of the year.

giving us a little more room in 72.

And that kind of movement around the edges in a lot of these budgets is easy to do.

I'm just taking the defense example.

We have that billion in the bank, so to speak, and we could borrow a billion from 74, and we could take down the published outlay estimate for 73 by 2 billion just by this process of outlay financing.

We can do similar things on the domestic side within limits.

And these numbers and the variations, as you can see in the footnotes, suggest the way in which we'll play around with that and get to these kinds of numbers.

And you can see this third option under fiscal 73

that does not require as tough a bit of work on existing programs, controllable programs, which are really under remainder as under the middle column.

That's just by the way I'm displaying some of the options moving around here.

That is an overall picture of where we stand.

These are the numbers among the presidential initiatives.

Let's see how they line up.

George, is this a figure on revenues?

That seems to me to be a damn modest figure, the 223.

Well, this is an approximation that we'll continue to work on right up to the budget.

It represents the current sort of consensus forecast.

That is something that we can work with.

The 246, full employment.

is right up on the high end of where we think, at least at present prices, you could estimate that figure, but it's still a figure that is .

Well, let me ask you this.

I was always good at what Arthur's doing.

What's he doing now?

Arthur right now, where I should have,

The figures on what the Fed is doing and what is actually happening to the money supply, I don't mind what people say they want to do.

It is actually declining.

This is a rate of increase of less than the extravagant levels that we had earlier in the year.

But it is a minus.

It has declined in the last six weeks.

The money supply at the headline buy has actually declined.

And here again we have this

picture, which nobody pictures the pictures, but every time they do that, this chill goes on as it comes.

And that's exactly what happened in late July and August.

They started throwing that money supply down, and we had a pretty strong third quarter.

And that's what they're doing.

Just so you see where the dimensions of those are, the 260, the constant strength 73, contains the whole 8.3 billion.

And as you can see, the bulk of it is general revenue sharing.

And it's really that that needs to be focused on in terms of strategy, depending upon how successful or unsuccessful John is, and whether he lets you down.

Well, that is my way of background.

Here are the overall pictures.

And what I'd like to do now is just try to sharpen the policy choices of my first attorney to do these initiatives and try to just state succinctly the nature of that problem.

We haven't had a .

But I think .

I believe that we should stay very close to it.

All right.

Well, the first question here is the point that I raised, of course, .

Burns is going to play a dominant major avenue in the money spot.

And we sure can't do it.

The police are here to, you know, do what he says and we better do this.

There is a sense in playing a

very extravagant fiscal policy forces monetary entirety to be extravagant, too.

Because they're technically trying to keep the financial markets afloat.

All right, we've got huge deficits going in there, and they have to, in effect, almost monetize that by buying those trading obligations and keeping them out of the financial markets.

That's, I suppose, what happened in the late 60s.

I'd like to say, I mean, looking at this year, it's a very striking pattern.

In the first and second quarters, we saw an extremely strong private sector move up more than the average, but the government has not wowed in so much.

The third quarter is dominated by government, and private has dropped way off.

And I think my own feeling, anyway, is that there's much more desire to have an expansion of the private economy, and that's basically what you get out of the government's buying process.

Well, now, our first, I think, central question is how to handle these non-active presidential initiatives.

We serve, as you can see, background there, and there should be about 8 million.

These large sums, if they're not enacted, they're too thin to say.

They squeeze the data out of everything else in the budget.

That is, to the extent that you think the overall code is constrained and carrying a flow system that is not flexible and it presses everything else.

And the second problem is that they don't represent the true expansiveness of the budget in that they appear to be there, but if they don't get enacted, they don't get spent.

And so the budget is less expensive than it actually appears to be.

And if the number involved is a number as large as $8 billion or so, that's a lot of shortfall in the actual outline.

So I think it constitutes a problem from the standpoint of budget strategies, but of course also constitutes a political problem, too, in how to handle this stage of the game.

Or we have our hands full and get it.

to a $246 billion budget, which is the full budget level, that's very hard for them to do.

And we have some subsequent questions about how much in the way of the initiative and how tough we need to be.

But if we were to take out

say, a general referendum hearing, what strategy is the fourth one here?

If it isn't an activism conference, I may have made a reason to play out of not enacting it.

declare your dissatisfaction with what you're continuing to support for it and say that since this Congress was passed that you're going to whack them and come back in the next Congress and not include it in your budget.

It's not an item that the Army doesn't want to act on.

I think what you have to do is you have to make a perfect exploit of your government's form of insurance.

You don't have to leave something on the floor to insure it exactly as well.

on revenue sharing and welfare, too.

What we're going to end up with is the issue that you've mentioned where demand is an issue and not one vote.

Now, I don't think we can get around this fast and tell us it's no standard or something and all the rest and so forth, but we've got a long, long way to go on that.

And I think it turned to, well, first looking at welfare reform.

if we should get, and that is, but there's less chance of it happening, I think, with a recession.

It might have some political effect in terms of regulation, as far as the right can do.

And it's a good program.

Finally, down the road, I think that

It's basically a loser political, or not a gainer, I would put it that way.

I say that in spite of the fact that mayors are for it, governors are for it, and everybody else is for it.

But as far as the average guy is concerned, he doesn't know what the hell it is.

So what I'm getting at is that we have proposed both because we believe in them, and we have a good issue, and for those constituencies that are interested in it, we will continue to talk about it.

But I think what we have to do is, when you're up against that kind of a thing, the irresistible force that we see moving a lot of these things to do is to relax and enjoy it.

And the way to enjoy it is to make the issue, I mean, you know, raise hell about it, but then go on a new initiative.

We can come up next year, but after all, we haven't built our report in one year.

I'm down to two.

And rather than sharing the next year, let's go down to two.

You say, well, we've got to have something to be done in the investment field.

Well, I'm not so sure we do.

I'm not so sure that that's all that important.

We have a strong economy.

The rest doesn't amount to a damn.

That's what really counts, is the economy.

But the other, the only thing, when I talk about the new initiative business, I am struck by the fact that our, quote, so-called, quote, end quote, program in the domestic field at best is embedded in my own defensive actions.

They really not made us a hell of a lot of ER.

If you go down the line and you ask people about programs that we have now,

It might be like this, though I'm not sure.

I think we haven't done that.

It might have been a great disadvantage.

We haven't done something like this.

So that's good to do.

But I think as far as revenue sharing and welfare reform is concerned, except for a few political science mayors and so forth, especially in these groups, and the fact that it gives the impression that you're doing something,

I'm not sure, but basically it means a lot to us if you can grasp what it means.

Now, where I think, right?

Just to say another way you could even put it, President, is if you drop, at this point, all the credit there is to be done.

Well, we've made, and also, if we make the case the way I think it could be made, of putting the monkey right on the conqueror's back and get the hell out of it, all the people that are for it, like Nelson, aren't part of it.

You don't want to kick the britches of settlement about that shit.

You've got to get the rest.

They're the ones who are already telling about it.

Welfare reform, quite a hand of people like that.

I tell you, isn't this horrible?

So what I've come to is, frankly, is option four combined with option three.

When I say include them in a new package trying to do taxes,

Maybe there's a way, there's enough to do it.

I kind of think that maybe we've got to go for a new way to get at some of the problems that gnaw.

And frankly, and I really think, John, in terms of your property tax, what do you call it, the value added deal and so forth and so on, which goes really to a gut issue rather than revenue sharing, which doesn't really mean an issue.

and welfare reform pushes.

Frankly, where we look both ways,

where the poor don't think we're giving them enough and making them work, and the people that are against it think we're giving too damn much.

So we don't live in either way with the revenue sharing.

I'm not going to go much as we know that both charges are untrue.

There is a way you can get some of the advantages of both, Mr. President.

On the rearrangement of the dates, you can present a budget that still asks for revenue sharing,

And it saves 2.8, 2.9 billion off the planning levels right now, which would free quite a lot.

And at the same time, it would go in .

Well, what you do is you make the first quarterly dispersal is on the day of the next quarter, instead of within.

You get down to two quarters within the fiscal year.

And then if you postpone the effective date one more quarter, because Congress obviously is going to enact it by January, you get another .

So you could display on the budget still asking for revenue sharing, general revenue sharing, but regular now you don't want to... What do you think, Pat Catton, would prefer not to have a budget without anything in it?

I think it would be a little hard to back that far away from it.

Is there any way you could put it in and say we ask for it for next year?

Well, this would be almost that.

You'd be saving out of... That would appear to be too damn...

We're carrying the target for every mayor and governor in this country.

This is such a phony approach.

The only way to do this is to say, I've had it up there now for umpteen months.

You people haven't done anything about it.

I'm not going to stand here and continue to bathe.

You're adults, human beings, you've had a chance to do this, the needs are out there in cities and in the farms, and you go look at it, you don't know about it.

I'm not going to ask you again.

I'm taking it out on my own.

That's another way to do it.

That is a clear advantage.

The advantage of doing an attack is also what's happened to the odds.

Oh, sure.

And the way that it looks like it's bookkeeping,

It isn't really, well, the way I'm proposing head-on is in the sense that you would still be poor, but you'd be recognizing the actual dollars would not be $5 billion as we have been carrying.

We've been carrying it a full year.

We won't have it a full year, and $2.4, $2.7 we could carry in the budget as being set aside.

Well, let me ask this question, John.

What about the, is there an alternative, which says, all right, we drop them.

Yes, that's my proposal.

What is your proposal?

That you stand up and drop it.

That you stand up and say, I've had it up here.

I think it was the way to work this out.

But then what do you offer in its place?

You don't offer anything in its place.

And then you say, we're going to make an issue about it.

We're going to make an issue about it.

We're going to the country on this, and we're going to get a Congress that's fair.

You can say it's fair.

It's going to be dishonest.

But now, my point is, though, what I'm thinking is somewhat different, well, maybe related terms.

I would drop that.

But then I'd go on the poverty tax relief.

But the only credible way you can go on that, in my opinion, is to raise taxes and take it to education.

That's great.

I'm for that.

That speaks to the same issue.

Well, it does in a way.

That's right.

And you can argue that you're freeing up so much local money that people can now take care of it themselves.

But that, you see, you're caught on the horns of the dilemma there.

Because then what you're saying is that instead of the property taxes coming down, they ought to stay at the same level and the local governments ought to use that revenue for all of these local problems.

I think you're in a stronger campaign position to say education soaks up all these taxes.

We're going to pay for education this other way.

Therefore, local taxes can actually be reduced by so many dollars in this town where I'm speaking tonight.

The operating word is can be reduced.

Is there a way of forcing travel?

There's a way, but it's not a very good one.

It puts it right on their back.

You could get the worst of both of them.

You could get higher federal taxes.

That'd be horrible.

And no guarantee.

Let me say, Captain, I'm inclined to say this.

I think that our council is putting this in the budget

Frankly, the shortest of budgets.

And we're talking about Georgia's budget, about a full-fledged budget, an expansive budget, right?

God damn it, it is an expansive budget.

If you've got $5 billion, it's going to be expensive.

Now, the same thing, and it also, I think it also raises hopes for these local governments and so forth that we do not fulfill.

This is bad.

There's an aspect of this, though, that I think we're overlooking.

One is, we have no control.

over whether the revenue sharing is adopted or not.

The public interest groups are going to keep the pressure on them because their interest scenarios just have to be coincidental at the moment.

So they're going to keep the heat on up there.

If Wilbur Mills once got a whip of the possibility that we were going to take this out of the budget and lay the woods again, he'd pop it out of that committee on the 14th of November.

All right, suppose we take it out of the budget, then he might put it in the next session of Congress.

As soon as he knows you don't want it, he's for it.

Well, I don't think you've got the words to vote for him.

No, I wouldn't say that.

To me, that's a veto.

Obviously, we're not going to say anything about any decision.

If not here, we continue to push for revenue sharing right through to whenever Congress adjourns.

They adjourn until they haven't done it.

This is all based on that assumption.

And it isn't only this year that we've had residential sharing up there.

We had it up last year, and we had it up way back whenever that was.

So then they have an active, and we come in with a budget that's different now, right?

And if they go ahead and enact it,

Well, well and good.

It violates our budget, and you'd have to decide whether you're going to sign it or not.

It would be pretty hard not to sign it if it's in line with your original recommendation.

But we have put forward a credible budget that meets the fiscal responsibility that you've laid out.

And if we get a little bit more expansion,

At that time of the year, fine.

It's not going to hurt, Senator.

I don't think...

In other words, if they do that, I'm not so sure.

Well, let's... Is option four yours?

Yes, sir.

Except I wouldn't lay it over to the next Congress.

I would just make a flat, categorical abandonment.

And Wes dropped the other shoe and said I'm going to ask for it again in the next Congress.

What did you do it?

Stayed in here.

Oh!

Wait a minute, wait a minute.

Hold on.

No, no.

No, sir.

Well, you keep the heat on them in this.

Oh, we're on the same track.

I dragged them right up through the 15th of November when they dragged me.

And then I just say, we're going to make an agonizing reappraisal and we're going to put it on this thing.

Oh, I am for that.

I just feel myself that it's just not right to keep it up there and say, this is too damn bad.

This Congress is... Every piece of paper that comes out of Katz's office for the next two months ought to have it in there for the next year.

Yeah, maybe.

They're still here.

Yeah.

Keep a double set of books if you do anyway.

We just don't have to shift over until after they go home.

Do that, Cap.

Believe me, I really mean to keep a double set of books.

And if somebody gets in your office, whoever you think leaves, I'm sure you have some.

We have some.

Fine.

Just give them the other set of books and let them leave.

Well, we can...

But I feel Georgia that's the only office that can do that.

I feel that way, yeah.

And I'm just, just frankly, to hear what they've done.

You know, the reason that I put up with it, John, is the campus publishing, and I go out, you know, and I have a press conference, or I go out, and I sell the things, the questions, and everybody gets a statement, you know.

And I make a speech, and I say, you know, like how I'm speaking to women on Friday, and stuff like that.

and then I can't sell the convention because I know they aren't going to pass it.

You know what I mean?

I just don't...

I just... What I meant is...

I think the general point about asking for a Congress that will pass it, meanwhile not showing it, is very different.

I think it's difficult to abandon an idea that's been pushed so strongly that I don't...

I think you can certainly justify taking it out of the budget and doing it with an attack on Congress.

Okay, I'll just go submit it to the next Congress.

Well, I'm not so sure I would even go that far.

I think you could make the argument that this Congress apparently has no sense of urgency.

In the last year, they've taken so many days vacation.

The Democratic leadership apparently doesn't care about the cities and the poor and the blacks and the school children and the rural areas.

And until this chamber is filled with a Congress that does,

Revenue's time, or Sharon's time, has not come.

You wouldn't say that to the State of the Union?

What?

I wouldn't.

You might not.

I mean, next year?

Now, if that's the sense of what I meant, I would commit to reintroducing it again.

Oh, I agree.

But leave an answer.

you might very well give it to them.

And if that's the case, then I think we ought to be prepared to haul out whatever's in the budget in its place.

Because the worst of all worlds, I've always felt, is to not get this and get the money spent for something else and then come back and get any one of the number of things where you have to do both.

And the whole idea of it was to get a different way of financing something.

Thanks.

Well, there are, but there's smoke too.

Before you get into this, before you leave this,

He hasn't had a prayer in about an extra year.

No, that's totally well heard.

He hasn't had a prayer.

We can't at least kill ourselves, John.

Long, long, I talk to him, you know.

So...

So what do we do with that for sure?

Well, I think you have to budget a certain amount because by the time this budget comes out, I think a new strategy will be added.

For us or them?

Well, it depends on who them are.

I think that there will be a long-benefit deal.

And it will be anti-Rivikov.

And those lines will be drawn.

And your budget should reflect your support of the long-benefit position.

which will be a modified welfare reform and much less costly in this fiscal year or not in fact.

You know, there's something I think that's going to increase in the fact that there's 80,000 federal employees and that's a question of priority.

This goes to that.

Well, that's the present estimate for what HR1 will cost.

We want full family assistance.

It's a question I get at the meetings.

We could get by with state contracts on this long-vent approach and show practically no therapy.

I'm convinced that's what we ought to do, and I think also it's a safer way to go at it.

Well, I'm just afraid to punch that deep in the water.

Long's got his price, but it's all sorts of things.

He's got a whole reticule full of, you know, odds and ends that he's peddling.

And he now has to sit down with John Conlon to sit through some of this stuff.

I got up there to talk to him the first time and discovered that the Louisiana sugar cane growers were in trouble with the Across the Woodland Council.

We weren't going anywhere with any of them.

We got that son of a bitch.

It's just one damn thing after another.

It's the only thing in the Across the Woodland Council collaboration where a political pressure has made it too much easier than it has been.

I'm glad you did.

The first time I saw you, you had your own plug-in shirt, so when I went to talk to you about it, you sat me down.

And to that, I hope you're here for a little bit, Secretary.

You want your own plug-in shirt, so I'll tell you how you met.

You're closing down the Job Corps Center.

You keep that open, and you'll get your unemployment insurance.

You'll close it, and I'll pick you the wagon to work with.

But we closed it.

Well, if we have...

approach on general revenue sharing or on the revenue sharing issue.

These other initiatives we can play as they come along.

Let me say, you have an approach on both.

I think you should figure the budget both ways.

I think we ought to flush that one, sure.

And I think we also want to, if you've got any on that, I think an awesome welfare reform.

I would go for the Mickey Mouse bill.

Or just basically a Mickey Mouse experimental bill.

That's what we have to do.

That's something at least.

And also, it's a safer way to get at the thing, in my view.

You know, I have some...

serious doubts about, not doubts about, about if I have more faith in what people's religious do.

You know, it'll work, but I'm just not sure it's going to work.

And maybe we better try it a few places.

Maybe we better try it.

I'm not sure that the three experiments you have are enough.

I'm not sure.

So what?

Could we, I think you ought to put the button on it.

Now, how do we then present that to the public?

How do we present it to the public in terms of saying, on the welfare reform, well, we had to compromise with Congress because they wouldn't give us the rest, but it's a good program.

We're going to give people work and so forth and so on.

On the revenue, I think I'd be totally honest and say the Congress has been on that.

So in order to get a part of the problem, I'm going to work on this other field.

Here's another way to get at this problem.

In other words, it isn't really a problem.

In view of the fact that education is such a hell of a fight,

for as part of every budget.

I think, what if you buy this, Ken?

Well, if you could do, I'm, the property tax reform that would relieve local tax loans with education expenses, I'm 100% for that.

The only thing I'd like to try to do would be to get a guarantee to cut the property taxes in order to get it.

And that's awfully hard to do.

Without it, you run the risk of higher federal and local taxes.

And that's the real problem we have so long in California, China.

Well, how about giving them a program that does it?

are we attacking the quorum?

I mean, which, uh, which, uh, which, uh, give our voters some kind of action?

Yes, we are.

Well, we can.

Uh, the, the thing we're running into here, we've been marching around for almost three years saying that we ought to make these decisions to stay in local government.

Yeah.

And that they're competent to make these decisions in the long run.

Yeah.

And the federal bureaucracy is trying to be involved and the Congress should stay out of their business and so on and so forth.

If they want the education, they've got to cut the taxes.

Yeah, well, that's the problem.

And I think the reason we originally put this together was so that they had to lower the property taxes in order to get this better money.

I was swayed by the argument that really what we're doing is we're stepping in the shoes of the city councils and the county commissioners and telling them what to do at the local level.

I think that the first suggestion is saying this is another way of the same problem.

This is revenue sharing in a sense.

Because we're freeing up all this local money.

is an interesting approach, because now, here's this money that they're not any longer spending on education, and they can decide at the local level what they want to do.

They can lower taxes, they can buy policemen, they can raise, you know, the black vote.

Well, we don't have to decide that now, but they, as I understand,

That, however, that initiative which we cannot have not yet come through, that initiative cannot be implemented without another tax.

That's correct.

That's essentially my worry, that you're raising federal taxes without a guarantee that you're going to get a corresponding job.

You've got to hope.

And a hope, I'm afraid, is really not going to happen.

I don't think it's such a local, it appears to be a local rule, if you say, here's some money, and what you have to do to get it is to cut your local tax.

It doesn't tell us how to cut it.

But it is in an interest of the taxpayer type moment, really.

And this was the thing we, my view on this, I'm sure, colored by the long fight we had in California, in which we rejected twice democratic legislative plans that were just like, let's give more education money, and of course they'll have to cut lower their taxes.

And they've never done it.

This was actually the argument when the sales tax was put in in 1931.

After you vote for the sales tax, we'll cut property taxes.

I'm not so sure of job opportunities.

If you could get education.

I mean, we do all this and there would be no guarantee that it would be the property tax relief.

That's right.

That's one way to go.

No, I wouldn't be for that.

I don't think it's suitable.

You can do it the other way.

Well, you can or you shouldn't.

put them in the same bag, and at that time, enable us to make some reductions in some of the programs that were to be folded into special revenue sharing.

By doing that, in effect, we put a fence around the amount.

We said the programs aren't good.

We're going to give the dollars to local governments to do what they want.

And that, in effect, constrained us from making any reductions in those programs.

If we were to take the same course in special

If we did it with general revenue sharing, we could then perhaps make some reductions in some of the model cities and urban renewal and things like that that are fixed at the present time with special revenue sharing.

If that's the way you want it.

Well, I sure want it with water.

Any method you can get for reducing model cities and some of that stuff.

Thank you.

Do you mean that?

Why don't you?

Well, because of all of the heat you get, you get all of the flack, you get all of the light.

Isn't that what special revenue sharing is all about?

Sure.

Special revenue sharing is a mask for that.

You take none of the heat.

That's what I meant.

Yeah, but if you dismantle special revenue sharing, as Kat was suggesting, and just go in and say we're going to block 25% off model cities,

You'll never get it.

You'll never get it through the Congress, and you'll catch Mary Nell from every mayor that's got a Model Cities program, and all the urban societies, and all the governors, and everybody.

We're tying up quite a lot of money in the budget that Special Regents are sharing, as we are with General Regents.

I don't know that we have any more hope of getting it than we do General Regents.

Well, all I'm saying is... What about Special Regents, Sheriff?

What about the hope of getting some of it?

You'll get one or two of them.

I don't think you'll get most of it.

And if you're going to be honest about it, you just simply don't learn.

It's hard to... What are your feelings about special insurance if you flush that through?

It's a... No, I leave that in place just because it is our position on issues like public cities for the same device in this world.

Mind you, mind you, it's about money.

Mind you, when I talk about real estate insurance,

It's frankly about general revenue sharing.

My view about special revenue sharing is that it's a damn sound program because it is a way and a device through which, I haven't heard the first word that comes to mind, but it is a device through which you can sustain a lot of model systems.

A budget posture on this would be to continue special revenue sharing in the budget.

In view of the fact that Congress has typically raised the appropriations of these various complex programs this past year, that we consider those programs voted in as funded and don't add the sweetener on the sweetener.

Well, the other thing you can do, I agree with that, the other thing you can do is to eliminate education special revenue.

and fold it into this new initiative, and you pick up about, I don't know, a hundred or six billion dollars or something like that.

Well, you can fold the program to say you're going to raise the money for all federal primary and secondary education programs from value-added.

And so that's about six billion dollars that you take out of your budget and you put over in the value-added conditions.

That's a basic question that you're going to have to face, is where do you want to go with the tax amount.

But if you do, then you've got all that education money that can come out of it, out of this side of your budget that you have now.

Because if they don't enact the tax, you should never get away without having a federal education now.

Well, that you can have, but it doesn't

It doesn't do to your budgeting what this $1.9 billion does to your budgeting.

That's the point here.

This combination of $5.1 and $1.9 here is just...

I'm not sure that the value added approaches all of that.

I'm sorry.

The reason I think you could sell is that the courts are one by one holding that these state school support programs, district by district, are unconstitutional.

And so the states are right up against the crisis.

They're having governor seminars, and the state budget directors are having seminars, and they're beginning to analyze how to get out of this pickle.

And you're going to be a knight on a white horse if you come along in January.

You're way out of the way of whips.

I don't know if I'd always be the governor.

No, no.

To the people of the state who are now beginning to already read about a statewide real property tax in the state of California.

Please do.

Sure.

But, you know, the rates are going to be higher.

Probably.

Well, the legislature enacted a new state with wide real property tax and rates turned out lower in the Americas.

Well, it substituted for a local problem that we couldn't see.

Well, anyway, I think there's a lot going for it.

Whether or not you guarantee that local taxes will be reduced, I don't want to advocate it.

In fact, don't be concerned about the need to prove that local governments are responsible and they know their needs and all that sort of thing.

At this point though, more importantly,

Let me ask this.

You say that Fishinger says that .775

Do you think that's enough?

Well, I don't think so.

I was having a .

Well, what we've done here, sir, is to go down to .

Now, that involves some fairly heroic steps.

which we feel would have to be dictated by here, by the White House, and not just a level cut in the past, because I won't do it, and we'll end up suffering in our structure.

But we're really talking about a reduction in the number of ladies in our sites by two-thirds.

It's scary, but we should raise the page.

You don't even know.

40% cut in interceptor air traffic, right?

And a conserved economy in the United States, our site's down from 12 to 4, which is a very real thing to do in a congressional election in the great nation.

You can't go above that.

Then in addition to that, we added two additional deductions, two wings that we cut out of tactical air, which was a great defense plan that we would like to take it out of the Navy, because that's the cost of excess package.

But through that, you have to reduce carriers, and you don't have to afford to let's do it big.

Whatever we do on our structures, sir, it will keep it just about what we talked about in the NSC meeting.

We have 13 Army divisions.

We have three Marine divisions at full strength instead of in 3D, which I'm not even aware of the program.

We keep our 16 carriers.

And we've had 12 Navy Airwings, three Marine Airwings.

We've built 21 and a third to 19 and a third.

Air Force fighter planes.

So this is cold turkey in the air defense area.

Frankly, I'm not concerned about it in the sense that we've told them they're living with a structure that they haven't really investigated properly or given their alternative.

In that sense, that's where the cuffs came from.

What about this?

What does that do to the hair?

What does that do?

That probably requires support from some patients, I think.

Well, so we haven't...

Some of these 90 studies have swung a little vertical.

I don't think they represent much of an economic impact.

The point is that there's a lot to be done about close invasions in clinical states, anti-invasions in prisons.

I don't think that I understand this program.

None of that has been contemplated at all in the last few years.

Let me ask you, Al, maybe in terms of the economy of Jersey, is it best to add a couple of billion dollars to the fence in a place like California?

It's just putting in cold turkey, and we talk about putting more into cesspools and model cities and the rest.

If you're going to go for government expansionary budget, having in mind the fact that we could also very well use this as the bargaining position, having in mind, in fact, also the oil, it would be quite a problem to yank about something in the United States.

Well, we have useful things that we feel are necessary to do, and it's made us the obligation to find a way to do it.

If it is wasted, then it is wasted.

I think there are all sorts of things in other parts of the budget that we can do.

It's no problem to find a place to spend money.

Yeah, yeah, I know, but I sort of always have had the impression that the best spending seems to be the most effective in terms of retirement.

Certainly have a lot more than model cities.

If that were to be the decision, I would hope that it could be matched by a decision that we could take down some other area so that we would still keep the whole point of balance and increase the fence if that may go by by reducing some other areas rather than build both of them.

And it ought to be for spending that can be done quickly and that will reach the economy.

Certainly your ideas about the tactical area

They do, but they've been absolutely a tough one, sir.

We're ringing out each of these issues.

We're not prepared to be finished in ten days.

What about Packard?

Packard?

I had a discussion with Patrick back in the summer, getting ready for his wedding session, and he had a couple of other things that he was really proud of.

He had a couple of other questions that he was really proud of.

Larry, why don't we keep all that and add some more to it?

What's he want to add?

Well, the additions, I think, are primarily the additional weight of the vessel.

There's probably one or a couple more magnets in there.

It's important to talk to someone who's been in this place for more than eight months, which we've got to handle sharply.

He was mentioned in the casket meeting the other day.

You know, a lot of these people have to be laid off.

He's got to be replaced.

He's on Facebook.

I think that's a person you ought to ask.

But you know, we put a block on that in California, and as a matter of fact, we have beefed up the expenses in California in order to stay in those jobs.

So there's not just a whole lot more that you could do collectively in California that we're already programming to do.

Well,

Pretty slow to finish.

That's right.

Oh, see, that's a real timeline.

I know.

I'm just trying to be ready.

They really rang out.

The Flanagan's guys, in conjunction with it being from defense and from law, analyzed everything that was quick and blunt, where they brought the most jobs in the shortest time.

I saw that.

I don't think it's that important.

Well, I think it's the answer to the question, you know, could we do more in California if we spent more of the investment?

The kinds of things that you can do to create jobs in a year, let's say, are relatively limited.

There's no budgetary constraint to put on that episode.

All right, I can take three more questions.

This figure also visualizes the...

That's very realistic.

Very realistic.

That could be a hell of a lot less than 100.

I think...

I don't want to get it out because our bargaining position is then compromised.

But I think that this is one place where CAF is going to have some money that we didn't expect to have on the crisis evidence.

We've been saying that for a long time.

You've also taken into account the sole possibility...

Yes, sir.

That's why we... Is that why we have to retain the foresight?

Huh?

We have to retain the foresight.

No, but I mean...

that we would recoup from there if we get an EPS loan.

That would be a way to go.

Maybe I'm bad, but I'm not bad.

No, I mean, if we get, if we got a, if that developed that way, and it held zero sites, if we held the two, we'll get two recoupments.

George, what do you think, though, about the, you once spoke to me about the defense payout, and you're very well, you know, thanks a lot for this, and thanks for helping us out.

Thank you.

I'm just spending as much as there is to spend, and no more.

There are many ways to spend money elsewhere.

Well, Al, is this enough?

I mean, I understand.

I do know a lot of people that don't talk about all this balancing and so forth.

Is this enough to...

the credibility of our defenses at this time that we're running with China and Russia and all of that.

I think we've got two problems.

One is a real problem, and one is part of our military policy.

I don't think it's enough, of course.

But I think this is the point here that we have to guide, to some extent, our organization and the Russian people.

I don't think it's near enough.

Where are the two corporate increases?

The Army don't have those terms, right?

It's modernized, no shift.

It's modernization, not maintainable.

Not that account.

We do that, George.

I'm for that.

Well, I would say that we have to think about it.

First, it's a question of the economy, the impact on the economy.

And I bet

discussed in terms of the budget as a whole.

What we want is a budget more expensive than, say, a full fund account.

We want to go well at the desk and have a full fund payment.

That's essentially the issue as far as the economy is concerned for the budget.

The issue of where exactly you spend it is secondary from the standpoint of the impact on the economy.

It might be in the back, or it might be elsewhere, depending upon...

where you want to target and who is able to spend it right.

And that's one.

The second issue is, how much money do we need to spend on this to achieve the foreign policy and security goals that you have?

And that is what we try to determine.

Not to be excessive about it, but that is the number that we try to come up with.

And that is the 77.5

or in that range somewhere.

It seems to me, where it was in the Executive Office of the President, our analysis says we can get along on that.

All right.

The third issue, which I have a good way of explaining myself, but I can see that it's a very important issue here, is the political issue, and that is

There are times when it seems as though the good politics is the guy who cut the defense budget, and that means that he serves himself and all that kind of stuff.

There are other times when it seems that the good politics is the person who's providing a strong defense.

And I would interpret what Secretary Larry is doing.

as switching sides on the kitchen.

He was a cutter for quite a while, and I personally don't think that he is focusing, and particularly from the standpoint of the content of that cutter, he is posturing himself as a

strong defense standards.

Financials thinking about Jackson?

Jackson.

So I'm saying that's a political move.

And I suppose there you see this whole cosmetic thing that we could take 77.5 and we could make 80 billion out of it by outlay management, just as we could also bring it down.

and leave the content the same.

He's also got, of course, from the standpoint of trying to develop a budget going back to the first chart that we had, and getting over here into the third column, where we have a chance to get full employment balance, and he also has some room to move around in to look for new initiatives here or not.

not do such a job on existing programs that we get into basically a powerful black on all these little things that we need to get down into this 76 billion dollar range for defense.

And we can't get there.

And we have to go up over 80.

We are in very tough shape to get into these full points of balance here.

And that's our problem.

But if I were

from our analysis, and from listening to Al and Henry and everybody, that 77.5 was an irresponsible leverage as far as defense is concerned.

I would be here for a minute talking about it, because I think that is number one.

No, I'm going to want to clear that question.

This is a question for you to look at.

with this fairly decisive air defense and provision that we can dictate the main components of what the player must provide to prevent him from distorting the button.

With that, we think we've got a fairly sound plan.

How are you going to do it?

Well, we have a lot of ideas about how to write that system.

We're in a position where every department of the government has had fiscal guidance.

They've created their own, and theirs is sort of off and running.

And there's no rain on it.

But I think we have to write that carefully, and it's our community.

He is right in terms of the things that he must have.

He must have certain innovations.

He must have three full marine divisions and so on.

Because their typical ploy, when they get a number, is to cut way back on those things that they know we've got to have.

And that just forces him into it.

That's right.

We do also have a...

We have our OMB Defense Department joint budget review going on.

We're doing all of that traditional things.

We have a side exercise that Henry and David packed and worked out after the NFC meeting.

Where we have three people are Wendy Smith on the NFC staff.

And Ken Dam on the OMB staff.

going through particular issues, and they have gone through them, they pretty much come down recommending to you this sort of thing.

and that exercise can carry along and help point out this air defense problem.

But I think we have to take a very strong, firm position and be explicit and give the Secretary his marching orders.

I think the way to do that is better if it does not come so much from you.

It is when Henry goes back.

What we'd like to do, sir, is complete this process and finish it in ten days.

And we'll give the packer room a chance to try his kitchen.

I want you to Henry this back.

Henry and you.

And I'll have him sit up for the packer and players.

Here he is.

I'll just put him on the beat.

I think it's very important that Laird not be able to be in the position when she got mail where he says the budget is going to determine the defense, rather than the defense determine it.

That's why I want Kissinger in the lead.

See the point?

And NSC isn't going to let Kissinger take the key.

So it's not simply a budget decision.

You see the point, Al?

I would agree with that, and I don't feel it is a budget thing in the sense that we have said we must make room in this budget for what is necessary to defend our congressional rule.

We do.

I don't really notice this third paragraph on the page here, but that is a...

That is a way to get the Secretary off the hook.

Because we have high obligational, the obligational terms are running way up there above .

Yeah, I put in obligational 30 million, so you've got an $80 million budget.

On the other hand, the spending will be about 75 million.

I don't think anybody in the budget, at least none of these people, to the humor point, have the slightest feeling that any domestic program or anything else is worthwhile if the borders aren't safe and we don't have enough strength.

So we start from that, but there is still some areas, as Al said, for directing the funds in a way that's good.

John, what's your feeling about this budget?

Do you know what I mean about the issue, you know, you're a friend of Jackson and so forth?

I would, yeah, I wonder whether Laird really takes Jackson seriously.

I find to think he's more under pressure from his side than he is responding to him.

I think Laird tends to try to broker with his people.

As human resources are a better person, we may not be talking to them as much.

We're going to have a, it was an argument last year, maybe the year before, because they were closed by this time.

The HGW budget by itself, far out of this, not much they can spend on behalf of them, but they have some money to figure.

That's going to get bigger and bigger and bigger.

That would speak very well to the country.

Maybe we go ahead and go down and get up.

I understand.

Well, the idea, the idea, the idea of the cut and so forth, as you know, Al, and the briefing we had, because I raised it on several occasions.

And every time I raise it, they just blam and say, oh, well, you can't do anything about that.

But now anybody who's got any goddamn brains at all knows the Soviet Union

We got this jacket.

No one's going to send some aircraft in on a strike on the United States of America for Christ's sake.

They're not going to do it.

We can strike back in 15 seconds or whatever it is, 30 seconds or 20 seconds.

Isn't that correct?

The whole idea of having a lot of interceptors there ready to take out these bombers, and then they say, oh, yeah, but they're building bombs.

What it's about?

It's probably about China.

It may not be about us.

They'll make all sorts of arguments, but the flyboys, there's plenty of things they've got to realize in regard to this.

They're going very quickly the way the battleship wants them to be.

And it's sad, but it has to be true.

And we've got terrible redundancies.

We do have some.

For Christ's sakes, we're so goddamn redundant that we find now that as I understand it, 80% of the truck kills are made by these old two-engine planes, reconverted cargo planes, right?

And all those super jet boys are up there, you know, getting air medals for dropping them out in the jungles.

You say that a lot.

And when you ask the question about the level of spending, my main problem with certain pieces of political history is they're not monitored.

I personally think we're in a hell of a lot of underwhelming situations, given the statistics.

So am I.

Okay.

The strategic evidence.

Well, assuming we've got a SALT agreement, we still have it.

I think so.

I think we're going to get something that will be right on the balance of being distinctive throughout this attack.

On SALT?

But then now, what do you think should be done about the budget?

Yeah, but on the other hand, we get the right kind of

We don't know what kind of assault we're going to get, Senator.

That's right, Senator.

That is very hard.

On the other hand, I assume that this whole budget that we're going to go forward does hold on America.

Yes, it does.

It helps a little bit.

It helps a little.

It doesn't help if they're not the first strike that happens today.

Yeah, because America is retaliatory, right?

Gives us the numbers.

Yeah, but if you get an unsolved, so that you get an agreement, you mean you don't think the agreement is on the edge?

I think it's right on the edge.

And allowing them a first strike given the whole thing?

No.

No, I didn't say that far.

Yes, sir.

They'd have to have quite a bit for a first strike down.

Wouldn't they?

They have to go considerably farther.

But also, when you stop to think about the strike, the first strike thing, when you look at narrative,

That's got to be one hell of a determination.

And a great number that you get through.

What do you think we ought to do?

Do you want to get going on some more?

No, let's assume we don't get it.

So we don't get solar energy.

What would you do then?

Next year?

I definitely can't do it.

Yeah, but what?

The what?

Medivac?

What the hell?

I have no problem with both.

Polaris and Medivac?

No.

Well, they don't give us first-rate.

Is that what we're looking at?

Are they trying to balance that?

Well, I see.

Never.

That's right.

But you may, in fact, when you really think of the present time, you feel we need more minutes than in Mark Hilaire in order to deter the first strike.

Is that it?

But you don't think we should do it now?

We don't think so.

Because I can.

In the first place, I don't think the Congress would stand for it, second price, and raise hell for the Soviet Union.

That's what it's about.

The way we have to consider this next year is that it's all on the Soviet Union.

Oh, absolutely.

We're not going to get a stall on Cove, Al.

In my view, there's not going to come a stall.

We aren't going to make a deal.

It's going to be a close deal, but we'll go ahead with Merv.

I don't like that.

Hell, if it goes to the creditor, it's written down.

We're the murderers, the warmongers.

Mr. President, coming back to the first... All right, this is fine, Mr. President.

We've done what you want to do.

But remember, if you have the meeting, it should be gung-ho with Blair.

About that, I don't mind.

Why, Henry's sitting there now, you're sitting there, and he lays it right out.

Maybe.

And Henry just got in trouble.

and also that I'll come in when it's necessary.

Because I feel so strongly that, I agree with you, that air is not the solution.

The air academy better couldn't graduate as many people.

The football team would be able to be there.

We have three additional

question one having to do with how much do we need for new initiatives and the second having to do with how tough should we be instead of the existing programs and the third having to do with testing you out on veto drafts I would say that going back to this broad table when we started this

that with these two decisions, we're definitely in the third column.

And we were in the fourth column.

The fourth column.

It wasn't the 37th or 38th column of the day.

Well, that's good.

Don't you think, John, does that port call bother you?

It depends on some of these questions that George is raising right now.

I would be considerably bothered if you give it an unrealistic basis.

Okay, go ahead.

that the line labeled remainder, which is the Egyptian pro-domestic program, which we struck away on in the budget process, which is the outlay management, can be all the way to the non-extraordinary ticket, as we would have to do on the next day with this ticket at the top, and still have a small amount left for presidential initiatives, about a billion or so.

or we can squeeze some of that down and have a greater amount.

I have the impression, for example, that we definitely ought to have, we would like to have in here a sort of a major push in the R&D area in some fashion.

Right.

So I think we could wheel that, plus

not doing much violence to the existing program and still stay within.

Or we can push down some of those existing programs, build up some of the others, and we have running room to do that.

We can talk through those issues now, or we can come back to you and say we've sort of positioned some of these broad alternatives.

Let me suggest that we ought to perhaps look at the alternatives on the domestic side now.

I mean, in a week, if that time is available to you and I, this week could go on.

But what I'm getting at is that I want to get a better feel of a job in what your needs are.

Let me say this.

I'm putting it quite brutally, I don't think argumentation is a very helpful thing politically.

I think maybe we have to have it because people expect me to have an education.

But I have a claim in it as far as this country is concerned.

Those of us who come here to Washington become obsessed with the idea that the whole country is so terribly interested in all of these things.

Why have we got to do a nation?

Why are we doing this?

Well, we did not have anything in the way of leadership in certain other areas.

And of course, the people got used to it in Johnsonville.

I'm also concerned that we're not where we are.

We've got .

As I said, .

I don't think they help us very much.

John's suggestion with regard to the property tax that appeals to people.

I think as far as other things are concerned, .

How the hell did you do it under the Constitution?

It's a hell of a lot better.

It's a hell of a lot better to spend a billion more on the growth of this group than it is to spend eight and a half billion for a year.

They're going to get rid of it.

But that's the kind of thing that we're up against, Larry, in terms of dollars.

And some of us like it.

If we want to lay out, you'll have to decide which ones you want to go.

Let me see, too.

I want to see.

I thought it was bright enough.

If it's tied to it.

I just don't know how to get at the damn thing here.

Maybe your value added is gone.

Well, you know the thing we've been saying all along is that revenue sharing is a stopgap.

That what's wrong is that we've got a lot of tax systems.

And the revenue sharing is a band-aid on that.

And eventually your country is going to have to come to grips with this.

Interesting enough, Cal Poly is going around saying that too, as we go.

And there's some stuff for New York Times and other places, which he says we've got to come to grips with.

Let me pick up something you said.

You talked about R&D.

I think it's important.

We didn't create the issue for domestic issues.

And what we've tried to do is to come up with some responses to what are existing issues.

I know.

I know we have.

And to a greater or lesser extent, these issues won't go along.

Neither the administration responds to them or the Congress responds to them.

And the Congress responds to it.

Then what happened to your budget?

So a lot of this is, as you say, defensive.

It's deflected.

And you can bog the Congress down and debate on some of this stuff like the problems of the cities by having in there an arguable alternative.

And then they get all bogged down and they don't do anything.

And that's, in a sense, a big problem.

This veto strategy thing is something that I think we ought to talk about.

We'll be ready in a week to go on these various issues.

Do you want to talk about the veto strategy now?

Well, the veto thing I'd like to just kind of draw your attention to because we have OEO extension rolling down the pipe very shortly.

And it's a prime example of the sort of thing that you're going to be experiencing all next year.

And it's very tough for us to anticipate what we're going to be really getting into next year in the way of, quote, domestic issues, unquote.

Because we aren't going to crank it.

Really, we're going to have to play kind of a zone defense.

through a lot of specific domestic issue attacks that are going to be raised by the fact that most of the opposition candidates come out of the Congress, and they've got the initiative up there, and they're going to be slinging stuff down on us in murders.

There's going to be all sorts of attacks on this book.

So I'd like to see us arrange a sort of a strategic defense here.

In other words, a double-covering...

Sure, sure.

And we can predict pretty much.

We've got a lousy water bill that's going to come back.

Water quality, water pollution.

Oh, Christ, that's easy.

And that's a musky thing, and it is pretty easy.

It's going to be hard as hell for you.

I know.

And there are all kinds of little stuff.

They put money in my pocket, and this is breaking one of my heartstrings.

No question.

I understand.

The alternatives in every one of these are going to be bad.

Damn if you do in one segment of the society and damn if you don't in the other.

And so one of the reasons that the approach we took was to try and identify regionally where issues matter.

What kinds of issues matter in key states?

What kinds of issues are national issues and what kinds of issues are not?

So that, and that's the kind of a zone defense.

I think we have to come back to this again, frankly, for a political discussion.

But Al is not here, and you should participate.

You should.

Who else would be here?

I like John Mitchell in this.

I'll tell you why.

I don't think John's political...

not the one that Keith cares about.

He's a great tactician, but John doesn't really like that.

Yeah, but John is going to immerse himself more and more next year in the, Jesus, you've got to do this for New Jersey, God, you've got to do that for California, kind of talk.

And I'd like him to understand in the inception what it is that you're dealing with and why you're deciding things the way you are, just so that

We cannot stop it.

Let's wait a week.

I think we do.

Let's leave them all at the moment.

Okay.

And he's not, he's not a senator.

We don't think so.

I agree with your participant.

Let me say this, that I, however, I would not bring in, like, Dole or, like, their judgment would be worse than that.

I mean, I mean.

Is there anybody else you want in, in terms of the, sort of, the Dole?

Well, I wonder if Colson might not be.

Colson would be fine, and, uh, Paul McConaughey would be fine, if he has the time, but he's often busy right now.

Well, he'll be looking off to the 30s or something.

Yeah, Connolly would be very good.

I'd like to do it before he leaves.

All right.

Yeah, Connolly would be good because he has good political antennae.

I think Colson would be good.

Not that his judgment is all that good, but he does know where the pressure lines are.

Right.

That's enough.

Okay.

In other words, you, the three of us, the three of you, Colson, I put Baldwin in just because he's parenting a lot of people, too.

and Connelly and I were the children.

And I actually am interested enough, Larry knows a lot about this sort of thing, but I have a conflict with him.

Yeah, another one who, well, Roger has good blood in a sense, but not...

I agree totally with the idea that your response to domestic issues is bad.

I have any questions?

We've been kind of disappointed, haven't we?

You know, we get out and make these great big speeches,

I'm not disappointed.

I think it serves a purpose.

I agree.

It makes you carry your force on the line.

Well, sure.

You also have a, uh, there's a distant philosophical thread that you've heard.

Yeah.

I don't mean to knock you, but you said what it is that I know how hard all of you have worked.

Right.

The thing that went through with getting that stand, you know, whatever became our program for remaking the country.

Oh, you mean a national growth policy?

Oh, it's alive and well.

As a matter of fact, one of the things we're going to bring you is a great national growth policy that has new towns and housing and all sorts of stuff in it that is available to you if you want to go with it.

You could do one thing.

Maybe you could finish up a little gilding for the kids here in the mall.

That would be one thing we could leave.

You can do that.

That's well along.

One point that I'd like to make about the new initiative column in here is that if we have...

low probability of an accident were effective in fiscal 73, and yet they show up with large, promoted outlets.

You get into the same box as the old presidential initiatives.

In that, they make the budget look more expensive than it is.

And in this fiscal year, we do want the budget to be expensive, not just to look expensive for real.

You can do an awful lot with small first-year outlay amounts, and just an awful lot of program content that can be put in for a billion and a half dollars.

Well, if we go for this education, that is $20 billion in price tag, and we continue to work with our tax issues.

And so you're going to be looking at all kinds of maybe mass numbers that won't really have anything to do with education.

Right, right.

As long as that's been taught.

Yeah, the education should be picked up.

It will be.

But some of these other initiatives, like R&D, can have relatively low first-year costs.

Let me say this, that if you're going to go for that, look, if you're going to go for what is basically a tax increase,

I might, in my view, you're not going to get hurt anymore by going for more in parents and then get a budget that might be balanced.

You see, Pat, I know you're concerned about raising taxes and all that.

However, and I'm concerned about it.

However, if it's moving it around, it's moving it around.

And if actually it doesn't happen, we're going to be in two different things.

We're not raising taxes.

This is cutting your local taxes.

That's the way I present it.

But my point is, if you're going to fool around with the value added, I would put it in there, and I would put in enough to...

who say are not submitting a balance of budget.

See my point tonight.

Yeah, $20 billion has six billion in these education costs.

Well, that's all right.

I'd still put it in.

I mean, why not?

Why the hell don't we want a balance of the budget?

Well, if the economy is below full of funds, I would say no.

No, no, we're talking about what happens now, not what we're asking for.

You'll still ask for this same amount of money.

But the point is, we put in this, I mean, you're going to go for the value-add and put in enough so that on paper, it looks as if we're having a balance of money.

You basically keep two sets of books.

But if we had a budget like this power, and then we laid on a value-added tax that had a net take for the federal government of, say, $22,000, we would then be showing a full point of surplus of $22,000.

Oh, I know, I know.

That's true, but...

What it shows is one thing.

What it does is something else again.

This document, this budget, and your messaging company that is, you've got one.

You've got 10 things you've got.

All right.

Well, back to what I said a minute ago, I see all these domestic things.

I'll be sure.

It's vital and commonly being on this discussion from the past.

So if you want to set that, my view is maybe Monday would be a good time.

This is Tuesday.

Well, it's my lucky day.

I'm afraid you may be hearing it for the first time.

I'm not so sure this video is going to be really attractive.

Christ died a long time ago.

No, they won't be here.

They won't be here.

But, uh...

This VCO thing is really the battlefield, as I see it.

You talk about the platform, yes.

But the battlefield is going to be what they send us.

The VCO makes the story over and over again.

It's going to be the free lunches, and it's going to be the little kids, and it's going to be the hungry Indians, and it's going to be all of that stuff.

And the...

The thing we erect as a domestic proposal in the State of the Union ought to be designed to soak up as much of the shock of those things as possible.

So the President could say, I'm vetoing this because I'm for that.

I'm vetoing this because we've already covered that in this.

And deflect as much of this as possible without the necessity of being flatly negative.

That's it.

We've got to be for something.

Actually, we can do this when we talk about our investment conditions.

despite the fact that when I say they're defensive, the defense is very important.

And we've created a lot of oppression around the country.

Some way back in there, we were for a lot of stuff.

People don't care about it.

We were for something.

No, that's right.

And when you veto this OEO thing that's coming down here, I'm afraid you're going to have to.

And you're going to be against the poor people and all that.

But you're forcing it.

It is not going to be a totally negative proposition.

It is in defense of the budget.

And the OEO veto needs to stay in the House.

I'm loving it.

Yeah, I'm all for it.

Loving each one.

Well, we're probably going to get you a dirty bill some day.

Pretty bad.

Good.

Very, very well.

Very sweet dad.

He can't clean it up.

I thought he was going to remember our strategy and clean it up.

Yeah, but since then, we've met again, and I haven't bothered you with the details of it, but it's going to come with a great big child development program.

Which is, we're for that.

No, sir.

We're not.

Child under five.

Well, we're for children under five, but we're not for the federal government taking children away from their mothers and bringing them up.

Which, hell no.

See, that's about what this is about.

We can campaign against that.

all year long.

You want the state to bring up your child.

That's what that is.

It's statism.

You want the state bringing up your child.

That's the way to make the issue.

Put it right there in the message.

You want the state then.

The government has got to bring up your child.

We passed the word to the Hill that if child development is on there, that it will probably be, and that we would have to separate it off and preserve it over the Hill.

And that's well understood now and tested with some of these calls this morning.

And often the buying of roads and all of them are, you know, very, very sure that they can sustain.

Could you have a chance, John, before Monday, to grab Conley and get him started thinking about this problem of your tax thing?

He should come into the meeting.

You see, do you remember when we had our other meeting, Treasury had its tax proposals, which I didn't think were exciting enough.

Those I don't think are exciting enough for you to work for.

This one is.

Basically, they have two things to talk about.

This one and the tax credits and other deductions .

Well, we've been working with the Justice Department, and there are several ways of doing it that they will give us favorable things.

And one of them dovetails pretty nicely to this point that it's not perfect.

So that we could do it out through that.

Do you abandon the idea of the Constitution?

Kind of abandon it, but it would certainly be a last resort.

I'll tell you what, the Constitutional Method route, I've talked about that, but I think

Yeah, it poses enormous problems.

Well, it poses problems in terms of what the damn Constitution is going to be like in the California Constitution, if you don't regret that.

Yeah.

I think it is.

Yeah, very much so.

All right.

The other thing, one of the worst.

Yes, it is.

And the other thing is that the Constitutional Amendment thing,

just going to put right in the fat of the fire and this church they think I mean I can see the NEA you know those radicals in there fighting the hell out of them Billy Graham's fundamentalists are fighting the Catholics will be for it who have blood mistreatments on that one on uh now Russell is a different problem this this thing though is it can be structured on a per capita basis well in fact every kid gets

$400 in federal money for his education.

Almost, almost $1,000.

No, no.

In this case, if I kept that fee, for example, as part of the what point, as part of the what check are you at?

This is going to be one of the options.

One of the options we'll get here is anything.

Right.

I'd rather do that than to have this budget that we have here.

put it over there and that, so that we can separate the hard part of the analyzer rather than over George's catapult.

Another thing that we've said for our value-added system is this kind of approach of getting people thinking about it is basically getting the value-added into the backstrap as a substitute for other things that improve the quality of the backstrap.

That was under the tax.

Well, this is like how you can buy all kinds of accessories with this.

You can even solve the busing problem with this thing.

Oh, yeah.

So, that's all we need.

You mean by buying buses?

No, sir.

Never leave.

By doing away with assignments to schools.

As long as the kid carries his voucher with him, what difference does it make what school he goes to?

I could talk a lot about that.

It's a very good exercise and I appreciate all your work on it.

We'll get back to this.

We'll, when we ever have a meeting, we set aside a couple hours on each other.

I think this is a good time of day to meet at around 3.30, 4 o'clock, and then everybody's done with everything else and we'll meet at 6.

Could I raise one other layered problem?

I'm always here and we're all together.

Actually, there are two problems.

One is on international narcotics control.

We're not achieving anywhere near an optimum cooperation level.

And another problem is that there is now a Department of Defense damage assessment

so-called, which has been prepared, to the effect that the Pentagon Papers inflict no damage at all on the security of the United States.

Now, the court files are replete with affidavits from admirals and generals saying how much the Pentagon Papers would damage the United States if they were released.

For some reason, Laird has caused this no-damage assessment report

As long as the kid carries his voucher with him, what difference does it make what school he goes to?

It's a very good exercise and I appreciate all your work on it.

We'll get back to this.

When we ever have a meeting, we set aside a couple of hours on each other.

This is a good time of day to meet at around 3 or 4 o'clock and have everybody done with everything else before 6.

Could I raise one other layered problem?

We're all here and we're all together.

Actually, there are two problems.

One is on international narcotics control.

We're not achieving anywhere near an optimum cooperation level.

And another problem is that there is now a Department of Defense damage assessment

so-called, which has been prepared to the effect that the Pentagon Papers inflict no damage at all on the security of the United States.

Now, the court files are replete with affidavits from admirals and generals saying how much the Pentagon Papers would damage the United States if they were released.

For some reason, Laird has caused this no damage assessment report to be prepared.

And we'd like to

get back in position on that because we've, of course, got the Ellsberg case to try.

And I'm open to suggestion.

I'll call him if that's the way that everybody thinks I ought to go and just tell him to get a damage assessment report in that shows damage.

Consistent with Admiral Giler and everybody else.

But somehow or another, he's got reason why he should...

Call him.

Okay, well, I'll call him and just tell him.

No, that doesn't help with the judicial and other things there.

At the same time, if you don't mind, I'll get him on the narcotics thing.

All right.

And see if we can get him in line on that.

But I hesitate to badger him because he always supports the NRC as a...

As far as levels are concerned, I think that we can sort of reserve

uh some finality we'll see what president's final selections are yeah i think it's a good idea at this point you let everybody know that we're trying to get full blood and bones because if you don't try it at this point you don't ever get yeah you know nothing final at all what is the situation

I think I can't wait to talk to Colbert.

We've only got another month now.

We don't have a lot of time as well.

Congress will come back in.

Like Harold said last year, we've got to have this budget up until January 20th.

We're figuring now, and a lot of things have to be done ahead of time, but they're still there.

They're still responsible for this.

It's been unbelievable how we've gotten through the career.

And to think that, for example, that Tony today ought to be so close.

from each of them, you've got the Russians on account, you've got the Chinese on account, and everything.

And here they know damn well, you know, I left very clear, well, I think, I'll bet you we got, I just want to check the group that were there this morning.

I'll bet you they're both, I'll bet you we didn't miss one or two or three.

But we frankly, here we are, I said, look, it's very clear, we have a program.

It is working.

It will work.

I give you that commitment that it will, and in our involvement.

It will succeed, and in a way that will succeed.

We're going to get our prisoners back.

Now, you can do it that way, or you can do it another way.

And, uh, that is for Congress to serve itself in.

Goddamn, I wouldn't take that on my, myself, on my responsibility as a Jew.

No, no, no, this is terrible.

Because you don't take the prisoner issue and make it a little bit more important.

But it says that, what they say, that within six months after prison, you can release him.

That's what they said.

I don't know how to agree with that.

I agree with that.

Put yourself in the position of the enemy.

If they pass such a resolution, such a restraint on the president, if the fact says, well, if we release the prisoners, we get all American forces out in a certain time.

And so basically the prisoners are not.

As a matter of fact, we probably will be out roughly in that timeframe anyway.

Well, but if on the other hand, on the other hand, you leave any hope in the fact that maybe you won't get out at all.

If on the other hand you leave out on the fact that maybe you're going to go in and bomb the hell out of them, which we damn well may do it for the prisoners alone.

Maybe you've got three weapons, and you're likely to get the prisoners to hell a lot sooner.

That's my point.

You make certain now, with the Mansfield Amendment, that you are going to get the vote.

Right now.

Except under those, on that narrow, there are a lot, that's my point, they don't realize it.

And we may not beat that deadline, but I think we will.

I think.

At least that's what we're counting on.

What the hell is this?

We're trying just as hard as we can to go down.

Last week, last week the casualties were eight.

This week they're five.

That's too bad, but they're five.

For Christ's sakes, what are these people talking about?

Well, they want it.

They don't understand it.

Exactly.

That's the problem this year.

Oh, sure.

They want to be in a position where, well, we let this poor, dumb president down.

I mean, he would flaunt it, but he would kick it and scream it.

to end this war, and so we voted for it, and so forth.

Some secretly hanker after that humiliation of the withdrawal.

We have to have this kind of experience.

Well, that's true.

Oh, yeah, there are some that don't.

Well, put a cap right at the reading that says, some really want the United States to end this war in a way

that it is known that we lost.

That's right.

They wanted to talk about it.

We failed, because they said all along that we shouldn't go in.

And we didn't get in, and they got us in.

They said we should get out.

Because it was the wrong war.

And therefore, you've got to lose.

That is a terrible attitude.

That's what I'm curious about the optimization in your policy, because today it's working.

And what it is, and there's another thing that you have to have in mind.

And it turns out that 402 is re-election.

I mean, all of history has told us that.

And the fact that he had such a big vote is helping us with an argument that he had.

Well, that big vote.

I mean, I haven't realized it at the time.

I thought it was done.

And I wish he had.

If I'd have done it, I'd have put up a couple of clouds and bought hate of Iran.

Then it got 50%, 40%.

I don't know what he was talking about.

But he didn't do it.

It's just not that way.

But when you come down to it now, that's one point.

So you've got two with no election.

Or some election.

That's not an argument.

Or the alternative, which is so dreadful, and actually is, a communist South Vietnam with no elections, and with, and I know where I am putting this, with at least a billion killed.

My God, they've been fighting for five years.

At least, by the very smallest number that we can think of, how many North Vietnamese have been killed in this war in the past five years?

How many?

A half a million?

Probably 750,000 have been killed.

What the hell do you think they're going to do when they take over South Vietnam?

How many do you think they're going to kill?

They killed, even when they had deaf people, when they got to North, they killed.

They, according to the Catholic vision of the dead, they killed and starved to death 750,000 people.

God damn it, that's what will happen to the South.

Now, of course, all that doesn't matter.

We're going to do the death.

We've suffered enough.

What are we going to do to the South?

We're going to have to go better and all the rest.

Don't think it wouldn't matter if we didn't die.

And particularly, but we're so close.

It was 5 this week, 8 weeks, 15 this week, 16.

So we're out 6 months, 8 months, 10 months, whatever the case might be.

And we succeed.

And South Vietnam survives.

And the prisoners are back.

It's been a miserable long war.

South Vietnam, with the government that we would prefer was elected as most governments in the world are not.

With a contested election.

South Vietnam is there.

God damn it, that's a hell of a difference.

And that's why these people, oh boy, once we get to that point, I'd love to take them on and kick their balls off because it's so horrible in this business.

Is there a chance of getting those prisoners by force?

Do we know where they are?

Oh, no, you need another... We don't know where they are.

He's moving them back and forth now after that.

Yeah, yeah, definitely.

They were moving them.

But let me say this, there is another chance to get them.

Northgate amazes desperately in an argument on the best rehearse in front of the club, desperately in front of the club.

This is why the men's field didn't have complaining.

Yet, the negotiating track closes, as it might, in December of early January.

Let me tell you, I'm not going to come in there and simply say, look, we're going to get out in six months in the nap time period of time.

We will keep a residual force if we get the prisoners.

Uh-huh.

We're going to take out, on a very highly selective basis, we will take out those military targets which are needed until we get the prisoners.

And then we need to wrap it around.

Now that, you see, is that very fact they know, because of Cambodia and Laos, that I will probably order this.

And the Russians know it, and the Chinese know it also.

That may get us a negotiation.

But you see, in the event that they pass this ban, they pass the House and Senate, they pass this kind of amendment, that becomes an idle trend.

See?

They think it's idle.

Nixon, Ehrlichman & Haig on Federal Budget and Revenue Sharing

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Nixon Library Finding Aid

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Also recorded on October 19, 1971

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Nixon, Ehrlichman & Haig on Federal Budget and Revenue Sharing

AI Summary

Audio

NARA Description

Nixon Library Finding Aid

Transcript (AI-generated)

Also recorded on October 19, 1971

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Cite this conversation