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Well, let's see.

No, I think I will go over to the other side.

I'll be over there, rather than over here.

Public service employment.

We've been nursing along one way or another, and it's moving very fast.

So I thought I'd better get a reading right away from you.

House and Senate have both passed a public service bill.

From our standpoint,

The Senate bill is considerably better than the House, although we haven't been in favor of the loan.

We have tried, as you remember some time ago we discussed, to get manpower reform revenue sharing.

There's a debate that we would compromise some on public service employment if they would do it.

And we didn't get anywhere with that.

There was a big effort in the House, and we didn't get enough votes.

It was closely disappointed.

And the House voted this public service bill, which was allowed almost deliberately to be bad, anticipating a veto.

Now, the Senate is better.

The Senate is somewhat better.

Now,

As we have talked about this, public service employment bill, right at this time, is not the easiest thing in the world to veto.

So we have to look at here.

I think it would be sooner than that.

This might very well conclude the day.

Oh, I get it.

All right.

So we might have to act.

It might be positioned so that the public works bill, which is on its way down tomorrow, so our 10 days will start running then.

So the two would physically be here at the same time.

We could do the both together.

I think on the public works bill, we're very strongly positioned on a veto on that.

OK. We're all set.

What we have been trying out is the notion that if the conference will produce the Senate bill with a few touches that give a little special thing for veterans, and we can get a commitment from the chairman and the ranking member of the committees and the subcommittees

to produce a manpower reform revenue-sharing bill by the end of this year.

What we've said is, I don't know whether the president will veto it or not, but that would increase the probability that he might not.

And that has moved to the next.

But the main thing I would like in the Darren bill is just if we could get it as flexibility so we could put the money, whatever damn money we have to spend in the places we want and under the circumstances we want to spend it or not spend it, as the case might be, that's it.

The public, you know, I mean, it's a miserable thing, we all know, but if we have to sign it, because you would agree,

We've got to, the more flexibility we can have to play it the way we want.

I suppose there is one.

There's a little, but I don't think there'd be very much because it would go to units of general government.

I think we can establish that like revenue sharing.

But I'm sure they would tie it pretty tightly to a distribution formula, just as all the manpower funds tend to be.

Now, it might be that there are always opportunities during the year to reprogram some and move it around a little bit.

But there's not a great deal of flexibility there.

Now, it's interesting how fast this is possible.

compromise has moved and they are visibly seeing if they can get commitments from these people.

And I thought Jared had said a little bit on the Cleveland Public Service deployment thing.

I thought your feeling was that it isn't going to allow us to do much about the, wasn't really going to affect the whole thing about the climate at all, is it?

It doesn't affect it much.

Well, we think that you would... Tenth of a percent.

Tenth of a percent or something.

It just isn't a way to do anything about it on a planet, but it has great visibility.

It's jobs.

We have... Just me, George Shultz, I'm just opposed to it.

I don't think it's the right way to go about it.

On the other hand, here we are.

Well, I don't know.

Jerry is firmly positioned on this.

He's troubled that we might move off of a straight veto position.

On the other hand, I think all our discussions around here are, and reflecting your directions, that, boy, we better keep our eye on this employment thing

both in the substance and in the way that we care, that we care.

That's what it really gets down to, in order to get us to the question of what we do.

We all know we do the wrong thing.

It's a terrible conviction that we will have to be forced to be just about, but we have to indicate that we care.

That's the real problem.

Well, I think that if we can make the chairman, as well as our ranking members, and we have to make our public commitment

They will get some of that.

That is in the general ballpark that everybody knows about of manpower reform and revenue sharing.

And the general thrust of that is, all particulars can be argued about, the thrust of putting the programs together and decentralizing to the states and the cities and changing the arrangement is well known.

And if we have a public commitment from the chairman that they will get us a bill, that, I think, takes some of the sting out of it.

But before running this thing race along any further, I wanted to check this with you because these people will be going on the line saying, all right, I'll, I'll, I will.

If they can get that, we'll do it.

Okay.

Well, it's a good price.

I mean, I think we just have to...

If we can get that commitment, then you could say that I will reconsider my veto.

I'm strongly alluded to veto, but if I get that kind of commitment, that changes the situation so that I would be able to justify reconsideration.

But if I don't get that commitment, I've got to be serious with the veto.

Shall we try?

Well, that'd be my

feeling that we ought to try to do that.

It's an interesting lesson in how powerful the potential presidential veto is.

And even when the politics sounds as though the Democrats would like to draw you into a veto, the chairman of these committees that bring their bills down don't like it, particularly when they think they might.

lose so uh they they they are in something of a negotiating move well we'll proceed on this and uh it's it's just that i didn't want to go any further and then wind up with you deciding you would veto it and them all feeling that we have bad faith involved let me ask you uh i haven't talked with john about the

about the developments in the last hour or so, because he's tied up.

Yesterday, the alternate was to veto this and then suggest that the public service component of HR1 be moved up.

Do you have to separate it up?

Thinking about that, it seems very hard to differentiate.

public service employment for welfare people and public service employment for unemployed generally.

And you can make a distinction on the better and everything.

But it's a fine line.

I think it would look as though you're being a little too fancy about it.

We're going to have the budget meetings next week.

Yeah, David.

Saturday.

we'll give a good comprehensive picture and then in terms of guidance from you

What we're looking for, I think, is guidance for fiscal 72 and how we're playing that.

And then we thought, well, we'll have the 73, and later we'll have the California one.

We would have this larger discussion of goals and so on, and then branch off into .

This is for purposes of the immediate tactics.

The other is for the purpose of the long range.

I agree with that.

We have to do it.

We need to take care of this one.

I had said we were going to do it this weekend.

You said you weren't ready.

That's right.

We will be ready by probably Monday or Tuesday.

This next week?

Yes, we can do it more quickly.

I understand you're standing at the press conference.

This next week, not next week.

It is, I don't know.

There isn't too many.

I mean, Atlantic City, the medical association, go out there and they have a few other things.

But this weekend, we might have six and seven.

That's fine.

I mean,

Yeah.

Yeah, I'm telling you to ignore that call I just gave you.

Fine.

I want to see you before he gets away.

I was reflecting more about the enemy.

I thought that perhaps one day next week you might...

get a hold of Conley, that you and Conley and I always sit down and be informed.

I think sometimes we've got to separate out people that know we can sit there and we don't get about the whole darn thing, and we get off on 18 different tangents.

But you have ideas, Conley has, and I haven't.

Let's have a little talk about how the energy looks for, you know, so you get a hold of Hall and having Conley in.

It can't be like this next week, or Tuesday, or Wednesday, or next week.

And where we just, you and just the three of us sit down and hear you talk about an argument, like you.

I get more out, frankly, of a meeting where we have that kind of talk, and I consider this, like, the kind of view of, like, when you brought it on down here.

No.

No, that's good, that's good.

You get some more of you.

Is he out of that meeting?

He's out of the meeting.

No, no, I'll, I'll, I'll, I'll, I'll, I'll, I'll, I'll, I'll, I'll, I'll.

Uh, the second point is, uh, the, uh, I think, I just don't think that economic experts are very darn sure as to what is happening to you, George.

I get, every time I get, I get a paper virtually every day from the council.

Like, the relationship with the housing charge are doing well.

And the next day, well, this is still sluggish and personal and constant.

And so it just bobbles along, which of course leads you to the conclusion that, I mean, usually leads you to the conclusion, well, if you're not good enough to do something, on the other hand,

When the options for what you do are so unattractive, maybe it's better to risk the uncertainty.

I'm sure it would be hard.

Well, I have my reasonably firm convictions on this that haven't... You still feel the same way?

We had a first look at the second quarter DNP figures, and they are disappointing.

They are.

They're above.

In my own mind, I calibrated it and said if it's below 20, that'll be quite disappointing.

If it's in the vicinity of 25 billion increase, well, we can feel darn good about it.

Now, their first look is 20.4.

So it is within the bounds.

The...

I...

My guess is that'll be revised upward.

The first quarter was revised upward sharply, and I think it's going to be revised upward again before they get through.

It's also the case that the income side of this is running ahead of the output side.

That is, you can compute product, gross national product.

And then sort of the other side of the coin, in a way, is the income that people are receiving.

And they don't exactly balance.

And the main thing involved is transfer payments, like Social Security payments, that don't produce any output until recipients spend the money.

Now, the income side outran the product side in the first quarter by a couple of billion dollars.

That's somewhat unusual.

This second quarter, it's been outrun it quite a lot because

there is a very large lump sum Social Security payment coming just about now, being mailed out as a result of the early Social Security actions.

And that is sort of money in the bank.

That is, that will be growing spending.

Just because of this increment, the savings rate will look as though it has gone way up.

But that's reflecting the moment of time, which happens to come in the middle of June when these large payments arrive, are all of our indications of consumer sentiment.

The surveys plus basically, I think, the sales are showing that the consumer is spending, maybe not spending wildly, but is in the market.

Businesses, I think, are being extremely cautious.

They're not building inventories and they're not building

new plant and equipment.

If the sales keep going, they will be forced to rebuild their inventories.

They have no alternative.

They've got to get the stuff in there to sell.

And once that process starts, then you get a big lift.

So I still see it as a strong expansion, but there are lots of nervous people around.

On the seal thing, I think we are about ready to bring you back a definite idea about how to get into that.

And I'm also preparing for this Camp David meeting kind of a wage-cost outlook.

I think that we can do a fair amount of forecasting there about what's likely to happen on the

I don't think that'll be released for another month.

They sort of get up a preliminary view and they pass it around the government.

And then they wait a while.

Well, they, you know, it's based on about a month and a half worth of figures.

And they now have quite a few things in May, mostly, mostly having to do with early May.

It's disappointing to me that it's higher.

It's sort of within the range of tolerance, but just barely.

But I think there are

There are these pools in the picture, and they're just going to pull awful hard one of these fine days.

But nevertheless, the unavoidable is there.

And that's a reason why it seems to me, I would feel very hesitant in recommending to you that you don't stop at the pool.

Once it really begins, then it just builds on itself.

It builds very fast.

And then you can't turn it off.

Once it goes, you can start trying to hold down construction and whatnot, but it's awfully hard to do.

Contracts are left.

Yes, it would be nice.

We were worried about it before, but I don't think we're worried about it now.

Maybe just as well, but it's coming just a little late.

And if it pulls, and it should pull,

In the third quarter, that's about right, you know, pulling too early.

You can pull up and then we have to be worried too much about the inflationary factors and so forth and so on.

Okay.

Well, we have the SOTOs, of course, they're, well, they're all, they're all a bunch of nervous alleys so far because they're, they all talk to each other sweetly about the wage price push.

I'm also worried about interest rates and inflation.

None of them seem to be buying.

I say none.

A lot of them must be.

Some people are doing that.

But just a lot of them are not gambling on the future, is that it?

Well, they are gambling on the future by not getting the inventories in now.

They may lose some sales, and they may pay more for the goods at a later date.

So I think they have to gamble either way.

a completely different topic.

I've been wanting to get a chance just to mention this to you.

Next week, if all works out right, Ed Morgan and I are planning a swing through five southern states to talk to our state advisory committees about the impact of the decisions on their state as we see it and the

prospects for this emergency money, which I wish were better, but just to touch base with them and to keep their spirits up and to keep them alive as a committee.

So I would be out for a couple of days.

Getting back to the economic thing, there's nothing really that can be done with regard to instilling conferences.

It just can't be done with regard to, I don't know,

I on the other hand, I think that a lot of people can repress confidence within the country that they talk to negatively, can't they?

They can overdo it.

The feds say this, the media say that, and so forth.

Yet this is an awful big country and a very diverse country and all the rest.

I just feel that national psychology is going to change.

I mean, we must have some confidence in the world.

Well, we all

do a little bit of subjective sampling.

I was interested.

I call people once in a while that I know in various parts of the country.

John Connolly was commenting the other day that he'd done a little bit of that with some friend of his who runs a big yard, somebody who does this or that.

And you just kind of get a feeling from how they talk.

And they talk pretty well on the whole.

I think that's likely, but I say that on the basis of the sales information, of thinking the inventories are going to be, that they're underestimating those, and on the basis that practically every figure that's been published this year has been revised upwards.

When will they have the final figure in the first quarter?

In July.

They go back and they revise the whole year.

And then they'll pretty well finalize the first quarter, although they've revised these figures for years.

Is the summer basically at a time of...

So fall has occurred in America for the summer.

Summer shows third quarter to be a pretty good quarter.

I mean, are there any psychological factors that, apart from this particular year, that generally affect third quarters?

Well, in terms of retail sales, they generally are a little soft in the midsummer.

And then toward the end of the summer, they pick up.

And there's clothing and things like that that are

purchases as people go back to school and the fall fashions come in and so on.

But that's accounted for in these Seattle fashions.

Will we get together next week when we'll get some good news or something?