Nixon & Shultz on Treasury Department restructuring and Tax reform

1:50:12Let us know if we can do anything for you down here.
1:50:12I'll see you.
1:50:35that would be a very bad tactic.
1:50:40What would happen is that
1:50:58they will in the proper time.
1:51:00But if we separate them, what they want to do is just separate the two in order to have client issues and issues.
1:51:05Yeah.
1:51:05And if they don't separate them, I mean, I mean, if they don't go forward, you just go with them.
1:51:12You just be the acting secretary of the treasury and stuff like that.
1:51:16Well, I think they will have a hearing fairly soon.
1:51:20I mean, should they have recorded a nomination?
1:51:21I don't know if they'll have a second.
1:51:24You've got to go forward in the hearing, and of course, which you will come out and treat an analyst with.
1:51:27And it's right there, and then your floor will be almost automatic.
1:51:30But if you separate the two and put you ahead of the client each time, they've got to do it.
1:51:34They've been totally irresponsible.
1:51:35And the client each time, we're not asking them.
1:51:56it will work.
1:51:56I think it will work with the next maybe two weeks.
1:51:58But yours is so simple, I mean, and I mean, I'm having to check to see if you can be active.
1:52:09I haven't checked that out.
1:52:10I have to.
1:52:11Well, I think it's important for you to do that.
1:52:14If you are not confirmed by the time I return on the 1st of June, I will send a copy on a trail to me.
1:52:28I'd like for him to leave about then.
1:52:29I think that's a good thing from two standpoints.
1:52:30First, I want him to take the trip.
1:52:31But second, I think it's very important for you to be there in the saddle.
1:52:33It is good to have another guy hanging around because they've got to know who's boss.
1:52:35And I think what you ought to do, what we ought to do is to do better.
1:53:00but you will be
1:53:34Which would be a nice thing.
1:53:37Okay.
1:53:37And that's about the right amount of time, isn't it?
1:53:43Because he should say 10 days.
1:53:53I'm sort of intermixing briefings on the treasury, calls on senators and so forth, and disentangling from OFD.
1:54:03That also gives a good reason for it.
1:54:18on these things that i said on the personnel things george you just just you just come and decide whatever you think is right now sign the papers you know i think the the but i would only say
1:54:45You've got to get, I just said, you've got to get a top-lying group of people that you have total confidence in to come up with a tax reform thing.
1:54:54And you've got to get that in.
1:54:56Don't let that be done with, well, Sherry Cohen and the rest of the work, and then they'll come up with the same damn thing they have previously.
1:55:04The other thing is that I think that you've got to examine the people over there and just
1:55:16Tracery.
1:55:17Tracery is, it's got, it's muscled on in the head now.
1:55:18I know there are a lot of good men, but, you know, it's still muscled on.
1:55:20I agree with that.
1:55:21It really is.
1:55:21And I think, you know, I'd like to do it by a strong urge to get to the people from out in the Midwest.
1:55:24I mean, take for Chicago or a load of men there.
1:55:38Well, he doesn't know that the economic policy stuff too well.
1:55:45On the other hand, he weighed in very well with us on the freeze and all of that.
1:55:53And in terms of the operations over there, there's a huge...
1:55:58uh, management job in the Internal Resident Service, Customs and so on.
1:56:02Internal Resident Service, you understand, we've got to get a hold of that thing and run it better than the spec law.
1:56:09And, uh, it's, in Treasury, see, the economy is not a great job in terms of big plays and the rest, but he'd be the first to admit he hasn't gotten a hold of running the organization.
1:56:19You can run the organization.
1:56:21And you should just be, just, I want you to look them all over.
1:56:26Because I would rather brutally all go home on that.
1:56:31I will.
1:56:32And get your names ready.
1:56:33Pick the very best people you can.
1:56:35And be ready to move in with a new team, and particularly a young team.
1:56:38Young team, you know.
1:56:40Bye, young.
1:56:45I will have that right there.
1:56:48I didn't want to mislead you yesterday.
1:56:50I think to let go of these top people right now would have been very disruptive.
1:56:56And they're very supportive of you.
1:56:59Well, they're good men.
1:57:00And they're good men.
1:57:00We will find places for a couple of dogs like Walker and Booker and Chris.
1:57:10You need your team.
1:57:11Connery never got his team.
1:57:13You need your team.
1:57:15You need people that you have confidence in, that you can work with, or otherwise they're going to cut you off.
1:57:23Well, I will do that, and I think I did manage to run the Department of Labor, and I have got that.
1:57:34small thing, I think you ought to get, and I don't think he's going to do, I don't think he's going to be there, but I think you ought to give George Meany a call.
1:57:43I said to the president, you know, you go over there, and you have a customer, you can also sort it out.
1:57:46I'm afraid you're going to touch him when you get back to him.
1:57:49Just go over and have him chat with me.
1:57:53Find an excuse to talk to him.
1:57:57See what I mean?
1:57:58All right.
1:57:58I've got to say that we, if we go down this road, which maybe, you know, they're going to start having a better job now.
1:58:28I called and told him about this change, and good.
1:58:34And I have a perfect little thing that I've been working with him on, because I felt good to stay in contact with him.
1:58:41He's very interested in getting the golf professionalship for Lee Elder.
1:58:47who's a Negro golfer here in Washington, at one of the National Park Service golf courses here in town.
1:58:54It's a golf course that's right in the black area in the kitchen, and he thinks that it would be nice for Elder to have a home course and so forth, and I do too, so we're working with Roger Morton.
1:59:04That's the first thing you can do on a hard-on one.
1:59:06Now, that shirt hurts all over here, I see, so...
1:59:14And then when it's done, you call George and you say, Mr. President, you might tell him, you say to the generation that I was enthusiastic, and I said, for you to break whatever challenge was necessary to get it done, and the elder's going to be a...
2:02:09The thing is, if you will read, there isn't any price.
2:02:14You should know what the hell it's all about.
2:02:16Also, if you look on the economic policy, you'll find there is money supply.
2:03:24Now, first, the main thing, the thing is, if you will leave, there's going to be a fight.
2:03:30You should know what the hell it's all about.
2:03:32Also, on the economic policy, you're fighting burns on money supply, and you're also fighting on convertibility, which is good.
2:03:43And the main thing I think we really want to do, though, is to create a thing in the tax system.
2:03:52That in the tax system is an abomination.
2:03:53It is abomination.
2:03:55You know what I mean?
2:03:56It's too complicated and so forth.
2:03:57I just think we've got to grapple with the problem.
2:04:01I don't know how, man, I'm sorry, but if somebody can do a little thing.
2:04:05I think, really, that what's happened here is we've probably hit a stage
2:04:11and using the tax system as a hodgepodge for purposes of social aims.
2:04:15I think really social aims should be accomplished through legislation and appropriation rather than through the tax system.
2:04:26Now, understand we're far down that road already.
2:04:29We have charitable deduction, et cetera, et cetera, et cetera.
2:04:34What I'm getting at is that a simple tax system, I think, is desperately needed.
2:04:38It'll put a hell of a lot of tax lawyers out of business.
2:04:43That's just too bad.
2:04:44That's good.
2:04:45That's one of the reasons why I've always favored it.
2:04:48Just call it value added, call it manufacturer's excellence, call it anything else.
2:04:53I favor that kind of an approach rather than the other, because basically it's simple.
2:05:01It's dang simple.
2:05:02And they talk about loopholes.
2:05:04They're asking, are there no loopholes in it?
2:05:07I've asked Milton Friedman to come down.
2:05:11He's coming down next Monday.
2:05:13He said, oh, wait.
2:05:13I know this is probably not meant.
2:05:15Everybody would say you were bringing a damn rat in the right.
2:05:19But I think if you could get Milton to come down in, frankly, the span of a few months, I mean,
2:05:25He's so bright.
2:05:26Now, it's so interesting to start there.
2:05:28It's so interesting he can't do it.
2:05:31Well, I'll sign him up, and I'll get a good bit of his time.
2:05:34He worships you.
2:05:36Well, you can.
2:05:37It's the way the person goes, but he can't do it.
2:05:39Why do I have to do it?
2:05:40Because you know what I think?
2:05:41He'll come and work for you.
2:05:43I think the goddamn wage and price controls are no good.
2:05:45Oh, but they've worked pretty well so far.
2:05:47Tell Milton Friedman that I really think we now need you.
2:05:51And that he ought to come down and help you.
2:05:53You tell him that.
2:05:55Okay.
2:05:55And if Frank and I get back from Russia, if I have to arm him, I'll do it.
2:06:00But he's got to do it.
2:06:02Maybe he can get his teaching loaded.
2:06:04He doesn't have any teaching.
2:06:06Summershot is a free man.
2:06:07But then the other men...
2:06:09You can say, I don't know, maybe three, four days of your time in an apartment.
2:06:12You know, there are some ways that you can work out an extra inch, probably an extra year or, you know, over a temporary, about $30,000 or something.
2:06:22Damn it, you know, you need a couple of other very bright people.
2:06:26Look around, look through your mind, charge the brightest people you know in this field who are not radical leftists.
2:06:33There must be three or four.
2:06:34Now, for you, that's too far to the right, for me and for you.
2:06:39And there's guys that are not just animals.
2:06:42too much capital over there now.
2:06:45Friedman is creative.
2:06:47And also, if you come up with something, Friedman will show you the holes, and if there are holes, faster than anybody.
2:06:54His mind works like a radiator.
2:06:58And he tells you right after he'll tell you, or me or anybody.
2:07:03Well, I will definitely get on that, and I will be bringing in bright people as I go along, and I will have a plan for
2:07:10for our group once the election is over.
2:07:12And we'll have work going on that.
2:07:14You just totally are right.
2:07:15Shave up the trade because it hasn't been shaved.
2:07:17Georgia hasn't been shaved up since World War II.
2:07:20The same dead people were over there.
2:07:24The same kinds of people were there when Eisenhower was there.
2:07:29They were never worth a damn.
2:07:31I really mean that.
2:07:32I don't mean they were crooked, except .
2:07:35But they are not creative.
2:07:36They are not creative.
2:07:40So let's go.
2:07:40Okay.
2:07:42I have always, of course, go out and sit down with a load of animals and law.
2:07:51You've got to do both.
2:07:52Tell the president that you would, and he'd ask you specifically to go out and hear the specific requests and the last things that he wants.
2:08:03Senator, the President admires you greatly and respects you for your time, your creativity, everything, that's irrelevant.
2:08:11But we want your advice.
2:08:12We want this to be a partnership working together.
2:08:15And we're not going to have the House dominating the Senate.
2:08:19Now, with Mills, you play exactly the opposite.
2:08:22You just play the lie and go, now, we know we can't get any tax legislation through without you.
2:08:31I mean, the President told me about his breakfast with you.
2:08:33It was very, I mean, very encouraging.
2:08:37It made me very, very constructive concerning that we want to, we have, we have the ability to get the right kind of tax money, that you have no right of authorship in this thing.
2:08:46You know, a little of that.
2:08:56The outcome of the breakfast, I think, was that there shouldn't be a tax bill this year.
2:09:00Yeah, yeah, except that he's trying to wiggle his way around saying, well, maybe they should have some sort of a system whereby he has an idea of putting in a legislation that could be effective every five years, every exemption is reexamined.
2:09:15That would create, unbelievably, great chaos in business planning and the like.
2:09:23We can't do that.
2:09:25You can't say that automatic exemption ends.
2:09:27Five years of conversation, all hell breaks loose.
2:09:31You can go around and say there are loopholes.
2:09:35Well, I should think that another month or so when the Democratic Convention is over, we might just come back down to earth a little bit.
2:09:45We might have a talk with him into both of those
2:09:53The Republicans are interested, but they don't really matter.
2:10:00I mean, yeah, but he quite can.
2:10:01Those, I want you to see them separately.
2:10:03I want you to see them for lunch and dinner and all, and just say, who the hell used the facility here?
2:10:10And you say, I'm doing this on a specific request and everything.
2:10:14When he gets back from this trip and so forth, then you, he, and me, we'll want to meet again.
2:10:18See what I mean?
2:10:18What I'd like to do is for you to handle some items.
2:10:22I don't have a very good opinion of you.
2:10:24What I mean is I know it's not at this point where you're not there to discuss anything.
2:10:28You just don't make any comments.
2:10:29But be that as it may, you develop a personal relationship with these guys so that you can work closely with them.
2:10:34You just said the president is a realist.
2:10:37He knows he can't win any of the tax cuts without your help.
2:10:39He wants to work with you.
2:10:42He said that you want to work with him.
2:10:46Fair enough.
2:10:47I'm glad to do that.
2:10:49I know them both fairly well.
2:10:55I didn't have a chance to collect my thoughts the other day when you asked me to do this.
2:11:01However, you kind of talked about it, and I thought I might just review my understanding of some of the things that I take it you want me to do in the positions that we're on.
2:11:15And this reflects, to some extent, discussions with Connolly and others.
2:11:18Right, right.
2:11:20But I would take it you want me to continue to maintain an overall relationship with CAAT on the budget and the budget strategy.
2:11:28Exactly.
2:11:30And CAAT will do the .
2:11:31So I will take steps to do that.
2:11:37On the matter of the trade and monetary front,
2:11:45We want to pursue our line that has developed that we're damn well going to see that America gets bargained for, right?
2:11:53At the same time, we also have a line we're not withdrawing from the world.
2:12:01We're not putting a circle around the United States.
2:12:04We want to trade on fair terms.
2:12:10But between now and the election, leave more to the protectionists and less to the undercutters.
2:12:17I know my own purest thinking is to move in the other direction.
2:12:22But between now and the election, George, we need to take, basically, the economy.
2:12:28I don't want the story written with the effect that it shows back away from the economy's composition.
2:12:33And a few of these orders to write nasty things about you, that's good.
2:12:38I notice there's been a little of that already, because at the beginning of the international monetary crisis, I sounded off once or twice that we weren't going to sacrifice the domestic economy to any international monetary objectives.
2:12:53So I'll continue to push that.
2:12:57I take it also that
2:13:01that you would like me to work closely with Peter and Peter Flanagan on the coordination of the international economic business.

Nixon & Shultz on Treasury Department restructuring and Tax reform

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Also recorded on May 19, 1972

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