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Conversation: 777-002

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Start Date: 14-Sep-1972 3:49 PM

End Date: 14-Sep-1972 5:59 PM

Participants:

Nixon, Richard M. (President)Ehrlichman, John D.Bull, Stephen B.Shultz, George P.Burns, Arthur F.Connally, John B.Stein, HerbertZiegler, Ronald L.Sanchez, Manolo

Recording Device: Oval Office

777-002a.mp3

777-002b.mp3

777-002c.mp3

NARA Description:

On September 14, 1972, President Richard M. Nixon, John D. Ehrlichman, Stephen B. Bull, George P. Shultz, Arthur F. Burns, John B. Connally, Herbert Stein, Ronald L. Ziegler, and Manolo Sanchez met in the Oval Office of the White House from 3:49 pm to 5:59 pm. The Oval Office taping system captured this recording, which is known as Conversation 777-002 of the White House Tapes.

Nixon Library Finding Aid:

Conversation No. 777-2

Date: September 14, 1972
Time: 2:34 pm - 5:59 pm
Location: Oval Office

The President met with John D. Ehrlichman.

            Greetings

            Louis P. Harris


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BEGIN WITHDRAWN ITEM NO. 1
[Personal returnable]
[Duration: 6m 39s     ]


END WITHDRAWN ITEM NO. 1

*****************************************************************
                                  2

         NIXON PRESIDENTIAL MATERIALS STAFF

                         Tape Subject Log
                           (rev. Oct-06)



Revenue-sharing bill signing ceremony
   -Length and location
   -Logistics
   -Vice President Spiro T. Agnew
   -The President's speech
        -Proponents of bill
        -Nelson A. Rockefeller
        -Prominent citizens
        -Agnew’s role
   -Logistics
        -Crowd response
   -Gifts for guests
        -Pens
   -Historian speaker
        -Richard B. Morris
             -Columbia University
             -Speech for television
             -Historic perspective of bill
   -Agnew
   -Rockefeller
        -Possible speech
   -Historian speech
        -The President’s view
        -Media reaction
   -Rockefeller
        -Role
        -Effect on Congress
        -Remarks
   -Joe Peckman and Walter E. Heller
        -Efforts for George S. McGovern
        -Lyndon B. Johnson
        -The President’s view
   -List of invitees
        -McGovern
        -Bipartisanship
   -Rockefeller
   -Wilbur D. Mills
   -Support for bill
   -Rockefeller
                                               3

                      NIXON PRESIDENTIAL MATERIALS STAFF

                                        Tape Subject Log
                                          (rev. Oct-06)

                      -Signing ceremony
                      -History of bill
                      -Opening speech
                           -The President’s view
                 -Support for bill
                 -List of guests
                      -Aid to Administration
                           -Political benefits
                      -Heller
                      -Peckman
                 -Previous photographs of participants
                      -Requests for photograph
                      -Murray L. Weidenbaum
                      -Administration's work on revenue-sharing
                 -Planning for ceremony
                      -Passage through Congress
                 -Rockefeller
                      -As proponent of bill

             Tax policy
                 -John B. Connally
                      -Ehrlichman’s previous conversation with Connally
                      -Ideas on tax policy
                      -Increase in minimum tax
                           -Connally’s view
                 -Ronald L. Ziegler
                      -Interest in tax policy

Stephen B. Bull entered at an unknown time after 3:49 pm.

             The President's schedule

Bull left at an unknown time before 4:07 pm.

             Tax policy
                 -Connally
                      -Dividend
                 -Increase in minimum tax
                      -The President’s view
                      -Need for action
                 -Ehrlichman’s letter to Washington Post
                                               4

                      NIXON PRESIDENTIAL MATERIALS STAFF

                                      Tape Subject Log
                                        (rev. Oct-06)

                    -Response to Carl T. Rowan column
                    -Administration's stance on taxes
                 -Wall Street Journal article

Bull entered and left at an unknown time before 4:07 pm.

                 -H.R. (“Bob”) Haldeman

             Frank L. Rizzo
                 -Revenue sharing
                 -McGovern

George P. Shultz, Arthur F. Burns, Connally, Herbert Stein and Ziegler entered at 4:07 pm.

             Greetings


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BEGIN WITHDRAWN ITEM NO. 2
[Personal returnable]
[Duration: 55s        ]


END WITHDRAWN ITEM NO. 2

*****************************************************************


             Tax reform discussion

Manolo Sanchez entered at an unknown time after 4:07 pm.

             Refreshments

Sanchez left at an unknown time before 5:59 pm.

             Tax reform
                 -Proposals for tax reform
                      -Merits of choices
                      -Need for decision
                                   5

        NIXON PRESIDENTIAL MATERIALS STAFF

                         Tape Subject Log
                           (rev. Oct-06)

    -Property tax
        -Senior citizens
        -Middle-income sector
    -Progressiveness of taxes
        -Income tax framework
             -Rise in federal revenue
             -Compared to actual income
    -Minimum tax
        -1969 proposal by the President
    -Combination of programs
        -Fiscal merits
        -Achievement of the President's objectives
    -Paper
        -Middle-income group target
        -Property tax program
             -Table
             -Credit on income tax
             -Income limits
                  -Deduction
             -Possibility of variation of targeted groups
             -Senior citizen tax benefits
                  -1973 estimates of costs
                  -Credits for income tax
                  -Five-year program for reform
                       -Beneficiaries
                        -Older people
             -Middle-income tax benefits
                  -Tax credits
             -Senior citizen program
                  -Present property tax average
                  -Credits toward income tax
                  -Deduction for interest on mortgages
                  -Charitable contributions
                  -Revision of standard deduction

Property tax
    -Income tax deduction
         -Effect on wealthy schools neighborhoods
    -Maximum tax
    -Phase-out
    -Texas
                                 6

        NIXON PRESIDENTIAL MATERIALS STAFF

                        Tape Subject Log
                          (rev. Oct-06)

    -Effect on localities
         -Property tax increases
         -Effect on Federal Reserve System
         -Need for safeguards
    -Grant approach
         -Grants payable on property tax payment
    -Inclusion of renters in property tax program
         -Administrative problems
         -Standard deduction for renters
         -Gasoline tax
         -Land lords’ possible role
             -Tenants
                  -Internal Revenue Service [IRS]
         -Renters' problems with property taxes
    -Reform program
         -Time frame
         -Need for goals
    -Senior citizens
         -Phasing of taxes according to age

The President's 1969 tax reform proposals
    -Minimum tax
        -Individuals
        -Corporations
        -Revenue
        -Political benefits
        -Complications of proposal
             -Municipal bonds' interest
             -Congress's past reaction
    -Minimum tax proposal
        -Frederick W. Hickman
        -Edward S. Cohen
        -Taxpayers' reaction
        -Possible revision of present system
             -Retention of basic tax framework
        -Revenue
        -Parallels with old age property tax
        -Effect on budget
    -Federal revenue
        -Growth over years
             -Labor force growth
                              7

    NIXON PRESIDENTIAL MATERIALS STAFF

                     Tape Subject Log
                       (rev. Oct-06)

         -Inflationary effect
              -Proportional growth
              -Tax bracket progressivity
              -Rise in real per capita income
                   -Productivity rise
    -Milton Friedman
    -Congress's revision of taxes
         -Shifting of tax bracket
         -End of progressivity effect
    -Friedman theory
         -Presidential proposal of tax revision
-Minimum tax
    -Progressivity effect
         -Inflation progressivity
         -Real income progressivity
              -Use of funds
                   -Offsetting property tax program
    -Projection of federal budget
         -White House five year budget projection
    -Brookings Institute study
    -Federal revenue spent
         -Need for increased revenues
              -Tax increases
    -Congress's tax policy
         -Traditional revision of tax brackets
         -Property tax
    -Elimination of inflationary effects
-Total revenue gains
    -Increase in federal revenue
    -Progressivity effect
         -Real income growth
         -"Progressivity dividend"
    -Deductions
    -Increase in real income
    -Description of revenues
         -Combination with property tax program
    -Spending budget
         -Part of program
-Potential problems
    -Maintenance of present tax rate
    -Property tax changes
                              8

    NIXON PRESIDENTIAL MATERIALS STAFF

                     Tape Subject Log
                       (rev. Oct-06)

     -Aid to senior citizens
     -Aid to middle-income group
-Minimum tax
-Tax equity factor
-Tax simplification program
     -Credit approach
     -Use in grant program
          -Effect on property tax for education
          -Advantages of grants
-Grant program
     -Effect on property tax
     -Shift of burden of tax
     -Attachment of conditions
          -Effect on property tax
     -Potential problems
     -Property tax variations
               -Conflict with state and county programs
     -Solution of problems
-Inflation progressivity effect
     -Lowering personal income taxes
          -Friedman
     -Capital gains tax
          -Differentiation between real and inflationary
           gains
     -McGovern’s proposal for taxes
          -Shultz’s press conference
          -Tables
          -Progressivity effect on capital gains
     -Application to income and capital gains
-Capital gains tax reform
     -Effect during election
-Tax form simplification
     -Short form
     -Package return for older taxpayers
-Political effects
     -Tax reform compared with tax increase
     -Complications of introducing new programs
          -Deductions
          -Loopholes
     -Congressional input
     -Public reaction
                             9

    NIXON PRESIDENTIAL MATERIALS STAFF

                    Tape Subject Log
                      (rev. Oct-06)

          -Acceptance of reforms
          -Fear of increase
               -Connally
          -Wealthy people
-Tax system
    -Rewards for hard work
    -Loopholes and tax shelters
          -Use by taxpayers
               -Tax lawyers
    -Loophole use
          -Farmers
          -Cattle-growers
          -Housing developers
          -Oil drillers
          -Corporations
    -Impact of closing loopholes
          -Ranchers' concern
          -Capital gains
-Political effect of reforms
    -Effect on November 1972 elections
    -Political contributors
    -Misinterpretation of reforms
          -Need for tax equity
          -Equating of reforms with tax increase
          -Possible solutions
               -Reaction of public
    -Structural change compared to tax level change
          -Income tax revision
               -Value-added tax [VAT]
    -Property tax problem
          -Shultz's efforts
          -Need for solution
          -Need for progress
    -Fulfillment of promises on taxes
          -Property tax reform
          -Old age tax reform
          -Need for increase in revenues
          -Raising of taxes
          -Avoidance of issue
          -Old age income tax for 1974
               -Progressivity effect
                                10

        NIXON PRESIDENTIAL MATERIALS STAFF

                        Tape Subject Log
                          (rev. Oct-06)

            -Balancing of future budgets
            -Congress's traditional adjustment of taxes
                 -Capture of progressivity dividends
            -Expenditure program
                 -Future economic trends
            -Property tax relief
                 -Costs
                 -Funding of program
                     -Expenditure cuts
                     -Tax reforms
                          -Public reaction
   -Five-year tax plan
       -Projection of revenues
       -History of planning
            -John Enoch Powell
                 -Conservative Party rally address of October 1968
                     -Decreases in taxes
                          -Results
                             -Burns’s view
       -Burns’s Senate testimony
            -William Proxmire
   -Difficulties
   -Need for defense outlays
       -Percentage of revenue
            -Vietnam
            -Arms control

Budget-cutting proposals
   -Administration's progress
   -Reasons for administration's results
        -1968 victory margin
        -Democratic Congress
   -The President’s view
        -Community action programs
        -Office of Economic Opportunity [OEO]
        -Job Corps
        -Education departments
        -Department of Housing and Urban Development [HUD]
        -Food stamps program
   -Big-spending programs
        -Administration's stance
        -Welfare
        -Education
                                         11

                  NIXON PRESIDENTIAL MATERIALS STAFF

                                 Tape Subject Log
                                   (rev. Oct-06)

                   -Community action
              -Incoming Congress
                   -Outcome of 1972 presidential race
                   -Relations with administration described
                       -Need for budget revision
                       -Connally
                       -Agriculture Department
                            -Cotton program
                       -Department of Health, Education and Welfare [HEW]
              -HEW budget
                   -Subsidies for higher education
              -OEO
              -Community action program
              -Urban renewal
                   -Transportation programs
                       -Budgetary revision for future
              -Stein
              -Possibility of deficits
              -Need for fiscal responsibility in budget
                   -Constraints
              -Future opportunities for administration
                   -Conservative philosophy
                       -Government growth
              -Commitments to cut budget
              -Administration's goals
                   -Spending cuts
              -Group over 65 years old
                   -Administration's aid
              -Tax reform
                   -Avoidance of tax increase
                   -Progressivity effect
              -Need for spending restraints
                   -Balance-the-budget proponents
          -Mills meeting
              -Support of the President's budget ceiling
              -Welfare program
                   -Chances for reform in House of Representatives
                   -Incoming Congress's view on welfare
              -Pledge of support for the President


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                                          12

                  NIXON PRESIDENTIAL MATERIALS STAFF

                                  Tape Subject Log
                                    (rev. Oct-06)

BEGIN WITHDRAWN ITEM NO. 3
[Personal returnable]
[Duration: 2m 8s      ]


END WITHDRAWN ITEM NO. 3

*****************************************************************


          Administration policy
             -Rockefeller
                  -Domestic policy ideas
                  -Program costs
                  -Restructuring cost
             -Direction after election
                  -Continuation of first term trends
                  -Foreign policy achievements
                  -Domestic policy achievements
                       -The President’s view
                       -Democratic Congress influence
                  -Revenue sharing program
             -New policies
                  -Re-examination of older programs
                       -The President’s view
                  -Hunger issue in America
                       -Columbia Broadcasting System [CBS]
                       -Influence on Congress
                       -Politicians
                       -Journalists
                       -White House Conference on Food, Nutrition, and Health
                            -Dr. Jean Meyor
                  -Food Stamp program
                       -Funding
                       -Use of stamps
                       -The President’s view
             -Changes in policy
                  -Liberal stance
             -McGovern's proposed budget
                  -Programs
                  -Compared to the President's budget
                  -Effect of election on future policy
                       -Connally’s views
                                 13

        NIXON PRESIDENTIAL MATERIALS STAFF

                        Tape Subject Log
                          (rev. Oct-06)

             -Appeal to public
    -Health program
        -McGovern's proposal
        -White House program

Tax reform programs
    -Options
         -The President’s instructions
    -Equity
    -Old-age tax reform
    -Progressivity effect
         -Stein
         -Connally’s view
              -Ways and Means Committee
              -American taxpayer
         -Public opinion
    -Property tax
         -Administration's pledge
              -Old age tax relief
    -Cutting of expenditures
    -Personal income tax
    -Progressivity effect in taxes
         -Shultz’s view
         -Influence on tax reform
    -Charlie Lawles
         -the President’s view
         -Duke University
         -Tax philosophy
         -Income tax to achieve social changes
    -Grant approach
    -Goals of tax reform program
         -Government's share of Gross National Product [GNP]
         -Societal shifts
         -Tax system attributes
              -Incentives
              -Effect of changes on society
         -Working papers
         -Treasury Department
    -Deadlines for reform proposals
         -Presidential election
         -Property tax
              -Old-age tax relief
         -Tax form simplification
                            14

    NIXON PRESIDENTIAL MATERIALS STAFF

                    Tape Subject Log
                      (rev. Oct-06)

          -Timing
          -Deductions
          -Effect on public
          -Short form completion
          -Old-age tax forms
          -Accountants
-Avoidance of tax
-Long-range goals
     -Fiscal dividend
          -Stein’s view
          -Public perception
-Business Week
-Journal of Certified Public Accountants
-American Economists' Association
-Public perception
-Proper time for public proposal
-Increase in revenues
     -Increased returns for taxpayers
     -Budget deficit
     -Progressivity effect
-Tax reform program
     -Congress
     -Compared to tax increase
     -Aid to senior citizens
     -Phase-out of benefits
          -Income levels
          -The President's constituency
               -Machinists
               -Automobile workers
          -Homeowners compared to renters
               -Benefits
               -Comparisons
               -Administrative problems
               -Use of standard deductions
               -Deduction for renters
-Renters program
     -Presentation to Congress
-Phase-out of benefits
     -Income levels
     -Old-age benefits
          -Standard amount
     -Credit for taxpayer
          -First-year goals
                           15

    NIXON PRESIDENTIAL MATERIALS STAFF

                   Tape Subject Log
                     (rev. Oct-06)

-Proposals for reform
    -Timing
    -Possible modifications
-Old-age tax relief
    -Pro-rated with age
    -Early retirement
    -Social Security system
    -Navy retirement age
    -Tax credit
    -Senior citizens’ opinion
         -Arthur S. Flemming
    -Number of people affected
-Overall program
    -Need for consistency in proposals
    -Congress's effect
    -Credit for the White House
-Old-age tax relief
    -Flexibility of age requirement
    -Credit approach compared with grant approach
         -Shultz’s view
         -The President’s view
         -Political effect
    -Advisory Commitee on Intergovernmental
     Relations [ACIR] report
    -Congress's approach
    -ACIR report
         -Study of taxation's effect
    -Need for solution
    -William D. McElroy
    -ACIR report
    -Relief from property tax for seniors
    -Appeal to young people
         -Republican National Convention
    -VAT program
         -Administration's policy
         -Efforts
         -ACIR
-VAT
    -Public stance
    -Efforts by administration
-Administration's public stance on tax increase
    -New tax proposals
    -VAT
                             16

    NIXON PRESIDENTIAL MATERIALS STAFF

                     Tape Subject Log
                       (rev. Oct-06)

    -Chairman of ACIR [William R. MacDougall]
         -Progress report on taxes
    -Tax plan
         -John Kenneth Galbraith
              -New tax program by the President
-The President's stand on tax increase
    -Described
    -ACIR
    -Past policies
-Equity
-Tax preferences
    -Tax revisions
    -Reduction of rates
    -Alternative proposals
         -Minimum tax
              -Timetable for presentation
                   -1972 election
                   -The President’s previous press conference
-Congressional proposals
    -Tax reform discussions
    -Administration's counter proposals
    -Mills
-Administration proposals
    -Ways and Means Committee
         -House tax proposals
    -Timing of White House announcements
    -Capital gains tax
         -Inflation premium clause
         -Effect on taxpayers
         -Campaign contributors
         -Congress's view
         -McGovern's campaign proposals
-Capital gains tax
    -Homeowners
         -Advantages of capital gains
         -Political effect
         -Senior citizens
    -McGovern rebuttal
-VAT
    -Connally’s view
    -The President's policy
    -Public's expectation
         -Property tax reform
                                              17

                       NIXON PRESIDENTIAL MATERIALS STAFF

                                       Tape Subject Log
                                         (rev. Oct-06)

                       -Opposition to tax increase
                       -ACIR position
                          -Sales tax
                          -Effect on local revenue
                          -Media coverage
                               -New York Times

              Revenue sharing bill
                 -Shultz’s recent conversation with Ehrlichman
                 -Retroactivity
                 -Administrative procedures
                     -Federal government-recipient ratio
                 -Treasury Department opinion
                     -Shultz’s view
                     -Timetable for fund allotment
                     -Governors
                     -Mayors
                     -Option for releasing funds
                          -The President’s view

              Parting remarks
                   -Paper

              The President's schedule
                  -Saturday appointment
                  -Trip to Texas

              Connally's schedule

Ehrlichman, et al., left at 5:59 pm.