On April 26, 1973, President Richard M. Nixon, George P. Shultz, John D. Ehrlichman, and Stephen B. Bull met in the Oval Office of the White House from 10:24 am to 11:20 am. The Oval Office taping system captured this recording, which is known as Conversation 905-010 of the White House Tapes.
Transcript (AI-Generated)This transcript was generated automatically by AI and has not been reviewed for accuracy. Do not cite this transcript as authoritative. Consult the Finding Aid above for verified information.
George, sorry to keep you waiting.
All right, President.
It was pretty good, thank you.
Well, let's see.
Sit over here if you like.
All right.
Good news.
John, how are you?
I read your whole...
I saw that, and on the... Do you have any objections?
No, there's no... You see him, John?
Yes.
I think that it gives us a good posture to talk with the committee.
And basically, the big thing is, will people want to reduce those top rates?
And as I understand our posture, it is that well,
We're not proposing that.
If the Congress wants to propose that, then if you do it, that has its implications for capital gains and this and that and the other.
And we'll work with them on those implications.
But the plan rates for individual income?
Well, as you know, the earned income rate is 50%.
The earned income rate, the top rate is 50%.
The rate on interest and dividend income is 77%, I think.
And it is that high rate that causes all these problems with capital gains and so on, and causes all the tax shelter-type problems.
So if you brought it down to 50%, then you've got a whole new world opened up to you.
And that's what's been proposed by a lot of people.
But my...
reading is that the position we're in, as well, if that is what they want to do, all right.
Well, let the Congress believe me.
Let the Congress do that and get the credit and order.
The credit and order, as far as we're concerned, negotiated.
It's part of the package, and we'll sort of take it.
But from a political standpoint, there ain't a damn thing in it for us to read on.
The one thing that our staff is aware of is the tendency of some of your folks in the tax department over there to work toward a compromise which would, in effect, increase the tax on capital gains.
You know, it's a complicated aspect of it.
Yeah, I don't think they've understood it right.
Yeah, that's why I marked it there on that thing there.
That is something that if they're going to increase the gaming thing on capital gains, let the Congress get the credit and or the blame, but don't us propose it.
I understand that.
You can negotiate as a whole, Congressman.
Do you agree, Jonathan?
Yeah.
I mean, it's like the last of the tax bill of 69.
There are a lot of horrible things in there, but let's get up there and say we advocate
an increase in the tax of capital gains or we advocate increase in the uh you know it's this whole crap in the state tax and the rest i have great doubts about that i am i'm totally opposed to doing anything that's going to reduce contributions to private institutions because i think they're the lifeblood of our diverse system i'm totally opposed to that i don't agree
The Mills argument is the argument of the big government people.
They think the government should do everything and private institutions should do nothing.
I'm also totally opposed to any kind of a situation.
I realize it's state taxes and so forth that are very difficult to be able to talk about.
But my feeling is, like the British experience and the experience of other countries,
that the destruction of these things, the incentives to build them, and so on and so on, serves only an egalitarian, you know, size.
And as far as I'm concerned, I'm simply not going to do it.
Now, most things, therefore, I'm just going to suggest to you,
to do those things.
You should make all the arguments against it you can.
You know what I mean?
And your position is what?
Where?
Well, but don't even tell your most tax people what your position is, or leave out the next day from Treasury.
Are you ready to take their back that position?
Is this or that better?
This is just for George Shultz to have in mind.
That's why I said I was going to Shultz on a couple of these things.
How does that sound to you, John?
I think, as George and I talked about this, where we went wrong in 69 was that we were flanked by Treasury staff, a trucker, and they tried to maybe throw people in the water, I'm not sure.
But you just have to watch these guys on the hawk.
This is like when there's a bitchin' heat when that Ways and Means Committee starts in on the tax reform.
And every guy's got his own thing.
In fact, I want you to take, in every one of these instances, the hard position.
The president opposes the change in state taxes.
The president opposes the change in state taxes.
That's the line you said there was a presidential decision.
Well, what can we do about it?
And so forth.
Well, that's up to the committee to discuss it and so forth.
But that's our position.
We oppose it for various reasons.
You could argue bigger support on it.
Now, I'm just going to be telling you, the bill comes down here with that stuff in it.
We'll sign it.
But don't get in the position where we go up there and give those guys, your treasurer guys, the guys that say, well, I'll just let them go back in the dark corners around there and have a couple scotches and say, all right, we'll make a deal.
That's what I'm going to be saying.
Well, I will see to it that in these executive sessions,
Either Bill Simon or I are there, and we'll have our technical people there, but we won't leave them as the marriages of that discussion.
On the simplification business, I think Lee Henkel and company have worked out a really interesting thing, starting with the tax form and making it simple and then seeing what legislative changes need to be made in order to
And Lee is a very good presenter, and I'm going to have him come to the Ways and Means Committee and present it very effective, and it will help him to do that.
There are a couple of things connected with the simplification proposal that I thought I wanted you to be just alert to in case they hadn't been drawn to your attention.
that in the so-called miscellaneous deduction that we need to have in which you bundle up certain things and give a deduction, we include the elimination of the dividend exclusion.
That is one of the items that is now in the law which gets eliminated and included in effect in this miscellaneous deduction.
And we're in favor of that.
It simplifies matters and people.
It's equitable and so forth.
The New York Stock Exchange will scream bloody murder because they think this little reduction helps stimulate purchases of stock by small investors, and they're suffering badly.
So we'll hear from them quite adversely on this aspect of the proposal.
And I just wanted to be sure you were aware of that.
How much is it really worth it?
Well, you're doing this with all kinds of these odds and ends of special favorite deductions, a lot of other things that are all sorts of stuff.
All right, good.
And it wouldn't stick out when we sort it out.
OK, we'll do it.
We'll do it.
The other item that is
might cost us a fair amount of money, like $300, $400, $500 million, has to do with the retirement income credit.
As the situation is now, there is a $1,500 retirement income credit, and a person must deduct from that credit any earnings and also Social Security payments.
The idea of it
was to put people who don't receive Social Security payments, like firemen, policemen, federal government employees who are retired, in the same tax position, more or less, as somebody who does receive Social Security, because Social Security is tax-free.
Now, the proposal is to eliminate the earnings deduction, so that you take your $1,500, you deduct your Social Security from it, and that's it.
You don't deduct your earnings.
and to change the eligibility so that instead of just declaring you're retired, you just have an age.
Age 65 is what we propose.
It'll probably come down to 62.
But if you find eligibility for this $1,500 simply by age, and everybody over 65 gets it.
Now, the reason why this may cost us
a fair amount is that there is a real prospect that the $1,500 amount will be increased because Social Security has increased, you see.
And they want to increase the $1,500, and some are proposing it go as high as $3,000 or so.
The higher it goes, the more this costs.
Now, there are a lot of permutations
Well, we think that this again is a good simplification.
It affects older people particularly.
It will cost us something.
We can't be sure exactly how much because of this wild card off to the side.
And we think it's worth doing, but we just want you to realize that the cost could be more substantial than the proposal as such.
But we think, in many ways, the most interesting thing in our whole tax package is this business of making the form simple.
That will affect a lot of people, and we should go all out to try to make that good.
Is that right, that we can't cost more than $500 million?
The maximum we think it could cost is $800 million, just from this proposal.
Wouldn't that be then an even parity with Social Security?
They came up to about $3,000.
That would be $3,200 they're proposing.
And that's parity.
That's sort of parity.
That gets up to the maximum under Social Security, and would mean some Social Security people would be able to claim this credit.
But it stayed at $1,500 for quite a while.
The biggest group who benefit from it are federal government employees.
About a million and a half federal employees.
1.6.
Well, they're not the only ones.
municipal governments have their own retirement plans and are not in Social Security, but more and more they're swinging over to Social Security.
Just going back to the estate and gift and so on, our intention now in the testimony is just, again, not to say anything about it.
Would you rather have us come on hard and say we're opposed to any change, or is
See, what we're now discussing is we are proposing various things, quite a few things.
My view is to propose the things that we have resolved and agreed on.
Then I can say that it's faith and gift that these are matters that we know the committee is very interested in.
We have a very diverse opinions that have been submitted.
And we are not prepared, and we do not believe that we are not prepared at this time to advocate in this position.
Okay, and say that explicitly.
Say that explicitly.
I look out on you, John.
I'd like to say, as George C. Davis has stated, the Congress is the one to do the talking on that, versus the Congress.
The Congress, we suggest, we welcome your participation.
consultation with the Congress and so forth, but that the administration has not reached it.
We have no recommendations to make in this field.
We feel that this is a matter, however, that could and should be discussed in the appropriate space.
What about this consolidation, George, of a state gift?
Is that so?
Is that so obvious and sort of generally accepted now that we ought to join in that?
Or is that still controversial?
Well, everything is...
If that's controversial, the fact that the two things are separate enables wealthy people to give more to their children than would be the case if you combined them.
But it's...
It is hard to argue that you shouldn't combine them.
Intellectually, it's difficult to make that argument, just as I think it's difficult to argue that you shouldn't treat capital gains at death the same way you treat them at life, or in some manner deal with that problem.
It's a hard position to maintain, although I'm quite prepared to maintain it.
feather this in in such a way that people have time to plan or change their estate plans.
Oh, yeah.
The transition rules can be worked out that are on all of these things.
That are equitable.
From a political standpoint, that's the most important thing to us, would be the transitional aspects of all of this.
The fight for a transition that gives us the least amount of heat
You don't have guys like Scaife and others coming in here just knocking the walls down if all of a sudden, overnight, there's going to be rules.
Because those are the kind of guys that spend a lifetime constructing a lab.
Right.
Well, I would say that the... That's among the different things that one talks about here.
That unification of the state to give tax rates is...
something that people think ought to be done pretty broadly.
The liberalization of the marital reduction, which we talked about, really helps the person with an estate of, say, $200,000, $300,000.
It doesn't make any difference to the wealthy person and is a way of, in effect, changing the rate schedule insofar as it affects people like that.
The generation-skipping transfer business, that has an air of mystique and mystery, and that's where all the tax lawyers play around and love to do.
And that's one that we have—we made a proposal to you, which you rejected.
And I think it's—that's wildly controversial, and that's a good one to stay away from.
I agree with your call on that.
the capital gains of debt, the American Bankers Association has a proposal there, and there are lots of other proposals that people on the whole would like to leave that alone, but they find it so difficult to argue that you shouldn't tax capital gains at debt that they have been looking around for formalizes.
How do we do that?
Do you negotiate on that?
It says here, George, use your judgment and bargain hard across this set.
If we...
If we...
Yeah, I think Mills and the committee have a full head of steam up on that, don't they?
And you can't just go in there and say, no, I'm not sure of that.
But I would say that this is a matter, and I would say that it's a stated gift, and this is a matter that we have not been all in full position on.
We'd like to get the views of the committee, and then we'll continue the discussions.
But the transition, it seems to me, is where the politics is now.
Well, suppose we said something like that, and that we recognize sort of the key ingredients here are capital gains at death, the rates, the marital deductions, the unification, and the generation skipping trust.
Those are the things people talk about, that they're interrelated.
But these are matters that are all, that are transitioning to all these stages, and it is needed.
They're all matters that now need the most intensive study and consultation between the Congresses.
It's a matter that typically lends itself to this kind of approach.
So we're going to have a meeting with the bipartisan leaders on taxes, aren't we?
No, sir.
You talked about that at one of the meetings, and then we sent you a note.
You let down, so that's powerful.
Okay.
How would that be?
It says bipartisan leadership here.
830, would that be on the 1st of May?
We didn't want that to be.
Well, it wasn't.
I think we agreed that it wouldn't be for this purpose.
Oh, was there not?
I don't know what they're working on.
Just be sure.
I want to check if it is for this purpose.
I don't see if it is for this purpose.
You don't want to tax me.
I can see from the basis of this, good God, we'll get to all that.
Well, Mills is very, his strategy is, I would say, it says it by far, the leadership meeting, is that supposed to be on taxes?
Is that what you're asking?
Yes, sir.
I'm sorry, that was for a name.
For a name.
Right, for a name.
I'm good with that.
Yeah, leave it on.
I'm afraid we haven't got taxes.
You're out.
You're safe on that.
Well, Mills has us at the end of his tax hearings.
and we'll wind up either in one or two days.
Then we move on to trade, and we won't come back to taxes until the fall sometime when he'll go into executive session.
What he thinks is going to happen is that we'll wind up with some kind of a bill out of ways and means and an open or partially open rule, and then it's going to be mayhem in the House
And he doesn't have much hope that there'll be a reasonable tax bill.
And he thinks that what may happen is a bill that you'll have to veto.
That is, it'll be so bad, and he'll help you sustain the veto.
But he doesn't.
In other words, he isn't very optimistic that we're going to...
But anyway, he's impressed.
But from our standpoint, it seems to me, we want to stake out some high ground of things that we're for, like the things you mentioned.
That's our program.
Oh, yeah.
I mean, in the politics, simplification is not the end of the world for a lot of people.
But in terms of the politics generally, just remember to keep federal folks' deduction in that, regulate the schools, and change the point that this must be a responsible tax code.
If it's made at Christmas tree,
and they load too many arguments on the tree, the whole tree will break down.
I think you could even use that advice and say, now look, this has got to be a tax bill that should zero in on some specific things that are needed to be done.
Also, your minimum deduction is not good politics.
minimum tax.
That's good politics.
But my point is, I'm beyond that.
If this becomes now a Christmas tree with too many ornaments on it, it'll break the tree down.
And we are not going to, in order to get good things, the Congress should not approve and the President will not sign
a bill that has too many bad incidents, which is the decision we had in 69 made in the reverse of this time.
We're going to make it flat out.
Right, Governor?
I think you have to do that.
I think that would strengthen Turner's hand.
I think you should tell him that.
If it's loaded down with a lot of arguments, that the whole thing is going to come down.
And get Mills to know that I'll stand for a responsible tax bill.
Maybe that'll help him on some other rules.
Yeah, it'll probably will.
Well, I think on that part of it, I'm pretty well set.
And we'll take that posture on the estate and gift, which is recognizing the elements of the problem, willing to be forthcoming.
But we want to work with the committee.
We're not making a specific recommendation.
But we're also against fouling up
the incentives of people to accumulate in the state and so on.
I have a couple of other things in the tax area.
And then, just to mention, the way we're moving on the Phase 3 business and getting ready for next Monday and whatever the Congress does.
Are we going to have a meeting Saturday morning?
Yes, we are.
Let's do it.
But I wanted to give you a little... Sure.
...adventurification of the thinking.
Who even wants a meeting?
Dunlop doesn't pray to the Congress.
Well, I think since Barry's attitude is so critical on these things, that if you're willing to... Oh, I'm willing to.
You call the signals.
Okay.
Mills has proposed, this gets over in the foreign tax, but Mills has proposed that we eliminate the withholding, which we do by law, of
tax on interest and dividends paid to foreigners.
In other words, somebody from another country buys stock in the US, dividend is paid, and we withhold 30% unless we have a tax treaty with that country.
Mills has proposed that we eliminate that in the interest of attracting capital to the US.
This is a proposal we made at the time we were having our international upsets.
It has a fair amount of support.
and it would help attract capital to the U.S.
There are several downsides to it.
There is the fact that we use this as a device in our negotiations with other countries to develop a tax treaty with them that has its effect on how our citizens are treated abroad.
It has a problem in it that if we
deductive if we force a U.S. citizen to pay a tax on a dividend and we don't force a foreign citizen of another country to pay a tax on a dividend from the same country.
That it is a, it invites the U.S. citizen to open a numbered account in Switzerland or something and purchase his stock that way and escape the tax.
And we would have to put some very tough rules in on identifying who it is that's bought this stock and so forth in order to implement it.
The third thing that it has going against it is the argument that why should we give a break to a foreigner that we don't give to our own citizens?
We make our citizens pay a tax.
We don't make the foreigner pay a tax.
What the hell?
And that argument would be strongly advanced.
Now Mills has put it forward.
It's something that's been debated back and forth over the years.
Some of these points can be met.
And on the last one, you just say, well, if you want investment, this is one way to get it.
Our group that discusses these things is sort of divided on, although nobody feels terribly strongly.
As something with Mills, if he wants to push it,
My inclination would be to say, well, Mr. Chairman, if you feel that this is that good, we'll go along with you.
It's your proposal.
We're not making the rest of the money.
This is one that is too damn complicated for most people to understand.
But let the monkey be on Mills' back.
Take the leadership.
We will not oppose it.
OK. Now, finally, on the tax area, we now believe that in fiscal 73,
Our receipts will be on the order of $6 billion more than was estimated when the budget went up, and in fiscal 74, probably something similar.
Now, in terms of the yield of our tax system and in terms of the budget deficit and inflation and so on, that's an important fact.
is widely known in the market that that's so.
We just had a big refinancing we announced yesterday that met with the usual run of bankers and securities people, and we do.
And they all have their estimates, and they all think on the whole, and our budget picture is even better than that.
But it is not a secret or anything.
People know it.
And we...
need at least to put forward our re-estimates of receipts sometime soon we don't need to re-estimate our outlays but we need to put the receipts forward and i and there are two options it seems to me one is that i can just put it out in the course of this testimony and on monday so it's an item that our receipts are higher and to argue the budget case
And so on.
Or as part of any statement you make on Phase 3 and the Economic Stabilization Act and so forth, that's an item that you could mention in there.
But this is something that we ought to announce pretty soon, and we could do it either way.
Do you have any thoughts on that?
Well, on Monday, the Congress will pass, or not pass, an extension of the Act.
Now, maybe they'll just leave it in limbo for a while.
But anyway, Monday is the date when that act expires.
So the following day, you might be, one, in a position of signing the bill, and then you'd want to make some statement as you sign the bill about our efforts against inflation and so on.
Or, two, you might be in a position of not having any
economic stabilization program, and either then you would rail up the Congress to get going and pass it, or say, well, all right, if they don't want to—we think they've made a mistake, and we had a program that was forceful and so on, but since they've decided not to do it, we're going to, however, continue the fight against inflation on a voluntary basis, and we'll try to
We expect business to cooperate, labor to cooperate.
We repeat these various committees on food and so forth that we have.
And I want to again emphasize the importance of the budget.
Our receipts are higher, and we are making progress against the deficit.
And we have a list of things that could be said under those circumstances.
So that is a context in which
saying something about the receipts is tonight i mean it's not news in the sense that sophisticated people know it but it's news that it would be officially announced when would you testify monday is the day my tax testimony is monday i think uh basically uh probably john john i don't think it's enough
Why waste your tax testimony?
Maybe it's worth just putting out as a separate story.
I mean, you might as well get two ounces out of it.
It's basically two stories, put your tax testimony in one, and then you show us, rather than me, perhaps, then you put out the next day, we have a re-estimate, a sheet of receipts, this and that, but we still have a deficit, we still got a hell of a problem.
Would your testimony, if it included this,
I don't think so.
I don't.
That is too late.
I don't think so.
I don't think so.
I'm likely to get questions on this, I think.
Well, what you do is say, yes, there has been an increase in receipts, and we're now evaluating when I'm going to have a statement later in the week on it.
That's what I'd say.
Okay.
That's the way I think.
I think we should run back to a separate story.
You've got a good story.
I mean, it's a sort of a half-good story.
It poses problems.
But don't you agree, John, to put it out and say, well, the receipts are out?
You had some other good news, didn't you?
Yeah, well, we have some very good price figures this month.
Our deficit is down in this month to $50 million.
It's been running on the order of $300 million, $400 million, $500 million a month.
So we've had a big decline there.
So maybe we're getting somewhere, although there's
Lots of room for skepticism about an individual month's figures in the Council of Economic Advisers.
So that's one item.
Another item that's really pretty impressive is that since your energy message, and particularly the revised oil import program, we have had announcements of six new refineries.
intended to be built in the U.S.
Isn't that great.
And we haven't had any new ones announced since 1965.
So it really hasn't made a difference.
Also, that's the main jobs, right, John?
Right.
And supply and prices.
So something's going to happen for us.
A lot of things are going to happen.
The problem being that I'm not referring to the inflation problem in terms of the new orders, et cetera, et cetera, et cetera.
I'm watching these figures.
It's going too fast, and we need to slow it down.
Otherwise, it gets— What about your suggestion about
Well, I got—I sent in something on that.
We had that meeting here, and we wanted to hear about it and so on, and I sent that in.
Well, what I will—Herb Stein made a statement the other day that we were considering something in the area of taxes, and I've just had
raise all kinds of money right now he was very circumspect and what he was referring to was this proposal so what i said yesterday was that arthur burns had publicly proposed that there be
a variable investment tax credit.
And so naturally, Windburns makes that kind of statement.
We consider it and think about it.
But we have no present intention of offering anything of that kind.
The Mills is dedicated against it.
And the note that I got back from you
was that we shouldn't propose this if other, and we might try to get some other private people to propose it, and then there could be some discussion on it.
So that's the line I've been on.
It is unfortunate, I think, the comment that Herb made, because it has got people all visibly placing orders all of a sudden this week.
They know I'm going to take supply on Monday.
They think it's taxed down.
We're afraid.
Call me, and I'm absolutely probably indignant about it.
Well, Herb, we talked about it.
He's back.
The first place, he didn't say what they said he'd say.
The second place, it's very easy.
You can say anything at all about taxes.
That's right.
That's why you're getting up before the committee is a good thing.
It'll get a lot of people calmed down, a lot of people stirred up.
It will not have the people stirred up in the first place, for the most part.
Well, on the economic stabilization,
the path we're on is that if the act passes, we have some toughening up things in phase three, but no big deal.
We will make a big effort to make this program more visible as an administrative process, but the kind of statement that we've been working on follows the line we discussed here, that you compliment the Congress on not going for the
We go forward with this program, so that's the kind of recommendation that you'll be getting on Saturday.
Now, there's a terrific amount of sediment around the country, but a freeze or a rollback or something like that is what we need.
Mostly it comes from people who think it will be applied to somebody else and not to them.
Well, you really come down to it.
Labor wants to roll back or freeze prices.
Businessmen want to freeze wages.
Consumers simply want to freeze anything that affects their cost of living.
the old action types, DeWitt, Brinkley, Connolly, and all say, well, just do something.
You've got to have action rather than sit here.
It's just there in the psychology of the country.
It's very badly shaped and so forth and so on.
Now, prior to our meeting, let me just news a bit about that.
We've been around that track.
We've looked at all those options.
And every time we look at it, George, it comes back to the point that a rollback certainly, a freeze, and when Bert said one for 30 days, that's like, fine.
But a freeze for any length of time is a hell of a good 48-hour story, and a lousy even 48-day story.
And...
Now that's what it really gets down to in my view.
I would like to do something that is very positive and dramatic and say, by God, the President is taking the helm on this economic thing.
However, when you talk about the fact, well, let's get out and make a speech about how phrase three is going, that isn't going to send anybody anywhere.
I think we've got to do some things, I mean, say some things, show that we're acting, act in various ways, and we can talk about that exactly what we can do on the PR side.
Uh, I didn't deal with that labor management commission, because I didn't know anything about this, necessarily.
That's next week, isn't it?
That's come to, um, well, I think it's very good.
I want to meet with them, have a good heart-to-heart talk.
Uh, the, uh, but when you come right down to it, George, there isn't a damn thing that'll work.
That's, now that's my, I, uh, I think I've thought it through very well, John.
It's been very helpful.
Because he's an activist type, too.
But John, do you have any other view at this point?
You came down on the side of the, well, the top of the...
He are.
He are.
Yeah, he are.
He's very important.
Somebody like Rudy or someone like your fellow ought to get in this and map a campaign and there ought to be some sloganizing and some fairly...
What do you say to me?
Yeah, I will.
Aggressive and merchandising of this thing.
Right.
Now, the other thing that I think we have to have in mind, too, is that...
I think that...
I believe, and I know the Congress didn't know it, but I'm not going to...
But I believe that last month was a peak.
I mean, that 10% deadline.
Well, we're seeing stories now, President, where people are writing, hey, look, prices aren't going up so fast right now.
And that's true of the wholesale.
Spot prices aren't going up so fast.
My point is, where am I?
I really feel this, John, very strongly.
And then, for example, while we used to think that when they went up six-tenths of a percent, that that was a hell of a thing, let's suppose that next month, instead of going up ten, at ten percent, or whatever it is, or whatever that number was, what was it, ten percent?
Well, for you, I had to raise my CBI.
About ten percent, yeah.
CBI was 10.8 per month.
0.8 in a month, so that's about it.
0.8 in a month a year.
All right, 0.8 in a month.
We used to think 0.6, but suppose it comes back at 0.6.
It's going to come down some.
It's bound to the ceiling, not even the meets.
It's going to come down to 0.6.
Well, that means that maybe the dam problem is not at all that insightful.
What do you think, John?
Well, I'm an economist.
I think an awful lot of this is in the minds of the holders.
We've had an interesting...
I mean, the people, the consumer, the average citizen who thinks controls are off, that Phase 3 means the end of controls.
And I think you can sum up the proposition that Phase 3 has controls.
I think it really can be done.
We continue to have very good luck in the collective bargaining front.
And most recently, we've just had the rubber settlement that everybody's been afraid of.
It came out all right.
We're not saying anything about it because it still has to be ratified, but I think that we can take it.
I wonder if a letter, a precedent to all editors regarding phase three.
We've tried to get out and work something out about it here at the television press, but I'm really talking about those
get it out.
I don't know.
I don't know.
George can talk on it.
Stein can talk on it.
But they usually hold it up.
You said Baruti can do something about it.
What do you think Baruti can do?
Well, what I was thinking is there ought to be a merchandising manager for Faith Street who really lays out the program.
of even the advertising council could help him.
There are all kinds of ways to get the word out.
If you've got a story, you can get them.
And I just don't think we've been too moderate in our work.
I think we could have done more.
We've also been
in a position where the act has been under consideration in the Congress.
The prices have been going up with food particularly very fast.
Let me say this.
The day after the economic stabilization, if it passes, then I think...
There must be a presidential statement, which I would do.
I think it should be a written sign statement, however, rather than one that I get out and address the nation on.
Because isn't that exciting, unfortunately?
But a written sign statement.
We are doing this.
We are doing this.
We are doing this.
We are doing this.
Controls are still in the courts.
and so forth, and they will be, and I have directed the Constable, the Council, the Secretary, the Treasurer, and so forth, to redouble their efforts in every area to see this effect.
And maybe we redouble the team, say, redouble the number of people, you know what I mean?
Anything they can do to do something more to enforce faith-free.
The second point is that the order of Congress doesn't pass.
Now, you can, on the one hand, say, please, Congress, pass it.
On the other hand, you can say that Congress has acted irresponsibly in this case, not passing something.
You know what I mean?
Or you can pass it to the veto.
We're going to veto whatever.
They're going to have to sign it to the Senate.
But they may not pass anything.
That's your point.
They may get hung up between the Senate that wants rent control and the House that doesn't want the stuff that's in the Congress.
You can report and just seal me.
All right.
Well, then we can't, we'll have to wait a little while while we still do.
I think we should say to you, if they don't act that way, that we are, that the statement should get out from the White House.
All, that this is the congressional impasse, but that all, all controls remain in force.
And, and, you can say this, that if any crisis runs during the period before the Congress does act,
I mean, we should say that.
You could take that approach, or you could take the approach, well, all right, and they don't want controls, but we will put in a voluntary program.
Yeah, yeah, I mean, no, but I'm just assuming that they don't want, I'm assuming the fact that you may have a situation where there is a clear indication that the Congress is not going to have it.
it may be a situation where they get an impasse and then spend four or five or six days in conference and eventually see my client and that that is the place where we've got to take a take a lot of we've got to wait for the congress but anyway we are going to continue everything remains in force unless until the congress act then if the congress doesn't act take it off flat out say this is too bad and we therefore are going forward with a stepped up system of
I've called in the major business leaders, and I've called in the major labor leaders, and we are—we take every action that we can to deal with the inflation, and we're going to redouble our efforts on the budget.
Yes.
Yes.
Yes.
Yes.
Yes.
This is a deceptively, as far as our battle against inflation is not lost because of this Congress.
We now are forced to take another road, and that road will succeed too.
And so to unlock the cost of the council, I ordered it to stay.
In fact, we are going to continue to call in the major businesses and so forth and so on and urge to restrain them.
I don't know, John, what's your line on that?
Well, I think that the great leaders are going to have to tell us what will work here, what has a chance of working, and then combine that with some of these appeals and so on.
I keep thinking about old Harry Truman and the rail strike.
That was at a time when his fortunes were low.
And he seized that, and to the great disadvantage of the Brotherhoods, marched up the hill and raised a lot of hell and made this a great cause, and it became kind of a rallying point.
We loved for a while.
Bob passed it up and said, hey, what is this?
Some kind of a potato chip?
You're going to never have the iron.
He showed emotion.
He showed leadership.
And it wasn't a rowdy thing.
It only lasted about four days.
And then they went back to work.
They caved.
My history may be wrong, but it seems to me that they're caving.
Because on a saleable chance here, for you to be on the side of a consumer and say, man, I'm sorry.
Right.
And it's unconscionable, unforgivable.
In other words, it was one of the days to put the money on their back without emulation.
Yeah.
and raise some hell about them.
I mean, just stamp around.
Make a word starter of a speech someplace and just really jim the thing.
They don't have to be involved.
Well, maybe.
Or if you go somewhere and make a speech that's carried or, you know, and you say a few things that are rather extreme and, you know, that's it.
Another thing.
I'm afraid the best thing to do is to hold a law office in that case.
Well, maybe you might find some consumer group someplace that's meeting or, you know, something like that.
You wouldn't want to do the Chamber of Commerce, for example.
No, you'd have to align yourself with a little guy.
I think.
He's got a good point.
We just may raise that with the Congress, and the Congress doesn't act, at least we've asked them to act.
In the meantime, the whole thing probably didn't work.
Well, we can put in a system.
We've got to fight it, but I can't fight this alone.
the president needs the tools to fight inflation well you could not believe it you can say here's a whole sector of the economy that's doing their part in collective bargaining they're holding the line over here and we're holding the line in government and now the congress is going to give us the tools to do the rest of the job
Very good point.
What I mean is, what you're doing is putting the line there on the Congress, and the Congress has put the damn blame on the inflation and chips of the President's White House, at least he's on the side of the folks.
Then we perceive the best we can.
Look, what we know in this room, what we know in this room, what all of the real sophisticates know really is
that we ought to get the hell out of the wage price control business.
But we also know, or believe we know, that if we do get out of it, that if one of us is going to be painful for a while, the pressures will come easier.
Because, in other words, the market is going to be making it worse.
Now that's really what I believe, John.
You know, I've always believed that.
When people are no longer afraid that there might be a freeze because no one can put one on, then some of this anticipatory pricing would pass out.
I think you've been along with that.
I think in political terms, at least as I have tried to think about it, I've tried to say to myself, well, put yourself a year from now or so.
we have taken a fair bulge from undoing some things.
And then if we tighten up again, will we have another bulge a year from now when we go through the same period?
And aren't we better to take our lumps now than to take them a year from now as we get them closer to the next election?
That's my opinion.
I think if we met for an hour and we went over these things and we sat down and we would
be able to prepare material for you for the various contingencies.
We'll talk about the different contingencies and the three different laws.
Because that's the problem.
Or as long as they aren't going to pass along.
Right.
And what are we going to do about that?
And also, a little, if you could have also, as a fourth thing, have at least somebody based on what John said, do a little planning about the PR of phase three.
Right, John?
That's for sure.
If there's anything else.
Well, good.
Good.
Good.
I wish you well.
Thank you, sir.
You know, Harry the Bear.
I've got to go.