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238 [Postal Strike] [II] [1 of 4]
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238 [Postal Strike] [II] [1 of 4]
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White House Staff Member and Office Files (Nixon Administration)
John D. Ehrlichman's Files
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DOCUMENT WITHDRAWAL RECORD [NIXON PROJECT]
DOCUMENT
DOCUMENT
NUMBER
TYPE
SUBJECT/TITLE OR CORRESPONDENTS
DATE
RESTRICTION
N-1
Memo
Colson to the File Re contact with
3/25/70
c(Nixon)
Rademacher
N-2
Memo
Colson to Ehrlichman Re: Radernacher/
3/25/70
c(Nixon)
Postal strike
N-1 reintegrated from Contested Tiles
on December 19, 200 6
FILE GROUP TITLE
BOX NUMBER
WHSF: Ehrlichman
33
FOLDER TITLE
Numerical subject File: 238 [Postal strike, 2 of 3 ]
RESTRICTION CODES
A. Release would violate a Federal statute or Agency Policy.
E. Release would disclose trade secrets or confidential commercial or
B. National security classified information.
financial information.
C. Pending or approved claim that release would violate an individual's
F. Release would disclose investigatory information compiled for law
rights.
enforcement purposes.
D. Release would constitute a clearly unwarranted invasion of privacy
G. Withdrawn and return private and personal material.
or a libel of a living person.
H. Withdrawn and returned non-historical material.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
NA FORM 1421 (4-85)
Reproduced at the Richard Nixon Presidential Library and Museum
DOCUMENT WITHDRAWAL RECORD [NIXON PROJECT]
DOCUMENT
DOCUMENT
NUMBER
TYPE
SUBJECT/TITLE OR CORRESPONDENTS
DATE
RESTRICTION
N-1
Memo
Colson to the File Re: contact with
3/25/70
C (Nixon)
[86]
Rademacher
N-2
Memo
Celson to Ehrlichman Re: Rademacher/
3/25/70
C (Nixon)
[87]
Postal strike
open 6/8/2009
FILE GROUP TITLE
BOX NUMBER
WASF: Ehrlichman
33
FOLDER TITLE
Numerical subject File: 238 [Postal strike, 2 of 3 ]
RESTRICTION CODES
A. Release would violate a Federal statute or Agency Policy.
E. Release would disclose trade secrets or confidential commercial or
B. National security classified information.
financial information.
C. Pending or approved claim that release would violate an individual's
F. Release would disclose investigatory information compiled for law
rights.
enforcement purposes.
D. Release would constitute a clearly unwarranted invasion of privacy
G. Withdrawn and return private and personal material.
or a libel of a living person.
H. Withdrawn and returned non-historical material.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
NA FORM 1421 (4-85)
Reproduced at the Richard Nixon Presidential Library and Museum
Presidential Materials Review Board
Review on Contested Documents
Collection: John D. Ehrlichman
Box Number:
33
Folder:
238 [Postal Strike 2 of 3]
Document
Disposition
86
Retain Open
87
Retain Close Invasion of Privacy Open 6/8/2009
Reproduced at the Richard Nixon Presidential Library and Museum
march Cabin 28 1970 WHITE Room house
WASHINGTON
0900
usery
Hodgron
Sec Sumez
Beount
Nelson
Hampton
E
Cashen
Jones
Keassen
Harlow
which am
Klein
Reproduced at the Richard Nixon Presidential Library and Museum
###############
Hadgron- THE WASHINGTON WHITE HOUSE
Inexperienced reg. for Union
all gou- wege
Reform
- - possib of union
table agreemit.
double cress after
very delicate next week
Monday - mág.
NPU
usery &
alliance
Kiason will see
today
- delicate - -
large #'s
Reproduced at the Richard Nixon Presidential Library and Museum
THE WHITE house
WASHINGTON
Chese unions
must Somehow be
included -
1
BU: posib by Mon
work This wee Kend
alliance: big Civ rts a
Amnessy =
"
Injune Consempt citarion - Judgent
21 union & NY
leaders , Eined
no
cans condone
Indiv. compassion-
Phose not leaders, no
crim punishment
Reproduced at the Richard Nixon Presidential Library and Museum
THE WHITE house
WASHINGTON
No fixed position-
amenty -
1
H Cashen
FAA were last nite
Categories
Jones
Comparability 5.75 6%
Close to
12% w/
compression. -
w/ retroactive adjustment
Part now, '69 comp = 5.75
Part later- -
across the board
Reproduced at the Richard Nixon Presidential Library and Museum
THE WHITE house
WASHINGTON
union = asking what The
committed to -
gor is already
mn
Teamster deadline = Tues 12pm
RR's - 4/7
1
in Cong-
- -mediaring
Mon- -
Mtq Mon-
- will prob
= =if Cong debys, will
postpose
have wildeats - -
4,300,000,000 @ 12%
buger: 5.4% for postal-
Reproduced at the Richard Nixon Presidential Library and Museum
THE WHITE HOUSE
WASHINGTON
Harlow - people
unsymp. w/
big raise-
= opposed to pul sers.
sfrikes - TT should
say So-
it's now in doweler-
= Talking about tax
dollars + postage-
country needs to
understand This 1
out of hand politically $
practically - weakness - a position of
Reproduced at the Richard Nixon Presidential Library and Museum
THE WHITE HOUSE
WASHINGTON
ShulFz disagrees -
Reproduced at the Richard Nixon Presidential Library and Museum
Bloud -
[3-27-70]
1
Groups-
5 days:
Meany repud 5 days
offer - counser offer
=
2 Mc ge = 1
Negot- -OK-
Confid 6%
2
Reform - locked into
his approach-
- Statt mig w/ Dave
Today- -
3
to CSC
use Hodgron - Ger reg. reports
Reproduced at the Richard Nixon Presidential Library and Museum
IT Stmts:
postal & 7ed Pay
Environmt T 1B/yrt
(1)
Volume Army". 4B 7/71
Deseg 1/2 bel
A Qualite Sch-
Budget over- . run
Need more -
options-
Pay- was mistake To delay To 12/20
Be realistic
Needs cant pay for
Reproduced at the Richard Nixon Presidential Library and Museum
TT BROUNT Ke@sen ZE
3-26-70
12
1245
1
any settlemit refroactive- -
Effect on 5 day neq. limit
Effect on public-
dunne
30 days to a final result
Deliberate pace -
2
II aware of needs
Degree of retroactivity
TT mois(s There be a settlem't
A fair settlem's
IT pers will do everything to
Men Kept part of bangain- -
get thru cang.
3
A package Postal
Rate classified / milit
Reform
B
4
Bear deal:
1- - 5.4% all gov. neiro to 1/0/70
2- Reform bill = coll. bang.
a K - addl increase
as once - 90 days
for PO only - -
Reproduced at the Richard Nixon Presidential Library and Museum
information
4
3-
5
Union went permit reform to be
pined-
6
TT: no 12% increase
Senate wont buy He HR 13000
F
7
Rate increase - 10 ¢ max.
B agrees
To adequately pay workers -
8
Bold when public Firred up-
Annesty
9
Pay for strike days:
TI: most people feel They gave up
& have been purished-
I can be very generous -
Give here - Take on other Rigs
B= disagree
Ted - Might encourage sherr to sFrike -
IT- We have troops- -
=\
10 Be quite generous ,
=
12% demand
Reproduced at the Richard Nixon Presidential Library and Museum
Fuid a way To do 12%
separate 1 other classif-
ag 10¢ + Reform- -
II will personally push is -
12% is in The ball park- -
BOOO is dead -
2
Reform
HR (Mcgee) S full of makes -
TT- we have to give too
Rates wages your of Cong-
will try to mysrove is over wk-end
There
13
workers slewed good fanth
we will two
Dts of A
14 Timing
15
TI personal interest
&
16 Klein - tough letter re
headline NY Times
"Segregasion"- -
Reproduced at the Richard Nixon Presidential Library and Museum
POST OFFICE DEPARTMENT
DATE:
March 26, 1970
REPLY TO
ATTN OF:
DAN:rg
SUBJECT:
Strategy for Pay and Amnesty
P.O. CL:
TO:
Postmaster General
Deputy Postmaster General
SANCTIONS
The options (various combinations and permutations of which are pos-
sible) are these:
1.
Criminal prosecutions against the ring leaders and, if desired, a
small, medium or large group of second echelon leaders (i.e.,
those who took an active part in picketing, who spoke vociferously
at union meetings, etc.)
2.
Adverse action charges leading to the dismissal from Federal
employment of the ring leaders, and, if desired, a small, medium
or large group of second echelon leaders.
3.
Civil actions against striking locals to recover compensatory
damages and, possibly, punitive damages.
4.
Withdrawal of recognition from locals that went on strike; this
automatically terminates the dues deduction for such locals.
5.
Unfair labor practice charges against the locals that went on
strike, with the dues we collect being paid into escrow pendente
lite; depending on future developments, the pot of money thus
accumulated would be available to pay subsequent court fines,
to be returned to the individual employees, or to be paid over to
the unions.
6.
Let everything remain in statu quo; the employees would receive
no pay for the time they were out, but there would be no other
penalties.
Reproduced at the Richard Nixon Presidential Library and Museum
7.
Pay all employees (or all except the ring leaders) for the time
they were out.
RECOMMENDATIONS
Options 1, 2 and 7 make no sense to me, for reasons with which you
are familiar. Option 5 -- the unfair labor practice charge, with dues
being held in escrow for an indeterminate time -- has the most appeal
for me at the moment, but some other form of economic sanction against
the striking locals might ultimately prove to be more desirable.
PAY/REFORM
It is crystal clear that the general public believes postal employees
ought to get a raise now. For the Administration to appear to be trying
to block a reasonable raise by refusing to consider any increase that
is not tied to postal reform would put us in an impossible position with
the public.
Senators McGee and Fong have long maintained that classified Federal
employees ought to get the same increase that postal employees get.
They were wrong before, but right now. The goal that we ought to have
in mind at this point is a general pay increase that does not appear to
give any undue preference to those who broke the law by going out on
strike.
One way or another -- by use of a Presidential veto if necessary - - we
can fend off a general 12% increase. Any general increase actually
enacted into legislation is bound to be too low to satisfy the postal
employees.
The way to take care of the postal employees, both now and in the
years to come, is for Congress to pass -- probably after the general
pay legislation has been enacted -- a good postal reform bill that
authorizes the Post Office Department to begin immediate negotiations
on the wage scales for the reformed postal system. The wages that will
be put into effect as a result of those negotiations can be justified by
reference to
(a) the increased operating efficiencies possible in a truly
reformed postal system, and
(b) the 8¢ stamp, and other postage rate
Reproduced at the Richard Nixon Presidential Library and Museum
increases, that should be tied to any postal reform legislation.
Realizing, as it now does, that postal pay is too low, the public would
now be prepared, I believe, to accept first class rate increases of
even greater magnitude than those we have been discussing. He might
grumble a little, but I think the man in the street would accept a 10¢
stamp; the impact of that kind of rate increase on some businesses would,
however, be catastrophic.
D.a.n.
David A. Nelson
Reproduced at the Richard Nixon Presidential Library and Museum
Drafts of message
on postal strike
oduced at the Richard Nixon Presidential Library and Mu
THE CHAIRMAN OF THE
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
April 3, 1970
VII S8
MEMORANDUM FOR JOHN EHRLICHMAN
I crossed the trail of a rumor that the detailed table
"Changes in the FY 1971 Budget" on page 7 of draft #3
of the proposed message may be dropped. This in my
judgment would be a mistake. There is going to be keen
concern about the details of this $3.4 billion change in
projected outlays (over $2 billion of which consists of
other matters than the pay raise). The best way to handle
the problem is to have the details right in the text of the
statement.
Daul Paul W. McCracken
Reproduced at the Richard Nixon Presidential Library and Museum
As a further step to assist the economy in making its
adjustments along a less inflationary course I am setting up a
Watchdog Committee. The functions of this Committee will be: to
assure that the actions and programs within the Government itself
are making their contribution to achieving a new stability in our
price-cost level; to report to me on programs for achieving stronger
gains in productivity; to analyze and report to me on factors under-
lying major wage and price decisions; and to conduct studies of the
relationship between concentration and distribution of economic
power and the possibility of achieving stronger gains in productivity
and a greater stability of the price-cost level.
Members of this Committee will consist be of the Secretaries
of the Treasury, Commerce, Labor, Agriculture, and Housing
and Urban Development, the Attorney General, the Chairman of
the Council of Economic Advisers, the Special Assistant to the
President for Consumer Affairs, and such others as may from
time to time be appropriate. The Chairman of the Council of
Economic Advisers will act as Chairman of this Cabinet Committee.
Reproduced at the Richard Nixon Presidential Library and Museum
THE WHITE HOUSE
WASHINGTON
April 2, 1970
MEMORANDUM FOR JOHN EHRLICHMAN
From: William E. Timmons
I cleared the postal-financial statement with Jerry
Ford who is in California.
John Byrnes is touring Florida. His staff & maid
said he couldn't be reached.
I'll brief Wilbur Mills and Byrnes' Ways & Means
counsel in the am.
Ken BeLieu is still trying to reach Senators Williams
and Griffin. He'll make a contact with Russell Long
in the manana.
Reproduced at the Richard Nixon Presidential Library and Museum
Ehrlichman: 4/2/70
Statem't
message or ?
Yesterday, the government negotiated a settlement
with its postal employees.
This settlement could not properly be made in isolation
from the needs of all Federal employees. In dealing with the
special needs of the postal workers, the government represent atives
took into account the context of the Federal government's
relations with its entire work force.
It should be noted that this negotiation took place only
after the postal work stoppages had ceased.
One who works as a government employee agrees not
to strike. But, concomitantly, the government has an obligation
to insure each of its employees fair treatment so long as
each lives up to his or her obligations.
The government is committed by law to a pay policy of
comparability; that is, pay levels should correspond to those
in business and industry. The agreed-upon government-wide
pay increase complies with this standard.
Reproduced at the Richard Nixon Presidential Library and Museum
-2-
This Administration is committed to a policy of pay-as-
you-go. I believe that we have an obligation to provide
revenues to meet the increased expenditures involved in
this settlement. This is only good business and it is
insurance against inflation.
Accordingly, I will send the Congress a message
as follows:
1. I propose that the Congress enact a pay increase
of 6% for all Federal employees, paid under statutory salary
systems, including members of the armed forces, retroactive
to the last pay period at the end of calendar 1969.
2. At the same time, I urge the Congress to take action
to reform the postal service. Had this action been taken
earlier, the postal work stoppage would have been averted.
The Congress must recognize the need to modernize
the postal system, to improve working conditions and to give
employees and management an effective medium for bargaining.
The proposed postal reform will be worked out by
April 10; I am sure the proposals will meet these needs.
Reproduced at the Richard Nixon Presidential Library and Museum
-3-
3. Immediately upon enactment of postal reform, the
process of collective bargaining will begin. In recognition
of improvements in postal operations, the results of such
bargaining will include an increase in wages of at least 8%
in addition to the government-wide increase.
4. It has also been agreed in negotiations this week that
the inequities created by the need to wait 21 years to move from
the entry to the top rate in a job classification should be
removed by reducing this to an 8-year period.
Postal revenues: To pay as we go for the postal salary increase
and to eliminate the current postal deficit of about $600 million,
I urge that the Congress raise first class postal rates to 10¢
for regular first class mail as soon as possible. This increase
will produce added revenues of approximately $2. 5 billion.
Concurrently, the subsidy we now pay to users of other
classes of mail should be ended, and those rates should be
increased in phased annual increments, starting with an
increase which will generate an additional $82 million in fiscal 1971.
Reproduced at the Richard Nixon Presidential Library and Museum
-4-
An adjustment in the schedule of fourth class rates
will also be sought to produce $100 million in revenues.
In all, I am proposing added postal revenues by Congressional
and administrative action of $1, 682, 000, 000. These revenues
are essential to meet the salary needs of postal workers,
to wipe out the postal deficit, and to contribute to the
efficiency of the postal system.
General revenues: To pay for the 6% increase to all government
workers, which will cost $1. 2 billion in fiscal 1970 and 1.3
billion additional over the $1. 2 billion already included in the
fiscal 1971 budget, I propose that the Congress consider
further actions which will result in modification of our 1971
budgetary program.
The Crossroads of Decision
At the beginning of my Administration I made the basic
decision that the Federal government must start to live within
its means. The long inflation that began after 1965 had its roots
in a string of unbalanced budgets capped by the $25 billion
deficit in FY 1968. To restore order in the economy the
Federal government's first responsibility was to restore order
in its own finances.
Reproduced at the Richard Nixon Presidential Library and Museum
-5- -
The tax program which I put before the Congress a year
ago called for a balanced set of reforms, at the same time
making provision for total revenues that would match the
prospective outlays.
Prospective revenues for FY 1971 in the tax bill that
finally reached my desk last December were more than
$3 billion below what my own recommendations a year
ago would have provided. I expressed my grave misgivings
about that revenue shortfall. I finally decided that, time having
run out for the last session of the Congress, there was no
alternative but to sign the bill and put before the Congress in
my Budget Message a program of expenditures consistent
with these reduced revenues.
That was done. It was an austere program. Important
programs were sharply curtailed or entirely eliminated. A
major omission was the overdue pay increases to Federal workers.
This tax bill has forced on the Federal government a level
of wage outlays that is inconsistent with any reasonable estimate
of wage level decisions in this session of the Congress.
Reproduced at the Richard Nixon Presidential Library and Museum
-6-
Yet I cannot and will not participate in an excursion
into fiscal irresponsibility. That would re-awaken
skepticism about our determination to quell inflation, just when
clear evidence of progress is in sight. And savings diverted
into financing a deficit mean reduced funds and resources for
housing, for State and local government projects, and for the
capital formation essential to our on-going productivity and
economic progress.
Therefore, I call upon the Congress and the Nation to face
the realities of our Federal budget. We must pay the bills
for the wages that we vote. We must pay just wages in government.
These involve more outlays than the revenues that last year's
tax bill would produce.
A pay-as-you-go approach shatters a favorite old shibboleth.
"Congresses do not increase revenues in an election year; voters
will not entertain a thought about new taxes as April 15
approaches. "
But I firmly believe, given the facts, the American people
will support the Congressmen with the courage to do what is
right.
Reproduced at the Richard Nixon Presidential Library and Museum
-7-
Putting the public interest first, it is right to build
confidence in the integrity of the dollar, which we will do
by redeeming our pledge of an anti-inflationary budget.
Putting the public interest first, it is right to insist
on a course of economic stability that will lead to price
stability, job stability, and a balanced use of our resources.
To face up to our responsibilities, here are my recommendations:
Added Revenues
The proposals contemplated by this message will
change the 1970 and the 1971 budget estimates as follows:
(In billions)
February
Revised
estimates
estimates
1970
1971
1970
1971
Receipts
199.4
202.1
199.4
206.3
Outlays
197.9
200.8
198.9
204.2
Surplus
1.5
1.3
+ 0.5
+ 2.1
Reproduced at the Richard Nixon Presidential Library and Museum
-8-
To meet these needs without contributing to inflation,
I propose the following revenue legislation which will neither
require extending the surtax nor raising income tax rates:
1. By accelerating collection from employers of
income and excise taxes withheld, some $1.0 billion will
be realized in FY 1971.
2. The 1971 budget forecasts the collection of $3.6
billion of estate and gift taxes in the coming fiscal year. I propose
to accelerate collection of these taxes, which would add as
much as $1.5 billion in receipts in fiscal 1971.
3. Leaded gasoline contributes heavily to air pollution.
I propose a tax on lead additives used in gasoline at a rate
equivalent to $3.00. per pound of lead, which at present rates
of use would yield approximately $1-1/2 billion. These taxes
will also make a major contribution to improving the quality of
our environment and the health of our people. Through this
tax on lead used in gasoline we will thus be giving an incentive for
reducing the use of a substance that may be harmful to health
in itself but which when used in automotive fuel shortens the
life of pollution abatement devices and stands in the way of
achieving a low pollution vehicle.
Reproduced at the Richard Nixon Presidential Library and Museum
-9-
4. As a result of the pay increases recommended in
this message, I estimate that about $180 million will return to the
government in personal income taxes.
The total of these added revenues to the fiscal 1971
budget would be about $4. 18 billion.
Within a few days, legislation will be prepared to achieve
the recommended wage increases, the reorganization of the
Post Office Department, the postal rate changes and the revenue
measures described.
I cannot stress too strongly my support of early adoption
of all of these inter-dependent and necessary actions. Each
will relate to and depend upon the others. I request the
Congress to act upon all, at once, to afford deserving employees
an equitable pay adjustment, to provide badly needed
reorganization to our postal service and to establish a sound
pay-as-you-go revenue program to support these needed
changes.
Reproduced at the Richard Nixon Presidential Library and Museum
-10- -
By adhering to sound principles, by being responsive
to the changing needs of our people, by being willing to
listen and to learn, and -- most important -- by being
courageous enough to take the right action at the right time
with the right motive, both the Congress and the Executive
Branch will inspire the peoples' confidence in government's
ability to manage the Nation's affairs.
((((
Reproduced at the Richard Nixon Presidential Library and Museum
Safire - April 2, 1970
3
DRAFT #A MESSAGE RE: POSTAL SETTLEMENT
NEW BUDGET REQUIREMENTS
FEDERAL LABOR RELATIONS
Today
Yesterday, the government negotiated a settlement with its
postal employees.
This settlement could not properly be made in isolation
from the needs of all Federal employees. In dealing with the
the government represensatives
special needs of the postal workers, we took into account the con-
text of the Federal government's relations with its entire work force.
Accordingly:
1. I propose that the Congress enact a pay increase of 6%
for all Federal employees, paid under statutory salary systems,
including members of the armed forces, retroactive to the last pay
period at the end of calendar 1969.
2. At the same time, I urge the Congress to take action on
my recommendations made last year to reform the postal service.
Had this action been taken earlier, the postal work stoppage would
have been averted.
The Congress must recognize the need to modernize the postal
system, to improve working conditions and to give employees and
management an effective medium for bargaining.
Reproduced at the Richard Nixon Presidential Library and Museum
-2-
My postal reform proposals meet these needs.
Immediately upon enactment of postal reform, the process
of collective bargaining will begin. In recognition of improvements
in postal operations, the results of such bargaining will include an
increase, in wages of at least 8% in addition to the government-wide
increase.
It has also been agreed in negotiations this week that the
inequities created by the need to wait 21 years to move from the
entry to the top rate in a job classification should be removed by
reducing this to an 8-year period.
To pay for the postal salary increase and to eliminate the
current postal deficit of about $600 million, I again urge that the
Congress raise first class postal rates to 7¢ for regular first class
mail as soon as possible. This increase will produce added revenues
of approximately $570 million in fiscal 1971.
Concurrently the subsidy we now pay to users of other classes
of mail should be ended, and those rates should be increased in phased
annual increments, starting with an increase which will generate an
additional $82 million in fiscal 1971.
In addition, I will direct the Post Office to take steps to institute
a new "fast first class" mail at 10¢ which is estimated to increase postal
revenues by about $400 million a year. An adjustment in the schedule
of fourth class rates will also be sought to produce $100 million in
revenues.
Reproduced at the Richard Nixon Presidential Library and Museum
-2-A -
In all, I am proposing, as was set forth in the 1971 Budget,
added postal revenues by Congressional and administrative action
of $1, 174, 000,000 These revenues are essential to meet the salary
needs of postal workers, to wipe out the postal deficit, and to
contribute to the efficiency of the postal system.
To pay for the 6% increase to all government workers, which
will cost $1.2 billion in fiscal 1970 and 1.3 billion additional over
the $1.2 billion already included in the fiscal 1971 budget and to
meet other urgent needs, I propose that the Congress consider a
modification of the fiscal 1971 budget.
Reproduced at the Richard Nixon Presidential Library and Museum
-3-
The Crossroads of Decision
At the beginning of my Administration I made the basic decision
that the Federal Government must start to live within its means. The
long inflation that began after 1965 had its roots in a string of un-
balanced budgets capped by the $25 billion deficit in FY 1968. To
restore order in the economy the Federal Government's first responsi-
bility was to restore order in its own finances.
The tax program which I put before the Congress a year ago
called for a balanced set of reforms, at the same time making pro-
vision for total revenues that would be consistent with prospective
outlays.
Prospective revenues for FY 1971 in the tax bill that finally
reached my desk last December were more than $5 billion below
what my own recommendations a year ago would have provided. I
expressed my grave misgivings about that $5 billion shortfall. I
finally decided that, time having run out for the last session of the
Congress, there was no alternative but to sign the bill and put
before the Congress in my Budget Message a program of expenditures
consistent with these reduced revenues.
That was done. It was an austere program. Important
programs were sharply curtailed or entirely eliminated. A major
the
omission was overdue pay increases to Federal workers.
^
Reproduced at the Richard Nixon Presidential Library and Museum
-4-
This tax bill has forced on the Federal Government a level
of outlays that is inconsistent with ongoing programs and with any
reasonable estimate of expenditure decisions in this session of
the Congress.
Yet I cannot and will not participate in another excursion
into fiscal irresponsibility. That would re-awaken skepticism
about our determination to quell inflation, just when clear evidence
of progress is in sight. And savings diverted into financing a
deficit mean reduced funds and resources for housing, for State
and local government projects, and for the capital formation
essential to our on-going productivity and economic progress.
Therefore, I call upon the Congress and the nation to face
the realities of our Federal budget. We must pay the bills for the
programs that we vote. We must pay just wages in Government.
These involve more outlays than the revenues last year's tax bill
will produce.
The responsible action is clear. We must strengthen the
revenue-producing capacity of our tax system so that we can pay
our way.
We can and will hold the line on excessive government
spending, now and in the future; but in the short period since I
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submitted my budget, I have had to honor top-priority claims
against our resources which have virtually wiped out the slender
$1. 3 billion surplus which I forecast for FY 71. In addition, I
have had to remove whatever flexibility that remained in the
FY 71 budget by reprogramming $500 million into a new school
desegregation program.
have
The fact that I insisted that Federal spending be held down.
This has
was salutary. It meant that each proposed new program had to go
through the most rigorous scrutiny; it set out in bold relief the
most urgent national priorities.
Now we have come to the crossroads of hard decisions.
We could, if we wished, go forward with the new programs
that have made their case as essential to the national well-being by
allowing vising expenditures to
going into the red by ^ throwing the budget into a substantial
deficit. But this would be deception. It would be inviting a rebound
of inflation, and it would reduce resources needed for important
needs outside the budget -- housing, financing schools and other
local and State government projects, the financing of capital formation
to sustain our economic growth.
We could, if we wished, hold grimly to the spending goal we
were forced to set after the tax bill reduced 1971 revenues -- but
we would not be responding to the legitimate needs of our citizens.
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Or we could take the course I now propose: to meet the
needs that have proved to be urgent and to pay for them as we go.
This pay-as-you-go approach shatters a favorite old
shibboleth. "Congresses do not increase revenues in an election
year; voters will not entertain a thought about new taxes as April 15
approaches."
But I firmly believe, given the facts, the American people
will support the men with the courage to do what is right.
Putting the public interest first, it is right to build confidence
in the integrity of the dollar, which we will do by redeeming our
pledge of an anti-inflationary budget.
Putting the public interest first, it is right to insist on a
course of economic stability tha t will lead to price stability and job
stability.
To face up to our responsibilities, here are my recommend-
ationsfor changes in the 1971 budget, responding to top priority needs,
economic requirements and the demands of laws previously passed:
Reproduced at the Richard Nixon Presidential Library and Museum
CHANGES IN THE FY 71 BUDGET
ITEMS
BALANCE
SURPLUS FORECAST IN FY 71 BUDGET
+$1,331
Top Priority Claims
Air and Water Pollution Control
$ 188
Veterans education benefits and medical care
$ 299
Labor-HEW appropriations, effect of 1970
enacted bill on 1971 budget
$ 248
Disaster Relief
$ 50
Right-To-Read and other education amendments
$ 162
Education aid to racially impacted areas,
totaling $500 million (portion that cannot be
redirected from other programs.)
$ 150
Subtotal
$1097
+$ 234
Changes in Response to Major Problems
-
In the Economy
Withdrawal of voluntary State-local
construction deferral
$ 625
Housing interest subsidies and home
ownership assistance
$ 81
Subtotal
$ 706
-$ - $ 472
Legally Required Changes
Dairy price supports
$ 120
Interest on Public Debt
$ 100
Health benefits for Federal employees
$ 91
Subtotal
$ 311
-$ - $ 783
Additional Expenditures by the Congress For
It's Own Operations
$ 21
-$ - $ 804
Government Workers Pay
$1,300
-$1,300
DEFICIT NOW FORECAST
-$2,104
*In millions of Budget Authority
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8 -
Added Revenues
The proposals contemplated by this message as well as
other actions noted will change the 1970 and the 1971 budget
estimates as follows:
(In billions)
February
Revised
estimates
estimates
1970
1971
1970
1971
200.4
205.4
Receipts
199.4
202.1
199.4
206.4
4,
Outlays
197.9
200.8
199.1
204.2
1,3
1,2
Surplus
1.5
1.3
+
+2.2
To meet these needs without contributing to inflation, I
propose the following revenue legislation which will neither require
extending the surtax nor raising income tax rates:
2021
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1. By accelerating collection from employers of income
tax withheld, in the last quarter of FY '70, some $1.0 billion will
be realized.
2. The 1971 budget forecasts the collection of $3.6 billion
of estate and gift taxes in the coming fiscal year. I propose to accelerate
collection of these taxes, which would add as much as $1.5 billion in
receipts in fiscal 1971.
3. Leaded gasoline contributes heavily to air pollution.
I propose that the Congress levy a $3.25 per pound tax on the
lead going into tetraethyl gasoline. This will average 2¢ per gallon of
gasoline containing lead. The tax on lead will not only increase revenues
by $1.5 billion, but will provide an economic incentive to use non-leaded
fuels.
4. As a result of the pay increases recommended in this
message, I estimate that about $180 million will return to the
government in personal income taxes.
The total of these added revenues to the fiscal 1971 budget
would be about $3.28 billion.
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In taking these actions now, we can meet the most pressing
n
beeds of our citizens without relenting in our battle for price
stability in a climate of prosperity. The Congress, I am sure,
does not intend to force cuts in necessary social programs -- yet
that is what failure to raise the needed revenues would do.
A strong budget continues to be a vital partof our strategy
to turn the flank of inflation. In recent weeks, we have begun to see
some tangible evidence of success in our fight against that inflation,
a result of actions taken to hold down excessive Federal spending
over the past year.
That is why I relaxed some of the restraints on construction
of public projects two weeks ago, and why I believe it is now in the
public interest to grant the pay increases and fund the urgently
needed programs I have listed.
But I am determined that our fiscal actions remain consistent with
a strong budget. We must neither permit inflation to resume nor
the economy to take a severe downturn. We must not permit govern-
ment to become a borrower of savings that are so necessary to the
housing industry. If we were to accept a substantial deficit now to do
what is needed, we would be crippling the potential recovery of
housing construction, which our people need just as badly -- in effect,
we would be robbing Peter to pay Paul.
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Our perseverance in the past year has shown how it is possible
to make genuine headway toward achieving a sound prosperity with
stability; to continue on this path, we cannot take the politically
easy way out. We cannot slip back into the ways of the past, with
the wide swings in government budget policy that caused the present
inflation. Finally, we cannot permit those hardest hit by the rising
cost of living to bear the heaviest burden in combating that inflation.
The budget decisions I have made, and the budget decision I
have hereby modified, are designed to meet our human and defense
needs without inflation and without recession. This has never been
done in modern times.
By being sensitive to trends in the economy, by being re-
sponsive to the changing needs of our people, by being willing to
listen and to learn, and -- - - most important -- by being courageous
enough to take the right action at the right time with the right motive,
both the Congress and the Executive Branch will inspire the people's
confidence in government's ability to manage the nation's affairs.
Reproduced at the Richard Nixon Presidential Library and Museum
THE WHITE HOUSE
WASHINGTON
April 1, 1970.
MEMORANDUM FOR
THE PRESIDENT
Here is a proposed three-part message that covers:
1. The postal and government-wide increases;
2. The budget overrun and what to do about it;
3. Relations with government employees in the future.
The basic problem in all this is how to justify busting the budget
limit so soon after the budget was sent up.
If we try to ignore the situation, we would be inviting a credibility
gap generally and with the financial community in particular.
If we admit a mistake on the spending goal, we would get credit
for candor but would appear indecisive.
If we complain that we have been pushed into this by events, we
would appear weak.
If we try to blame Congress, our position is indefensible since
most of these above-the-line expenditures are our own.
The approach of this message is to frankly admit a mistake -- but
not a mistake in the $200. 8 budget ceiling, which everybody expects.
The error we should confess to was in not vetoing the tax bill, which
cut out the three billion dollars in revenues that are now SO obviously
needed.
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In effect, you would be saying that your grave misgivings about that
bill, which you expressed at the time, were right; that Congress
shortchanged the needs of the public, as all can now see clearly.
You should have drawn the battle lines then, but there is still time
to raise that same three billion the Congress took away from the
government employees, the environment, the veterans, etc.
This is similar to the remark of the man who said, "The last time
I was wrong was when I thought I made a mistake. But I was wrong;
I didn't make a mistake at all."
This approach is presented as an alternate paragraph in the body of
the message.
The entire last section about employee relations could be detached
and issued later as a separate message. The ideas in it are still
subject to internal wrestling.
BILL SAFIRE
CC: J. Ehrlichman
B. Harlow
J. Keogh
P. McCracken
Reproduced at the Richard Nixon Presidential Library and Museum