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    "ocrText": "C-213-31\nAICO\n9\nMEMORANDUM\nTHE WHITE HOUSE\nWASHINGTON\nMEMORANDUM TO THE PRESIDENT\nFROM: PATRICK J. BUCHANAN\nMARCH 10, 1969\nNotes on the evening meeting with the GOP\nleadership, March 6, 1969.\n(These notes are not as complete as the others,\nas the meeting was originally billed as a reception, and Buchanan\nhad to use the proverbial back of an envelope.)\nAmong the features of the evening was a lengthy\ndefense of the Non-Proliferation Treaty by the Senator from\nIllinois, Mr. Dirksen. He compared it with the vote to defend\nGuam where, some twenty years ago, Republicans had gone down\nthe line against it and paid for it through four elections.\nPolitically, they had to support it, he said, and then he gave\na lengthy and somewhat moving plea for the treaty as taking that\nfirst step down the road to peace. Gordon Allott, in his own\nfashion, expressed his strong opposition to the treaty,\nespecially to Title VI. The President noted that he himself\nhad had and had expressed strong reservations about this measure,\nbut that now it was far down the road, and that there was really\nno alternative but to see it through. Senator Tower of Texas\nsaid that the 90-day escape clause made the treaty in his view\nrelatively meaningless; his concern was with the euphoria attached\nto it and, asking the President's indulgence, he would vote\nagainst the thing.\nReproduced at the Richard Nixon Presidential Library and Museum\nMEMORANDUM TO THE PRESIDENT\nPAGE 2\nGerry Ford discussed the President's debt limit\nproposal which had taken a beating in Ways and Means and Ford's\nconclusion was basically that the Democrats were going to make\nus come back to the Hill about August of 1970 for a new debt\nlimit. They were \"playing politics,\" he said. Apparently\nthe thing was not properly \"greased\" before it was sent to the\nHill, in the President's view. RN had had, he thought, an\nunderstanding from Brynes and Mills to go through with it -\nbut the revised budget concept attached to the debt increase\nwas the cause of the problem.\nIn the electoral college discussion, RN mentioned\nwith wry humor that Poff had not informed him that the Washington\nPost would oppose the message he had sent. Poff said that was\none of the good things about the proposal in the ensuing\nconversation Poff made a damned effective argument against the\ndirect vote, saying that while a third party might not deny\nthe presidential candidate his 40 per cent, a fourth, fifth\nand sixth party might succeed, and we would wind up with\ncoalition backing for one ticket or another in a run-off. Tower\nnoted that direct popular elections would require national election\nmachinery currently unavailable.\nRN himself, when talking of the NPT, indicated\nhis deep-felt antipathy toward war, and what would happen should\none come, and what we must do to fully eliminate the possibility.\nReproduced at the Richard Nixon Presidential Library and Museum\nMEMORANDUM TO THE PRESIDENT\nPAGE 3\nHe spoke of the \"trip wire\" military strategy which would bring\nan American nuclear response should the Soviets step into West\nBerlin, and rejected it as both unreasonable and unrealistic - -\nand not really credible to the Soviets.\nThe need to bolster our conventional power, a\ncredible deterrent against a Russian probè into West Berlin\nwas argued by the President - to which Senator Tower nodded assent.\nThe President also told a story that De Gaulle had\nrelayed about why America was so strong today and the nations\nof Europe SO relatively weak. America was not wounded by the war\nas were the nations of Europe and he said, \"All the nations of\nEurope lost the war; two were defeated.\"\nNow the situation got to the political problems.\nThe complaints of Congressional wing and conservatives about the NSC\nstaff were mentioned and the President noted that one of the\nnames brought up was that of Morton Halperin - Goldwater, the\nnight before, in a conversation with the President, had tagged\nhim a particularly bad egg. Tower said that our major political\nproblems were with the State Department and the Department of HEW.\nOther points that came up. The Reorganization\nBill was not moving as rapidly as it might on the Hill because\nFord said \"in this room\" it is in the hands of a committee\nwhose chairman, Bill Dawson, is senile.\nReproduced at the Richard Nixon Presidential Library and Museum\nMEMORANDUM TO THE PRESIDENT\nPAGE 4\nOn the Job Corps, a subject of controversy since the\nPresident's poverty program statement, RN reiterated his\ncampaign pledge to get rid of the thing, but said he needed time\nto offer an alternative and now he felt they had one with a\ntax credit program that was really substantial coming up.\nOn Head Start, the President said these were being put into\nLabor to shape them up.\nDirksen said he was delighted these hard political\nsubjects were being brought up because he had received letters\nthat were just \"full of fulminations.\"\nIt was here also that the President indicated that\nFinch was writing new guidelines for school desegregation, that\nFinch, like the President, was against bussing, and perhaps\nFinch might go down to that contested Tennessee district to\nshow his new guidelines.\nOne humorous note was when Dirksen noted that\nthe man who shot Garfield was a disgruntled office seeker, and\nthe President said he had better lay on some more security.\nOn the subject of hunger, which the President\nasked about, Ford said it should be incorporated into an \"overhaul\"\nof the welfare system, and others at the table, especially\nMilton Young, indicated they felt that the numbers of hungry\nin this country were being grossly exaggerated.\nReproduced at the Richard Nixon Presidential Library and Museum\nMEMORANDUM TO THE PRESIDENT\nPAGE 5\nThe National Alliance for Businessmen was brought up\nby Bill Cramer of Florida who said that the two men being\nappointed for Tampa and St. Petersburg were real klinkers --\nthe President promised to look into this.\nThe President, in mentioning OEO CAP programs,\nnoted that he was well aware that many of the local organizations\nwere Democratic Political Clubs and that we would have a fellow\nin there perhaps this week, if we could get him, who would\ntake care of that.\nThe President asked about the campus disorders and\nthere was broad agreement that he ought to come down hard for\ncutting off funds, that he ought to make an early and tough\nstatement on the issue. Craig Hosmer had delivered an impressive\nspeech on the subject just a day ago.\nAn individual at MIT who had organized a counter-\ndemonstration, -- a 16-hour work day to combat the sit-down\nday of those opposing government research defense contracts was\nmentioned -- and RN said on the spot we would give him a\nFreedom Medal.\nOn the guidelines for cutting off student funds,\nit was agreed that RN could score heavily on this one - because\nof the favorable contrast with the past Administration, who refused\nto write the things.\nReproduced at the Richard Nixon Presidential Library and Museum\nMEMORANDUM TO THE PRESIDENT\nPAGE 6\nA final note: John Tower said that the Political\ntypes, Morton, and Tower and Wilson, should have access to a\nman with direct access to the President - they should not have\nto go through a lawyer of authority. They felt John Sears did\nnot have this access.\nBuchanan\nReproduced at the Richard Nixon Presidential Library and Museum\nMEMORANDUM\nTHE WHITE HOUSE\nWASHINGTON\nMARCH\n1969\nFOR THE PRESIDENT'S PERSONAL FILE\nRE:\nMemorandum of a March 6, 1969 meeting with\nGovernor William Scranton, Dr. Burns and\nJohn Ehrlichman, about Noon.\nThe meeting was held immediately following the President's greeting\nof outstanding women in federal government. The President had\ninvited Governor Scranton in to meet the women and upon their departure\nDr. Burns entered with Mr. Ehrlichman.\nThe President sat on one couch, Governor Scranton on the other.\nGovernor Scranton congratulated the President on the foreign affairs\npress conference and mentioned that a number of people stopped him\nn\nthe\nstreet\nin\nhis\nhome\ntown\nto\nsay that the President had spoken with\nsuch candor that they felt that, at last, a President was levelling\nwith them as to the international situation.\nThe President noted that this was President Johnson's great problem\nand that he hoped to avoid it.\nThe President then discussed with Governor Scranton the Urban Affairs\nCouncil meeting which had just been conducted in the Cabinet Room.\nHe asked Governor Scranton is there was anything that the Governor\ncould suggest or with which the Governor could help in this area of\nurban problems.\nThe Governor stated that he was concerned that the whole war on poverty\nprogram was not viable.\nThe President expressed concern that the laudable objectives of OEO\nand the other war on poverty programs were SO closely involved with\nunacceptable methods of solution to which the Administration was bound\nto give continued life lest there be \"dancing in the streets\", as the\nPresident said.\nReproduced at the Richard Nixon Presidential Library and Museum\n-2-\nThe President asked Governor Scranton to \"take the whole field\" and\nbe the President's program man for the entire field.\nDr. Burns inserted the suggestion that this programatic activity\ncould be done by the Director of OEO and the President agreed.\nThe President stated that he wanted a relationship with his OEO\nDirector in the field of \"cities\" like his relationship with Henry Kissinger\nin the foreign area. He was really looking for a manager for the\nwhole poverty program.\nThe President expressed a need for someone on his staff to pull together\nand arrange in priority the various urban programs, defining to the\nPresident the decisions which he must make.\nThe Governor noted that in order for the poverty program to get money\nfrom the Congress it would be necessary for it to be operationally\noriented to the various departments.\nBoth Dr. Burns and the President agreed to this concept.\nThe President requested Governor Scranton to contact Dr. Burns further,\nto talk with Secretary Finch and Secretary Shulz and to John Ehrlichman\nof the White House staff, and at Dr. Burns' suggestion it was agreed\nthat Governor Scranton would contact the White House staff again in\none week's time with a proposal as to how he might proceed in this area.\nJOHN D $ EHRLICHMAN\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nMinutes\nCUA--PRIVILEGED\nMeeting of the Council for Urban Affairs\nMarch 6, 1969 - 10:00 A. M.\nThe President opened the meeting commenting briefly\nthat he had been reading some of the Council papers and that\nhe felt some were not grappling with the issues as much and as\nfast as they should be, while others were quite good. He singled\nout the minority business enterprise as an instance in which he\nhad indicated he would do something like this in a campaign\npledge, and that by the course of action in the newly created\nOffice, we would vindicate the promise. He also asked about\nthe work of the Committee on Food and Nutrition and said, \"I've\nbeen following the reports in the papers. 11 Dr. Moynihan and\nSecretary Hardin indicated it was their hope to have something\nready by the middle or end of next week.\nDr. Moynihan made a presentation on Aid to Families\nwith Dependent Children. He made the point that while after many\nyears of moving in tandem with economic cycles, the rate of\nunemployment and of increase or decrease in welfare cases began\nabout 1960 or 1961 to bear no relation to each other. The exception\nis the category of AFDC-UP (unemployed parent), where the\ntypical client still has a relation to a working member of the family,\nGUA--PRIVILEGIN\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nCONFIDENTIA\nL\n-2-\nGUA--PRIVILEGED\nand where the caseload tended to follow more closely the\neconomic cycle and unemployment statistics.\nHe pointed out that typically now too, people are on\nwelfare longer than they used to be, which underlines the lack\nof a link with work.\nThe coordinates indicate that the number of people coming\ninto the age range of 15 - 25 or so, the age where the beginnings\nof welfare dependency are so marked, will be reaching a peak\nthrough the 1970s; for the first time this year, the coordinates\nof the 5 - 9 age group and that of birth to 5 years are the same:\nthere has been a stabilization which will lead to a leveling off of\nthe caseloads only sometime in the 1980s, assuming all other\nfactors are equal.\nDr. Moynihan pointed out that there has also been an\nincrease in the percent of acceptances, or of acceptability of\ncases, which has risen quite markedly in the last 15 years after\nhaving remained steady pretty much since the beginnings of the\nprogram. This is the percent which reflects the acceptance or\nrejection of applicants by welfare officials.\nTaken together, the data would indicate that the welfare\nCUA--PRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nIDENTIAL\nCONFID\nENTIAL\n-3-\nCUA--PRIVILEGED\nrecipients have grown ever more isolated from the job market,\nand have developed into a subculture, principally in the urban\ncenters, and principally among non-whites.\nSecretary Shultz commented that the question of the rela-\ntion to the home environment is the most important idea in the\nJob Corps, just as it is with Head Start and the Day Care pro-\ngrams, administered by other departments. He said it should\nunderline the priority need of developing a program which takes\naccount of all of these.\nThe President asked if that was not what the Urban Affairs\nCouncil is designed to do. He asked, \"Do we have the capability\nto do this? 11\nUnder Secretary of Health, Education & Welfare John\nVeneman said that they were trying to do this with their examina-\ntion of Head Start, where they are probably going to focus on the\nchild development and home environment aspects. He noted that\nin the AFDC problem, leniency by officials is not necessarily the\nreason for the increase, but rather that the increase is simply a\nfact of life. He urged that we have to look at the 0 - 9 year olds,\nand must concentrate on this in this Administration.\nCUA--PRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nIDENTIAL\n-4-\nCUA--PRIVILEGED\nSecretary Romney then mentioned that the concept of\nModel Cities is to foster the kind of interrelationship the Presi-\ndent was speaking of, with its drawing together the physical and\nother development of the cities. He added that to provide jobs\nfor the teenagers, the construction field is crucial, plus the\nfact that we can be opening jobs in the area for blacks.\nSecretary Stans then inquired about birth rates, and\nwondered what might be done to reduce them in this dependent\npart of the population. Dr. Moynihan replied that the non-white\nbirth rate is about 40% greater than the white rate, with the\nrecent reduction happening at about the same rate. He added that\nif you were to try to reduce the birth rate of a given group, this\nwas an area of public and social policy that he had no guidelines in.\nThe Vice President commented that the heavier concentra-\ntion of dependent families in the urban areas leads us back to our\nearlier discussion about the standardization of welfare rates, in\norder to restrict the flow. \"We must avoid continuing impaction\nin the cities. 11\nDr. Moynihan said it behooves us not to have the push off\nof the rural areas attributable to abject poverty; but, that we are\nCUA--PRIVILEGED\nCONFID\nENTIAL\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\n- -5-\nCUA--PRIVILEGED\nnot certain about the pull effect of higher welfare payments in\nthe urban areas.\nDr. Burns agreed, but asked how an increase in the\namount of benefits solves the problem of the extraordinary in-\ncrease in the rolls. He felt the relationship lay much more with\nthe minimum wage, in that it forced a reduction in employment\npossibilities.\nDr. Burns said that by 1967 and 68, even the liberal\nintellectuals and the Johnson Administration economists admitted\nthe minimum wage was influential on the employment of teenagers.\nHe said we can't be blind and must realize that it is difficult\npolitically to make changes, but we ought to look at it.\nThe President said that during the campaign, \"as you know,\nArthur, I had things ready to say on the minimum wage, but\npolitically, it couldn't be wheeled. 11 He added that if you talk to\nMeany and Reuther about some possible change in the minimum\nwage, \"They go up the wall. 11 \"Can it be wheeled? 11 He focused\non teenage employment especially, saying the conservatives, the\nMilton Friedman group, have now been hitting it for years, and\n\"I tend to be convinced on it. 11 \"Can we do anything? 11\nSecretary Shultz said he felt that people might be brought\nCUA--PRIVILEGED\nOOM\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nENTIA\nCUA--PRIVILEGED\naround. But, he added, \"I talked about it, and Dubinsky gave\nme a lecture. 11\nThe President said to Secretary Shultz, \"Will you grapple\nwith this? Find out what the facts are. As a Congressman and\nSenator, I've religiously voted for increases, but now I realize\nit probably isn't good for it to go up. 11\nSecretary Shultz commented that Republican Congressmen\nhave taken me aside and said, \"Look, you're supposed to be the\nSecretary of Labor. 11 They might love to change the law, and\nthis year, they may discuss it with you, but probably not next\nyear, when they are up for election.\nTo this the President asked, \"These are especially from\nthe Northeastern States, aren't they?\" He stressed again that teen-\nage employment is a different problem, and we can probably \"build\na fire\" under people on it.\nMr. Veneman said that New York and California at least,\nand probably other States pose another problem, in that they have\na state minimum wage, and at the state level, it is higher for\nwomen and minors than the national standard, and therefore any-\nthing we do would not be effective. Secretary Volpe added that\nthis problem is \"plaguing the states. 11\nCUA--PRIVILEGED\nL\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\n- -7-\nCUA--PRIVILEGED\nThe President added that as to the teenage question, \"We\nought to be able to wheel that, some way or other. 11\nThe Vice President said that the argument against that is\nthat it constitutes a break-through -- you will give all the new\njobs to lower paid employees.\nThe President said, \"I'd like to see it tried. 11\nThe Vice President said, \"Rather than teenagers, let's\ntalk about apprentices, which is a fair sounding concept, where\nregardless of age, the pay is lower when you are learning. Dr.\nBurns noted that in the last 10 years, the unskilled wages have\ngone up at a faster rate than the skilled wages. He noted that the\nUnited States and Russia both have a problem of teenage unemploy-\nment, while Japan does not. In the first two, the price of teen\nlabor is high compared to its productivity, while the opposite is\ntrue in Japan.\nThe President said the key to the problem is that the social\nacceptability, as Dr. Moynihan points out, of going onto welfare,\nhas increased, and this increase is directly related to the time the\nGreat Society programs came out with the themes that \"the less\nfortunate people -- it's not their fault, etc. 11 were developing.\nThe circle begins to move. This gets us back to the whole business\nof incentives. We're on a spot - we want to be humanitarian, and\nCUA--PRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nCONFID\n-8-\nCUA--PRIVILEGED\nbe aware of these needs, yet the natural tendency of man is not\nwhat many academics say -- \"the natural tendency of man is to\nwork, if the obstacles are removed\" -- rather, the President said,\nthe \"natural tendency of man is to sit on his fanny. \" You don't have\nto whip him, but if this social acceptability factor goes up, that is\nthe problem.\nDr. Moynihan said, \"We'd be fools not to see a welfare\nsubculture growing up in our cities. 11\nThe President said, \"Jack Veneman is right to say that it\nis not leniency responsible for this -- I buy that, but it is this\nother. 11 We get into the whole business of morality, of one's\nbackground, church and family.\nDr. Moynihan said that the increase may in part be because\npeople who apply are now more in need. They are \"atomized\nindividuals\" that arrive in the city. Women arrive with children,\nand have no visible connection to relatives. \"People aren't glued\ntogether by the connections we assume. 11\nThe President said, \"Everything we do to help people may\nhurt them. 11 \"It has happened to a lot of societies before -- if we\nget $20 billion from a letup in the Vietnam war, maybe it's the\nwrong thing to spread it around this way. \"\nCUA--PRIVILEGED\nENTIAL\nOOM\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nTIAL\n-9-\nCUA\n--PRIVILEGED\nThe Vice President then briefly outlined the Summer\nYouth Programs proposal, saying that it is best not specifically\nto delineate the criticisms, especially the one implicitly attaching\nthe Mayor of New York. He added that the draft does not point\nheavily to new departures. He said that he would like\n(1) to send wires to the 50 Mayors, announcing distri-\nbution of the planning money;\n(2) to request the Governors to convene Summer Youth\nConferences;\n(3) to have a task force evaluation of the overall\neffectiveness of the programs, under which the Budget\nBureau will take a hard look, reporting back by\nSeptember 30.\nDick Nathan of BOB suggested that it whould be \"Business\nas usual this year, but report back at that time to plan for next\nyear's budget. 11\nThe President said that he strongly felt it was a mistake\nto take a program we inherited, knowing it is corrupt and ineffi-\ncient in many instances, and because of all the vested interests\nin it, to put out a statement that we will continue it. \"I am glad\nTed is sensitive to the problems of the Mayors. He should be in\nthis office he has set up. 11 But my view is that this year, \"I would\nENTIAL\nCUA--PRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nCONFID\nCUA--PRIVILEGED\n-10-\njust do it, I wouldn't say much about it -- no statement, just\ndistribute the money. \" \"We get no points endorsing in public\na program which we all know is lousy. 11 We all know the Mayors\nare going to go up the walls if we don't fund the program, but I\nsuggest we simply distribute the money.\nThe Vice President suggested that we let a statement come\nout after the allocation of the funds. The President replied, \"Let\nthe Conferences speak for themselves -- you'll get credit where\nit is needed -- out in the hustings. It's just that I have an uneasy\nfeeling about temporizing on something we have grave reserva-\ntions about. \"\nMr. Veneman suggested that we could link the Conferences\nwith the White House Conference on youth next year, which pro-\nvides some funds for preparatory State conferences.\nThe Vice President said that the problems aren't in the\nprogram or its objectives, but its administration.\nThe President concluded that the Vice President and he\nwould work something out with Dr. Moynihan. \"The fundamental\npoint is that whether it is the Poverty Program, or the Youth pro-\ngram, the whole country is aware of the inefficiency and overlap\nCUA--PRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nCUA--PRIVILEGED\n-11- -\nand that the programs have failed. Up til this point, our approach\nhas been mainly: let's run them better; but, on the other hand, we\nshould avoid getting into a deadly rut, simply because with a few\nnew people in at the top, and with some down below who were there,\nand are so bright and smart that they send you up suggestions, and\nyou sign them -- the fact is we weren't elected to do this. 11\nDavid Packard, Deputy Secretary of Defense, and Gerry\nGarbacz, White House Fellow in the Office of the Secretary, made\na presentation of the Department's involvement in social questions.\nThe President said at the outset, \"I don't share at all this concern\nabout the Defense Department becoming deeply involved in this\nproblem -- anything we can do to help we must. 11\nMr. Garbacz pointed out that the two criticisms made are\nthat the Department might use this as a means of sustaining high\nlevels of expenditure, and on the other hand, that the Department\nmight itself set social policy. Therefore, the DOD policy is to\nfollow the direction of the other, domestic departments, and not to\nbudget additionally for domestic projects of this sort.\nHe mentioned the three principal manpower programs now in\neffect, including Project 100, 000, for subnormal inductees;\nCONFIDENTIAL\nPRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nCONFIDENTE\n-12-\nCUA--PRIVILEGED\nProject Transition, for skills training during the last six months\nof service; and the Marine Corps Youth Physical Fitness Program.\nHe mentioned the great receptivity of the services: some 2500\nsuggestions had come back from the Air Force alone in response\nto a request for ideas.\nThe President asked Mr. Packard if he has been personally\ninvolved, and Mr. Packard replied that he had been somewhat\ninvolved. The President asked if he could find an opportunity\nduring the next month to evaluate what more can be done.\nDr. DuBridge suggested it might be useful in the areas of\nhousing and training technology, for there to be a far greater\nDefense Department role. Also it would be helpful if the Council\nfor Urban Affairs were to create a task force to work on say man-\npower, or housing. The activity within the Defense Department\nis strengthened if the CUA endorses the collaborative arrange-\nments.\nThe President noted that \"I do not buy at all this malarkey\nabout a defense-industrial complex, and whether we have civilian\ncontrol. We have it. 11 The figure of 4-1/2 million persons involved\nin the department offers far more opportunities than are outlined in\nthe report.\nCUA--PRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nCONFID\nTAL\n-13-\nCUA--PRIVILEGED\nThe Attorney General asked about the DOD summer pro-\ngrams here in the District. The President said to Mr. Packard,\n\"Would you look into this particular point?\" He mentioned the\nfailure to use schools, and Defense facilities. \"Really put the\nheat to this thing -- your Service Secretaries, Chafee, and the\nothers -- should be very interested. \"\nMr. Packard also briefly mentioned the role of the Defense\nresearch contractors, and suggested that a percent of their\ncapability be applied to these questions. The President said,\n\"Something could be done with the Rand Corporation and the others. 11\nSecretary Stans asked about the contract set-asides for\nminority businesses. Mr. Packard said, \"I'm interested; I set\nup a minority business myself, and there are many problems\nwith it. Take Watts Manufacturing, for example. The Depart-\nment now has enough tents to last six years. 11\nSecretary Romney then presented his voluntary action\nstatement, observing that this concept can be oversold; it takes\ntime to produce. The statement is intentionally low-keyed, and\nthe intention is to let the actions speak for themselves.\nThe President said we are right not to oversell this, as we\nfound with the minority business enterprise statement yesterday.\nCUA\n-\nPRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\n-14-\nCUA--PRIVILEGED\nHe added that he had a few proposed changes, and would like to\nspeak with Secretary Romney about them.\nThe theme I want to develop is that there should be some\nsignificant new directions out of the Council. We have a public\nrelations problem -- there are certain names and slogans which\nthe public has in mind, and they ask why are we doing nothing\ndifferent.\n\"We have to find some new directions. As we look at the\ncharts, we see that the poverty program is not a success. For\nus to come in, with the country disturbed, as it is, it is of course\nwise for us not to chuck it all out the window. Up to this point,\nwe have indicated concern, but time may be running out on our\ncoming up with some new initiatives. 11\nSecretary Shultz said that we have just about sold a sweeping\nreorganization of the manpower administration, which we raised\nhere in the Council.\nThe President noted that the Vice President had set up the\nOffice of Intergovernmental Relations, which is good. The Vice\nPresident said that \"In our eagerness to overcome the terrible\ndisabilities of the programs, do not chuck out the objectives.\nPerhaps we can make the summer program look more dynamic\nCUA\nI\n-\nPRIVILEGED\nCONFIDENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIDENTIAL\nCONFIL ENTIAL\n-15-\nCUA--PRIVILEGED\nif we can aim it at some new stuff. 11\nThe President said that \"We must not let the public\nimpression be that simply, here we are, and we'll make it work\na little better. We can tackle it, and we can throw out these\nprograms if we have better ones to replace them with. \"\nTo Dr. Moynihan, the President said we should go through\nCouncil matters, and note some of the things we are doing that\nare new. \"The nation is aroused, but a large part of the people\nare frustrated, thinking that it has not worked. We must show\nthem that we can make it work. 11 \"Pat, give us something on\nwhat we have that is new. 11\nThe President asked Dr. Burns briefly to sketch out the\ntax incentives proposal which would be made public in about ten\ndays' time. Dr. Burns said that it will provide a substantial\ncredit for investment in poverty areas on the one hand, and on\nthe other, a credit for job training programs nationwide, which is\nincremental in character. That is, if there is, from year to year,\nan increase in the number of people trained by the taxpayer, a\ncredit will be available.\nThe President noted that this was a \"hard, specific\" proposal.\nCONFID\nENTIA\nCUA--PRIVILEGED\nCONFIRENTIAL\nReproduced at the Richard Nixon Presidential Library and Museum\nCONFIRENTIAL\nOUNI IDENTIAL\nCONFIDENTIAL\n-16-\nCUA--PRIVILEGED\n\"What we have to do is coordinate so that with the new administra- -\ntion, we have new approaches. Collectively, we have not yet\ndone so.\"\nJohn John R. Price\nR\nPrice\nCounsel to the Assistant to the\nPresident for Urban Affairs\nJRP/djb\nCUA--PRIVILEGED\nCONFIDENTIAL\nOUNT IDENTIRE\nReproduced at the Richard Nixon Presidential Library and Museum\nC-213-31\nAICO\nL\nTo : HALDEMAN\nFrom: SAFIRE\n7 March 1969.\nRE: REPORT ON MEETING OF CABINET COMMITTEE ON ECONOMIC\nPOLICY, MARCH 7, 1969, 10:45 A.M. TO 12 NOON. PRESENT:\nThe President, the Vice President, Secretaries Stans, Hardin,\nRomney (as guest), Kennedy, Schultz; Budget Director Mayo,\nDr. McCracken, Dr. Houthakker, Dr. Stein, Dr. Burns, Dr.\nDr. Moynihan, Mr. Safire.\nThe President opened the meeting with an account of economic\nmatters covered on his European trip. (To Secretary Hardin: \"By the\nway, Cliff, I made a commitment for you to go to Europe about a month\nafter Maury gets back. '')\nTHE PRESIDENT: \"There was a curious British reaction worth\nreflecting on. I expected everyone to talk to us about getting our house\nin order, including inflation, that sort of thing. Of course, I told them\nhow we were doing it. The British replied, 'We think this is fine -- but\ndon't go too far. If the American economy slips, it would have a devastating\neffect on all of us. I\n\"This was repeated in varying degrees by every sophisticated\nobserver I talked to. They are keenly aware of the impact of depressing\nour economy too much; the American economy has enormous stroke.\nReproduced at the Richard Nixon Presidential Library and Museum\n-2-\nWhen you consider that our economy grows each year by the size of\nItaly's economy, you get some sort of an idea of its size.\n\"I pointed out the great pressures we are under here for quotas\non imports, and I told them this was not the time for new breakthroughs\nin trade procedures. There will not be a new Kennedy Round - - that's\nnot in the cards -- it's time to digest what we already have on the plate.\n\"On international and monetary affairs: First I told them that\nwe cannot continue to have hanging over our heads a monetary crisis\nevery year or so. And second, I said that an international monetary\nsummit conference at this time would be wrong. They all agreed --\nparticularly General de Gaulle. To show you the degree of sensitivity\non this: instead of sending their finance minister here soon, they are\nusing more discretion -- they are sending a highly trusted man without\na title. Obviously they don't want to have an official here or a situation\nwhere we are directly at odds. That's the way they want to play the game.\n\"But in terms of monetary policy we can't just muddle through.\nThis will require some hard thinking and we have to exercise some\nleadership.\"\nKENNEDY: \"We're getting a program ready. It's a good idea,\nhaving them come one at a time. 11\nReproduced at the Richard Nixon Presidential Library and Museum\n-3-\nTHE PRESIDENT: \"On trade, I said that Maury Stans would be\nover soon. Maury, be sure to include the Dutch. They're about our\nbest friends in NATO. Take along Samuels of the State Department and\ntake a member of the Council. As a matter of fact, it would be a nice\ntouch for you to go over to State to get a political briefing before going.\n\"Cliff, the reason you should go is that agriculture goes to the\nheart of European problems. \"\nHARDIN: \"And they're going the wrong way. 11\nTHE PRESIDENT: \"You mean more supports?\"\nHARDIN: \"Yes. 11\nTHE PRESIDENT: \"You've got a $500 million GNP in those\ncountries -- add us and Japan, and that's the game.\n\"I deliberately didn't put the Germans on the spot on offset -- -\nthey'll come here on it.\n\"Very important, before anybody travels abroad -- don't talk\neconomics without a political briefing. Let's not get in the fight\nbetween Britain and France. For example, I think Britain should be\nin the Common Market, but it's not going to happen soon, so let's stay\nout of it. \"\nKENNEDY: \"I'll be going to Guatemala for a meeting soon.\nTHE PRESIDENT: \"Take the State man along we are appointing\nMonday to be Assistant Secretary for Latin American Affairs. 11\nReproduced at the Richard Nixon Presidential Library and Museum\n-4-\nHARDIN: \"They want us down there; we should make an effort\nto have other Cabinet men travel to Latin America. President Comargo\nof Colombia can help. 11\nTHE PRESIDENT: \"I know him -- he's one of the four or five\nbest men in Latin America. 11\nDr. McCracken then discussed the influence of disinflation on\nunemployment, showing a series of charts illustrating the relationships.\nOne of the charts showed how many wage settlements were front-end\nloaded -- that is, they call for higher increases in the first year than in\nsubsequent years. Secretary Schultz observed that this front-end load\ngave us an advantage. If we want to deflate, then the people who come to\nthe bargaining table see the lower level of second-year increases rather\nthan the higher level of first-year increases.\nDr. Burns suggested that Dr. McCracken destroy the chart he was\nusing since it showed an 8. 5% wage increase average in 1969.\nOn unemployment, Dr. McCracken pointed out that during the\nrecessionette in 1967, there was a minimum effect on male adults but\na volcanic effect on non-white teenagers.\nDr. Burns added that the raise in the minimum wage had a lot to\ndo with that.\nReproduced at the Richard Nixon Presidential Library and Museum\n-5-\nLumber Prices\nA memo (attached) had been submitted by Dr. Houthakker on\nthe alarming rise in lumber prices. General lumber prices had risen\n30% in one year while plywood had shot up 90% in one year. Secretary\nRomney offered ideas on how to increase the supply of lumber and thereby\nlower the price. \"If the lumber people get away with these price\nincreases, 11 he said, \"others in construction materials will do the same.\nWe want to move before Sparkman does. 11\nSecretary Hardin pointed out that 54% of marketable timber grows\non land run by the Forest Service. Cutting could be increased, though\nnot up to the point where it would become faster than growing. An\nincrease in cutting capacity, however, would require an appropriation\nto build new roads into timber land. The President winced.\nBURNS: \"I owned some timber land -- why do you need new roads?\nYou can make a new road with a bulldozer. 11\nHardin replied that you don't just go in, cut the timber and forget\nthe area. Burns was not convinced: \"I would have some practical lumber-\nmen look into the need for roads and what kind of roads need to be built.\nI have a hunch that people want us to build far fancier roads than we need.' 11\nTHE PRESIDENT: \"You are touching a lot of raw nerves here --\nthe Sierra Club, the maritime problem, the imports -- but the rawest\nnerve is the price of lumber. 11\nReproduced at the Richard Nixon Presidential Library and Museum\n-6-\nRomney suggested the Department of Justice take a look at\npossible price fixing; Kennedy agreed.\nTHE PRESIDENT: \"I would like to get at the big companies if\nthey are fixing the prices, but not at the little companies that would\nbe driven out of business by dropping the price. George, you used to\nfeel that way -- do you still agree?\"\nROMNEY: \"When I was in business I never came down here to\nask for special favors. \" He urged that we announce an ad hoc committee\ntoday. The very fact that we are looking into the situation would have an\nimmediate effect.\nThe President directed that the committee be formed and\nannounced; Burns told Safire to handle the announcement, which was\ndone at the close of the meeting.\nAgricultural Trade with Europe\nDr. Houthakker reviewed the attached memo on the subject.\nSecretary Hardin pointed out that American agriculture is comparatively\nefficient: \"We should move to free up trade because it will help our\nbalance of payments. 11\nReproduced at the Richard Nixon Presidential Library and Museum\n-7-\nTHE PRESIDENT: \"State invariably looks at this from the\npoint of view of the other country. It is your job, and Stans', to look\nat it from our point of view. State traditionally leans the other way.\nFrom a foreign policy point of view, of course, I wish I didn't have to\nworry about soy beans. But I do. You and Agriculture and Commerce\nhave to present your views along with State -- the answer will lie some-\nwhere in the middle.\n\"The problems in Europe are more political than economic. A\ngreater percentage of the population there is in agriculture which adds\nto their political weight. 11\nHouthakker interjected that in Europe both the number and\npolitical power of agricultural interests were going down: \"The\npolitical influence of farmers in the U.S. is less, frankly, because there\nare less of them. In the Senate, though, they form a powerful bloc. \"\nDr. Burns suggested that Secretary Stans have a position paper\nprepared on the advantages to Europe of freer agricultural trade. The\nPresident agreed with this form of logical argument, adding: \"You're\nnever going to get anything out of Europeans by hitting them over the head. \"\nAt that point, Vice President Tolbert of Liberia arrived for his\nappointment with the President, who brought him into the Cabinet Room\nand introduced him to all present.\nReproduced at the Richard Nixon Presidential Library and Museum\nTHE CHAIRMAN OF THE\nCOUNCIL OF ECONOMIC ADVISERS\nWASHINGTON\nFebruary 28, 1969\nMEMORANDUM FOR THE CABINET COMMITTEE ON\nECONOMIC POLICY\nSubject: Proposed Ad Hoc Task Force on Lumber\nThere is widespread concern over recent sharp\nincreases in lumber and plywood prices. As the Appendix\nto this memo points out, Douglas fir increased 30 percent\nbetween January 1968 and January 1969, and softwood\nplywood by 92 percent. These increases have a major\nimpact on the cost of building single-family homes and\nsmall apartments.\nIt is not entirely clear what has caused these move-\nments, exceptional even in an industry with a history of\nvolatile prices. One leading suspect is insufficient avail-\nability of timber on public lands, but there are other\nproblems.\nAt the Cabinet Committee meeting on March 6, I will\npropose that an interagency task force be set up to\n1.\nidentify the causes of high lumber and plywood\nprices\n2.\nrecommend immediate action by the government\nagencies concerned\n3.\nrecommend long-term policies for facilitating\nsupply-demand adjustment in the industry.\nThis task force would operate mostly on the staff\nlevel but would be directed by a group on the assistant\nsecretary level. It would include representatives of the\nfollowing agencies:\nReproduced at the Richard Nixon Presidential Library and Museum\n2\nAgriculture\nCommerce\nHousing and Urban Development\nInterior\nLabor\nBudget Bureau\nCouncil of Economic Advisers\n[It seems appropriate that either the Budget Bureau or\nthe Council of Economic Advisers will coordinate the work.\n]\nAn interim report should be presented to the Cabinet\nCommittee by April 15 and a final report by May 31.\nReproduced at the Richard Nixon Presidential Library and Museum\nAPPENDIX\nThe Problem of Lumber and Plywood Prices\nIn the past year the prices of softwood lumber and\nplywood have risen at an extremely rapid rate and the advance\nshows no signs of tapering off.\nDouglas fir increased 30 percent and softwood\nplywood 92 percent in the 12 months ended in\nJanuary. (Many specific lumber and plywood\nitems have risen even faster.)\nThe increase in the lumber and lumber products\ngroup of the WPI during 1968 accounted for about\none-fifth of the total rise in the index, despite\nits relatively small weight (about 2. 5 percent).\nThe industry's labor contracts in the Northwest\nexpire this summer, threatening further trouble.\nThe major impact of these increases is on the construction\nindustry, and especially on single family and smaller multifamily\nhousing units.\nThe National Association of Home Builders (NAHB)\nillustrates the impact by estimating that lumber\naccounts for about 20 percent of the total construction\ncosts for a single family dwelling and that last\nyear's rise therefore added 5 to 6 percent to\ntotal construction costs.\nThe jump in price essentially reflects a deterioration\nof the supply-demand balance. According to BDSA, the first\n10 months of 1968 compare as follows with the same period\nin 1967:\nOrders up 9 percent\nShipments up 7 percent\nLumber production up 5 percent\nMill stocks declined 13 percent\nReproduced at the Richard Nixon Presidential Library and Museum\n2\nThe difficulty encountered by the industry in meeting\nthis relatively modest rise in demand is surprising. Housing\nstarts in 1968 remained well below the levels of 1963-1965,\nwhich occasioned no similar squeeze. It is true that distributors\napparently miscalculated prospects last spring and were\ncaught with very low inventories, but this is scarcely an\nadequate explanation. In recent weeks the situation has\nbeen further aggravated by extremely bad weather in the\nNorthwest and by the dock strike, but the great bulk of the\nincrease occurred earlier.\nProfits of the lumber and wood products industry were\nnearly twice as high in the last three quarters of 1968 as\nin the same period of 1967. However, these are not highly\nconcentrated industries, and we are aware of no evidence\nof collusion or abuse of market power.\nApparent Causes\nThe factors responsible for this runaway price situation\nare numerous and complex. They are listed here in random\norder. Further study is needed to determine where the\nreal bottlenecks are.\nPlywood mill capacity has been increasing, but\napparently not quite fast enough to meet demand.\nDuring most of the year plywood mills have been\noperating at about 90 percent of capacity, probably\nclose to the practical maximum. In recent weeks,\nhowever, adverse weather in the Northwest has cut\noff log supplies and BDSA reports 22 mills have\nshut down. (There are about 185 mills in all. )\nThe dock strike has curtailed imports from Canada.\nReproduced at the Richard Nixon Presidential Library and Museum\n3\nMany smaller lumber mills have gone out of\nbusiness in recent years, but there is no evidence\nof any real shortage of mill capacity.\nThere is good reason to believe that timber\nsupply, especially from national forests, has\nbeen a constraint. Prices of national forest\nstumpage have also risen rapidly. NAHB reports\nan increase of 55 percent for Douglas fir saw-\ntimber stumpage between the third quarters of\n1967 and 1968. NAHB also reports that a low\nelevation stand of peeler logs for plywood was\nsold in December for $165 per MBF as against\nan appraised value of $65 to $70. This would imply\na real shortage of supply.\nForeign demand for logs and lumber products\nhas increased (especially in Japan).\nLog exports to Japan have risen very rapidly in\nrecent years. Restrictions recently imposed on\nexports from Federal land have not yet had time\nto prove their effectiveness.\nIt has been suggested that there may be a shortage\nof labor for logging operations.\nThere have been complaints of shortages of wide-\ndoor box cars for shipping the products east.\nJones Act restrictions raise the cost of water-\nborne shipments, and are said to inhibit the\ndevelopment of Alaska as a source for the continental\nmarket.\nPossible Remedies\nAbout 66 percent of our total growing stock of saw\ntimber is estimated to be on public lands. The proportion\nof the actual cut coming from public lands, however, is\nconsiderably smaller, representing less than half of the cut\nin western Washington and western Oregon.\nReproduced at the Richard Nixon Presidential Library and Museum\n4\nIt appears important, therefore, to explore the\npossibility of increasing the timber availability from public\nlands, especially those controlled by the Forest Service.\nThe following specific questions might be raised:\n1.\nForest Service officials have indicated that the\ncut might be increased if it had greater assurance\nof funds on a continuing basis for opening up new\nareas and increasing thinning and salvage operations.\nIt has been suggested that revenue from timber\nsales could be put into a trust fund earmarked\nfor this purpose. Consideration might also be\ngiven to a supplemental for the current fiscal year\nand an increase in the request for fiscal 1970.\n2.\nCan the rotation cycle be shortened by making\ntrees available for cutting at an earlier age?\nDiscount rates used in determining the optimum\neconomic age for cutting may need review, especially\nin the light of the secular trend of interest rates.\n3.\nThere may be some possibility of temporary\nincreases in allowable cut to meet surges in demand.\n4.\nIt has also been contended that the procedures\nunder which bids for stumpage are now being advertised\nand awarded tend to ratchet prices upward, thereby\nleading to higher costs and higher prices for lumber\nand plywood.\n5.\nThe possibility of alleviating any transportation\nbottlenecks that exist may also merit examination.\nThe National Forest Products Association, supported\nby the NAHB and Retail Lumber Dealers, has prepared a\nbill covering some of these points for consideration by Congress.\nThis increases the urgency of action by the Executive Branch.\nReproduced at the Richard Nixon Presidential Library and Museum\nTHE CHAIRMAN OF THE\nCOUNCIL OF ECONOMIC ADVISERS\nWASHINGTON\nMarch 5, 1969\nMEMORANDUM FOR THE CABINET COMMITTEE ON ECONOMIC POLICY\nSubject: Proposed Task Force on U. S. - European Agricultural Trade\nThe effect of Common Market farm policies on our agricultural\nexports has already been serious, and it is likely to get worse. Our\ntotal farm exports to the EEC have been falling since the implementation\nof their variable levy system. Proposals now before the EEC to levy\na special tax on soybeans threaten a halt to one of our most important\nfarm products, of which we export nearly $300 million a year. Our\ntobacco exports, running to well over $100 million a year, are also\nin danger. Moreover the EEC is now subsidizing its exports to other\nparts of the world (especially Japan) in competition with ours. These\nsubsidies are financed in part from the proceeds of the variable levies\non imports into the EEC.\nIt is possible that these dangers can be countered within the\ndomain of trade policy. We have various threats we can use, and also\ncertain concessions we can offer. As to threats, we can question the\npropriety of variable levies before GATT, or we can impose export\nlevies which would preempt the EEC's levies and deprive them of\nrevenue. Possible concessions include an agreement on free trade in\nfats and oils, which would open the U.S. to dairy imports, now largely\nprohibited. Needless to say some of these possibilities may have\nserious implications for both domestic and foreign policy. Although\nthey need to be investigated, it can be argued that they do not go to\nthe heart of the matter.\nThere can be little doubt that a more durable solution to the\ndifficulties of U.S. - European agricultural trade must involve a degree\nof harmonization of domestic policies. At present there is no com-\npatibility at all. In fact, OECD estimates indicate that there will\nsoon be an annual grain surplus of 60 million tons (worth some $3 billion)\nand similar surpluses in other commodities. While the Common Agri-\ncultural Policy of the EEC is the principal disturbing factor, our own\npolicies contribute to these problems also.\nReproduced at the Richard Nixon Presidential Library and Museum\n2\nIn the past we have not been willing to discuss our domestic\nfarm policies with other countries, and as a result EEC has not been\nwilling to discuss theirs either. The time may be ripe for greater\nflexibility. One factor is that the new Administration is virtually\nuncommitted in farm policy. Another is widespread dissatisfaction\nin Europe with the Common Agricultural Policy, whose cost is growing\nastronomically. OECD has recently revived an earlier French\nproposal for high-level discussions of this subject. Furthermore\nMansholt, the member of the European Commission in charge of farm\npolicy, has invited Secretary Hardin to an exchange of views.\nIn order to coordinate views on this matter it would be expedient\nto set up an interagency task force to pursue these matters. It should\nrepresent the following agencies:\nAgriculture\nCommerce\nState\nSpecial Trade Representative\nCouncil of Economic Advisers\nOther agencies could be brought in as required. The task force would\noperate without publicity and report periodically to the Cabinet\nCommittee on Economic Policy.\nPreliminary reactions from Agriculture and State to this\nproposal have been favorable.\nPaul W. McCracken\nReproduced at the Richard Nixon Presidential Library and Museum\nTHE CHAIRMAN OF THE\nCOUNCIL OF ECONOMIC ADVISERS\nWASHINGTON\nMarch 5, 1969\nMEMORANDUM FOR CABINET COMMITTEE ON ECONOMIC POLICY\nSubject: A Truly Private Voluntary Approach to Price Stability\nWe should consider stimulating the initiation of a private vol-\nuntary effort to bring about the wage and price behavior that would\nassist in the transition to a less inflationary economy. There are\narguments against as well as for doing this. The purpose of this\nmemorandum is not to urge it but to write its discussion.\nThe Problem\nThe ingredients of the situation are as follows:\n1. The Government is determined to follow a fiscal and monetary\npolicy that will gradually reduce the rate of inflation.\n2. Nevertheless, business and labor are likely for some time\nto continue trying to push up prices and wages as if rapid inflation\nwere still to be expected.\n3. The collision between Government policy and private behavior\nmay result in excessive unemployment in the transition to a lower\ninflation rate.\n4. There are people who believe that this dilemma can be re-\nsolved by Government \"guidepost\" policy, in which the Government\nprescribes standards of non-inflationary wage and price behavior and\ntries to obtain adherence to those by more or less forceful means.\nThis Administration has properly decided not to follow that\ncourse, partly because it almost inevitably leads the Government\nto a choice between the application of pressure in particular cases\nand the flouting of standards that have been enunciated with the full\nauthority of the Government.\nReproduced at the Richard Nixon Presidential Library and Museum\n- 2 -\n5. Nevertheless, it remains true that the success of the Adminis-\ntration's economic policy will depend on private voluntary behavior\nwhich will be heavily influenced by private expectations about the\nfuture of the economy and, perhaps to a lesser degree, by notions of\nsocial responsibility. This Administration has indicated its confi-\ndence in private voluntary effort to assist in the solution of national\nproblems.\nA Possible Course of Action\nA possible course of action would be the formation of a private\norganization, including representatives of labor, business, and the\n\"public, 11 to carry on research, discussion and education about the\nprivate policies that would assist in achieving price stability with\nhigh employment. It would attempt to formulate standards of desirable\nwage and price behavior and ways of measuring what actual behavior\nis - - such as ways of calculating the cost of a labor contract. It\nwould not make findings about particular cases, but might make peri-\nodic reports on general developments. The organization would have\nits own finances and staff and would carry on such publicity as it\nconsidered useful.\nSuch a private organization, if the proper people were involved,\nmight achieve advantages of education and moral suasion without the\npossibility of the use of pressure and the problems of arbitrary\nGovernment control. Whether the effects would be large or small\nno one can say, but the effort would have been made and the risks\nwould not be great. Perhaps labor and business would be unable to\nagree on anything significant, but no Government policy short of\nmandatory controls will work either if this is really true.\nThe argument against stimulating a private effort of this kind\nis that it may look like a retreat from the pure free-market phi-\nlosophy implicit in the rejection of guideposts. Another danger is\nthat the step may suggest lack of confidence in the success of what\nwe have described as \"fundamental\" anti-inflationary policies.\nAn Alternative\nThe ideal development would be the spontaneous emergence of\na private voluntary effort. However, this seems unlikely. A possible\nReproduced at the Richard Nixon Presidential Library and Museum\n- 3 -\nalternative which would not put the Government too far out in front\nwould be to take up where the President's Advisory Committee on\nLabor-Management Policy left off. This Committee consisted of\nsix representatives each from business, labor, and the public plus\nthe Secretaries of Commerce and Labor. It went out of existence\non December 19, 1968, when all the members resigned. Its last\nofficial act was to make a report, not published, which recommended,\namong other things:\nDeveloping a broad and continuing program of education and\nprivate sector involvement to demonstrate the importance of\nsteps to cope with inflation and the role of each citizen in\nmeeting this challenge: The continued involvement of labor,\nmanagement and the public, through the President's Advisory\nCommittee on Labor-Management Policy, or a similarly\nconstituted group, seems essential to this process.\nThe President might call in the private citizens who served\non the Committee and ask them to organize themselves to carry on\nthe function described here and implied in their recommendation.\nIf they agreed they could be turned loose to do their best, without\nGovernment involvement except the offer of statistical information.\nPaul W. McCracken\nReproduced at the Richard Nixon Presidential Library and Museum\nTHE CHAIRMAN OF THE\nCOUNCIL OF ECONOMIC ADVISERS\nWASHINGTON\nREVISED AGENDA\nCABINET COMMITTEE ON ECONOMIC POLICY\nMarch 7, 1969, 10:45\nCabinet Room\n1.\nThe unemployment-inflation problem.\n-- Paul W. McCracken\n-- George P. Shultz\n2.\nVoluntary approach to price stability.\n- - Herbert Stein\n3.\nInter-agency study of agricultural exports.\n- - Clifford M. Hardin\n- - Hendrik S. Houthakker\n4.\nStudy of Government Programs with direct price-cost effects.\n-- Paul W. McCracken\n5.\nLumber supply and prices.\n- - Hendrik S. Houthakker\n6.\nInvestment controls.\n-- David M. Kennedy\n-- Maurice H. Stans\nReproduced at the Richard Nixon Presidential Library and Museum\nMEMORANDUM\nTHE WHITE HOUSE\nWASHINGTON\nMarch 7, 1969\nMEMORANDUM FOR: THE PRESIDENT'S FILE\nSubject:\nLate Afternoon Meeting in the President's Office\nwith Budget Director Mayo (4:45-5:20 p. m.)\nThis was the President's final appointment of the day prior to some\nbrief last-minute signing of correspondence and departing by air for\nAndrews AFB and Key Biscayne. Visibly tired after his European\ntrip and four busy days at home, the President sat back in his chair,\nput his feet on the desk, and appeared to relax as he listened to Bob\nMayo outline the status of the FY 69 Budget and the key features of\na recently completed preliminary FY 70 Budget review.\nMr. Mayo highlighted several problems which if left unresolved\nwould continue to chip away at the Budget surplus\nchiefly, the\ncontrollable increases being demanded by the departments and\nagencies for continuation or completion of programs already in the\nmill. He said that for the most part the \"depletion dilemma\"\nstemmed from, and could be directly blamed on, the LBJ Budget.\nThe President nodded in agreement and cited the simultaneous need\nto keep pressures on the departments and agencies to operate with\nsmaller staffs. The President said he felt that the entire Federal\ngovernment structure -- the White House included - could achieve\nconsiderable savings by reducing personnel strengths.\nAfter further discussion, Bob Mayo said that he wanted RN backing\n(hopefully without putting RN \"on the spot\") as he goes after our\npeople in an effort to promote greater restraints. He (Mayo)\nmentioned his determination to \"get under the LBJ Budget of\n$195 B, 11 which he said meant \"drastic cuts. 11 At this point the\nPresident cautioned against the practice of reducing expenditures\nso much that the national economy suffers. He said that instead\nhe wanted Mayo to come up with the precise LBJ Budget figures\na point-for-point statement of what LBJ really did; then, he said,\nReproduced at the Richard Nixon Presidential Library and Museum\n\"Our plan will be to cut that!\" The President reasoned that such a\nplan of attack could be better put across to the American public\nthat the public would understand it better. Bob Mayo agreed with\nthe wisdom of this strategy and as the President began looking over\nthe papers on his desk -- and packing his briefcase for the Florida\ntrip - the meeting came to a close.\nALEXANDER P. P. BUTTERFIELD\nReproduced at the Richard Nixon Presidential Library and Museum"
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