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President's Handwriting, November 1-15, 1973 [4 of 4]

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PHW K THE PRESIDENT HAS SEEN THE WHITE HOUSE WASHINGTON November 12, 1973 MEMORANDUM FOR THE PRESIDENT FROM: ALEXANDER M. HAIG SUBJECT: Summary of Proposal on Welfare/Tax Reform Attached is Cap Weinberger's proposal to reform the welfare system through tax reform. If you approve, he would like to assemble small group to develop a specific proposal for inclusion in your State of the Union message. A summary of the proposal follows. BACKGROUND: Past efforts have encountered four key obstacles: -- Fighting to reform individual categorical programs has not been a winning posture. -- The interrelationships of different programs have become more important -- and wasteful. -- Despite your 1974 budget ceiling, we have not achieved a viable linkage between welfare programs and fiscal sanity. -- Public frustration continues over the size and performance of the Federal bureaucracy, along with a related dissatisfaction with the size and equity of the tax bill. The conclusion is that incremental efforts have failed, and only funda- mental reform can overcome the obstacles to improvement. MAJOR TAX REFORM Based on Milton Friedman's concepts, a tax reform could also deal with welfare systems:

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