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Congressional Leadership Meetings with the President - 11/4/75: Republican
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Congressional Leadership Meetings with the President - 11/4/75: Republican
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John O. Marsh Files (Ford Administration)
John Marsh's General Subject Files
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Taxation
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The original documents are located in Box 9, folder "Congressional Leadership Meetings
with the President - 11/4/75: Republican" of the John Marsh Files at the Gerald R. Ford
Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 9 of The John Marsh Files at the Gerald R. Ford Presidential Library
GOP LEADERSHIP MEETING
Cabinet Room - November 4, 1975 - 8 A.M.
President
We have a heavy schedule this morning. New York City,
the tax cut, energy, foreign assistance and Consumer
Protection Agency.
My views are well known on New York City. I would
like to get your up to date appraisal and recommendations.
What is the status? Is floor action this week or next, Al?
Congressman
We reported it out of committee 23-16. Bob Stephens voted
Johnson
to report it, but will oppose it on the floor. John Rousselot
will also oppose it. There is not a ground swell of support.
There will be fairly tough sledding on the floor.
President
John, when is it scheduled?
Rhodes
Al, when do you expect to go to Rules?
Hutchinson
It may go sequentially to Judiciary.
Rhodes
They may try to marry the two in Rules.
McKinney
I expect it will go to Rules on Monday and be added there.
Rhodes
Timing is up in the air. We are not aware of when or what.
We also have another vacation coming up.
President
Bill, isn't there a deadline coming up?
Secretary Simon
Yes, November 10 or 15. New York may be able to meet
these obligations. The absolute deadline is December 1.
President
What about the Senate?
Tower
In the Banking Committee all votes on New York were 7-6.
Packwood voted to report but he may be opposed on the floor.
The Senate bill has loan guarantee provisionsin it. This
paper is non-taxable. There is no way it can get through
the Senate. A filibuster is certain and we can sustain a veto.
President
It has a default provision?
Tower
It does. It covers essential services. There is no section
in our bill on Federal Bankruptcy. The bankruptcy legislation
will pass. The loan guarantees will fail.
FORD
-2-
President
The Vice President has pointed out something. The
Democrats didn't know or they ignored the fact that Beame and
Carey had default legislation when they came down here and
Judge Rifkin sat right there next to the Vice President's
chair with the legislation. Don't let them get away with it.
Vice President
It also cost them $300, 000 to get the bill drafted.
President
Caldwell Butler has introduced it in the Judiciary Committee.
Hruska
Senator Burdick and I have introduced it in the Senate. We
may have one day of hearings. There are two roads open to us.
We can amend Chapter 9 or add a new one for municipalities
larger than one million. Tendancy seems to be the new
chapter route. We are zeroing in on specific points hoping
to develop a plan with some character. We could report some- -
time next week.
Hutchinson
In the House the Democrats may act on Chapter 9. The
Administration bill was co-sponsored by Congressman Butler
and myself. The bill got to Banking by an historical accident.
There is nothing final in the sub-committee. Clearly the
Democrats can act on Chapter 9 if they choose. They have
5 votes to our two.
President
Any comments?
Rhodes
New York has authority to carry on essential services.
Vice President
There may be chaos.
President
I saw some press reports on a suit by a bank to protect its
interests.
Rhodes
Our posture should be to amend the bankruptcy law.
Tower
Rhodes is right. Our course is Judiciary and not mess
around with Banking.
Vice President
The State could vote a temporary tax and appropriate to
the city based on this tax.
President
When is that legislative session? They keep putting it off.
-3-
Hruska
Without the new law they may come under Chapter 9.
Vice President
The State has $7 billion in obligations and the city has
$5 billion and that is a tough road.
President
Floor situation seems to indicate there is no time for a
bailout. Keep the pressure on to get the proper default
procedure.
Hruska
Those hoping for reversal by the President may tangle it
up so much that default may result.
President
I have no inclination to change.
McKinney
The House leadership will try to force the President's hand.
They will claim anarchy if we don't get legislation. The
Democratic solution is chaos.
Horton
There are some strange things going on in Judiciary. Badillo
and Rodino are saying no movement on legislation without
request from Beame, but there has been no request from
Beame.
Vice President
They have no courage to ask.
President
They had legislation drafted and wanted us to take it.
Vice President
Did they leave the Rifkin bill?
Seidman
No they didn't.
Edwards
On the debt ceiling bill 18 New York members voted no.
Johnson
They could work out a solution with their pension system.
The only way is through orderly court procedures.
President
Let me point out. I'm not going to change my position. I
will not be locked in a corner to buy a married bill that is
unacceptable. The other way is clear, quick and sound.
Now let's move to the tax cut. Herm.
Schneebeli
We have met with Secretary Simon and we are sticking to
the balanced approach. We have no delusion about winning
but we will fight hard. They may add to debt ceiling. The
tax bill is 668 pages and the Chairman may try to consider it
in one day. We have 3-4 Democrats with us. Landrum,
Waggonner and Burleson. Al Ullman is gun shy of losing his
third bill. It is still iffy. We may finish today.
President
What is the schedule on the tax bill?
Schneebeli
We hope to finish by Thanksgiving and do the debt ceiling
by the 15th. The Senate will hand the tax bill on the debt
ceiling. I asked Wilbur if he will be in Conference and he
said yes and he will be with the Republicans.
President
Carl.
Curtis
Senate Finance meets today. We won't really know until
the House bill passes. People really understand the
argument of no tax cut without a spending cut. This may
prevent a bad bill. We always know when Christmas is
coming. The Senate Finance Committee starts working
on a tax bill.
Secretary Simon
We are on 6 different tracks. They may attach tax bill
to debt ceiling and if that occurs I recommend you veto
the debt ceiling bill.
President
Talk about the perils of Pauline.
Any other comments, John. Will it be a closed rule?
Schneebeli
Democrats and Jim Corman want a closed rule.
Michel
Current law expires December 31. In the absence of your
proposal what do we do?
President
The previous law before this tax cut goes back into effect.
Michel
Are we willing to go that far?
President
I am.
Lynn
Come January, 1976, we see a deficit of $60 billion without
a spending reduction matched with the tax cut. No one wants
a tax bill in July of 1976. This is a strange bill.
President
Somewhere between $63-70 billion is the deficit for FY 1976.
The Budget Committee figure is between $70-73 billion.
It will be somewhere in that range. A tax cut without spending
cut will be a minimum deficit of $60 billion next year.
5
Curtis
The spending cuts are not necessarily fatal politically.
There is greater responsibility on part of the electorate.
We may be just as well off politically.
Michel
I can't agree, but we should run it by our people. I
have a feeling that is not the sentiment on our side.
Cederberg
We talk much about reducing spending, but there is not much
chance for that. Mr. President, your State of the Union and
Budget messages should list the specific reductions and
changes in the basic legislation that will be required. The
Chairman of the Education and Labor Committee will not
consider reductions without Presidential recommendations on
where we really bite the bullet.
Lynn
There is no way to get a $395 figure without changing the law.
Ninety percent of our spending is mandatory law and entitle-
ment programs plus Federal employees. If we pass a ceiling
it gives us a better chance next year. A Presidential ceiling
will cut the rhetoric from the Departments and agencies.
If the President has spoken it will be easier for Congressional
budget committees. We should put a ceiling on this year
because next Spring it will be impossible.
Cederberg
That's fine Jim, but it won't happen.
Rhodes
The only way is to suspend operation of the anti-impoundment
act.
Lynn
On the big bucks you need some limitation.
Rhodes
We need a legislative agenda -- ABCD. It's the only way to
make it credible.
Lynn
How do you do that?
President
Get a rule. Del.
Latta
The old Frank Bow approach is available. You need 5% off -
send it back.
Cederberg
That 5% won't come off. Take it off from Social Security --
never will that happen. The only place it will come off is
from Defense.
Young
I agree with Al Cederberg. It can't be done in this Congress.
The laws must be changed.
President
We must recognize the practical parliamentary problems.
We must make a determined fight or we'll never get it
under control. If we don't change the law we will be over-
whelmed. The same as New York City.
Case
What are your ideas for cuts and what laws do you recommend
be changed. This will have to be a joint process. We need
to know what to do.
President
I have given guidelines to every agency and department
covering the $28 billion cut. I expect they will cooperate
with some pain and anguish. There is a tendency to recommend
changes only for most popular programs. I have gone over
two major departments and will go over every one.
Case
Is it possible to make these changes without substantive
changes in the law?
President
Changes in substance are required. There is a recognition
that uncontrolled items must be controlled. I am going
through every department.
Lynn
A one percent break on Federal retirement and food stamps
are substantive changes required. Social Security Insurance
is another. Every county has a different formula for cal-
culating the level of assistance. This change alone could
save $500 million yearly. Can't change any of these without
changes in the law. Someone will always scream but we must
handle it now. Looking at the out years, we always have a
balanced five years down the line, but something always
happens to destroy that estimate.
Bellmon
I am not as pessimistic, but we do need some guidance.
We may have a majority on the Budget Committee. Three
Democrats, Chiles, Nunn and Hollings usually vote with us.
I don't see a spending ceiling before April 15, 1976.
President
We will work with you.
Bellmon
If you refuse to sign the tax extension, you have Congress in
a tough position.
-7-
President
That's in the back of my mind. Let's turn now to energy.
Fannin
The conference is working hard, but I am disturbed about
the GAO and mileage provisions. The Democrats have us
over the barrell and are now concentrating on price. We
meet on Friday. There are 25 conferees from the Senate
and 7 from the House. The Chairman has ruled that one
Senator can conduct business and vote for the Senate with
12 proxies. It's a difficult time but I'm hopeful we can get
a bill. They may add the allocation provision to the debt
limitation in the Senate.
President
Returning from Florida on Sunday evening, I had a very
interesting discussion with Dick Stone who is working to
get an acceptable bill.
Fannin
He is cooperative.
Brown
There is substance in the pricing section of the bill. Zarb
has met with House Democrats on pricing.
Zarb
They are not anywhere close among themselves and there
is a considerable distance from us. The Democrats have
caucused on the Senate side and have some agreement.
Jackson is in a position to do it. Stone and Johnston can
help, but Jackson is playing games. If we get no agreement
our position should be one of increased vulnerability and
higher imports. The price mechanism has some merit,
but if the number is too low, we'll just have to see where we go.
Brown
Jackson spoke optimistically yesterday and said they would
continue to work.
President
When does conference meet again?
Fannin
10 A.M. It may be postponed.
Stevens
Keep the Administration position clear so there is no confusion.
Zarb
We will staff those positions, including natural gas.
-8- -
Brown
The Dingell solution is only a short term one. Pearson-
Bentsen is proscribed in a Parliamentary sense. We
will try to get around the parliamentary hurdle. We may
loose in the subcommittee or the full committee. We'll
try in Rules for an open rule to allow consideration of
Pearson-Bentsen on the House floor.
McKinney
I am the only member from New England who supports
deregulation, but on radio this morning I heard a report
from FPC that there is no gas shortage. If this is true, our
case is hurt badly.
President
In Baltimore they have announced cutbacks in natural gas
availability. It will be especially acute in 10-15 states.
Zarb
Numbers are up in the cutbacks occurring in 12 states where
it is especially serious.
McKinney
When cutbacks begin then we can sell the program in
New England.
Brown
The press is saying that long range decontrol is frustrating
a short term solution. We should keep trying to bring them
around by blaming the Democratic leadership.
President
This is November 4 and controls expire November 15.
We are going into winter and curtailments of natural gas.
Ten states are severely affected and five less SO. Fifteen
of the 50 states have deadlines. Do all you can in the
committees. I talked to the Speaker and Mansfield and
asked them to pressure Scoop and Staggers. I also called
Staggers, but I don't know if that will do any good.
There are two more items - Foreign Assistance and CPA.
The foreign assistance figures are less than the January
budget, but larger than a year ago. 70% of it relates to the
Middle East. Israel would get $2.3 billion and Egypt $750.
My recommendations for the Middle East are very impor tant.
This will help substantially to maintain peace. It's a big
chunk of money. In the case of Israel we have recommended
less than 76 Senators requested in their letter and we still got
the Sinai agreement. Your support in committee and on the
floor are very important.
-9-
Kissinger
I'm so busy counting the jobs I have lost that.
Rhodes
How high did you count.
Kissinger
I'm going to think of a good answer. On economic and
military assistance, Congress on the latter wants to
increase MAP and reduce grant assistance. There is
some debate on the level of U.S. assistance. There are
four things to remember.
1. The threat to the assisted countries.
2. Interest of preserving U.S. security.
3. Diplomatic reasons.
4. Consequences of not doing it.
The bulk of the $2.3 billion for military sales goes to
Israel. She receives $1.5 billion and any cut would have
serious affect on security of Israel.
Many are reluctant to see the U.S. in the arms business,
but if they don't buy from us, they buy from the Soviet
Union or Western Europe. Also if we don't sell, we lose
sales and political influence.
The Middle East is part of the package. Most is for Egypt
and Israel. $2.3 million for Israel and $700 million for
Egypt.
Some people think the Sinai Agreement produced these figures,
but our relations with Israel are independent of these figures.
Israel was so confident of them she included them in her
printed budget prior to the Sinai Agreement. In fact for
Israel, no sum can be charged to Sinai Agreement. The
$2.3 billion for Israel would have been necessary with or
without the Sinai Agreement.
Egypt is $150 million higher due to the Sinai Agreement.
Egypt has broken with the radical Arabs and the Soviets. It
is our long term interest to keep this arrangement. The
1973 war cost $15 billion. I urge you not to look at this
assistance as payment for the Sinai agreement, but for
stability and to prevent Soviet domination and to keep Jordan
on a moderate course. There is $90 million for Syria which
we may reconsider.
-10-
Kissinger
Other items of support include funds for Greece - to
strengthen the Caramanlis Government. Funds for Portugal
and its relatively moderate government which no one obeys.
We do want to see Portugal move back to a pluralistic
society. We have also included some money for Cyprus
to be used primarily for refugees.
President
Cliff.
Case
I don't anticipate many difficult problems. You may end
up with some cuts. I don't think we should worry too
much about these countries going elsewhere. Aren't we
the only source of high quality weapons?
President
Cliff, I can answer part of that. Today the Germans make
the best tank in the world. The French have a good fighter
and the Soviet Union has some good equipment. They are
always probing and are making some inroads with Syria.
We must continue our efforts.
Kissinger
The French F-1 is better than our F-4, but not as good as
our F-16. The things the Saudis want they can get from
Britain and France.
Broomfield
We started hearings Thursday. Some concern about figures
not high enough for Israel. There may be a move to cut Egypt.
I hope the nuclear proposal for Egypt will go. It will be tough.
Rhodes
Is the package for bigger grants and lower credits for Israel?
Kissinger
There was a bureaucratic mixup on message from the
President. The mix was set at 2/3 credit and 1/3 grant.
The President decided on a 50-50 mix and we sent up
2/3 and 1/3. It is now straightened out and will be 50-50.
Rhodes
$1.5 billion is part of each?
Kissinger
50-50. Supporting assistance is all grant.
Edwards
How much for Portugal?
Kissinger
$55 million.
President
$65 million.
Kissinger
$55 million for support and the additional for refugees.
-11-
Horton
Who pays for Sinai technicians?
Kissinger
$50 million and we pay.
Stevens
What is the total dollar figure?
Kissinger
$4.7 billion
Edwards
There will be increased pressure. Our own subcommittee
is trying to increase sales over grant.
Michel
The defeat on the debt bill seems to indicate there will
be deep cuts on this bill if my ears are tuned right.
Edwards
We may loose our national constituency if New York goes.
President
Some members are on the horns of a dilemma. We are
going to fight hard in the Passman subcommittee. Otto
has been a good team player and he understands the problem.
He does an honest job.
Let's move now to the CPA. I had a 10:30 meeting today
with Virginia Knauer and some representatives from
the Federal agencies on our in house program. We need
a stronger program to protect the consumer interest. I
have two plans and I will squeeze each one. Once finalized
the plan will be published in the Federal Register. I think
it is an adequate way to protect the legitimate interests of
the consumer. We don't need an extra agency. The
legislation is on the floor this week. Frank, do you want
to make a pitch for it.
Horton
I won't make my pitch again. I'm glad you are doing what
you are. The consumer will be better off and this will help
Republicans to show interest in the consumer. I also urge
you to keep your program on regulatory agencies. You must
continue to talk about these programs. The CPA is a way
to curtail regulatory problems. We are setting up a paper
work commission.
President
John, you are on the other side.
-12-
Erlenborn
I am flat out against the bill. Head counts look good
enough to sustain and maybe to defeat the bill on the floor.
Rhodes
I agree with John. Michel says Republicans will vote over-
whelmingly against the bill. We will need some support
from the Democrats.
President
Can you finish in one day. We should cover labor and if
they know it the bill may not pass. Jim, what is the status
of the regulatory reform legislation?
Lynn
Con Rail and airline proposals are on the Hill and trucking
goes today. Competition is the best protection for consumer.
Our action has been therapeutic for regulatory agencies.
They seem to be cutting down on red tape and are doing a
a better job.
President
That completes our scheduled topics. Are there any others?
Michel
Maybe sometime soon we should have a session to talk
politics. We must stick together. We should also get
together and find out where we are going and get some
encouragement.
President
We could have a report from Ted and Guy. We could do it
next time.
Michel
We have some members who are retiring and we should
assess where we are.
Stevens
We need to resolve some conflicts between the RNC, the
Senate and House committees and your own committee.
President
We will schedule it next time.
THE WHITE HOUSE
WASHINGTON
November 3, 1975
MEETING WITH REPUBLICAN CONGRESSIONAL LEADERS
Tuesday, November 4, 1975
8:00-9:30 a.m. (90 minutes)
The Cabinet Room
From: Max L. Friedersdorf
m.f.
I. PURPOSE
To discuss with the Republican Congressional leaders
the subjects of New York City, tax and spending cuts,
energy, Middle East military assistance package and
consumer protection legislation.
II. BACKGROUND, PARTICIPANTS AND PRESS PLAN
A. Background:
1. Guaranteed loan legislation to bail out New York City
is moving in both Houses and may be on the Senate Floor
this week. In the House the guaranteed loan proposal
is likely to be joined with the President's Bankruptcy
Act amendment.
2. Representative Caldwell Butler and Senator Roman Hruska,
both of whom accepted for today's meeting, introduced
the President's bankruptcy legislation.
3. House Ways and Means Committee is in it's final review
and mark-up of tax cut legislation. Final Committee
vote could come on Wednesday. Bill Simon has been work-
ing closely with the Minority and Joe Waggonner to have
the President's tax cut and spending reduction proposals
considered.
4. House and Senate conferees could conclude work this week
on the energy bill (S.622/H.R. 7014). The conference
is at a critical stage with the pricing provision to be
resolved.
5. The President's request for military assistance for
Israel and Egypt was submitted last week. Secretary
Kissinger will testify on Friday, November 7, before the
FORD
House International Relations Committee, and mark-up is
ARVUSIT
scheduled to start next week. In the Senate, Sparkman
is starting hearings on the security assistance bill.
-2-
6. H.R. 7575, a bill creating a Consumer Protection Agency,
will be on the House Floor this week. The Republican
leadership, led by John Erlenborn, is mounting a strong
fight against the bill. The Republican whip check is
encouraging and enough votes seem assured to sustain a
veto, and possibly defeat the bill outright on the Floor.
B. Participants: See TAB A
C. Press Plan:
The Press Office has announced the meeting. Press and
White House photographers.
III. AGENDA - See TAB B
IV. TALKING POINTS - See TAB C
1. We have a heavy agenda today, gentlemen, on five issues
of great importance.
2. Those five subjects which I would like to address today
include the New York City financial situation, my tax
cut and spending reduction requests, energy, our Middle
East security assistance request, and consumer protection.
3. In addition to our regular leadership, we have here
today the appropriate Minority Members from the juris-
dictional Committees, as well as our own Administration
people with responsibilities in these areas.
4. Let us first discuss the subject of New York City.
PARTICIPANTS
The President
The Vice President
The Secretary of State
The Secretary of the Treasury
The Administrator of FEA
HOUSE
SENATE
John Rhodes
Bob Griffin
Bob Michel
Bob Stafford
Sam Devine
Ted Stevens
Jack Edwards
Carl Curtis
Lou Frey
John Tower
Barber Conable
Roman Hruska
Jimmy Quillen
Paul Fannin
Guy Vander Jagt
Cliff Case
Ed Hutchinson
Henry Bellmon
Caldwell Butler
Milt Young
Al Johnson
Stew McKinney
Herm Schneebeli
Bud Brown
Bill Broomfield
Frank Horton
John Erlenborn
Del Latta
Al Cederberg
STAFF
Don Rumsfeld
Bob Hartmann
Jack Marsh
Phil Buchen
Ron Nessen
Max Friedersdorf
Jim Cannon
Jim Lynn
REGRETS
Bill Seidman
Alan Greenspan
Sen. Hugh Scott - out of town
Bill Baroody
Rep. John Anderson - out of town
Dick Cheney
Brent Scowcroft
Doug Bennett
Vern Loen
Bill Kendall
Pat O'Donnell
Charles Leppert
VORD
Tom Loeffler
Bob Wolthuis
LIBRARY
AGENDA
8:00-8:05 a.m.
The President opens the meeting, announces the
(5 minutes)
agenda, and introduces the subject of New York
City's financial problems.
8:05-8:15 a.m.
The President requests Bill Seidman and Bill
(10 minutes)
Simon to comment on New York City.
8:15-8:20 a.m.
The President requests the leaders to comment on
(5 minutes)
New York City. (Senator Hruska and Rep. Caldwell
Butler will attend. They are the ranking Minor-
ity Members on the Judiciary Subcommittee for
the bankruptcy bill.)
8:20-8:25 a.m.
The President introduces the subject of his tax
(5 minutes)
cut, spending reduction proposals.
8:25-8:30 a.m.
The President calls on Alan Greenspan and Bill
(5 minutes)
Simon for comments on the Tax bill. (Simon has
been meeting regularly with Ways and Means Minor-
ity Members on Committee strategy.)
8:30-8:35 a.m.
The President calls on the leaders for comments
(5 minutes)
on the tax bill. (Herm Schneebeli, Barber Conable
and Carl Curtis will be in attendance.)
8:35-8:40 a.m.
The President introduces the subject of energy
(5 minutes)
and calls upon Frank Zarb for comment.
8:40-8:45 a.m.
The President requests comments from the leaders
(5 minutes)
on the energy conference, and natural gas. (Paul
Fannin and Bud Brown will be in attendance.)
8:45-8:50 a.m.
The President introduces the subject of military
(5 minutes)
assistance to the Middle East and calls upon
Secretary Kissinger for comment.
8:50-9:00 a.m.
The President requests comments from the leaders
(10 minutes)
on Middle East security assistance. (Senator
Case and Rep. Bill Broomfield will be in
attendance.)
9:00-9:05 a.m.
The President introduces the subject of consumer
(5 minutes)
protection. (Bob Michel will have a good whip
check report; John Erlenborn, who is the chief
opponent will be in attendance, as will Frank
Horton, a proponent of the objectionable bill.)
9:15-9:30 a.m.
The President suggest the leaders may wish to
(15 minutes)
discuss other subjects in the brief time remain-
LUVERIT
ing. (Other subjects which may be raised include
the Schlesinger change, Rockefeller statement,
situs picketing which is on the Senate Floor this
week, 200 Mile Limit which is in Senate mark-up
-2-
this week, No Fault Insurance which is ready
for full Committee mark-up in the House with
all Republicans opposed, and busing.
9:30 a.m.
The President concludes the meeting.
1
LIBRARY
TALKING POINTS
ON ENERGY
FOR REPUBLICAN
LEADERSHIP MEETING
1. I am pleased that S. 2310, providing for both emergency
natural gas legislation and long range deregulation,
passed the Senate. It is my hope that the House Commerce
Committee will begin early deliberation on a companion
bill which would also provide for emergency measures as
well as a long range solution -- new natural gas deregulation.
2. The Conference Committee on S.622/H.R.7014 is continuing
deliberations this week. I have been pleased with the
attitude of the Committee so far in addressing the concerns
of the Administration. However, we still have some
serious problems with the non-price provisions. The oil
pricing provisions, however, have not yet been resolved
and I cannot consider the bill acceptable until these pro-
visions are addressed.
3. As you know, the bill extending oil price controls until
November 15 did not allow the submission of the Administra-
tion decontrol plan before November 1. While the
Administration could now submit a plan of its own to
Congress, I think we must wait until we see how the
Conference is proceeding. I would appreciate your views
on this matter as well as your thoughts on strategy with
regard to natural gas legislation and the Conference
Committee.
4.
Frank, do you have anything to add before we begin our
discussions?
LIBRARY
TALKING POINTS
1. I continue to be concerned about the citizens of New York City in the
event of default. As I've said in the past, I think it imperative that
essential services be maintained. I still believe that the City and
State have it within their power to avoid a default, and I am con-
tinuing to keep abreast of the New York situation through my
economic advisors.
2. I understand that the Senate and House Banking Committees have
reported legislation which would provide financial assistance prior to
default and also contain provisions authorizing essential services
after default. Neither of these bills requires the Executive Branch
to provide funds to pr event a default.
3. I would like to have your views on these bills with the understanding
that in the event I decided to sign a bill into law, I would in no way
consider ex ercising the options which would provide the federal funds
to avert a default.
LIBRARY 2)
November 3. 1975
Wm. Sendman
Talking Points
My program is directed at one of the most important
long-term economic problems confronting this country: an
accelerating and increasingly uncontrollable rate of
increase in federal outlays.
The rate of increase in nondefense budget outlays,
in real terms, has been exceeding the real growth of the
economy. Payments to individuals in real terms for
example, rose at a 11 percent annual rate between fiscal
1965 and fiscal 1975. Real outlays for all nondefense
programs, excluding NASA and interest payments; rose at
an annual rate of more than 8 percent. (Real GNP rose at
a 3-1/2 percent rate.)
The size of the developing problem has been obscured
for years by the decline in real defense outlays following
the Vietnam War peak. Between fiscal years 1968 and 1975
such outlays declined by an average of 6.4 percent per year.
These trends obviously cannot continue if we wish to avoid
the fate of New York City. We have three choices -- to
sharply curb the growth of domestic programs, to continue
the gradual dismantling of our defense establishment, or
to raise taxes. Even should we, as a nation, short-sightedly
opt for either of the latter two courses of action, we
would be only postponing again, the inevitable confronting
of the unsustainable real rise in domestic programs.
The full significance of this acceleration in outlays
became particularly evident during the spring and summer of
this year as the fiscal 1977 budget began to take shape.
Accordingly I directed Jim Lynn to devise measures and ways
by which the expenditure growth could be slowed. I further
directed that any savings be refunded to the American tax-
payer in order to maintain private purchasing power and job
creation.
One problem that I had in formulating my program was
that the temporary tax cut for calendar year 1975 expires
on December 31st. Unless the new permanent tax structure
were put in place as of January, income tax rates would have
risen automatically. In order to reduce the uncertainty with
respect to taxes, I decided to recommend my tax legislation
to be effective as of January 1, 1976.
This timing problem could produce a small increase in
the deficit for the first 9 months of 1976. But as I
indicated previously, I would support further curbs in fiscal
1976 expenditures to eliminate this increased deficit.
FORD VIBRARY
-2-
In any event, the deficit increases are certainly not
large when compared with a program of an extension of the
current tax withholding rates and prospective outlays. Hence
the impact of my program on the path of economic recovery
would not be significant.
What would be significant are the effects on the levels
of federal outlays during the fiscal years 1978, 1979 and
beyond. The $28 billion cut in the fiscal 1977 rate of
increase in outlays, which I have proposed, would help insure
that the dangerous acceleration in federal spending would be
dramatically slowed and budget balance achieved in FY 1979.
This would be a major first step toward defusing the very
strong inflationary bias that has gripped our economy.
FREE is LIBRARY OF
Talking Polats
General Position. I have publicly stated that I will veto
legislation to create an Agency for Consumer Protection (ACP)
The proposed ACP would have broad powers and discretion to
participate in any Federal agency actions affecting consumers.
Its authority would include:
-- an extensive right to intervene in proposed Federal
actions which "substantially" affect consumer interests
by injecting itself into agency proceedings and court
actions;
-- sweeping independent authority to issue interrogatories
to private parties; and
-- access to trade secrets and financial information.
ACP would not, however, have authority to review labor-
related and other matters which also have a great
impact on consumer interests.
Objections to Legislation. I am opposed to H.R. 7575 because:
--- There is no such thing as a single consumer interest
that the agency could fairly represent. An ACP would
have to pick and choose among competing consumer views
in selecting its stand, thereby leaving other consumer
views to fend for themselves.
FORD is LIBRARY GERALD
2
-- ACP would add a new Federal agency and layer to the
Federal bureaucracy at a time when both the Congress
and Administration should be trying to cut down on
the size and cost of government. ACP could cost $60
million over three years, and could require an
additional 1,000 new Federal employees.
- This $60 million in direct costs does not include the
substantial costs to other Federal agencies and to the
general economy caused by the inevitable delays, back-
logs, and confusion which ACP could create.
-- The laws authorizing most Federal agencies' activities
specify that they are responsible for protecting the
public intercst, which includes consumer interests.
A separate agency would further encourage existing
agencies to be lax in this responsibility. The Admin-
istration and Congress should make sure that existing
agencies respond to legitimate consumer interests. If
Congress and the Administration fully exercised their
oversight responsibilities, an ACP would not be necessary.
- I have recently launched a number of steps to make
Executive Branch agencies more responsive. In April,
I instructed Virginia Knauer to head an effort to
examine the means by which Federal agencies consider
consumer viewpoints in their decisions and activities.
3
This month all major Executive Branch agencies
will publish a consumer representation plan for
public comment and hearings. I am also anxious to
see that existing laws are reviewed to make sure
that outdated or burdensome government requirements
do not work against consumers. I have supported
repeal of the Retail Price Maintenance laws, for
example, because I feel they tend to reduce
competition, which is the means for insuring that
consumers' wishes are met.
FORD & LIBRARY QERAL