852–15

Conversation No. 852-15

Date: February 7, 1973
Time: 3:15 pm-5:11 pm
Location: Oval Office

The President met with George P. Shultz and John D. Ehrlichman.

Legislation

Tax policy
-Commitments
-Property taxes
-Tax credits
-Private schools
-Simplified forms
-Tax reform
-Political advantage for administration
-Criticism
-Budget
-Wilbur D. Mills
-Russell B. Long
-Congressional and public’s support
-Proposals
-List
-Compared to major goal strategy
-Mills
-Reactions to proposals
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NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Shultz’s caution
-Tax reform proposals
-Consultation with Congress
-Commitments
-Cooperation with Congress
-Candidates

Foreign trade
-Important aspects
-Taxes
-Burke-Hartke bill
-Taxable foreign earnings
-American foreign investment
-John B. Connally's assessment
-Shultz’s and Ehrlichman’s assessments
-Union support
-George Meany
-New York Newspaper Guild
-Conversation with Shultz
-Trade legislation
-Jobs
-Businessmen council meeting
-Oil industry
-Exploration abroad incentive
-Losses
-Early exploration
-Deductible
-Income
-Tax
-Loss to US
-Taxes

Energy
-Imports
-Shultz's report
-Connally
-Independent oil operators
-Opposition
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NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Oil prices
-Incentives for domestic production
-Oil Policy Committee
-William E. Simon
-Chairman
-Restructuring
-Imports
-Necessity
-Restrictions
-Preferred market
-Bargaining tool
-Mohammed Reza Pahlavi [Shah of Iran]
-[Faisal, King of Saudi Arabia] Malik Faisal ibn Abd al-Aziz
al-Saud
-Oil study
-Shultz's staff
-Political considerations
-Earlier delays
-Senators
-Clifford P. Hansen
-Quotas and tariffs
-Differences
-Long
-Meeting with President
-Oil and gas interests
-Family
-Meeting with Golda Meir
-Restrictions on Arab oil
-Domestic oil producers
-National security
-Tariffs
-Domestic incentives
-Reform
-Liberalization
-Experimental process

Tax reform proposal
-Capital gains
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NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Minimum tax
-Changes
-Capital losses
-Exploration for oil
-Tax breaks
-Drilling costs and depreciation allowance benefits
-Difficulties
-Drilling incentives
-Dry holes
-Energy message
-Trade bill
-Foreign tax bill
-Tax reform package
-Hearings
-Politics
-Oil companies
-Dry holes
-Appearance of loophole
-Energy plan
-Tandem with tax plan
-Trade energy packages
-California
-Presentation to Congress
-Integration of packages

Congressional relations
-Energy policy
-Bipartisan leaders
-Publicity
-Meeting with President
-Scheduling
-Trade policy
-Bipartisan presentation
-California
-Message
-Devaluation announcement
-Timing
-Consultation with Congress
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NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Recess
-Difficulties
-Telephone calls from White House staff
-Timing
-Trade bill announcement
-President's return to Washington
-Meeting with Henry A. Kissinger
-Leaders' meeting
-Radio speech
-Support for President

Energy policy
-Connally's attendance
-Comprehensive paper
-Peter M. Flanigan
-Option paper
-Decisions
-Charles J. DiBona
-Analysis
-National security
-Oil imports

Stephen B. Bull entered at an unknown time after 3:15 pm.

Wilbur D. Mills
-Arrival for meeting

Bull left at an unknown time before 3:44 pm.

Energy policy
-DiBona’s analysis
-National security
-Oil reserves
-Arab oil
-Conservation
-Contrast with Long’s view
-Oil study
-Levels of domestic production
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NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Bargaining position
-Exploration
-Long
-Prices

Energy paper
-Nuclear power
-Breeder reactor
-Soviet prototype
-Time before production
-Budget
-Breeder reactor
-President's conversation with Dr. Edward Teller
-Feasibility
-Theoretical stage
-Soviet Union
-France
-Prototypes
-Scientific community involvement
-Consensus
-Dr. H. Guyford Stever
-Carnegie Mellon University
-Dr. Edward E. David, Jr.
-Involvement
-Connally
-Connally's views
-Deregulation of gas prices
-Exploration
-Price incentives
-Continental shelf
-Leases
-Deep water ports
-Tankers
-Connally

Mills and the White House photographer [?] entered at 3:44 pm.

Greetings
 -47-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)



Seating
-Edward R. G. Heath
-[Hussein, King of Jordan] Hussein ibn Talal
-Mills
Mill’s appreciation
-Photograph [?]
-First Family

[Photograph session]

Ehrlichman and the White House photographer [?] left at 3:44 pm.

Congressional relations
-Legislation
-Mill’s vote
-Farmers
-President’s trip to Arkansas
-Searcy, Arkansas
-Harding College [?]
-University of Arkansas
-Little Rock
-Hendrix College
-Mill’s alma mater
-Arthur F. Burns
-School of Social Sciences
-Curriculum
-Mill’s interest
-Liberalism
-Compared to social services
-Sociologists

Stennis
-President's visit
-Chances of survival
-President's telephone call
-Tricia Nixon Cox
-Recovery
 -48-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Gen. Walter R. Tkach
-Appearance
-Hand-shaking
-Doctor's comments
-Physical condition
-Compared to James O. Eastland
-Liver
-Habits
-Compared with Eastland
-John J. Flynt, Jr. [?]

Economic legislation
-Arkansas farmers
-Price supports [?]
-Mills's knowledge
-John W. Byrnes
-[Herman T. Schneebli] [?]
-Leadership
-Meetings with President and Shultz
-Tax problems

Tax proposals
-Discussions with President
-Legislation
-Tax reform
-Energy
-Oil, natural gas

Trade
-International monetary situation
-Mill’s interest
-Public posture of administration
-Markets
-Mills's work
-Administration's work
-Most favored nation [MFN] status
-Soviet Union
-Albania [?]
 -49-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Jews
-Votes in House of Representatives
-1948 United Nations [UN] agreement on emigration
-Soviet Union

Soviet Union
-Israel
-Jewish emigration
-Administration's negotiations
-Jews
-Mills’s attendance at Philadelphia event
-Fund raising

Trade
-Bipartisan meeting
-Scheduling
-Trade package
-Shultz's meeting with Mills
-Mills's schedule
-Byrnes's visit
-Protectionism
-Burke-Hartke bill
-Administration's opposition
-Balance of payments
-MFN status
-Bargaining position
-Compared to unilateral action

International monetary situation
-Shultz
-Consultation with Congress
-Balance of payments, trade deficit
-Need for surprise
-Great Britain
-Currency flow
-Dual arrangement
-Balance of payments
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NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


Manolo Sanchez entered at an unknown time after 3:44 pm.

Refreshments

Sanchez left at an unknown time before 5:11 pm.

International monetary situation
-President's program
-Conversations with Burns
-Publicity
-Surcharges
-Amounts
-Balance of payments
-Imports
-Inflation
-Wages
-Compared to rates in France

Trade package
-Bipartisan meeting
-Scheduling
-Preliminary work
-Administration's approach
-US jobs
-Flooding of US market
-Japan
-Bipartisan meeting
-Message to Congress
-Shultz’s role
-Meeting with Mills
-Scheduling
-Mill’s schedule
-Speaking engagements
-New Orleans
-Car dealers
-Little Rock
-Broadcasters
 -51-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


George S. McGovern

International monetary situation
-Shultz’s telephone call to Mills
-Prompt action

Manolo Sanchez entered at an unknown time after 3:44 pm.

Cigarettes
-Smoking
-Allergy

Refreshments
-Iced tea

Sanchez left at an unknown time before 5:11 pm.

Trade proposals
-Mills's speech
-Economy
-Future
-International problems
-Conference
-International conferences
-Number of countries
-Value
-Dealings with individual nations
-Big five nations
-US, Great Britain, France, Germany, Japan
-Discussions over trade, money, defense
-Defense expenditure
-Link
-Trade arrangements
-Great Britain
-Separate issues
-Heath

Tax policy
 -52-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Shultz
-Testimony

Trade proposals
-International Monetary Fund [IMF] speech
-Negotiating authority for President
-Tariffs

Unknown person entered at an unknown time after 3:34 pm.

Photograph [?]

Unknown person left at an unknown time before 5:11 pm.

Trade negotiations
-Balance of payments emergency
-President's authority to declare
-Surcharge
-1971 surcharge
-Bargaining chip
-Japan
-Possible import surcharge in legislation
-Effects
-Balance of trade deficit, payments
-Leaders' meeting
-Bargaining
-Japan
-Europe
-Bipartisan clout
-Authority for President to restrict imports
-Inflation
-Selected items
-Beef, cattle
-Fear of flooding markets
-Japan
-Safeguards
-Choices for President
-Tariff commission
 -53-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Compared to radio, television [TV]
-Protectionism
-Burke-Hartke bill
-Sentiment
-Balance of trade deficit
-World trade
-Concerns
-Labor unions
-Job safeguards
-Adjustment assistance
-Shultz’s discussions
-George Meany
-Trade bill
-Safeguards for jobs
-Unemployment compensation bill
-Federal standards
-Congressional support
-Standards
- -States
-New York compared to Arkansas
-Ways and Means Committee
-Social Security Act
-State legislatures
-Arkansas
-Governor
-Income maintenance
-Imports
-Resulting loss of jobs

Labor issues
-Jobs
-Vested pensions rights
-Ways and Means Committee
-Appropriations Committee
-Education and Labor Committee
-Contractors with government
-Defense, National Aeronautics and Space Administration [NASA]
-Employees
 -54-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Length of employment
-Pension rights
-Pension funds
-Pooling
-Employer payments
-Mobility of work force
-Construction industry
-Contractors
-Trade bill
-Pension bill
-Employment termination
-Guarantees
-Labor unions
-Pensions
-Expense
-[David] [?] Leonard
-Meany
-Government supervised pension fund
-Standards
-Social Security buffer

Trade
-Possible legislation
-MFN status
-Developing countries
-Japan
-Europe
-Latin America
-Special treatment
-State Department
-Africa
-Common market
-Commonwealth
-Great Britain, France
-Special deals with former colonies
-Mediterranean
-Latin America
-US special deals
 -55-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Formulas
-Brazil
-Gold reserves
-Political system

Philippines
-Ferdinand E. Marcos's government
-Internal situation
-US Support for Marcos
-Necessity

Foreign policy
-Dealings with other nations
-Internal affairs
-Genocide

Trade
-Congress
-Modification of President's authority to negotiate
-Trade barriers
-Tariffs
-Desirability
-International monetary situation
-Undervaluation of dollar
-Tax policy
-Congressional relations
-Japan
-Leaders' meeting
-Consultations
-Pressures
-Mills's role
-Agreement with administration
-Working together
-Long
-Welfare reform meeting with President
-Bipartisan strategy
-Tax policy
-Difficulties
 -56-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Demagogues
-Labor leaders
-Business leaders
-Mills’s role

Congressional relations
-Consensus
-Lyndon B. Johnson
-Role of President
-Tax reform
-Disagreements
-Trade
-Jacob K. Javits
-New York constituents
-Free trade
-Consultation
-Bipartisan leaders
-Shultz’s role
-Requesting support
-Advice from Congress
-Mills
-Nomination for Presidency as Democrat
-Fred Barkley
-Mills’s friend
-President of Union Oil
-Testimony on fuel shortages
-John O. Pastore
-Silvio O. Conte
-Bipartisan meetings
-Taxes
-Trade
-Energy
-Shultz
-Ways and Means Committee
-Quotas
-Imports
-Long
-Ehrlichman
 -57-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Oil interests

Energy policy
-Kerr-Mills
-Federal Power Commission
-Gas
-Arkansas
-Gas shortages
-Atlantic Richfield Company [ARCO] gas field in Oklahoma and Texas
-W. R. (“Witt”) Stevens
-Federal Power Commission
-Request for pipeline
-Chairman
-Responsiveness
-Report from staff
-Study in administration
-Shultz, Ehrlichman
-DiBona
-Simon
-Flanigan
-Rogers C. B. Morton
-Importance of problem
-Francis Case
-Oil interests
-Fred Barkley
-Oil prices
-Arabs
-Bargaining leverage
-Long
-Intrastate gas
-Price control
-Compared with interstate gas
-Meetings with Shultz, Ehrlichman and Connally [?]
-Mills’s recommendation
-Campaign contributions

Tax policy
-Tax angles
 -58-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Trade aspects
-Energy problem
-General tax message
-Energy, trade messages
-Mills’s schedule
-Paul A. Volcker [?]
-Bailout
-Public witnesses
-President's views
-Tax reform
-Commitments
-Credit for private schools
-Congressional action
-President's problems
-President's political commitments
-Catholics
-John F. Kennedy
-Dual school system
-Property tax relief for elderly
-Burden
-New England
-President's political commitments
-Checklist on tax reform
-Tax reform
-Important areas
-Investment income
-Amount
-Tax rate
-Capital gains
-Changes
-Nelson A. Rockefeller
-Depreciation
-Conversion
-Rate structure
-Wall Street
-Reactions
-Speculation
-Taxation
 -59-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Capital gains
-Amount
-Beneficiaries
-Sale of homes
-Exclusions
-Mills's views on reform
-Capital gains reinvestment

Bull entered at an unknown time after 3:44 pm.

President's schedule

Bull left at an unknown time before 5:11 pm.

Tax policy
-Capital gains
-Payments over years
-Political appeal
-Conservatives
-Estate taxes
-Rates
-Charity contributions
-State taxes
-Capital gains
-Labor
-Inherited assets
-Market value
-Inequities in tax structure
-Mortgage deductions
-Charity deductions
-President's support
-Hendrix College
-Whittier College
-Tax relief
-Gasoline tax
-Middle incomes
-Silent Majority
-Meany
 -60-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Protests
-Poverty level income
-Minimum wage
-Subsistence level
-Whittier, California
-Little Rock
-Welfare reform
-Annual income

Unemployment
-Young people
-Breadwinners
-Compared with late 1960s
-Women
-Youth
-Meany
-Beginner's wage rate
-US, Soviet Union
-Minimum wage
-Unemployment rates
-Meany
-Labor market
-Peter J. Brennan

Great Depression
-Unemployment
-Percentage calculation
-Welfare recipients
-Social Security

Tax policy
-Credit for private schools
-Property tax relief for elderly
-Simplification
-Energy, trade
-President's checklist from Shultz
-Shultz's conversation with Mills
-Areas of agreement
 -61-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Inequities
-Incentives
-Equity
-Problems
-Conflict with national objectives
-Charity
-Social objectives
-Employment of women
-Energy
-Tax reform
-President’s law school
-Charles Lown’s [?] comments
-Social purpose
-Charles Lown’s [?] comments

Stephen Bull entered at an unknown time after 3:44 pm.

Alice Roosevelt Longworth

Bull left at an unknown time before 5:11 pm.

President’s schedule
-Ronald L. Ziegler’s telephone call
-Longworth
-Illness

Congressional relations
-Consultations between Shultz and Mills
-Energy
-Trade
-Tax
-Another meeting

Tax policy
-Mills’s commitment
-Single taxpayers
-Numbers
-Importance
 -62-

NIXON PRESIDENTIAL LIBRARY AND MUSEUM

Tape Subject Log
(rev. Mar.-09)
Conversation No. 852-15 (cont’d)


-Burden of taxation
-Compared to families
-Women's longevity
-Unknown woman's support for President

President’s schedule
-Future meetings with Mills and Shultz
-Camp David

Franklin D. Roosevelt
-Meeting with Winston S. Churchill, Josef V. Stalin, Chiang Kai-shek
-Seating arrangements

Shultz and Mills left at 5:11 pm.