240. Memorandum of Conference With President Eisenhower0
OTHERS PRESENT
- Secretary Anderson, Director Stans, Mr. Harlow, Mr. Morgan, General Goodpaster
Secretary Anderson said that he had talked to Republican members of the Ways and Means Committee. They are opposed to an increase in the gas tax (or in any tax, for that matter). If funds are insufficient they say the road program should be cut back. However, he doesn’t feel they would stand with this position when the pressure builds up.
Mr. Anderson said the picture on taxes is that it looks as though receipts will run somewhat higher than estimated. But outlays will run higher also—he mentioned that interest payments will exceed estimates. Regarding the recommendations of the Draper Committee, he would like to see re-programming efforts carried out to cover $250-300 million of the $400 million recommended by the Draper Group.
[Page 456]The President recalled that the Committee had thought that not much of their recommended addition would actually be expended in fiscal 1960. Mr. Anderson said that this is a distinction that it is impossible to get across to the public, who would be told by members of Congress that the President had broken his own budget.
Mr. Stans said there seemed to be only two approaches to accommodating the recommendations within budgetary limits. The first is to say to Defense that they should add some $250 million to the aid program, taking it out of Defense proposals, particularly those which seem to be in difficulty on the Hill such as the proposed carrier. The second is to reprogram within Defense and the Mutual Security Program so as to bring together sufficient assets to carry out the Draper Committee recommendations. The figures recommended come to $345 million for the NATO area. Mr. Quarles has agreed that it would be possible to take out some $45 million of this.
The President said that what the Committee has brought out is that what the Administration asked for this year is $400-$500 million too little to keep the program going at the rather constant level that is required to maintain world security. They do not believe we would ever go back up in total program funds once the program has been dropped to this lower level. The result would be a let-down all around the world.
Mr. Stans said that there are possibilities in the field of excess determinations and declarations which might help this program very greatly. Defense maintains an “economic retention inventory” aggregating nearly $5 billion of items stored for possible future need, but not in use by the services. A hard look at this inventory should make available very sizeable proceeds.
The President said that the Draper Committee by its action has put him into a position where he does not know what to do. He thought that if we could find ways of reprogramming we could advise the Congress that we are meeting the Draper recommendations through extraordinary measures but that next year the program level will have to go up. He felt that those chiefly concerned in the program must reach agreement on some money figure as to net needs, if any, in additional funds to carry out the Draper proposals. He thought that Mr. Draper must be made a party to this determination. The President said he felt he is committed to this group of men, who are very fine men who have given up a great deal of their own time in order to make this study for him. He asked me to arrange to get Mr. Dillon and Mr. Quarles in with Mr. Anderson and Mr. Stans to arrive at a figure.
Following the meeting with the President, my discussion with Mr. Anderson and Mr. Stans disclosed that there were differing interpretations of what the President had asked. Mr. Stans and Mr. Anderson felt that the President had said that the Draper recommendations [Page 457] should be carried out through reprogramming this year and through a statement that he would ask for an increase in the level of the program beginning in FY 1961. I had thought the President’s instruction was to get a group together to see what could be accomplished through reprogramming, having in mind that if the residual figure were quite small it could be left over to next year. Accordingly, I spoke to the President later in the day. He confirmed that what he wanted was to have the group in to see what they thought they could agree upon in the way of reprogramming. In connection with this consideration, they should address themselves to the question of what is the best thing for the President to do in acting on the Draper recommendations. If the problem can be met through reprogramming, this would be most desirable. If not, is there any practical and satisfactory method to proceed other than sending up a supplemental.
Brigadier General, USA