49. Draft Memorandum From Secretary of State Rusk and Bureau of the Budget Director Schultze to President Johnson 1


  • Report on the Executive Review of Overseas Programs

At the Cabinet meeting of March 25, you instructed the Secretary of State and the Director of the Bureau of the Budget to review the programs and activities of the Government in 10 to 15 countries to assure that our resources—manpower and money—are property allocated in support of our foreign policy objectives and that these resources are being managed efficiently.2

This Executive Review of Overseas Programs was conducted in 13 countries: Italy, Germany, the United Kingdom, Colombia, Venezuela, [Page 107] Mexico, Guatemala, Greece, the United Arab Republic, Ethiopia, Japan, the Philippines, and the Republic of China.

This is to report to you:

how the Review was carried out,
the results of the Review, and
the steps we intend to take to improve our capability to conduct regular reviews of this kind.

Procedures Used to Conduct the Review

Each Ambassador was asked to examine in depth the programs and activities of all U.S. agencies represented in his country. Detailed State Department/Budget Bureau instructions required the Ambassador to identify the lowest priority activities in the mission and to recommend a total U.S. program which, in his judgment, was the minimum needed to carry out our objectives.
A programming system, developed experimentally by the State Department, was used by the Ambassadors for their review. This system collects and displays information on the activities of all agencies, country-by-country and in common manpower and dollar terms. The system thereby assists the Ambassadors and Washington managers in evaluating the level of each activity and its relationship to other U.S. activities in the country.
The recommendations of the Ambassador were then reviewed by the State Department, other agencies whose programs were affected, and the Bureau of the Budget.
Action decisions were then made and transmitted to each Ambassador for revision of field budget estimates.

Results of the Review

Program reductions and administrative savings totalling an estimated $7.8 million in fiscal year 1967 were identified, resulting from cutbacks of activities and from management improvements, out of a fiscal year 1965 total of $425 million for all U.S. programs in the 13 countries, excluding major military and economic assistance.

These savings not only can permit allocation of our resources to higher priority needs, but also result in net budgetary savings. Many of these proposed savings are being realized by actions now being taken. Others will be reviewed in the context of the current budget reviews.

The following are examples of some of the major Ambassadorial recommendations:

  • —Ambassadors Bruce and Reischauer recommended organizational consolidation of U.S. scientific representation in London and Tokyo.
  • —Five Ambassadors recommended either a reduction or elimination [Page 108] of the Travel Service Program at a savings of about $289,000, on the grounds that the host government regulations are the main barrier to travel to the United States or that promotional activities of private firms are adequate.
  • —Eight Ambassadors recommended significant reductions in Military Attaché operations at their posts. Concentration of available manpower on priority intelligence requirements could save $300,000 annually in Germany, $700,000 in the United Kingdom, and $131,000 in Italy. Overall changes affecting the Defense Department’s non-command overseas operations could save $2,900,000.
  • —Eight of the thirteen participating Ambassadors are taking steps to consolidate the administrative activities of the various agencies. Motor vehicle operations and communication facilities are being pooled or reduced. Personnel, fiscal, and general services are being standardized and consolidated. Estimated annual savings of $3,000,000 in these eight countries can be realized.
  • —Ambassador Bruce recommended a reduction of $361,000 in the United States Information Service program.

In sum we believe that the Executive Review of Overseas Programs will result in:

  • —significant savings
  • better allocation of our manpower and money to high priority requirements and objectives
  • more efficient management and organizational arrangements in our field missions
  • a greater understanding of the relationships among our programs overseas and how they, in concert, can better contribute to achieving our objectives
  • an enhanced capability of our Ambassadors to manage the total U.S. effort in the field.

Next Steps to be Taken

We believe that the results of the Review warrant establishing a permanent system to improve the efficiency of our foreign affairs activities. This system should be developed to facilitate both the (a) Government-wide planning-programming-budgeting system that you announced on August 25,3 and (b) the responsibility of the Secretary of State to manage the nation’s foreign affairs. The establishment of the system requires a coordinated effort by the Bureau and the Department in carrying out the following steps:

Programming Systems for the Foreign Affairs Agencies. As a part of the planning-programming-budgeting system announced on August 25, programming systems for each of the major foreign affairs agencies are now being developed under Bureau of the Budget leadership. These systems will include the State Department, AID, USIA, CIA, and the [Page 109] Peace Corps. The agency programming systems will be designed to: (a) improve the allocation of resources among agencies as well as within agencies, and (b) to assist the Secretary of State and the heads of other foreign affairs agencies in the execution of their responsibilities. By programming agency resources by country, these systems will, along with enterprises outlined in paragraphs 2 and 3 below, permit the development of an over-all Foreign Affairs Programming System.
Refining and Expanding the Country Programming System. The experimental country programming system developed by the Department is designed to assist the Secretary and the Ambassadors in carrying out their responsibilities for the management of foreign affairs by relating individual agency activities to U.S. policies and objectives on a country, regional, and global basis. This year’s review indicated that the country programming system can be improved by eliminating certain features and simplifying others. The Department will modify the present system to incorporate both these improvements and to reflect changes made in the individual agency programming and budgeting procedures resulting from the effort described in paragraph 1. The revised programming system will be used to conduct country and regional reviews (similar to those conducted experimentally this year) beginning with the FY–1963 budgetary cycle.

Strengthening Foreign Policy Planning. Clear statements of the objectives and operating strategy of the United States with respect to other countries are an essential underpinning for judgments on the kinds and levels of programs we require overseas. They are needed specifically to provide guidance for the programs under paragraphs 1 and 2 above. The State Department will improve and expand the National Policy Paper program and promptly develop statements of U.S. policies toward individual countries not covered by that program.

These three steps will enable us to:

  • —extend the benefits produced by this year’s Review, and
  • —develop a fully integrated planning-programming-budgeting system for the foreign affairs agencies.

It is evident that the attainment of these planning and programming objectives in the field of foreign affairs will require the most intimate collaboration among the several foreign affairs agencies. For this reason, we recommend that the attached draft National Security Action Memorandum be issued.

  • Dean Rusk
  • Charles L. Schultze 4
[Page 110]


National Security Action Memorandum No.


  • The Secretary of State
  • The Secretary of the Treasury
  • The Secretary of Defense
  • The Secretary of Agriculture
  • The Secretary of Commerce
  • The Secretary of Labor
  • The Director, Bureau of the Budget
  • The Director of Central Intelligence
  • The Director, Arms Control and Disarmament Agency
  • The Chairman, Atomic Energy Commission
  • The Director, United States Information Agency
  • The Administrator, Agency for International Development
  • The Chairman, Joint Chiefs of Staff


  • Coordination of Foreign Policy

In keeping with the Secretary of State’s responsibilities for the coordination of foreign policy and as an extension of the responsibilities vested in the Secretary by NSAM 281,6 the President has today instructed the Secretary to develop comprehensive planning and programming documents for all United States foreign affairs activities.

In the development and installation of processes, procedures, and systems necessary to control the implementation of such documents the Secretary will coordinate his efforts with the Director of the Bureau of the Budget in order to insure compatibility of the foreign affairs programming system with the development of the national planning, programming, and budgeting system announced August 25.

  1. Source: Kennedy Library, Crockett Papers, MS 75–45, Taylor Task Force Report. Unclassified. Drafted by Barrett. The first page of the memorandum indicates it was not sent. The serious differences that developed between State and BOB over the draft memorandum’s recommendations are described in Mosher and Harr, Programming Systems and Foreign Affairs Leadership, pp. 108–114. The objections expressed by AID, Agriculture, and DOD are summarized in a memorandum from Barrett to Crockett, January 11, 1966. (Kennedy Library, Crockett Papers, MS 75–45, ORG 1)
  2. See Document 33.
  3. See Document 45.
  4. Printed from a copy that bears these typed signatures.
  5. Confidential.
  6. See Document 6.