380. Conversation Among President Nixon, the Director of the Office of Management and Budget (Shultz), and the President’s Assistant for Domestic Affairs (Ehrlichman)1
[Omitted here is discussion of a number of issues, including the West Coast dock strike, the federal budget, and Peter Peterson’s appointment to head the Department of Commerce.]
Shultz: Well I have one request for a position, that I sent you. But it has to do with the Magnuson Bill on export expansion, which we view as a bill that is not designed to go anywhere but to sort of mess around in the area. And we have been working with the agencies trying to get an administration position on it.
[Omitted here is Shultz’s discussion of the first part of the Magnuson Bill, which, he said, “has all sorts of devices and gimmicks that would subsidize exports;” he indicated that OMB’s position was to say [Page 828] we have studies and negotiations under way concerning that part of the legislation and we should see what comes out of them before taking a position.]
Shultz: Second part has to do with a proposal in this bill to transfer out of the State Department all of the commercial business representational and diplomatic work and put it in the Commerce Department. This is a bill that Senator Magnuson has up and we have to testify, and the reason I’m bringing it up now is that the testimony is presumably scheduled to begin on Monday, so that it’s right on us. Now, Secretary Stans, of course, is strongly in favor of it. Rogers, of course, is strongly against it.
Nixon: Unalterably opposed to it.
Shultz: My own feeling—
Nixon: My own feeling is that it ought to pass, but it’s going to be a hell of a problem. It’s a hell of a problem for me to go ahead and fight the Secretary of State on a matter of this sort of thing. Just hope to God that the Congress overrules them. State’s been wrong on this for years. I don’t know of one man, a soul that’s worth a goddamn as an economic adviser. Not one. Not one at all.
Shultz: Well, I think our question is, what position should we take on the bill, since State and Commerce, among others, will be testifying. They will, we’ll need a viewpoint.
Ehrlichman: Commerce will have the edge in Magnuson’s committee, won’t they?
Shultz: Well, I think that whatever position we take, if we were to take the position that we oppose it, nevertheless there will be a stream of witnesses and a design to develop the point that the State Department is not doing an adequate job of representing commercial interests, so I think there’ll be a lot of pressure on State. Now our, my feeling—I’ll tell you what I think, my view on the thing is, first of all that there is a real big problem in the State Department in the way this has been handled, and so the fact that State is going to get bloodied up a little bit in these hearings—
Nixon: Is good.
Shultz: —is good.
Nixon: That’s right. That’s what I—
Shultz: And that we should use the occasion through an internal effort similar to the one we did on intelligence to put a heavy pressure on State to change itself and in the process of conducting that effort not rule out the movement of or the restructuring in one way or another of not only how the commercial things are handled. Treasury of course has a big interest in this, and so on, so that we look at the way the U.S. represents itself in a given country as a mission, what the roles [Page 829] of respective departments are. Well, if we say explicitly in our testimony that while we, while we would not favor the passage of this transfer now, that we, we want everybody to know that we are undertaking this examination because we do feel there are genuine problems there. That is sort of the way we have drafted it, but I know your feelings about it, I—
Nixon: You want me to say we’re studying it then?
Ehrlichman: Rogers will want [unclear]
Shultz: He will agree to it. Stans won’t. Stans wants to go gung-ho to change it.
Nixon: Well look, the way to go is to—Stans has to understand [unclear] the way to do it is to get yourself in a little, maybe position there. I’m surprised Rogers would agree to that. But then to push that damn committee to kick State in the ass. That’s what has to be done. I totally disagree with State. I just want my position understood. Totally. They’re dead wrong. They’ve always been wrong. The Department is totally inadequate in this field. So we begin with that. Now the question is, though, how do we accomplish it without breaking too much china in the cabinet. And the way you accomplish it basically is to let the Congress do the dirty work.
[Omitted here is further discussion between Nixon, Ehrlichman, and Shultz.]
Shultz: Well, we could, we could stake out an administration position in favor of that transfer.
Nixon: Well, I’ll tell you, I’d like for you, let me put it this way, George, we have a difficult problem here as we have in all our relations with all of our [unclear] bosses, particularly here between State and Commerce. It’s just tight as a pick. You know what my belief is. My belief is that I’d put the whole damn thing out of State and put it in Commerce or make them take them, Commerce attachés. However—so therefore lean strongly in that direction but do what’s possible. See what I mean? We’ll even have confrontation on the thing. If we can avoid it, fine. But if you’ve got to have one, I’ll lean that way, I’ll lean that way if we have to. But I guess you’re going to have to have one.
Shultz: Well, the only way out of a major confrontation in the testimony is the device of a study, but the study needs to be positioned so that the, so that it’s serious and so that the scope is such that it isn’t just necessarily going to rubber stamp the current situation, and it’s clear in the format of the study that that’s the case.
Nixon: What do you think, John?
Ehrlichman: You say Rogers agrees with that. That surprises me.[Page 830]
Shultz: Well it does. I think Rogers sees that he’s on the defensive and—
Nixon: I’ll tell you one ally you’ve got there is Connally.
Shultz: Well Connally bought this approach. I talked it over with him before we—
Nixon: The study?
Shultz: The approach, yes the study.
Nixon: All right, study—have the study come up against State. Fair enough? Okay. And I’ll back it.
Shultz: Okay. I would regard this [unclear exchange] in OMB if we were to do it internally, and I believe probably that’s the best way to do it, as a very serious proposition. And we worked the intelligence community over very hard.
Nixon: All right, I know.
Shultz: And I think we can do that if we have your support.
Nixon: You’re exactly right.2
[Omitted here is discussion of a number of other subjects, including Chile and Salvador Allende, the Department of Agriculture, the timber industry, tax legislation, declassification of government documents, narcotics interdiction, busing, several administration officials, and the Department of State (including comments that are in Document 340).]
- Source: National Archives, Nixon Presidential Materials, White House Tapes, Conversation among Nixon, Shultz, and Ehrlichman, January 18, 1972, Oval Office, Conversation No. 650–12. No classification marking. The editors transcribed the portions of the conversation printed here specifically for this volume. The President met with Shultz and Ehrlichman in the Oval Office from 12:33 to 2:29 p.m. (Ibid., White House Central Files, President’s Daily Diary)↩
- The Magnuson bill was not enacted. Stans resigned as Commerce Secretary in a January 17 letter to the President. His resignation would become effective February 15.↩