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27. Memorandum of Conversation1

PARTICIPANTS

  • President Nixon
  • James Schlesinger, Secretary of Defense
  • Roy Ash, Director, OMB
  • General Alexander M. Haig, Jr. (Ret’d), Assistant to the President
  • Major General Brent Scowcroft, Deputy Assistant to the President for National Security Affairs

President: We must save our international airlines. You will have to draw down from DOD jet fuel. It’s tough, but we can’t let our airlines go down the tube. It’s imperative. The international lines are in a difficult situation.

Schlesinger: I will discuss it with Simon.

President: Tell me what you are going to do.

Schlesinger: In real program dollars, we will be going down steadily. We’ve done fairly well on the Hill. We expected a cut of $5 billion; they cut $3 billion.

As we look to FY 1975, the Department’s request came in at $95 billion, and outlays of $90 billion, to get to $84.

The increase in fuel costs will cost about $1 billion.

We are shrinking in total employment, and defense industry also. For each $1 billion in outlays, there are about 60,000 jobs and secondary employment of 90,000.

—We think our drawdowns should be rapidly replaced.

—Readiness is poor.

—We need increased airlift capability.

—We need increased rate of modernization.

—We need a strategic force option to offset any success or failure of SALT.

—There’s a major shortfall in incentives.

—We’re behind in ship and aircraft overhaul.

—In critical armor—TOW 19 percent, Maverick 30 percent—we are in bad shape.

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—Airlift: To support NATO we need to be able to move one Division every five days. Now it takes 12 days.

—Our conventional force is aging.

—We need a new strategic capability and bargaining chips for SALT.

—The supplemental for FY 1974:

• It has out-year implications adding $4 billion to out-year requests for TOA.

• We need to improve our airlift capability.

• This would stabilize the real-dollar program rather than allow the yearly shrinkage now taking place.

I would like to ask you to consider a supplemental—to add $3 billion in FY 1975 outlay.

As for the Intelligence Community: There’s been a fifty-percent manpower decrease since 1969. Output is reduced by one-third. It was bloated, but further reductions beyond what are presently programmed would jeopardize our take.

President: Roy [Ash]?

Ash: I agree in principle with the numbers. We are at the best possible tradeoff. We need to spend on things that have maximum impact on the economy in the short term.

President: What would it do to the budget?

Ash: It would add $3 billion to 1975. We are right around 300 now. It might bring us to 305. Revenues are at 292–294 now. We’ll probably have a deficit just about fitting the economy this year, just at the edge of . . .

This has to go in as a supplemental in January or we won’t see it for a year. We need the impact next summer. It is a good program.

President: Is defense the best place to put the money?

Ash: In certain areas. Increase inventory, O&M—this gets the money into the economy as rapidly as anything.

President: What is the Hill view?

Ash: McClellan will back it.

Schlesinger: Mahon is ambivalent. Stennis will back it. Oddly enough, our ’75 budget requires your decision before the ’74 supplemental.

President: What about the $2.2 (billion for Israel)?2 It’s sailing right through.

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Schlesinger: Yes.

President: What is the spending situation? Can we drag our feet?

Schlesinger: We have spent $1 billion. We are holding back on major items to give Henry leverage.

President: Hold back 25 percent more than Henry wants. Hold back, filibuster, drag your feet. We may want to goose it later, but now [we] don’t want to build Israel up to intransigence, but we want to have some carrot too.

I don’t have Henry’s confidence of Israeli cooperation. What is this Arab blackmail stuff? The Arabs just want what has been promised.

Be very slow in committing.

I want to see everything we are sending to Israel.

I want to go on the supplemental. If we need excess spending, I want to put it into Defense. None of this HEW. Same in Housing.

Al [Haig], get Timmons to start work on Mahon. Get Laird too. That is double-edged because it will start backfires.

Get the defense and military lobby going. We need to spend the money and I would like to spend it on Defense.

We are hurt in Southeast Asia, Laird says, in the budget.

Schlesinger: We got some of it back.

President: Why has the sentiment toward DOD changed?

Schlesinger: I think because of the Middle East war, the new equipment which proved so effective.

Cranston wanted the 2.2 out of DOD for the Israeli supplemental.

President: That is the L.A. lobby. The Jews have been doves in Vietnam and Hawks in the Middle East. If Golda loses,3 they may dig their heels in and lose the chance for peace.

But slow down on Israel.

Schlesinger: We have said we couldn’t spend until the supplemental is signed.

President: Scowcroft, I will sign only on the last day. Roy, here goes your balanced budget. But we need a strong defense and if we throw around money, here is the best place.

Any place else we could spend it? Energy?

Schlesinger: Energy, it won’t show up.

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President: Then let’s go. Is this enough?

Ash: We can’t do too much without pushing the effect into the out years. We want an immediate effect.

[Omitted here is discussion unrelated to national security policy.]

  1. Source: National Archives, Nixon Presidential Materials, NSC Files, Box 1027, Memcons—HAK & Presidential, Presidential/HAK Memcons, December 1973 [1 of 2]. Confidential. The meeting was held in the Oval Office from 3:11 to 4:04 p.m. (Ibid., White House Central Files, President’s Daily Diary)
  2. On October 19, during the 1973 Arab-Israeli War, President Nixon asked the Congress for $2.2 billion in emergency security assistance funding for Israel to pay for equipment sent during the airlift. For the text of the President’s message, see Public Papers: Nixon, 1973, pp. 884–886.
  3. Reference is to Israel’s Knesset (parliament) elections held on December 31, 1973. Golda Meir’s Labor “alignment” retained 51 of 121 Knesset seats (down from 56). The Likud Party, Labor’s chief opposition, increased its membership by 25 percent—from 31 to 39 seats. With its victory, Meir was asked by the Israeli President to form a government and retained her position as Prime Minister.