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40. Memorandum From the President’s Assistant for Domestic Affairs and Policy (Eizenstat) and Robert Ginsburg of the Domestic Policy Staff to President Carter 1

SUBJECT

  • Adjustment Assistance Program for the Shoe Industry

General Outline of the Program

The Commerce Department has developed an adjustment assistance program for the shoe industry which has the following principal components:

1. Commerce will encourage the major domestic retailers (Sears, K Mart, etc.) to increase their purchases from the trade impacted shoe manufacturers. Commerce reports that the retailers have indicated their willingness to participate actively in such a program.

2. Approximately 20 specialist teams will be formed, drawn principally from the private sector, to assist the affected companies in modernization.

3. Financial support would be provided for education and training courses for prospective managers of shoe companies.

4. Financial support would be provided for increased advertising by the domestic industry.

5. Approximately $40 million in loans and loan guarantees would be made available for increased capital investment in the affected companies and for the purpose of facilitating the sale or merger of affected companies.

The program is more fully described in the attached memorandum from Under Secretary Harman.2 The total cost for the three-year program would be approximately $60 million. No new legislation would be required. The general outline of the program has been approved by the EPG.

There can never be certainty that any adjustment assistance program will work—it is extremely difficult to achieve a turnaround for a single company let alone a large number of companies in a declining industry. Nevertheless, against that background, we think that Commerce has designed a good program. Both the industry and the shoe unions support the program.

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Subject to your separate decision on the advertising component, we recommend that you approve the general outline of the program.

Approve3

Disapprove

Let’s discuss this further

Advertising Component of the Program

Commerce proposes to spend about $1 million per year ($3 million total) to provide financial support for increased advertising by the domestic industry. Commerce argues that there is precedent for U.S. Government financial support for advertising (tourism and certain agricultural products) and that such advertising will be helpful in securing retailer support of the program.

Charlie Schultze argues that subsidized advertising is a questionable Government activity and sets a bad precedent for other industries that may seek similar assistance.

On balance, we do not think it would be good policy for the Administration to spend money for domestic advertising.

Approve advertising component of the program (Recommended by Commerce)

Disapprove (Recommended by Charlie Schultze and us)4

Presidential Announcement of the Program

Ambassador Strauss believes that you should not personally announce the program. He is skeptical about the viability of the program and thinks there is insufficient reason for you to undertake what he regards as risky personal exposure.

Under Secretary Harman believes it is important that you personally announce the program. He thinks that your personal involvement will increase the chances that the program will work, particularly in solidifying the moral obligation of the major retailers to increase their purchases from the affected shoe companies. We agree and would add the following points:

(1) your personal involvement will demonstrate your commitment to developing good trade adjustment assistance programs and enhance the Administration’s credibility in this area generally;

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(2) if the program works, you will have personally associated yourself with what will be a significant accomplishment for the Administration; and

(3) the industry and the unions support the program and would be appreciative of your personal involvement.

We recommend that you personally announce the program with a very brief statement at the White House; Under Secretary Harman would conduct the press briefing to follow.

Approve personal announcement

Disapprove5

  1. Source: National Archives, RG 364, 364–80–4, Special Trade Representative Subject Files, 1977–1979, Box 4, Footwear 1977. No classification marking. Ginsburg did not initial the memorandum. A stamped notation reads: “The President has seen.”
  2. Not attached.
  3. Carter checked this option and wrote in the adjacent margin: “Kreps announce—not much fanfare. Emphasize ‘one-time trial’ basis. No precedent being established. No extra budget requests. J.C.”
  4. Carter checked this option.
  5. Carter checked this option and initialed “J” at the bottom of the page.