 I think we've got a way to get that budget down to $57 billion. Now it's a slight a hand that may lead us to a lot of criticism and may lead others to say that it's another indication of the lack of credibility that can be attached to your announcements or my announcements or administration announcements. But I think it's fair and square and open and above board. What it does is stop financing military personnel and operations and maintenance costs for South Vietnam after the end of 1966. On the theory we can't see that far into the future. If it looks as though we'll need the large expenditures that we're planning for 66 into calendar 67 we can always come back to Congress before the end of the year and it would be imprudent at this time to try to look ahead 18 months in a picture as uncertain as this one. In any case that's the only way we can get down there. And I think it's a fair and square way and Charlie Schultz and Zion. I and Bob Anthony who's my controller all agree on this. Secondly, I talked to Von Hossel this afternoon at considerable length. There are two matters that you might like to mention again to Earhart tonight. One is this offset arrangement. Von Hossel says the only way to ensure that we will receive the money in order to do us under the offset. And here he's speaking not of before the end of the year which is really unimportant. But the monies we are to receive over the next 20 months, 18 months is for you to tell the chancellor we just have to have them. And our troops in Europe are dependent upon their compliance with the offset agreement and you hope that he will instruct his finance minister and defense minister to work out a solution to it. They have gotten themselves in such a budgetary jam that unless the chancellor himself personally instructs the finance minister and the defense minister to do this it won't be done. So Von Hossel says. And finally, I hit Von Hossel very hard on military troops for South Vietnam. And I think there's a chance of getting some. Not very much and not combat troops but military troops out there and I am inclined to think it would be very much in our interest to do so. A medical company for example or a construction battalion. And I thought you might want to know that he would be willing to go along with that if the chancellor indicates that that's what should be thought of. All right. Before I leave, we'll get together and hear these details on the budget thing. I'm meeting on some minor ones this afternoon. I want to say this one until I can get some of these others worked out. I'll probably leave tomorrow night if it's a convenient view. We'll try to have two meetings tomorrow. One on the general thing after we hear from Wheeler and one following that one, maybe on the budget thing. What I want to do is to get as low as I can with as little scare into the Russians and the Chinese as I can with as little inflationary psychology as I can with as little deficit as I can. And we have been all over the lot this year. We've been everywhere from three billion, three and a half. First we had a six billion deficit. Then we jerked it down with good figures to three and a half. They all came in and said announce because our revenue exceeded and our expenditures were less. Then they got it back now up to we're going to spend 105 to 107. We're going to take in 97 to 98 so it's back up to 78 now. I want to try to get a figure that I can stay and live with as much as possible. My guess is if I could do something in this neighborhood with you and with the drivers getting a whole double what they got last year and about the same what they got this year. HEW going from 7 to 11, 7 something to 10 something. I might get by without a tax raise. I think what I want to do is I get, let's get you out of reaction. How much trouble would I have in the light of this psychology we have and everything? This goddamn Federal Reserve cost me 600 million in interest rate. Just on my refinancing. How much trouble would I have cancelling this telephone excise and auto excise? I think you'd have a lot of trouble. I don't think that it ever should have been reduced. I never did think that was the way to cut taxes. But now that it's been done, my own feeling is it would cause you a lot of trouble with business, with the Congress, and with the press and the public. That business wants you to raise what you spend and it hasn't gone, you see, it hasn't gone in effect yet. Miss President, there are strong lobbies and strong segments of American business that are being benefited by that excise tax reduction. Two primarily auto and telephone. But they are very strong and they've got 40,000 automobile dealers in this country that will be benefited by it because their price to the public goes down, presumably their sales will go up. And you've got all of them plus the companies and they've had a hell of a lobby on here. They did last year, that's why it went through. It never should have been cut, in my opinion. And I say that after 15 years with the industry. I thought that all of our economists thought it had to be to keep our prosperity. I think even many of the economists would have said it would be better to cut income taxes rather than these excise taxes. But anyhow it was done and all I'm suggesting now is that I think you would have great political trouble with cancelling it. My own view is you'd be better off going up for a tax increase at some point in the form of an assert tax on the income tax if you feel you need additional tax revenue and I'm my own guess is that's only a guess now that you will need additional tax revenue but you could probably wait until June to get it. My economists tell me if I can keep under $10 billion deficit I can write it out. Yeah and you might possibly be able to you see and that's really what I'm saying with this $57 billion. I can't tell you that we'll be at war with them 18 months for now or if we are how much we'll be spending and why should I try to forecast me on the end of this year or the end of 66? One way I guess you could cover yours when you make this announcement you could say well I know that for this six months it's going to take $12 billion now this is a good year and for the next six months it's going to take $11 or $12 billion I can't tell 18 months from now so I'm asking for the next 12 months now and I'll have to ask for the next six months if we're still at war. What I would say Mr. President is I've financed all the normal expenditures of the department through for 18 months to the end of fiscal 67. In addition to that I've financed all of the long lead items such as airplanes things take a long time to produce on the assumption the war will continue through the end of 67. But it isn't necessary today to provide for the money for 500,000 additional men in January a year from now. So why do it? We'll come back in mid-year. Is this the best plan to... Mr. President it's the only plan really that will get us to $57 billion except just frankly underestimating. Now we can underestimate after all the difference between say $60 billion and $57 billion is only about 5% and in the size of an operation we're running here you can't estimate accurately within 5% or turn around the other way it's only about two weeks. So if I assume that everything slips two weeks I can just drop 60 to 57 on that basis but that's a much less acceptable way of explaining it to the Congress if they ever have to drag it out of me and I think they eventually would drag it out. Somebody in the building would expose it and if it's going to be exposed I would much prefer to follow the first proposal where we simply say that we've financed all normal expenditures for 18 months all long lead items for 18 months and those short lead items directly associated with South Vietnam for 12 months. January to January. If you talk to anybody like Mayhem or Russell. No sir I didn't want to. No I understand that. But I will of course do so. What do you think their reaction would be? Well I would change it a little bit when I was talking to Mayhem. I'd say it would be a serious error to go up for a tax increase now if it turns out later we don't need one. Now how the hell do you know what's going to happen 18 months from now? And wouldn't it be unfortunate if we put a tax increase bill through here and these expenditures didn't materialize? I think everyone agrees we don't need it in the first six months of calendar 1966 so why not wait until June? At that point I'll be able to tell you better what the military expenditures for the full fiscal 67 will be and if at that time it appears that they'll continue at the December 1966 rate then perhaps you'll want to consider a tax increase. But don't consider one now on an expenditure total it may prove fictitious 18 months from now. What about the Senate? Well I'd tell Russell the same thing. Who give you trouble? The Republicans layer it'll just tear me apart. Fictitious reporting misleading the American people seeking to finance the great society by deficits spending hiding from the public the true facts relating to war you know. But then in closed session I can go at him on the same basis. Is he suggesting we raise taxes and we don't know we're going to have expenditures? What kind of responsible fiscal management is that? And we can argue it out but he'll just give me hell I know. Are you thinking we ought to announce before Christmas Eve that we're going to have no firing unless fired upon? Mr. President I just saw I just talked to Psy a moment ago he and Mack have been working on that we just sent a message out or are sending a message out to South Vietnam saying that we plan to do that. I rather lean to saying it before Christmas Eve Mr. President we'll use the public relations effect of some of these actions by failing to announce them ahead of time. Why are the Chiefs against it? Oh they don't like to be tied down by having made a public announcement they think if we make a public announcement then we can't protect ourselves. Well Psy has changed some language in the originally proposed state draft which properly protects us it says in effect we won't fire on except in self defense. It says that here in a valley and behind the hill they are bringing up forces and they're just going to clobber you the minute the seas fire in. You mean to say you're going to sit there all night long and let them build up those forces? Well we changed the language so it says we can fire in self defense. I think we've properly protected ourselves and if we fail to announce it I think we're just failing to take advantage of the public relations move that would benefit us. I don't feel too strongly on it so I'd announce it. Did you get your power playing? I don't know, frankly I just haven't even had time to look at the cable. We did authorize it however after you saw that it made a run at it but they had to go through clouds. They said that the plane to try to picture it got knocked down and another one didn't show up or something. I just don't know, I'll check on him. Now let me see what you're saying to me. You're saying to me that we want to say to the Chancellor tonight that we expect him to go through with his offset agreements and tell his finance and defense matters to get a radio on that. We want some military people out there, medical companies or constructs, but how many? I got one of each Mr. President. How many in each? Well I guess there's about 150 in a medical company and probably a thousand in a construction battalion. Now, have you got these ships being unloaded Russell Ray's now about 40 of them in the hardball? He's right on that. They're backlogged out there and we're getting them on mode of Mr. President. It's better now than it was but it's still bad. Is there anything else we can do? No sir. We've helped them. Have you sent your expeditors out? Yes, I have and you either you or I don't remember. We sent the Gleason out there and while I was in Europe last week we came in and talked to Psy and we're going to get a weekly report from Gleason as the Steve Adarring. Yeah. Now somebody tells me that Cameron, your army engineers are not doing well at the dam and that your Mars and Mützen crowd is moving heaven and earth and going to town but they show up at your Cameron Bay whatever you got going there your construction group at 11 o'clock in the morning nobody's there. You better check with Mansfield because he's raising hell about that. Maybe you want to... Mars and Mützen show up at 11 o'clock in the morning? No, I would gather it's the army construction. I can't believe it. I've been out there all hours of night and day and they're working 24 hours a day but I'll check on it. He was talking to me about it fussing and said your private people don't find your government people weren't any good. Well I'll check on it immediately. All right, thank you.