integrity in the turbulent and trying days of the past. I do not think that Brookings I will fail us either.

Thank you for letting me come and be with you.

NOTE: The President spoke at 9:50 p.m. in the Presidential Room at the Statler Hilton Hotel in Washington. His opening words referred to Robert D. Calkins, president, Eugene R. Black, chairman

of the board of trustees, and Kermit Gordon, vice president, all of the Brookings Institution.

Later the President referred to Gen. Hugh S. Johnson, Administrator of the National Recovery Administration 1933-1934, John W. Gardner, Secretary of the Department of Health, Education, and Welfare, Robert C. Wood, Under Secretary of the Department of Housing and Urban Development, Charles M. Haar, Assistant Secretary for Metropolitan Development, HUD, and Dr. Spurgeon Bell, staff member of the Brookings Institution 1936–1940.

THE PRESIDENT. [1.] Those present at the luncheon were Governor Rockefeller of New York, Governor Tawes of Maryland, Governor Johnson of Mississippi, Governor Chafee of Rhode Island, Governor Philip Hoff of Vermont, Governor Goddard of Arizona, Governor Boe of South Dakota, Governor Clement of Tennessee, Governor Avery of Kansas, Governor Burns of Florida, and Governor Egan of Alaska.

We followed the same procedure today as we did in the other two meetings, generally. I won't go into any great detail.

I will take any questions you may want on it. I will try to summarize the highpoints.

We reviewed a summary of my statement to the other Governors on crime,1 a copy of which you were given yesterday and which. each Governor will be given today, in which I reiterated the desire for the President to have each Governor have representatives come to our meeting in Washington for a major conference in October.2

1 See Item 491.

2 For the President's remarks to the delegates to the Conference of State Committees on Criminal Administration, delivered on October 15, 1966, see Item 526.

I went over with them the work of our National Crime Commission and the fact that 20 Governors have already acted in creating State crime commissions.

The cost of crime in the country and the increase in crime among young people under 18 is up 50 percent since 1960. There are certain highlights which are available in the statement and in the brief summary of it. Second, we reviewed the economic situation. Mr. Ackley took some questions. Mr. Schultze took some questions. I took some questions.

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Generally we talked about the need for restraint. We pointed out the strength and health of our economy. We have 10 million more jobs than in 1961. We have had 67 months of expansion. We have the problems of strength. We had inflationary pressures.

We had a gross national product growing at 5.5 percent a year for the last 5 years.

We have the problem of consumer prices being up 32 percent and wholesale prices. up 3.9 percent. Much of the rise has gone to lift incomes of farmers and low-paid workers. Even so, with less price increase,

there has been much more income increase in the past 5 years than in the previous 51⁄2 years.

We reviewed the budget for this year of $112 billion. Revenue for this year, as we estimated, would show us a deficit of $1.9 billion if those figures held up.

But we pointed up the possibility that Congress would increase our budget in the domestic field by some billions of dollars. We didn't know how.

The House this morning, I am sure, did not feel it would be substantial. The Budget Director thinks it could be up as high as $7 billion or $8 billion in authorizations and appropriations.

In addition to that, we will very likely have increased expenditures in Vietnam. We will make estimates on those. They are now being reviewed. At the end of the quarter, we will have a quarterly revenue estimate and we project it for the end of the year.

When we get our appropriations bills we will try to reduce those by at least a minimum of $3 billion. Of course, that will largely be over what the regular budget has been increased.

We do not expect it to be under the $112 billion. We expect it to be over. We will take at least $3 billion withholding and postponement out of it, and then we will look at our revenue and see what our expenditures will be and see what we need to do.

We will make adjustments and recommendations accordingly. When we make these reductions of $3 billion, or when we propose them, we will send to each of the Governors our thoughts in that field, as I stated to the Governors yesterday and in the previous meetings. There is a limited field. in which you can reduce, but we will have each Cabinet officer try to pick out the low

priority items.

We reviewed the Vietnam situation with the Governors. We talked about the diplomatic conversations taking place; the possibility of the meeting of the Manila Conference in late October, whenever the dates can be agreed upon; the desire to coordinate our efforts in Vietnam, and the meeting with the representatives of the allied powers associated with us there.

I reviewed with them off the record some conversations I had had with General Westmoreland and made brief reference to them, and with Admiral Sharp when he was here last week.

I didn't tell them anything new that you don't know, except that I thought our situation had improved there from a military standpoint as well as from the pacification standpoint. I believe it is getting better each day.

We are giving General Westmoreland's requests careful consideration and acting on them promptly, and we will give him whatever men he needs. He was unable to project the amount at this time. He will ask for them as he needs them. He stated in an open press conference 10 days ago that he couldn't state at this time just how many he would need.

We asked the Governors to review any projects that they had in the offing at home. of any proposed security sales. We told them what we were doing on the Federal level to try to reduce our security sales. We realized it would involve a tightening up on some of our loan programs that we have, but we don't want to put any more pressures on the securities market or on the economy than was absolutely necessary.

We asked them for no commitments and we received none. We had a free exchange of viewpoints. Each Governor talked about the work that was desirable in their State

and the problem that they faced in their State.

I think it was generally agreed that these meetings that we hold two or three times a year are very useful meetings. There was no partisanship in evidence. There was nothing spectacular, I think, to report, or

sensational.

You will have a chance to talk to each Governor and get his own viewpoint. If any of them have anything to say, I will be glad to have them say it. If you want to ask them any questions, I will be glad to have you ask them. If you have any you want to ask me, I will be glad to answer them.

Governor, have you anything to say?

COMMENTS BY THE GOVERNORS

[2.] GOVERNOR ROCKEFELLER. As in previous occasions, Mr. President, it has been a very informative and helpful meeting to us as Governors. I know that all of us want to cooperate with you in your objectives to the fullest along the lines of the action being taken by the Federal Government.

THE PRESIDENT. Governor Hoff? GOVERNOR HOFF. I would simply like to say that I think the inflationary pressures at work in our society affect all of us. I don't see how any American can avoid them. I admire the President in terms of his stand on them to date. I understand better now why certain measures cannot be taken until the actual appropriations have been made by this session of Congress.

I have admired the forthright way in which he approached it and the honesty with which he approached it. I came away happier about it, and certainly much better informed.

THE PRESIDENT. I pointed up today something that I don't want any of us to overlook. We have taken about $12 billion in taxes or administrative actions out of our economic bloodstream already this year.

On March 15th we signed a tax bill and in our Medicare program we took about $4 billion. So we have somewhere around $12 to $14 billion. It is $12 billion, anyway, that has been taken out in the form of revenues already this year.

The investment credit we expect to pass the House this week, maybe today. We hope to get action on it very soon up there.

The appropriations bills are coming along. I believe the House has acted already on several of the eight that we had. So we will be making our review shortly.

I impressed the Governors that we would forward to them from the Budget and from the White House, the Executive Office, at least, indications of the areas where reductions could be made.

Governor Clement?

GOVERNOR CLEMENT. I found the meeting most informative. The President and his staff were most gracious in answering our questions and furnishing us some very valuable information.

I was particularly interested in discussions about Vietnam. I found it, generally speaking, a very helpful session.

THE PRESIDENT. I wrote a letter the other day to a family up in New Jersey that had five sons in the Marine Corps. This week I got several letters, at least five, from over the country, of other families where they said they also had five sons in the various services. One of those letters came from Tennessee. I related it to the Governor. Another one came from Rhode Island. GOVERNOR CHAFEE. Newport?

THE PRESIDENT. I will have Bill Moyers 5 give you those, any of you who are interested in those areas.

Governor Goddard?

GOVERNOR GODDARD. Mr. President, I would like to say on behalf of the people of Arizona we appreciate very much your communication with the States. It gives us a great deal of help in bringing us together with national policy.

I have a new finance commissioner in Arizona, the first budget executive that we have ever had. I intend to call him in and ask that our departments cooperate with your plan for helping to pull some of this consumer price hike increase off.

THE PRESIDENT. Governor Boe? GOVERNOR BOE. Mr. President, I might say that so far as the State of South Dakota is concerned we certainly share with you and the other Governors the concern with respect to the matter of inflation. This is not to any extent a partisan matter whatsoever.

I think it was noted in this conference that there is a concern on the part of some Governors that when we take a good, hard look at the holdbacks that might be necessary in order to combat this inflation, that we should and we would hope that the Federal Government and the administration would take a good, hard look at the economic conditions of each respective State, inasmuch as they all vary so much.

South Dakota is an agricultural State, and we depend greatly on that. Therefore, a cutback in highway construction, in public construction, such as college buildings and so on, would seriously affect our economy and the ability to put our workmen to work and to take care of them, particularly over the winter months.

THE PRESIDENT. Or farm payments, agricultural payments.

Bill D. Moyers, Special Assistant to the President.

Governor Tawes?

GOVERNOR TAWES. Mr. President, this has been a very informative session this morning, as our previous sessions with you have been.

I think it is a very excellent way to get the communications from the Capital of the Nation into the respective capitals of the States of the Nation.

We, of course, want to follow your pattern here that you have laid down this morning for combating the inflationary spiral that seems to be taking place. We in Maryland certainly will be using our best efforts to cooperate with you in every way we can.

I think the policy of cutting down on spending before the tax program is invoked is certainly my philosophy of meeting these problems.

THE PRESIDENT. Governor Chafee?

GOVERNOR CHAFEE. Mr. President, I think you pointed out to us the necessity that all of us should do everything we could to cooperate in this effort, to stop heaping fuel on the fires of inflation, and we certainly will try.

Furthermore, I would like to thank you for inviting us down here-this is the fourth time I have been down as Governor-and I do think it is wonderful the way you keep in touch with the States.

Frankly, I am making every effort to make it possible for me to be back after the first of the year for further meetings.

THE PRESIDENT. Governor Egan?

GOVERNOR EGAN. I can just echo what has already been said, Mr. President. I am very appreciative of having this opportunity to come here and have you and your people give us this rundown, a full-scale story of the steps you have already taken, the steps contemplated to combat the inflationary

pressures.

I am also very happy that I had this opportunity to have been brought up to date

on the measures taken in Vietnam, and the plans and hopes there.

THE PRESIDENT. Governor Johnson? GOVERNOR JOHNSON. I don't have any

statement.

THE PRESIDENT. Governor Burns? GOVERNOR BURNS. Mr. President, I am very much impressed with the grasp that the executive branch has with the economic picture. I am saying this for myself now: that I am afraid that we are dealing with an overgenerous Congress. I think the people of the United States are going to appreciate a voluntary cutback on the part of the executive branch, both at the Federal level and the State level.

I certainly pledge to you the cooperation of the officials of the State of Florida to your program.

THE PRESIDENT. Does any other Governor have a statement they wish to make or raise any question with me?

If not, we are open for questions.

QUESTIONS

AREAS OF POSSIBLE BUDGET REDUCTIONS

[3] Q. Mr. President, did you indicate in any way how much of this $3 billion reduction you are aiming at would come from grants to the States?

THE PRESIDENT. We don't know until we get the bills, Ray. I wish I could tell you.

What we will do is get each bill and we will have the totals. Let us assume it is $3 billion above my budget. We don't know what it will be, but we will pick a hypothetical bill. We will send those to the various Cabinet officers and give them some indication of the amount in their bill that is reducible. They can't reduce salaries and can't reduce interest on the debt in the "Raymond L. Scherer, NBC News.

Treasury bill, things of that nature.

Then we will ask them to pick the low priority items and report back to us. We hope that they will add up to more than $3 billion when they come back. If they don't we will have to go back.

We know those won't come from salaries. We know they won't come from interests on the public debt. We know they won't come from veterans' pensions. We know they won't come from social security. We know they won't come from Defense contracts. We know they won't come from insurance obligations that we have to our retirement plan.

We know a good many things won't come from projects that are being completed— that we can't halt. But each Cabinet officer will review them and just as soon as he can we will add them up, because we are anxious to see how we come out ourselves.

GOVERNORS' VIEWS ON FISCAL POLICY

[4] Q. Mr. President, some of the Governors indicated that they felt that there should have been steps taken before now to deal with this problem of inflation.

Have they indicated to you or given any advice as to what they think should have been done?

THE PRESIDENT. No, no Governor has. Q. That is, in the last three meetings you had.

THE PRESIDENT. I understand a Governor advised you all in front of television yesterday, but he didn't advise me in the meeting where he was about the necessity of a tax plan some time ago.

We will make our recommendations. We did on taxes last year and we passed a bill on March 15th and signed it.

We took a total of $12 billion in various legislative and administrative actions out of