Guns or Butter

by Bernstein, Irving;

  When he got home for dinner, Mrs. Warren had already heard the news on the radio. Johnson had immediately issued Executive Order No. 11130 creating the Warren Commission, officially the President’s Commission on the Assassination of President John F. Kennedy.

  One of the first people Johnson had called was former President Eisenhower. He drove down from Gettysburg on Saturday, the day after the assassination. They visited for the better part of an hour and then Eisenhower composed a memorandum of “the things he would do if he were in my place.” Among the most important was that “you call a Joint Session of the Congress to make a speech of not over ten or twelve minutes.” Johnson readily agreed on the need for such an address because he must talk directly to the American people.

  But, according to Michael Amrine, there was a good deal of fussing over this speech. Several advisers urged Johnson to speak to the people over television from the Oval Office; others agreed with Eisenhower. Senator Humphrey argued that Congress “is really Lyndon’s home. … He feels natural there and at ease.” The President concurred and, indeed, said so in the address: “For 32 years Capitol Hill had been my home.” He had Sorensen, John Kenneth Galbraith, Adlai Stevenson, and Horace Busby of his own staff work up drafts. On the night before the delivery Johnson invited Humphrey and Fortas for dinner and he read from these versions. Finally, he said, “Hubert, you and Abe go ahead and redraft these speeches and get me one that will be suitable for tomorrow.” They worked on it till 2 a.m. and Lynda Bird, the President’s daughter, typed it. Johnson made some changes the next morning.

  The President addressed the joint session on November 27. He opened with a glowing tribute to President Kennedy, including the memorable opening line, “All I have I would have given gladly not to be standing here today.” He, of course, stressed continuity. In his inaugural address Kennedy had said, “Let us begin.” “Today,” Johnson said, “in this moment of new resolve, I would say to all my fellow Americans, let us continue.”

  He then struck the note of unity. He urged the passage of the civil rights bill in order “to eliminate from this Nation every trace of discrimination and oppression that is based upon race or color.” It was time for “Americans of all races and creeds and political beliefs to understand and to respect one another.” They must turn a deaf ear to “the apostles of bitterness and bigotry.” “I profoundly hope,” the President concluded, “that the tragedy of these terrible days will bind us together in new fellowship, making us one people in our hour of sorrow.”

  He spoke slowly in a serious and dignified manner. The address, according to Amrine, was an “enormous success” with both the Congress and the American people.

  In pursuit of his goal of unity, Bill Moyers said, Johnson spoke to 3000 important people in his first month in office, some alone, some in small and others in large groups. He ran his staff ragged preparing him with background information and suggested topics for discussion in these meetings. He tailored his message to those who heard him. He told businessmen how well industry was performing and how much better it would do if the tax reduction was enacted, and he told labor about declining unemployment and the prospect for even more jobs with lower taxes. But, like all the others, he stressed to both that he needed their help to pull the nation together.

  Johnson made a special pitch to Republicans. Eisenhower had urged him to confer with Robert Anderson on subjects of “a fiscal and financial character.” Anderson had been Secretary of the Treasury, was a rich and very conservative Texan, and shared Eisenhower’s pristine views of the balanced budget. Johnson dutifully met with Anderson and, as will be noted, doffed his hat to the conservative position during the debate over the tax bill. He also spoke with the Republican leadership in both houses of Congress and particularly with the minority leader in the Senate. Lyndon Johnson and Everett Dirksen were old and close friends, understood each other perfectly, and had wheeled and dealed for years. The President wanted Republican support in the Senate for the tax bill and, more important, would depend upon it critically in the cloture vote on the civil rights bill. Dirksen was capable of supplying the votes. Johnson later wrote,

  I asked [Dirksen] to convey to his Republican colleagues, in the Senate and throughout the nation, that it was essential to forget partisan politics, so that we could weather the national crisis in which we were involved and unite our people. There was a long pause on the other end of the [telephone] line and I could hear him breathing heavily. When he finally spoke, he expressed obvious disappointment that I would even raise the question of marshaling his party behind the President.

  “Well, Mr. President,” he said, “you know I will.” And he did.

  Johnson also moved to reunite lines to the left. Jim Rowe was a former supporter and a New Deal liberal, and the President quickly brought him back into the fold. The wooing of Joseph L. Rauh, Jr., was far more complicated. He was an ideological liberal, the leading white lobbyist for civil rights, Washington counsel for Walter Reuther’s United Auto Workers, and a pillar of Americans for Democratic Action. Rauh had been at war with Johnson for years in the Senate over cloture against a southern filibuster and over the 1957 Civil Rights Act. “It was perfectly clear,” Rauh said, “that Johnson was trying to appear as an all-out conservative in Texas and as a moderate in national politics.” When Kennedy picked Johnson as his running mate at the convention in 1960, “nobody was any angrier about the Johnson nomination than I was.” Rauh said on the floor, “the Democratic Party shouldn’t have for Vice President a gas and oil, anti-civil rights senator.”

  Senator Herbert Lehman of New York, one of the small band of dedicated supporters of civil rights, died on December 5, 1963. Johnson invited Rauh to join him on Air Force One for the trip to the funeral in New York City. Though certain that the President was making an “appeal to the liberal forces,” Rauh accepted. A few days later he was in the Oval Office. As Rauh put it, Johnson said, “Let’s let bygones be bygones. If I’ve done anything wrong in the past, I want you to know that’s nothing now. We’re going to work together.” They went right to work on the civil rights bill.

  On the fifteenth day of his presidency, December 7, 1963, Johnson held his first press conference. He, of course, picked up his two major themes. “We think we have made very good progress in showing the continuity in our transition. We have tried to, second, give a sense of unity in the country and in the world.” This brought Lyndon Johnson’s presidential transition to a close.

  It had been a formidable performance. The American people, the Congress, the interest groups, and the world at large had been convinced that Lyndon Johnson had legitimated his presidency and that he would be a strong President in the twentieth-century tradition of the Democratic party. George Reedy, who worked for Johnson and whose admiration for his boss was severely restrained, wrote,

  His performance following the assassination fully justified the use of the overworked word “magnificent.” He eased his fellow citizens over the shock of losing their President; he set the wheels of government in motion again; he unified the American people as they have not been unified at any point since Eisenhower stepped down.

  Doris Kearns agreed. Johnson had effected a transfer of government that was “smooth and dignified” by “a brilliant display of leadership and political skill.” He himself seems to have been most pleased by the fact that on Tuesday, November 26, the first day the New York Stock exchange was open after the assassination, the Dow-Jones Industrial Average staged the biggest rally in its history. The Gallup poll in interviews conducted during the week of December 12–17, 1963 confirmed the public’s judgment. The way Johnson was handling his job won the approval of 79 percent; only 3 percent disapproved.

  Perhaps most interesting was the letter Liz Carpenter received from her friend Tom Hatfield in Texas. He had gone south to Gonzalez, west to San Antonio, and on to Banderra and Kerrville for political sampling. “Conversation and overt concern about the assassination has subsided remarkably, as though th
e people have been exposed to all of the horror their minds can bear.” A number of the 25 or so people he talked to said LBJ reminded them of FDR. Hatfield was “astonished” to learn that no one opposed Johnson and only one person seemed lukewarm. Kerr County was the most Republican county in Texas. A woman in Kerrville who had not voted for a Democrat since 1936 said, “I’m not just for him, I’ll fight for him!” An elderly gentleman in San Antonio who had not voted for a Democrat since 1916 said he would vote for Johnson in 1964. As every political observer quickly realized, Lyndon Johnson himself not least among them, he would easily gain the nomination and win the election the next year.

  But that lay in the future. Now the new President must confront the Kennedy legislative legacy, and he immediately set to work.2

  2

  The Tax Cut

  THE Keynesian tax cut came first on the unfinished Kennedy agenda. The civil rights bill had won approval only of the House Judiciary Committee; it still needed to clear the Rules Committee, gain a majority on the floor, and then confront formidable southern resistance, including a possible filibuster, in the Senate. Medicare and several federal aid for education bills had been laid over because they were snarled in complications. By contrast, the tax bill was much farther along, the opposition was fading rapidly, and passage, barring a miracle of mismanagement, seemed assured.

  Kennedy had sent up a two-part tax bill on January 24, 1963. It provided for both a large reduction in tax rates for individuals and corporations and a comprehensive reform of the tax structure to restore equity by closing loopholes. Almost no one was against cutting taxes, but scores of lobbies charged up Capitol Hill to prevent reform. These vested interests dominated the hearings before the House Ways and Means Committee, and, after prolonged executive sessions, Charman Wilbur Mills in August notified the President and the Treasury that most of the reforms must go. The administration quietly accepted the inevitable. The committee then adopted the truncated bill 17 to 8 and the House passed it on September 25, 1963, by a comfortable vote of 271 to 155. Chairman Harry Byrd of Virginia opened the Senate Finance Committee hearings on October 15, and they were expected to conclude on November 27, 1963.

  Shortly before Kennedy left for Texas, Treasury Secretary Douglas Dillon met with Byrd. While the crusty Virginian had an unblemished record as a fiscal conservative and regarded the Keynesian tax cut as a dangerous disease, he seems to have become convinced that the bill would pass. According to Dillon, he was “holding out for some sort of gesture of saving money, of being careful in expenditure control, that he could tie with the bill.” He told Dillon that he would not “let the bill go out of his committee unless the budget for the coming year was under $100 billion.” Dillon reported this to Kennedy and suggested a budget of $99.5 or $99.6 billion. The President said that “if that was necessary he’d do it.”

  Kermit Gordon had been a professor of economics at Williams College and a member of Kennedy’s first Council of Economic Advisers, which had urged the tax cut. At the end of 1962 Kennedy had moved his budget director, David Bell, to the Agency for International Development and had put Gordon in charge of the Bureau of the Budget. The federal budget was clamped into a tight time cycle because it had to be submitted within two weeks of the opening date of the new Congress. Gordon took over in late December 1962. The fiscal 1964 budget (July 1, 1963, to June 30, 1964), therefore, had been prepared by Bell and defended by Gordon.

  A year later Gordon was working up his first budget and by late November was, as he put it, “deep in the final stages.” On Wednesday, November 20, he had told Kennedy that he wanted to meet with him the next week for decisions on the outstanding major problems. He got an appointment for Wednesday, November 27.

  On the afternoon of Friday, November 22, Gordon and his staff were at the Pentagon meeting with McNamara and his people to lock up the department’s budget. They had hardly begun when an aide entered and handed McNamara a note. He excused himself and left the room. A few minutes later he returned, ashen, and announced that the President had been shot in Dallas. “The people in the meeting,” Gordon said, “just sat—just sat!” Shortly they learned that Kennedy was dead. After a while McNamara said that he did not think “there was any point in our sitting there.” Gordon returned to his office and “paced the floor without knowing quite what to do.” Since he wanted to be with his family, he went home.

  On Saturday, Gordon said, “I began to think for the first time of my responsibilities and how this terrible thing had affected them. Of course, my first concern was with keeping the budget on the track.” He would be meeting with a new President who probably did not understand the budget process, and they would have little more than six weeks to get the numbers straight. Gordon wrote a one-page memorandum briefly describing the functions and responsibilities of the Bureau of the Budget. He also wrote that if Johnson was willing “to devote a great deal of time to mastering the budget and its problems, there was still time for him to make the budget his budget.” The President responded at once and met with Gordon and his deputy, Elmer Staats, on Sunday evening, November 24. Gordon elaborated on the budget process and again asked if Johnson wanted to take the time to learn it. The President most certainly did.

  Gordon was puzzled. “One would assume,” he said, “that a person who had been in the legislative branch for a long time would know a great deal about the way the executive branch works. That is a false assumption.” Neither Kennedy nor Johnson understood the budget process when they assumed office, and both needed to be educated. In Johnson’s case this was in face of the fact that he had sat on the Senate Appropriations Committee.

  The Sunday night meeting, Gordon said, “began what was probably the most hectic period of my life, a solid month of meetings with the President—morning, afternoon, night, Saturdays, Sundays—reviewing the whole budget from stem to stern, and getting from him the decisions that he had to make.” Johnson worked very hard and he was “a quick study.” By early January 1964 “he had made the budget his budget.”

  From the start Johnson confronted Senator Byrd’s demand that he keep the fiscal 1965 budget under $100 billion if he wanted to get the tax bill out of the Finance Committee. This created a bizarre episode. For starters, the number 100 billion, while indubitably round, had no significance. Dillon considered it a “gesture” and was confident that the budget could be brought down to that sum without “actual reductions in payments for government goods and services.” Walter Heller considered $100 billion a “totally artificial administrative budget figure [that] was just a will-o-the-wisp.” Gardner Ackley, also a member of the Council of Economic Advisers, said that despite Johnson’s reduction, “we managed to make the tax cut several billion dollars bigger, so that we really got about the same stimulus out of the total package as we otherwise would have.” Gordon thought the number entirely “symbolic,” an easily recognized figure used by conservatives “to dramatize the growing size of the federal government.” Charles Schultze of the Bureau of the Budget agreed. “Quite frankly,” he said, “we would have had a hell of a time getting the budget up to a hundred billion … because, if you look at the numbers, Bob McNamara’s cost reduction stuff was finally beginning to pay off.”

  Further, Byrd, perhaps, and Johnson, certainly, were not serious about that number. Joseph W. Barr, who worked Congress on the tax bill for the Treasury, closely followed the Finance Committee, particularly its chairman. On November 26, 1963, he wrote the White House that the vote on the House bill within the committee would be 12 for (including 3 Republicans), 4 against (Byrd among them), and 1 doubtful. The Virginian’s “public” position was concern over expenditures: “Whether or not this is his real concern, the Chairman must have some reason to protect his public posture.” He would probably demand a look at the preliminary budget figure, though he might be satisfied with a presidential “assurance of restraint.” Barr continued: “Privately he has told me and others that Civil Rights must pass first.” Thus, his “real reason
” for delay might be to hold the tax cut hostage to rejection of the civil rights bill. Barr recommended that the President meet with Byrd “to explore this situation.”

  Byrd’s $100 billion gambit energized Johnson’s not inconsiderable instincts for self-dramatization, secrecy, and manipulation, the details of which will be recounted below. Kermit Gordon watched the performance from a front-row seat. The President informed the press, Gordon said later, that “it was going to be very difficult to get the budget much below 101 or 102 billion.” Gordon knew this was a fiction and the White House press corps quickly reached the same conclusion. “A number of reporters said to me afterwards,” Gordon said in 1969, “that they thought they were being deceived by the President … just … to build up the tension and to make the achievement of getting it below a hundred billion even more dramatic than it would have been.” All Presidents engage in news management. In Johnson’s case, particularly during the Vietnam War, this came to be known as the credibility gap. Gordon thought this was where it began.1

  On Friday, November 22, 1963, Walter Heller, Chairman of the Council of Economic Advisers, and six cabinet officers—Dean Rusk, Secretary of State; Dillon, of Treasury; Orville Freeman, of Agriculture; Stewart Udall, of the Interior; Luther Hodges, of Commerce; and Willard Wirtz, of Labor—were on an airplane bound for a meeting in Tokyo of the Japan-U.S. Trade and Economic Committee. Several White House staff members, including press secretary Pierre Salinger, were also on the flight.

  About an hour and 45 minutes after leaving Honolulu, Heller wrote, Rusk informed the others that the President had been shot and was “seriously wounded,” and that Governor Connolly had also been hit. They canceled the Tokyo meeting and turned the plane back. There was a message from the White House from “Stranger,” the code name for the communications officer with the President’s party in Dallas, ordering them to return to Washington. Rusk asked, “Who is the White House under these circumstances?” They discussed “the sensitive problems of transfer and exercise of power of nuclear decision, the fear of disability if the President lived, and the awesome implications of succession if he died.” About an hour later Salinger returned from the phone and said, “He’s dead.” Heller wrote, “The plane fell into complete grief-stricken silence.”