MEETING WITH THE PRESIDENT ON COST REDUCTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP68R00530A000100020044-7
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 16, 2016
• Document Release Date: August 25, 2004
• Sequence Number: 44
• Publication Date: July 16, 1965
• Content Type: MFR

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MEMORANDUM FOR THE RECORD
SUBJECT: Meeting with the President on Cost Reduction
1. A meeting was called by the President of selected task forces
and cabinet heads for the purpose of expressing his cost reduction
program for the FY 67 bud et. In addition to the Prey ssidenntls comments
on this matter, numerous agency heads were called on to advise the
group on actions taken in their own 'departments. The President was
particularly gratified with the actions taken by the Defense Department
and called on Deputy Secretary Vance to give an extensive briefing on
methods used in DOD for cost reduction.
2. The thrust of the Presidential instruction to the Director of
the Bureau of the Budget and to the group involved two points:
a. . The identification of steps taken by department and agency
heads to eliminate lesser priority activites.
b. What new programs are required, in the context of the
FY 1967 budget.
3. In emphasizing the importance of point a. above, the President
and the Director, BOB, several times pointed out that the savings in
DOD, the sale of surplus property, and added tax revenue permitting
flexibility in last year's budget totaling $6 billion would not be available
to support the "great society" expansion in FY 67. It would have to be
'1 found &lsewhere. The President pointed out that the war in Vietnam
would require more instead of less resources for DOD. He stressed,
therefore, that the flexibility provided to him by the efforts of the Defense
Department in cost reduction would evaporate. He stated that the
requirements for the "new society" continued to be of prime importance.
(In this connection Sargent Shriver subsequently outlined some of the
programs being undertaken in the war on poverty.) Therefore, it would
be necessary, he said, if we were to continue to get Congressional
support essential to moving forward on the domestic front, for all
department and agency heads to eliminate unproductive activities and
to take broad steps to reduce and curtail those programs which were
not absolutely essential.
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4. The President stated he was prepared to provide the resources
necessary for national security, "but only those necessary. " He
emphasized his conviction that Congressional support would only come
if the Congress had full confidence that his administration was presenting
an absolutely minimum program in cost to the tax payer. The President
asked that the task forces in each agency boldly provide the support
he needs in reviewing their programs. He warned that the task force
members would run into pressures from key executives within their
agencies to the effect that nothing could be eliminated, and that everything
was important; continual buck passing could be expected. In this context
he cited numerous examples from his own experience, including some
in the White House.
5. The President set forth three standards:
a. No program is sacred -- all should face the searching
examination of essentiality. No group should worry about the political
implications of boldly identifying areas for curtailment. This, the
President gocepted as his responsibility.
b. Absolute essentiality must be the byword. In this connection,
he cited a series of things which he felt should get attention and where
material savings could be made, e. g. cost of transportation of people
and things, use of cables and other communication media, newspapers,
couriers, telephone bills, electric lights. The President placed
particular stress on vacancies and manpower levels, saying that it was
important for top management personally to satisfy itself that vacancies
must be filled. He also applauded the Secretary of Defense for cost
effectiveness programs developed directly from the Secretary's office.
(This point was later made by the Director, BOB, in calling for forceful
budget and management staffs in all agencies. )
c. Imagination in looking for areas of savings and lower
cost. The President stated that if the same imagination were put to
cost reduction programs that he finds throughout the Government in
proposing new programs, he was satisfied that the flexibility he was
seeking would be found.
6. In connection with the three criteria outlined above, the President
emphasized keeping the proposals for reductions "in the family" until
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he had.an opportunity to carefully weigh the relative importance of the
various departments' and agencies' submissions. He pointed out that
little was gained by permitting rumors to circulate about curtailments
which may or may not take place. Implicit in his comment on this point
was his insistence on loyalty to him in keeping this information within
the family (and presumably from the ears of Congress).
7. At the request of the President, the Director of the Bureau of
the Budget, Mr. Schultze, gave a rundown on the budget problems
facing the Government in the upcoming period. This was supported
by a later presentation by Secretary of the Treasury Fowler on the
subject of debt limitations and the importance of Congressional confidence
in Government frugality. The D;;a;s-o_r BOB, stated that he was under
sect orders from the President not to consider any agency's new
e
ogramun i e ad been
Pr
satisfied that aggressive and precisely
iaentixiea cost reduction programs were in being, and that eff nations
were taxing place or were programmed to take place. ire stressed he
t
d
wan
e
o x%x-Lvw wiiaL was eliminated before ne would consider what
was added.
8. The President followed the Director, BOB, for an additional
15 minutes on the importance of this approach. Walking among those
present, the President called for "balanced executives. " He identified
this to mean managers who, in a year-round effort, could keep their
organizations eliminating items of work and introducing new work with
screening and imagination. He advis d tha 't was his intention to " o do
to the farm" with heads of agencies 'without staff' to go over, on a line
item basis tl e r fiuc geR proposals as submitted to the Bureau of the Budget
on 30 September. He stated he expected heads of agencies to know tier
budgets inpfine detail and to be prepared to get into as much detail as
necessary in discussion. with him. He re-emphasized that this means presenting
clearly first their cost reduction programs and goals, and second, their
ongoing programs and increases. He called for vivid imagination over the
next months in preparing budget papers that would be coming to him. He -
warned that if the task forces or heads of agencies failed in finding reductions
and in presenting balanced programs, then he and the Director, BOB, would
make the decisions.
9. The President called on Secretary of Agriculture Freeman,
Attorney General Katzenbach, and Secretary of the Interior Udall to
present statements of their departments' efforts to meet the criteria
set forth. - -
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Gl Vi c c-
10. The President the meeting with a restatement in a lighter tone
? of the warning note cited above.
John M. Clarke
Director of Budget,
Program Analysis and
Manpower
Distribution:
copies to FPBC members
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CENTRAL INTELLIGENCE AGENCY
OFFICIAL ROUTING SLIP
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NAME AND ADDRESS INITIALS
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Dr. WWheelon
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ACTION
DIRECT REPLY
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DISPATCH
RECOMMENDATION
COMMENT
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INFORMATION
SIGNATURE
Remarks :
Attached is a Memorandum for the
Record written by Clarke concerning the
Presidential-chaired economy meeting
held last week.
FOLD HERE= TO RETURN ENDER
FROM: NAME, ADDRESS AND PHONE NO
DATE
John F. Blake, E0 DD S&T
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