Foreign Relations of the United States, 1961–1963, Volume IX, Foreign Economic Policy

166. Memorandum From the Administrator of the Agency for International Development (Bell) to President Kennedy⁰

Washington, April 22, 1963.

SUBJECT

• Congressional Presentation Strategy on the FY 1964 Aid Bill and its Relation to the Clay Report

This memorandum seeks Presidential guidance on further handling of the Clay committee report in relation to the successful presentation to Congress of the President’s FY 1964 aid bill.

Thus far, following the President’s lead, I have minimized our differences with the Clay report and stressed the area of agreement between the Administration and the Clay committee. I have indicated agreement on the “main points” or general thrust of the report and have pointed out that the reduction of the President’s request from $4.9 billion to $4.5 billion was in large part a response to the Clay committee’s recommendations. General Clay has expressed publicly the gratification of his committee for the President’s action in reducing the budget request and implementing the committee’s suggestions. Members of the House Foreign Affairs Committee and press comment across the country have expressed pleasure with the Administration’s response to the report and the apparent general agreement between the Administration and the report on the future nature of U.S. aid.

We do, of course, have certain differences with the report and will face still other problems arising from it. They are principally the following:

1. There are differences on specific areas and countries, some of which are primarily matters of wording in the Clay committee report, with no practical adverse implications (e.g., comments on Africa), and some of which are real and worth disagreeing on. I believe the number of differences in this latter category are few, such as cutting our dollar aid to Nepal, military and economic aid to Iran, and military assistance to Burma.

2. While we are not clear on the precise application of the report’s statement that U.S. aid should not go to state-owned enterprises which compete with private endeavors, we have stated our general agreement on this point. The Indian steel mill is the main object of the Committee’s recommendation, and this issue will have to be faced soon; thus far, we are replying to questions by saying that the survey report has just come in and is being studied.

3. We would oppose any attempt to make the signing of an investment guarantee agreement a legislative requirement for U.S. aid to any country. This problem has been raised by the Clay report, but the committee is on our side of this argument.

4. We would wish to oppose any strict limitation on, or prohibition of, voluntary U.S. contributions to United Nations aid organizations. The Clay report’s comment on this subject can be accepted as a general guideline, and we will get some support from the committee for our position.

I propose the following future course of action concerning the presentation and the Clay report:

1. that we continue to support strongly the President’s revised program and budget, indicating that they have taken the Clay report into consideration and that the Clay committee has expressed gratification and very large agreement with them.

2. that U.S. Government officials publicly should continue to minimize rather than maximize differences with the Clay report.

3. that legitimate differences which we have with the report should be defended where they are important and as they are raised by others before Congressional committees, emphasizing where possible that some differences are largely of timing and degree.

4. that, since General Clay is expected to specify or otherwise indicate next week a figure of at least $4.0 to $4.1 billion as the minimum need for FY 1964 appropriations, we attempt thereafter to focus Congressional and public consideration on the range between his figure and the $4.5 billion requested. The difference in figures should be explained on the grounds that the $4.5 billion figure is our interpretation of what is needed for U.S. and free world security, that we should have funds on hand for increased lending if Latin American nations perform properly and for demonstrating the continuation of serious U.S. commitment to the Alliance, that we can and should be trusted with the Contingency Fund requested, and that there may be a few countries where we propose to do more than the Clay committee might think minimally necessary. We should argue that any cut in the budget request would entail corresponding costs in the total contribution of the program to free world security.

5. that we seek ultimate authorization figures of approximately $4.3 billion from the House Foreign Affairs and Senate Foreign Relations Committees—roughly mid-way between the Administration’s and General Clay’s figure and possibly at the high end of his figures if he cites a range of $4.1-$4.3 billion—which allows both Committees to make some cuts. While the course of action beyond that point is now unclear, our intention should be to seek Congressional approval of an appropriation at Clay’s bottom figure of $4.0 or $4.1 billion.

If the President agrees with this course of action, I suggest he convey it to the leadership of the House and Senate, perhaps at its April 23 meeting, and to Chairman Morgan and possibly Chairman Fulbright at the same time, either personally or through Mr. O’Brien. This personal assurance to the chairmen of the House Foreign Affairs and Senate Foreign Relations Committees is considered necessary to assure them of the President’s strong backing of a $4.3 billion figure from their respective committees. It may well be that the Senate figure will have to be slightly higher than that of the House Foreign Affairs Committee to reach an authorizing figure at this level. Also, there are strong indications that these committees will require assurances that the Administration will fight for a figure no lower than $4.0-$4.1 billion at the appropriations stage. They regard themselves, rightly or wrongly, as having been somewhat let down by the Administration in the final stages of the appropriations process last year and the year before.

Whether this strategy will obtain the optimum appropriation remains to be seen. No one has proposed a real alternative, though some believe it will result in larger cuts than necessary. They point out that liberal legislators and humanitarian groups are disturbed with the Clay report and want the Administration to fight it. I agree that non-Administration officials and private organizations should not be discouraged from opposing the report if they so desire, since it is useful to have their criticism to balance the comments of others of opposite persuasion. While I agree also that the course of action proposed here would at least temporarily inhibit their support for the program, I believe our relations with these persons and groups will not suffer in the long run.

Finally and concerning General Clay’s testimony in executive session on April 25 before the House Foreign Affairs Committee, he has indicated quite clearly that he will abide by his promise to the President of supporting a figure of $4.0 to $4.1 billion. I had planned to speak with him once more before his testimony to urge him to support a range from his rock bottom figure ($4.0-$4.1 billion) to a higher one ($4.2 or $4.3 billion) which would allow more funds to be on hand for additional Alliance for Progress lending if Latin American nations perform properly, and for the Contingency Fund.

Some argue, however, that the House committee will view Clay as “an Administration witness” and cut under any figure he cites, and therefore Clay should specify no figure and simply state his belief in an appropriation “something under $4.5 billion.” While the Committee extracted a promise from Clay at his last appearance to name a figure this time, an attempt could be made to have him avoid a definite figure if the President thought this desirable. The risk obviously is that if this were done, the House Committee might cut more rather than less from the President’s request than if Clay named a figure.

If the President believes that Clay’s citing a specific figure now is desirable, or unavoidable in the light of his promise to the House committee, I recommend that I talk with him as planned, and that the President not meet with him until after his April 25 testimony. I think General Clay might feel that he was being pressed rather closely if the President reviewed the subject with him before his testimony.

We would appreciate the President’s guidance on the matters reviewed in this memorandum.

David E. Bell¹

0. Source: Kennedy Library, National Security Files, Departments and Agencies Series, AID, 4/63-9/63. Confidential. Attached to the source text is a memorandum from Easum to Lawrence F. O’Brien, April 22, noting that Secretary Rusk was given a copy of Bell’s memorandum that morning, had reviewed it briefly, and may have discussed it with the President at the NSC meeting. The summary record of the NSC meeting contains no discussion of Bell’s memorandum. (Kennedy Library, National Security Files, Meetings and Memoranda Series, NSC Meetings, 513th Meeting) Easum added that the President should read the memorandum prior to the leadership breakfast the next day.
1. Printed from a copy that bears this typed signature.