Foreign Relations of the United States, 1964–1968, Volume IX, International Development and Economic Defense Policy; Commodities

76. Memorandum From Edward K. Hamilton of the National Security Council Staff to the President’s Special Assistant (Rostow)¹

Washington, May 27, 1968, a.m.

SUBJECT

• Status report on foreign aid legislation

I thought you might want to catch up on events since our situation room meeting. You will recall we concluded then that we should try to put together a foreign aid legislative package—including all the relevant elements—which the President could use if he felt it might stave off something worse. The following events have occurred since:

1. On May 18 I convened a group which worked out a package involving a cut of just over $1 billion in appropriations below the President’s budget request. The major item was a $700 million cut in economic aid, but there were cuts also in all other elements except the IDA and the regional banks. These cuts and our negotiating priorities were agreed all around at the staff level.

2. That afternoon, after a report from the Treasury representative at the meeting, Fowler instructed his people to tell me that he wanted no part of any proposition which linked IDA and the regional banks with foreign aid. He said he understood and sympathized with the objectives of the exercise, but he felt the “foreign aid meatgrinder” would not do his programs any good regardless of how we approached it.

3. On May 21, I drafted and circulated a memorandum (copy at Tab A)² which tried to set out all the complexities in as clear a form as possible. It did not assume that Treasury was irreversibly out of the package approach because I had hopes of demonstrating to Fowler that the first objective of the package approach would be to keep his wards—the IDA and the regional banks—untouched.

4. Meanwhile, growing Congressional sentiment in favor of a stop-gap approach to both foreign aid authorization and bills produced an instruction to Doc Morgan to discuss a stop-gap approach with the House Democratic Leadership. The proposal, as far as we understood it, is that the Committee would report and recommend a short-form authorization bill which simply extends the expiration date and author-izes appropriations at 90% of this year’s appropriation level. This would be followed by a continuing resolution which would make appropriations available at this level through fiscal year 1969. The theoretical rationale would be that a new President should have a clear shot at reshaping the program as he wishes and that it is not worth the Congress’s time in this short session to get into the details. The practical rationale is that it will be much easier to get these bills through than the standard complicated Foreign Assistance Act and Appropriation Bill. As of May 21, Morgan planned to adjourn the mark-up of the Foreign Assistance Act while he (a) checked out this approach first with the Democratic leadership and then with the Senate Foreign Relations Committee and the House Appropriations Committee, and (b) wait to see how things look after the tax bill.

5. At the same time, apparently independently, there was a somewhat similar stop-gap approach aborning in the Senate. We are told it is the brainchild of Carl Marcy. It involves the same approach as Morgan’s except that the authorization and appropriation would be only for nine or ten months, and at only 80% of this year’s level. (This would cut about $380 million from current economic aid levels.) We also understand that Marcy’s scheme may be to merge the authorization and appropriation bills so as to get away with only one foreign aid vote in each House. Fulbright, though not anxious to have any aid bill this year, seems taken with this proposal.

6. The draft package memorandum was approved with minor amendments by AID, Defense and the Budget Bureau. State agreed with the substance but wondered whether so complicated a proposition could work. Treasury and Agriculture did not respond, though I think Freeman was sympathetic.

7. Gaud and I met with Katzenbach on May 23 to talk about the package. We found ourselves of one mind, that the package is a rather rickety collection of partially conflicting interests and objectives which has only a minor chance of success. But we also found ourselves barren of any better alternatives with the possible exception of the Morgan stop-gap approach. In any event, we agreed that we had been somewhat overtaken by events and that the immediate question was whether the Administration should oppose the Morgan approach. We concluded that it should not, provided the coverage is a full 12 months and includes continuation of the authority to use the Revolving Fund for Military Credit Sales. (Defense is prepared to live with the latter.) We also concluded that it is worth trying to get Morgan to try to make some provision for IDA in his dealings, since IDA would not be covered at all in the stop-gap scheme. Meanwhile, we decided to leave the package-approach in abeyance rather than cross Morgan’s wires by trying to introduce it now.

8. The plot thickened on May 24 when Gaud was informed that Morgan (a) had not done anything in the way of checking out the stop-gap approach, but (b) had decided to reconvene the Foreign Affairs mark-up session on the Foreign Aid BILL beginning tomorrow. We have yet to interpret these entrails.

9. Senator Fulbright has just called Tom Niblock to report the Foreign Relations Committee’s conclusions after two days of executive session on the IDA and Asian Bank Bills. To put it bluntly, the Committee has decided to defer action on both bills indefinitely. Fulbright claims that there were only two votes this morning (of 12) to report out IDA favorably, and that a motion to report out the Asian Bank BILL failed on a 6–6 deadlock. He added that these bills could be brought up again any time, but that he doubted there would be any change in sentiment unless and until there is progress on Vietnam. In response to Niblock’s question, he speculated that passage of the tax bill might help a little but not much. The net result is that the substantive committees—in both Houses—have taken conscious decisions to table both bills.

I know this is a convoluted story, but I thought that you would want to know what is going on. It is pretty clear to me that if we are forced to fall back on a package approach, it will take the President himself to get Fowler to sign up. More important, there is a real question whether any tactical scenario on the Hill can hold together the authorization and appropriation committees, let alone multiple interests on the Floor. Nick Katzenbach remains horror-struck by the number of bills, committees, personalities, etc. involved in the package-approach. But I think he would agree to some such line if the Morgan-type tack failed.

The weakest link in both the package and stop-gap approaches is the need for identical action by the substantive and money committees. You know the historical pattern; the authorizing committees cut $500 million or so and then the appropriations committees do the same. But there is a strong movement in the substantive committees in both Houses this economy-minded year not to fight to the death for amounts which the appropriations committees slash further. On the other hand, Passman & Co. are certainly no less anxious for economy kudos than in previous years. Our more difficult problem is to find a way to let Morgan and Fulbright make full money cuts while Passman and Mahon get a good share of the credit. This is the problem we will be addressing as we move along.

EH

1. Source: Johnson Library, National Security File, Subject File, Foreign Aid, Box 16. Secret; Sensitive.
2. Document 75.