Known and Unknown_ A Memoir - Donald Rumsfeld [75]
Connally, a protégé of LBJ’s, liked big, bold action. When wage and price control legislation first came up, Connally’s staff at Treasury drafted a memo urging the President to veto it on philosophical grounds. “Why are we doing this?” Connally demanded, when he saw their memo. “If a legislature wants to give you a new power—you take it. Put it in the corner, like an old shotgun. You never know when you might need it.”12
Six months later, to almost everyone’s amazement—and certainly to mine—Connally had successfully persuaded Nixon to grab that old shotgun and pull the trigger. The dollar was weak, inflation seemed to be getting worse, and Connally recommended presidential action.
In August 1971, the President held a confidential meeting with his economic team at Camp David. Nixon had long blamed an economic downturn for his narrow loss to Kennedy in 1960. Now that he was president, he was determined to not have the economy ruin his chances for reelection. At the meeting, the President agreed to the approach recommended by Connally.
Nixon demanded absolute secrecy about his decision until he was ready to unveil it. In the first phase of the program, Nixon planned to announce a ninety-day freeze on wages and prices in the United States. He also would sign an executive order to create an economic stabilization program, a pay board, a price commission, a health advisory board, a rent-control board, and various other new government entities.13 All of them would be overseen by the Cost of Living Council, to be chaired by Secretary of the Treasury Connally, which would include most of the non–national security members of the President’s cabinet.14
In my view, imposing wage and price controls may have been politically expedient, but it was probably the worst policy decision the administration made. I thought the proposal would subvert the free market’s ability to allow consumers and producers across the United States to determine prices based on the laws of supply and demand. This couldn’t be done by any centralized planning or planner, no matter how brilliant.15
The President needed a director for the Cost of Living Council (CLC) to administer what was called “Phase Two” of the program. Nixon, with the advice of Shultz, decided I was the man for the job. I’d told him I wanted to be involved in policy, and this was clearly a policy position. It just happened to be one I did not agree with. George Shultz, who had moved from being Secretary of Labor to director of the Office of Management and Budget, informed me of the President’s decision. He urged me to accept the post.
“I don’t believe in wage and price controls,” I told him.
“I know,” he said. “That’s why you need to do the job.”
Shultz told me he wanted a director of the program who would work to make sure the new controls were temporary and did as little damage as possible.16 So for the second time in the Nixon administration, I agreed to take on a presidential assignment that seemed like a no-win position, and which ran counter to my beliefs.*
If the goal was to end wage and price controls as soon as possible, I saw a first step in that direction: the need to ensure that we did not hire a permanent staff that would want to perpetuate itself. Instead, I borrowed individuals from other departments and agencies—called detailees—particularly individuals who understood the dangers of wage-price controls, and who could be sent back to their home departments with the stroke of my pen.
Second, I emphasized from the outset that Congress passed the Economic Stabilization Act for the sole purpose of dealing with inflation. Not only did I believe that such an intrusion by the federal government would undermine the free market system, I feared that it presented government officials with the almost irresistible temptation to