Mills backed off. Ways and Means met on May 6 and rejected the Republican-Mills 14-6-6 formula on a party line vote of 15 to 10. It then adopted the tax hike and a $4 billion spending cut, the Appropriation Committee’s 10-8-4 formula. The vote was 17 to 6. Mills seems to have gotten Johnson’s message—for the time being.
On May 8 the conference reached final agreement under Mills’s leadership on a $10 billion surcharge and a $6 billion cut in spending, that is, a 10-8-6 formula. Mills, usually extremely cautious, had taken a big gamble.
It was now $6 billion versus $4 billion, Wilbur Mills versus Lyndon Johnson. Generally speaking, the chairman was in a better political position because he was backed by most of the southern Democrats and the Republicans, who together constituted a majority in both houses, while the President had only the northern Democrats. But there were soft spots for Mills in the House leadership. Speaker McCormack favored $4 billion and was extremely angry with Mills, who, he thought, was trying to blackmail the leadership. The speaker, Sanders reported, said that “since Mills has taken over the leadership of the House, he can get his own Rule out of Committee and get his own votes on the floor fo_ the Conference Report.” Majority Leader Carl Albert and whip Hale Boggs were of two minds but said they would vote to follow the President if he asked them. Sanders concluded that “Mills cannot pass the report without active support from the Administration and some liberal Democrats.” The chairman did not disagree. He wrote Walter Heller on May 10, “We are still a long way from having votes in the House to pass this conference report.”
The President’s people were ambivalent. His domestic policy aides headed by Califano urged protection of the Great Society. They were joined by Sanders and Labor Secretary Wirtz. But the Council of Economic Advisers was of two minds. Its members, doubtless, hoped to preserve the Great Society and, after analysis, concluded that a $10 billion tax increase combined with a $6 billion reduction in expenditures was, as Okun wrote, “an overdose of fiscal restraint” that “could weaken the economy excessively, particularly in the first half of 1969.” At the same time, the CEA thought passage of the tax hike was critical. “The financial mess that would follow failure of the surcharge,” Okun wrote the President on May 20, “could jeopardize our 87-month record prosperity. It could bring on a recession and slump. Even a mild recession would cost $30 or $40 billion of production and 1½ million jobs.” Current economic events accentuated the need for action. Price inflation was at a 17-year record and the bond market was “thoroughly demoralized and close to being disorderly” with extreme jumps in interest rates. The cause, Okun wrote, was “growing uncertainty and continued delay on the tax bill.” The Treasury, of course, had no doubts. Fowler wrote Johnson on May 9, “I strongly recommend that the Administration accept the bitter with the sweet and work with the House and Senate leadership in securing speedy approval of the Conferees Report.” The deterioration of the bond market reinforced his position.
In the lobbying there was no match. Congressional Quarterly’s headline read, “Lobbying by Business Key to Passage.” The bankers, described by Fowler as “the world’s greatest worriers,” accepted the surcharge and adored the spending reduction. Nothing can match rising prices and interest rates in energizing bankers to defend the homeland. The American Bankers Association sent the word to its 13,500 member banks to descend upon Congress. Fowler met with the ABA in Puerto Rico to cheer them on, but quickly concluded that it was unnecessary. “I have never seen any group of bankers so keyed up and concerned.” In 1963—64, when he was Undersecretary of the Treasury, Fowler had organized a very effective group of 500 prominent businessmen headed by Henry Ford and Stuart Sanders of the Pennsylvania Railroad to lobby for the big tax cut. Now he made a few phone calls and they were back in business. The homebuilders and the U.S. Chamber of Commerce also pitched in.
Many groups—the labor movement, education, the cities, religious organizations—strongly opposed the $6 billion spending reduction and, as Andy Biemiller of AFL-CIO put it, “swallowed hard to accept the $4 billion cut.” George Meany visited the President to stiffen his spine and the AFLCIO executive council denounced the “meat-axe approach to cutting the budget.” But these organizations never coalesced into an effective lobby.
On May 21, the day following Okun’s memorandum urging the President to accept a cut in spending to get the tax surcharge, Johnson met with Mills, the House leadership, Okun, Fowler, and Zwick. Okun later recalled,
The President began the meeting by reading my memo. … I would say that there was a good deal of emotion, certainly on Wilbur Mills’ part, in which he was protesting his allegiance to the President and high regard for him and insisting that all his actions on the surcharge had been entirely misunderstood. … Mills made an unqualified promise to the President, which he subsequently broke, that he would make every effort to push that thing through with a four-billion dollar cut on it. … He made, apparently, no effort to get the four-billion dollar cut. In fact, he pushed it through with a six-billion dollar cut on it. … The President … said that he would agree to give his full support to the combination of a surcharge and a four-billion dollar cut.
Some of the northern liberals insisted on a vote in the House on a record motion to kill the conference report. The President and Sanders were opposed. If it succeeded, there probably would be no tax increase; if it failed, nothing would have been gained. But the liberals would not be put off on a vote to reduce the cut to $4 billion. Representative James A. Burke of Massachusetts made the motion on May 29 and it was defeated 259 to 137. The majority consisted of 167 Republicans, 63 southern Democrats, and 29 northern Democrats. The minority was made up of 111 northern Democrats, 20 southern Democrats, and 6 Republicans. The hoary conservative coalition was in firm control. The House adopted the conference report on June 20 by a 268 to 150 roll call and the Senate approved it the next day 64 to 16. Johnson signed the Revenue and Expenditure Control Act on June 28, 1968. Since it would have been unseemly for him to celebrate his defeat by Wilbur Mills, no signing ceremony was held.
But Johnson, as Califano put it, had “the last laugh.” He did not believe that Congress would actually cut fiscal 1969 appropriations by $6 billion. Thus, he refused to make any reductions himself until Congress had acted. “Congress was unable to cut even $4 billion in spending. … Fiscal 1969 ended with a $3.2 billion surplus—and the Great Society programs survived.”8
It is axiomatic that wars produce inflation, and that, certainly, has been the American experience throughout the nation’s history. It was dramatically so in the three wars that occurred earlier in Lyndon Johnson’s lifetime. Born in 1908, he was nine when the U.S. entered World War I and thirteen when the postwar inflation ended. While JoLnson City was in the remote Texas hill country, politics was the stuff of life and his father, Sam, was a member of the Texas legislature in Austin and a strong supporter of Woodrow Wilson. He took his boy on his campaigns and Lyndon would sit in the gallery in the capitol listening to the debates. He could hardly not have learned that the war had pushed up prices. During World War II and the postwar period inflation was a critical national issue. Johnson sat in the House when he was not in military service and it would have been impossible for him to ignore the question. He was in the Senate and became majority leader during the Korean War, when a host of questions about inflation was thrust upon him.
Yet there is no evidence that Johnson learned anything from these experiences. When he went into Vietnam in 1965 he seemed oblivious to the risk of imposing the cost of the war on an economy close to full employment. His falsification of that cost temporarily confused his economists. But he did not fool Martin and the Federal Reserve. After six months the Council of Economic Advisers figured out the truth and immediately urged a surtax on income taxes. In January 1967, a year and a half into the war, Johnson finally came around. But it was too late because the virus of inflation had infected the wage-price system. The Fed’s monetary controls were inadequate, and in the a
bsence of an incomes policy and/or a tax hike, the inflation exploded.
While the President now wanted higher taxes, Congress refused. Johnson tried to blame the Congress, but its leaders had a ready answer. If, Wilbur Mills pointed out, the President had called for an increase in taxes to pay for the war, he could have gotten it easily. As noted earlier, Budget Director Schultze agreed. But Johnson could never get himself, despite the massive military forces and the heavy casualties, to admit that Vietnam was a real war.
Thus, Lyndon Johnson, with Robert McNamara’s connivance, was the instigator of the Great Inflation. Once started, it seemed never to stop. During the early years of the Nixon administration prices and wages rose more rapidly than they had under Johnson. With the spike in food prices in 1973 and the first great oil shock of 1974 they surged to a double-digit level. In the latter half of that decade the economy sustained another massive rise in the price of oil. It was not until 1982 that inflation was brought under reasonable control. Johnson can hardly be held responsible for Nixon’s failings or for the greed of OPEC. Nor can he or his economists be fairly blamed for failing to foresee that 17-year disaster because there was no precedent.
One may ask what would have happened to prices if Johnson had not entered the war in 1965. Walter Heller, no mean authority, speculated about this question. During 1964 and the first half of 1965, he said, “We were moving under the more or less gentle zephyrs of the 1964 tax cut. We were moving so nicely towards full employment, and with very little price inflation.” One of the great tragedies of Vietnam was that it “rudely interrupted” this “great experiment.” For certain, if the U.S. had reached full employment, there would have been inflationary pressures. “But instead of having 6 or 7 per cent inflation at the peak, we probably could have held it to around 3 per cent, 3Vz, just half as much.”9
15
Turmoil at Home
LYNDON Johnson’s presidency played itself out against a backdrop of grave civil unrest. It first appeared in 1964, mounted in intensity during 1965–67, and reached a climax in 1968. Not since the 1850s had a chief executive confronted domestic turmoil on this scale. It caused his presidency to erode for four years and to collapse in the fifth.
There were three sources of this turmoil: opposition to the Vietnam War, black militancy, and student unrest in the universities. While there was some overlap—Martin Luther King, Jr., for example, was both a civil rights leader and a leading spokesman for peace—each of these sources was discrete. All three are treated in this chapter through 1967; the climactic events of 1968 are set forth in Chapter 19.
The first modest signs of dissent from the drift to war in Vietnam appeared during 1964. Two of the nation’s leading columnists, Walter Lippmann and James Reston, expressed their concern. In March, Students for a Democratic Society at Yale organized the May 2d Movement, which held a demonstration in New York, attracting about 1000 marchers. SDS then persuaded an equal number of draft-age college students to pledge not to fight in Vietnam. On July 10 a petition initiated by the National Committee for a Sane Nuclear Policy (SANE) signed by 5000 professors was presented to the White House. Hans Morgenthau of the University of Chicago, an authority on international relations who had earlier favored support for South Vietnam, was a signer.1
Johnson during 1965 worked hard to keep Congress in line behind the war, particularly the Senate. He sealed off Richard Russell, his mentor and old friend, who thought the war was terrible. Since the Georgian was the respected leader of the southern bloc, he must have carried others from his region with him. Mansfield could hardly be moved intellectually, but he usually made his objections in private. Johnson’s biggest problem was J. William Fulbright, the chairman of the Foreign Relations Committee, who had steered the Tonkin Gulf Resolution through the Senate. Shortly, Fulbright became convinced that Johnson and McNamara had lied to him and that the North Vietnamese had not attacked the Turner Joy. In 1968 he would hold hearings of his committee which would establish this point. But in 1964–65 he remained silent. George Aiken, the Vermont Republican, and Tom Kuchel, the California Republican, were restive about the war. Frank Church, the Idaho Democrat, became a dove and Johnson roughed him up. At a White House dinner he demanded to know whom Church had consulted on the war. He said Walter Lippmann. “All right, Frank,” Johnson snapped, “next time you want a dam in Idaho, you go talk to Walter Lippmann.”
In 1965 Douglass Cater, the new aide on domestic affairs, began writing memoranda to the President on Vietnam. On January 25 he wrote that Peter Grose of the New York Times, who had just returned from Saigon, was “quite fatalistic” and thought “the next six months may mark the end of the road and urge[d] that we be exploring every opportunity to withdraw with honor.” On May 25 Cater summarized a series of Reston columns. The reporter detected a “startling change” in the focus of the administration from domestic issues to the war. The President had thrust himself forward as the sole enemy of Communism. He seemed an “impulsive giant … fitful and unpredictable.” Reston urged public debate. On June 22 Congressman Jim Scheuer reported “widened unrest among the Congressmen about the situation in Vietnam.” On July 10 Cater talked to John Gardner and Walter Heller. They were “concerned that as troubles in Vietnam drag on and deepen, there could be an adverse effect on your leadership.” On July 24 Carl Marcy, chief of staff of the Senate Foreign Relations Committee, said that Fulbright, Aiken, Church, and perhaps Russell were concerned that the “U.S. was getting involved in a land war without any support from others.” On August 5 Cater wrote that several sources recently in Saigon had told him that “a number of young wire service and network correspondents there are thoroughly sour and poisonous in their reporting.”
As these comments suggest, Johnson’s effort to conduct the war in secrecy collapsed during 1965. The growing American presence, the rapidly rising number of troops, and the mounting casualty list brought the press and television networks to Vietnam in full force. CBS, NBC, and ABC sent reporters and TV crews to Saigon. “Vietnam,” Daniel C. Hallin wrote, “was America’s first true televised war.” The conflict became a staple on the evening news. Michael Arlen called it “the living-room war.” The American people received a crash course on Vietnam and guerrilla warfare and they did not like it at all. In the latter part of 1965 the White House was surprised to receive a large volume of antiwar mail from women. These women, many mothers, were watching the war on television and wanted the President to know that they did not approve.
“The first half of 1965,” Tom Wells wrote, “was an electric time for peace activists.” On February 8–10 about 300 women, the Mothers’ Lobby, descended upon Congress to demand a negotiated settlement and a “dignified withdrawal.” On February 13, 3000 people gathered in United Nations Plaza in New York to protest Rolling Thunder. On March 16 Alice Herz, an 82-year-old Quaker and a refugee from Nazi Germany, set herself on fire on a Detroit Street corner. She died a few days later.
On the night of March 24–25, 49 professors and 3000 students in Angell Hall at the University of Michigan invented the teach-in. The university would not allow them to disrupt daytime classes. Throughout the night there were lectures, debates, and discussion groups on Vietnam, all tinged with protest in a framework of reasoned inquiry. At dawn there was a torchlight parade and folksinging. It was a memorable event for the participants and it received national publicity. The following day 2500 participated at Columbia and within a few months 120 colleges had held teachins.
On April 17 much the largest crowd yet staged a march on Washington. They picketed the White House and then moved to the Washington Monument to hear speeches by Yale historian Staughton Lynd, Senator Gruening, the independent journalist I. F. Stone, and the civil rights leader Robert Moses, along with folksinging by Judy Collins, Joan Baez, and Phil Ochs. They then marched to the Capitol.
On May 15 there was a 15-hour debate between three academics who favored and three who opposed the war. It was broadcast to 100 colleges and was watched
by more than 100,000 people. McGeorge Bundy was scheduled to participate, but Johnson, who opposed his speaking, sent him on a special mission to the Caribbean. Three weeks later he did debate Hans Morgenthau on CBS. On May 21–22 over 20,000 participated in a marathon teach-in at Berkeley.
For reasons unknown, Lyndon Johnson thought he needed a resident intellectual and hired Eric Goldman, the Princeton historian. In February 1965 Johnson’s social secretary, Bess Abell, suggested a White House festival of the arts. Goldman and his staff broke the arts into seven categories—painting, sculpture, literature, music, dance, film, and photography—and made lists of the nation’s most distinguished artists in each group. Mrs. Johnson was enthusiastic and, after a long delay, the President approved. The date was June 14, the artists were invited, and the program was fixed. As the time narrowed, a number of problems emerged that disturbed the Johnsons. Most important, the poet Robert Lowell, who would read from his verse, announced that he was against the war; the novelist John Hersey would read from his antiwar masterpiece Hiroshima; and the critic Dwight McDonald, who strongly opposed the war, would do a piece on the festival for the New York Review of Books. The squabbling at the White House was intense, but Goldman managed to go forward. In fact, Lowell did not come, Hersey spoke out strongly against the war, and McDonald circulated an antiwar petition. After reading the papers the next morning and examining her husband’s “dark countenance … dour and grim,” Lady Bird called it “Black Tuesday.”
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