President: When we met with the Chinese in 1972, we talked about SALT, which we supported. The question was asked if we reduced our appropriations because of SALT, would the Soviets do the same? Chou said never, never -- without even waiting for the interpreter.
Ramsbotham: Will this antagonism be sustained, do you think, after the succession?
Kissinger: I know only a few of them. You met the younger one.
Heath: This is such an emotional issue because they think the Soviet Union is pulled out its engineers at the critical state of Chinese development. They want a stable relationship with the United States and Europe and won't ever go back to dependence on the Soviet Union.
Kissinger: They are lecturing Fulbright and Humphrey on the Soviet Union.
Heath: I am interested in your thoughts on the economy.
President: It was a gamble getting all the experts together under Klieg lights, but it turned out the difficulties were minimal. They wanted Burns to be more flexible on the monetary side, but that we had to keep the fiscal situation where it is -- keeping the budget under $300 billion. It will be difficult to do so. There was a feeling we needed adequate contingency plans to meet the crises with public service employment. This was generally agreed. There were some who wanted a tax increase and some who wanted a decrease. The next meeting is with Labor. We don't know how that will work. Then a regional meeting with business and agriculture people, then a repeat with the economists and then the Summit.
There was agreement on where we are. I wanted the American people to know the cold hard facts. If we can get some degree of unanimity we can work with Burns, keep our fiscal policy in control, and prepare contingency plans. Then I think we can weather the storm. If we don't resort to expediency we will be okay.
Heath: I tried a series of meetings with labor leaders in 1972. We have a mental block between labor and industry. But we did get general agreement on priorities. And we got massive support for the freeze until the miners broke. Getting it to the public I find fascinating. It makes the economists more responsible.
President: The reports I got were very good. Even the skeptics were favorable.
SECRET/NODIS/XGDS
