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F e b r u a r y 3 , 1972

D e a r M r . P r e s id e n t:
I h a v e r e a d and r e r e a d y o u r r e c e n t l e t t e r . I s h a r e y o u r b a s i c
th o u gh t, and I a m confident th a t m o n e ta ry p o licy w ill p ro m o te
r a t h e r th an im p e d e e co n o m ic exp an sio n th is y e a r .
I w ant you to know th a t I have so m e s e r io u s doubts about the
n u m b e rs in the r e c e n t budget m e s s a g e . T h e doubts a r e o f
tw o k in d s, f i r s t , w h e th e r a c tu a l e x p e n d itu re s w ill r e a c h th e
fig u re e s tim a te d f o r f i s c a l 1 9 7 2 , se co n d , a ssu m in g th is t a r g e t
is m e t, w h e th e r th e e co n o m ic stim u la tio n s u g g e s te d by th e
budget w ill be r e a l i z e d .
M y doubts on th e se co n d point d e r iv e f ro m fo u r s o u r c e s : (1)
G e n e r a l re v e n u e s h a r in g , even if e n a cte d th is f i s c a l y e a r ,
w ill not be p a s s e d b e fo re M ay o r s o , and in any e v e n t cannot
le a d to p ro m p t o u tla y s on h a rd w a re and p eo p le; i t is th is th a t
r e a l l y m a t t e r s . (2) T h e budget co n ta in s a su b s ta n tia l su m
in a d v a n c e p a y m e n ts to d e fe n se c o n t r a c t o r s and o th e r co n ­
t r a c t o r s . A g a in , su ch p ay m en ts h av e little o r no e co n o m ic
punch. (3 ) T h e p re ce d in g point a p p lie s a ls o to a d v a n ce p ay ­
m e n ts (1 b illio n d o lla r s ) to s ta te and lo c a l g o v e rn m e n ts .
(4) T he b u dget d o cu m en t a p p e a rs to have u n d e re s tim a te d by
a s ig n ific a n t su m th e w ithholding of in co m e t a x e s . (T he in ­
c r e a s e d w ithholding th is y e a r is a m o s t u n fo rtu n ate d ev elo p ­
m e n t !)




-2-

I h av e co m m u n ica te d th e s e doubts to M e s s r s . Sh ultz,
C on n ally , and W e in b e rg e r, and I c o m m u n ica te th e m now
to you b e c a u s e 1 think th e r e i s su b sta n tia lly l e s s stim u la tio n
in th e budget than you a r e counting on.
S in c e re ly y o u r s ,

A rth u r F . B u rn s

The H o n o rab le R ic h a r d N ixon
The P r e s i d e n t of th e U nited S ta te s
The W hite H ouse
W ash in gto n , D. C .

AFBiccm





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