Nixon's Secret (53 page)

Those who thought Nixon was a fiscal conservative who planned to repeal the New Deal and Great Society were shocked. The Nixon administration saw a period of high inflation and unemployment—“stagflation.” When Nixon took office in January 1969, unemployment was at a low 3.3 percent, but inflation was rising. In order to cool what Nixon’s in-house economic advisor Dr. Arthur Burns saw as an overheating economy, Nixon elected on a policy of monetary restraint. Though the policy showed gradual positive results, the quick, larger increments of economic success eluded the early administration and the country lulled in a fiscal depression.

Concerns about reelection would be
the
primary consideration in the economic decisions of Nixon’s first term. Unemployment rose to 6 percent by the end of 1970, a politically damaging high. In that year, Nixon appointed Arthur Burns, chairman of the Federal Reserve. Burns, who would come to be known as the “Pope of Economics,” told the president that he must hold federal spending under $200 billion or Burns would continue to keep a firm grip on the money supply in order to fight inflation.

With unemployment ballooning over 6 percent in 1971, Treasury Secretary John Connally predicted Nixon’s course: “Number one, he is not going to initiate a wage-price board. Number two, he is not going to impose mandatory price and wage controls. Number three, he is not going to ask Congress for any tax relief. And number four, he is not going to increase federal spending.”

Virtually overnight the president reversed course. In August 1971 Nixon announced a New Economic Policy that shocked his supporters. The NEP violated most of Nixon’s economic principles. Nixon stunned his own party by instituting wage and price controls, a 10 percent import tax, and a closure of the “gold window,” preventing other nations from demanding American gold in exchange for American dollars. I believe Richard Nixon’s biggest mistake as president was his decision to discontinue the dollar’s link to gold on August 15, 1971. Accompanied by wage and price controls, it brought to a climax the notion, personified by LBJ in the Great Society of the 1960s, that economic policy could be conducted in a top-down fashion from Washington, DC, with little or no input from the free market or the American people.

Though Federal Reserve chairman Arthur Burns resisted the move at a secret weekend Camp David conference that consisted of Nixon’s top advisers, it put unprecedented power in the hands of an increasingly unaccountable Fed, which eventually in December 2008 began a five-year-plus experiment in price controls. The zero interest rate policy would freeze the American economy in a low-growth mode during the Obama years.

Nixon’s move was popular at first. It enabled Burns and the Fed to gun the money supply in advance of the 1972 election, leaving the Democrats with no rebuttal. Nixon famously remarked, “We are all Keynesians now.” But inflation exploded to double-digit levels in the first year of Nixon’s second term. At the time many attributed the inflation crisis to an Arab oil embargo in response to Nixon’s pro-Israel stance during the 1973 Sinai war; the simultaneous spike in food prices refutes that explanation. The 1973–75 inflationary recession was the worst since the 1930s and undoubtedly was a key factor in the toxic political climate that led to Nixon’s impeachment and resignation in August 1974, just three years after his decision to end the gold standard. When Nixon left office, the economy was cratering, with rising unemployment and inflation, gas lines, and a weak stock market. “Probably more new regulation was imposed on the economy,” wrote Herb Stein, the chairman of Nixon’s Council of Economic Advisers, “than in any other presidency since the New Deal.”

There are, however, other ways in which Nixon the president proved himself to be an unrepentant pragmatist. His domestic achievements are surprising to those who think of today’s Republican Party. Nixon bona fides on Civil Rights are not well known. Vice President Nixon cast the tie-breaking vote against amending what became the Civil Rights Act of 1957 to give violators of the voting rights provisions and the right to a trial by state jury (thus guaranteeing that violators would not be punished by all-white juries in the Southern states). Senator Kennedy supported the amendment.
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Dr. Martin Luther King praised Nixon for rounding up virtually every Senate for the bill. As US senator, Nixon had supported every major piece of civil rights or anti-lynching legislation—all of it killed by Senate Majority Leader Lyndon Johnson, then the leader of the Southern bloc in the Senate.

From 1969 to 1972, President Nixon increased the budget for civil rights programs from $75 million to more than $600 million. Perhaps the president’s crowning achievement on civil rights, however, was the request for and implementation of the Emergency School Aid Act, for the purpose of ending forced busing and finally bringing about the end of school segregation as originally called for by the Supreme Court in 1954. For this purpose Nixon requested, and in 1971 would receive, $1.5 billion in appropriated funds from Congress over the course of 1971 and 1972.
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The results were undeniable; between 1968 and 1974 the percentage of Southern schools that were desegregated skyrocketed from 10 percent to 70 percent. The US Commission on Civil Rights wrote in 1975 that “it has only been since 1968 that substantial reduction of racial segregation has taken place in the South.”
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During his presidency, Nixon pioneered the affirmative action program—leading to an increase in federal purchases from black businesses to increase from $13 million to $142 million—and created an Office of Minority Business Enterprise under the auspices of the Department of Commerce.
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Indeed, Nixon had long felt that blacks had been treated unfairly in America and worked energetically during his presidency to do what he could to rectify that mistake. Between 1969 and when he left office in 1974, Nixon was able to raise the civil rights enforcement by 800 percent, double the budget for black colleges and universities, appoint more blacks to federal posts than any other president, including Lyndon Johnson, and adopt the Philadelphia Plan mandating quotas for blacks in unions and for black scholars in university faculties.

Nixon also created the Environmental Protection Agency (EPA), halted dumping in the Great Lakes, passed the Clean Air Act, and opposed an amendment to protect school prayer.

In addition, during Nixon’s presidency a number of other major environmental and health safety bills were made into law. Among these were the Noise Control Act (1972), the Marine Mammal Protection Act (1972), the Endangered Species Act (1973), and the Safe Drinking Water Act (1974).
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Nixon proposed more ambitious programs than he enacted, including the National Health Insurance Partnership Program, which promoted health maintenance organizations (HMOs). He overhauled federal welfare programs. Nixon’s welfare reform was the replacement of much of the welfare system with a negative income tax, a proposal by conservative economist Milton Friedman. The purpose of the negative income tax was to provide both a safety net for the poor and a financial incentive for welfare recipients to work.

Nixon’s Family Assistance Program was the brainchild of Pat Moynihan, the former Kennedy aide who Garment recruited to work on domestic issues such as poverty and urban policy. Harvard Professor Daniel Patrick Moynihan was a New York Democrat who held positions in the Kennedy and Johnson administrations. Moynihan would later secretly conduct an investigation of the JFK assassination at the behest of a bereaved and bewildered Attorney General Robert F. Kennedy. Moynihan lost a bid for New York City Council president. The Moynihan that Nixon hired was described as “good Pat” by former Moynihan staffer and later supply-side guru Larry Kudlow, as opposed to “bad Pat” who would move left and downplay his ties to the Nixon administration before snatching a US Senate seat in New York.

Moynihan was a thinker, a staunch anti-Communist, and a solid liberal. He helped Nixon think outside the box on urban policy, the problems of the black community, and welfare. Moynihan would craft the controversial Family Assistance Plan, which would have provided more payments to poor people and which drove the Republican right crazy. Moynihan appealed to Nixon’s more progressive instincts and convinced him that Disraeli had been successful in convincing the UK to adopt some liberal reforms because his ties on the right were so strong. It was
because
Disraeli was a Tory that he could get these things done, Moynihan would tell Nixon. Moynihan’s memos were famously pungent. His writing was prolific and to the point. An Irishman, but an Anglophile, Moynihan would ultimately be appointed ambassador to India by President Ford, where he would review Indian troops while wearing a bowler and carrying a furled umbrella in a sharply cut Savile Row suit.

Moynihan would often sport a jaunty bowtie, seersucker suits in summer, and herringbone tweeds in the winter. He popularized the Irish walking hat. Moynihan was one of the bright lights of Nixon’s presidency.

Nixon’s support for the Family Assistance Plan was bold and, apparently, insincere. While Nixon won kudos from the left for proposing FAP, H. R. “Bob” Haldeman noted in his diary that Nixon secretly hoped the Senate would reject the program because “we can’t afford it.” Conservatives were up in arms over the FAP proposal. Conservative members of Congress attacked it. All the while, Nixon milked the credit for proposing it from the left and being glad of its demise.

One part of Nixon’s welfare reform proposal did pass and become a lasting part of the system: Supplemental Security Income (SSI) provides a guaranteed income for elderly and disabled citizens. Nixon also pushed large increases in Social Security, Medicare, and Medicaid benefits. During his presidency, Nixon also proposed an expansion of the food stamp program.

Perhaps his least talked about progressive proposal, however, is one that would shock many today. Nixon was the first American president to propose a universal insurance mandate, the same mandate that now forms the backbone of President Obama’s Affordable Care Act (aka, “Obamacare”). Nixon’s plan was called a Comprehensive Health Insurance Plan (CHIP). CHIP required, among other things, that employers provide comprehensive health coverage for all employees, a substantial number of mandated benefits, and a government insurance program to cover individuals who could not afford health insurance.
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Nixon maintained that this program “let us keep . . . as the guiding principle of our health programs [that] government has a great role to play—but we must always make sure that our doctors will be working for their patients and not for the Federal Government.”
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In short, Nixon saw CHIP as the best way to avoid a slide into socialized medicine; interestingly, the plan was killed by Senator Ted Kennedy for not being liberal enough.
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Nixon also had a legacy that lasted beyond his term in office in the personages of his four appointed Supreme Court justices: Chief Justice Warren Burger, and Associate Justices Harry Blackmun, Lewis Powell, and (future Chief Justice) William Rehnquist. The Burger appointment was the first by President Nixon, as he was to succeed retiring former Chief Justice Earl Warren, a man hated by conservatives around the country. While Warren retired during the final months of the Johnson administration, a Senate filibuster of the Johnson nominee, sitting Justice Abe Fortas, allowed Nixon to make the appointment and steer the court in a direction he felt more appropriate. Burger had made a name for himself in opposing the direction of the Warren Court and was known as a believer in a strict read of the Constitution—a so-called “strict constructionist.”
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It is worth noting that during his tenure as chief justice, no major decision from the Warren era was overturned. In this, his appointment must be considered a disappointment for Nixon. Burger would also author the opinion that forced Nixon to turn over the White House tapes ultimately leading to Nixon’s resignation.

H. R. “Bob” Haldeman, President Nixon’s chief of staff, wrote in his diary on September 17, 1971, that the president was considering Philadelphia District Attorney Arlen Specter for an appointment to the US Supreme Court. “The attorney general wants guidance from the President on what he wants to do on a replacement [Supreme Court] appointment. Feels that we’ve got to really think it through carefully and establish our position on it. The President said to consider Arlen Specter as a Jewish seat.”
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Nixon and Haldeman had discussed Specter several months earlier, in June 1971, according to the Oval Office tapes:
2

RN:
Mr. Specter, he’s a very impressive fellow, Jewish . . . liberal . . . hard-line.

HRH:
Hard-line lawyer.

RN:
With good credentials.

HRN:
Which is unusual for a Jew.

RN:
Yeah. Good credentials and he’s got very good communication with the young people and the Blacks and the rest because he’s got imaginative procedures like, for example, in the field of drugs, he’s got this program that he’s against legalizing marijuana which is a position that’s exactly right, because the evidence points to that . . . That’s the kind of guy, you know, I’ve been thinking of.

HRH:
He could run your thing, couldn’t he?

RN:
In Pennsylvania.

HRH:
No, here—your dope thing if you don’t get what’s-his-name?

RN:
Hmm, yeah, I don’t think he’d do that . . . His future is there . . . We do have some appointments to the Supreme Court. If you go the Jewish route . . . I’m glad we’ve seen him . . . He’s got a great future . . . I will never see him acting an asshole like this [Pennsylvania US Senator Richard] Schweiker . . . Man, he’s tougher. He’s a Jew that’s come up like Henry Kissinger.

Mitchell summonsed Specter to Washington. By the time Specter arrived at the Justice Department Nixon had changed his mind. Specter remembered, “I was escorted to Mitchell’s inner office and shook the attorney general’s hand. We sat for twenty to twenty-five minutes. Mitchell talked about the weather. Whatever he’d wanted to discuss with me when he phoned urgently on Friday, he’d changed his mind by Monday.”
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