Presidential Papers, Doc#762 To Lewis Williams Douglas, 2 July 1958. In The Papers of Dwight David Eisenhower
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Document #762; July 2, 1958
To Lewis Williams Douglas
Series: EM, WHCF, Official File 114
The Papers of Dwight David Eisenhower, Volume XIX - The Presidency: Keeping the Peace
Part V: Forcing the President's Hand; June 1958 to October 1958
Chapter 12: America Invades the Mideast

 

Dear Lew: Your letter of May twelfth regarding the desirability of a tax reduction of the right sort posed too many questions of a technical nature for me, and I sent it along to Bob Anderson for advice on how best to answer you.1 To his embarrassment--and to mine--the letter was misplaced in his office, and only now have they provided me with a memorandum discussing the pros and cons of your recommendation. I found it so interesting that I am sending you a copy of the entire memorandum.2

At the moment one of my major matters of concern is the cut in mutual security funds. You perhaps will see the statement with which I opened the press conference today. I might add that I simply cannot understand, try as I will, the thinking that approves huge expenditures for the maintenance of a military establishment, yet cuts eagerly and substantially our minimum requirements for the waging of the peace.3

With warm regard, Sincerely4

1 In his letter dated May 7 (same file as document), Douglas had discussed Senate reactions to his statement supporting foreign aid and the Reciprocal Trade Bill (see no. 674). He had also outlined his thoughts on tax reduction, suggesting that the Administration needed to preempt the Democratic party by making its own tax reduction proposal. Any Democratic program would place the Administration "on the defensive and be a source of real embarrassment to you," he said. On the other hand, if the Administration proposed its own tax reduction program, the "demagogues" would "be compelled to disregard your recommendations or, by the logic of your proposals, be pressed to support them." An appropriate tax reduction, he suggested, could increase revenues by stimulating investment and by "the creation of employment by private initiative." "Accordingly, the appropriate sort of tax reduction recommended at this time might be not solely an anti-cyclical measure but a part of a longterm program, as well."

2 Treasury Secretary Anderson's memorandum of June 30, 1958, is in the same file as the document. He had stated that Douglas's argument was "probably correct." "Judicious tax reduction through tax reform could actually increase revenue within a short period." Since it would "give relief primarily to middle and upper bracket individuals and to business," however, it would be unpopular.

3 For background see no. 753. On June 27 the House Appropriations Committee had reported a bill recommending a total foreign aid appropriation of $3,078,092,500, which represented a cut of $872 million from the President's original request for funds, and $597.5 million less than the amount authorized for fiscal 1959 foreign aid spending (see Congressional Quarterly Almanac, vol. XIV, 1958, pp. 188 - 90). On July 2, prior to the full House vote appropriating the funds as recommended by the Committee, Eisenhower had issued a statement, calling the cuts "reckless." "It is my deep conviction," he said, "that reductions of a size contemplated by the Committee will have grave consequences in portions of the free world and to our nation's security--and will encourage Communist imperialists" (Public Papers of the Presidents: Eisenhower, 1958, pp. 519 - 20). For developments see no. 782.

4 Douglas would respond on August 4, 1958 (same file as document). While thanking the President for his letter, he noted that economic recovery had made his suggestions regarding taxes "past history." "I agree completely with your views on mutual security funds," he noted.

Bibliographic reference to this document:
Eisenhower, Dwight D. To Lewis Williams Douglas, 2 July 1958. In The Papers of Dwight David Eisenhower, ed. L. Galambos and D. van Ee, doc. 762. World Wide Web facsimile by The Dwight D. Eisenhower Memorial Commission of the print edition; Baltimore, MD: The Johns Hopkins University Press, 1996, http://www.eisenhowermemorial.org/presidential-papers/second-term/documents/762.cfm

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