Growing Impact of Aerospace Unemployment Concerns

As Magruder acknowledged, the New Technology Opportunities effort was in large part an attempt to find employment for those aerospace workers who had lost, or were in danger of losing, their jobs as a result of the Nixon administration’s budget reductions in the defense and space sectors. This was part of a broader concern—that unemployment in states key to Richard Nixon’s reelection in 1972, particularly California, would negatively impact the president’s election prospects. As of late 1971, the leading candidate for the Democratic nomination was Senator Ed Muskie of Maine, and in some polls Nixon was running behind Muskie.

The unemployment issue had been a White House worry since at least early 1971. The concern was that at the time of the 1972 presidential election, the California unemployment rate might be 6.2-6.9 percent, significantly above the national average of 5-5.5 percent. By the end of August 1971, the White House had launched a “California Employment Project.” President Nixon set a goal of creating 100,000 new jobs in California before the election, which would bring California unemployment down to the national aver­age. Nixon had directed that most of those new employment opportunities would be the result of DOD actions. An individual named Fred Foy had been brought into the White House to coordinate efforts in DOD and other government agencies to target job creation in California as a high priority. John Ehrlichman remembered Foy as “a retired business executive” who would go to a community in California and “smoke out. . . opportunities to let contracts on an accelerated basis.” Foy would report back to Flanigan, “who would pick up the phone and talk to the Defense Department and shake things loose.” As a result, “they would accelerate these things and cre­ate jobs by the scores in a relatively small geographic area. The impact was dramatic.” Flanigan’s assistant Jonathan Rose was the White House link to the California Employment Project. Rose in an August 28 memorandum to the president indicated that a “politically loyal” employee in the DOD would provide the White House “bi-weekly reports on the status of the agency’s job creation effort” and that “Governor Reagan’s office has designated a team of competent economists and others” to work with the White House on this effort. That was not enough assurance for Nixon; he asked Cap Weinberger at OMB to “personally stay on the project of jobs for California and that you make sure that there is no let up in the efforts on this.”36

It was becoming clear that the decision to approve the space shuttle would be influenced by job-creation considerations. A member of the California Legislature, Newton Russell, wrote Haldeman in early June 1971, for­warding a letter he had sent to NASA making the case of why the shuttle program “should be located in California.” Among the good reasons were “unemployment, source of supply, available technical engineers” but “if you want to put it down to crass politics. . . California will be a key state in ’72.” Haldeman forwarded Russell’s letter to Weinberger, who responded, saying that “because of all the factors you mentioned. . . I am sure that this [locat­ing the shuttle program in California] will be the case.” Weinberger noted that “there is still a problem in financing the whole project because of all of the overall budget totals,” but that “I am sure that whatever is done will be largely based in California.”37

Low noted that “on the unemployment situation, we are feeding a lot of information, first to Fred Foy, who is working in the White House on just that problem, and also to Jonathan Rose.” He added that “it is clear that a small acceleration of some of the new NASA programs would have a rather dramatic influence on the unemployment situation, particularly on the West Coast.” On November 3, Fletcher had written both Flanigan and Weinberger, noting the employment impacts of the space shuttle program, and especially “the substantial impacts of a possible acceleration of the Mark I/II Shuttle program.” NASA in its September 30 budget submission had proposed a budget level above the “minimum acceptable program” that would accelerate the pace of the shuttle program, thereby creating jobs sooner and in larger numbers than if only the minimal program were funded. The accelerated program increased the FY1973 shuttle budget request from $228 million to $400 million, and resulted in a first shuttle flight in 1977 rather than 1978. Fletcher called particular attention to “the very sharp build up (from 5,600 to 14,300) that would occur in the last six months of calendar year 1973” with the NASA minimal budget, and, more relevant to Richard Nixon’s reelection, “the very substantial increases in 1972 . . . that are possible with the acceleration indicated.”38

In mid-November, NASA sent Don Rice a brief report titled “California employment.” The report noted that “the prime contractors for the shut­tle have not been selected, but the majority of competitors are California firms and so the most favorable employment impact will be in that State.” It added that “historically, NASA spends 50Ф of each dollar in California.” The report noted that “the $500M contract for the rocket motor for the shuttle has already been placed with Rocketdyne (a division of North American Rockwell) in California.” But if the shuttle configuration was changed or if a glider were approved, so that the shuttle engine was not needed, “Rocketdyne says it will have to go out of business.” NASA provided addi­tional employment estimates to Rose on December 1, indicating a variety of NASA-related actions, including accelerating shuttle development, that would result in increased employment.39 NASA by this point recognized that the shuttle’s employment impact could be a decisive consideration in White House thinking.

That impact did not go unnoticed at the top levels of the White House. John Ehrlichman recalled that the issue of shuttle-related employment in Southern California “was a very important consideration in Nixon’s mind. . . I can recall conversations about that, which were highly persuasive. . . You must not underemphasize that element, that employment element, in Nixon’s deci­sion [on the shuttle].” Ehrlichman remembered “the quantitative breakouts of the number of jobs involved. . . When you look at the employment num­bers, and you key them to the battleground states [Those states with electoral votes important to winning the presidency in the 1972 election], the space program has an importance out of proportion to its budget.” Ehrlichman sat “in the Cabinet Room with Nixon, [Secretary of the Treasury John] Connally, and [OMB Director George] Shultz. . . looking at issues. We went all the way across domestic issues, the problems of veterans, the problems of the aged, space, health. . . and putting slides up showing where people were who were concerned about these issues. And then doing an overlay of the battleground states. . . It was very interesting then to see how some of these issues fell out of bed, because the people who were concerned with them were not in battleground states.” In this political exercise “space was way up to the top of the list, along with one or two other issues.”40

There was also a representative of California employment interests with direct access to the White House. Willard “Al” Rockwell, Jr., head of North American Rockwell, one of the contenders for the space shuttle prime contract and with its space operations based in California, was a long-time acquaintance of Richard Nixon and a major contributor to Nixon’s election campaigns. Ehrlichman recalled that “there was kind of a direct line between Nixon and Rockwell, which was important. . . I knew that there was a tight relationship.” Rockwell and one of his top execu­tives, Robert Anderson, visited Flanigan, Weinberger, and Rice in late November to discuss prospects for the shuttle. Flanigan told them that “there would definitely be a shuttle program, that the government was about to make the decision but that there is still some sorting to be done.” Flanigan added that “the big shuttle that NASA supported a year ago was definitely out but that NASA is still not ready to move out now. . . NASA is still not completely in tune with the realities of the day, but is slowly coming around.” The fundamental question, Flanigan told Rockwell, was “whether the shuttle should be a research vehicle or one that is produc­tive.” This was an indication that Flanigan was aware of the NASA-OMB/ OST argument about how best to proceed. When the administration deci­sion on the shuttle was made, indicated Flanigan, there would be “a very soft pronouncement. . . This was so the people in the aerospace industry will clearly see Administration support for their industry, while those not in that industry will not get overly excited.” Apparently Anderson in this meeting had made a case for the shuttle in terms of its being a bailout for the aerospace industry, and Flanigan had responded that this was not a rationale acceptable to the White House, at least publicly. Flanigan wrote Rockwell a few weeks later, saying that “I do hope my taking exception to what seemed to be excessive vehemence on the part of your subordinate [Anderson] regarding the shuttle did not leave the impression that we lack enthusiasm for the concept. I am quite convinced that we will come up with a viable and positive solution on the shuttle in a short period of time.”41