Dictabelt 10B.4

John Kennedy, Henry Fowler
White House Telephone

As part of a cost-cutting effort, Internal Revenue Service head Mortimer Caplin had announced a reorganization plan projected to save $5 million a year. The plan involved the consolidation of several offices, including a downsizing of the office in the economically depressed city of Scranton, Pennesylvania, while shifting some resources to centralized offices in Boston. New York Governor Nelson Rockefeller was quickly and vocally critical of the part of the plan that would move the regional headquarters from New York City to Boston. Some administration critics accused the administration of favoritism toward the President's youngest brother, Teddy, who had just won one of the Senate seats for Massachusetts having campaigned with the slogan of "more for Massachusetts."1

Operator: Yes, please?

President Kennedy: Secretary [of the Treasury C. Douglas] Dillon, please.

Operator: Yes, Mr. President. [There is a long pause of approximately 50 seconds.]

Evelyn Lincoln: Would you try to get [Under Secretary of the Treasury Henry H.] Joe Fowler?

Operator: Yes. [There is another pause of approximately 35 seconds.]

President Kennedy: Hello? [At this point, the recording becomes garbled briefly.]

Lincoln: Hello?

President Kennedy: Yes.

Operator: Mr. Fowler on the line, Mrs. Lincoln2.

Lincoln: OK.

President Kennedy: Hello?

Henry Fowler: Hello, sir.

President Kennedy: Oh, Joe. Listen, this goddamn thing of [Commissioner of Internal Revenue Mortimer M.] Caplin's is causing us a lot of headaches.

Fowler: I'm--I'm just rubbing my head from all over the place. Yes, I know.

President Kennedy: What is--how can they be that dumb over there? Will you tell me that? I mean, Christ, to take something out of Scranton and put it in Boston--which is a depressed area is just making it easy for the governor down there and everybody in Pennsylvania to say we're taking care of Teddy [Kennedy].3 I mean, are they out of their minds? What? To save a million dollars four years from now?

Fowler: Well, uh . . .

President Kennedy: He doesn't have any goddamn sense. He may be a genius, but he doesn't have any sense.

Fowler: We're . . . we're . . .

President Kennedy: Eating it?

Fowler: We've got--we--the real question, I think, is whether--I--my own suggestion, sir, would be this: that we get him to answer this tomorrow. Let's see how much follow-up there is from fellows like [Senator Norris] Cotton [R-New Hampshire] and Rockefeller, and see if this is a 24-hour wonder and whether it passes off.

President Kennedy: Scranton is the one that really bothers me more than New York, because you know they've got such a bad unemployment situation there.

Fowler: Well, it's a--it's a--it's a very miniscule number. I'm getting him to--I've had him on the phone with the last hour, getting me every fact I can get my hands on. [unclear]

President Kennedy: Wasn't he aware that this would have a bad repercussion? Or did he think everybody's going to--

Fowler: Oh, yes. We went into this in great detail, about what the consequences would be, and I had him go up and see everybody in God's name about it. And he checked in with--

President Kennedy: I wish he had talked to [Larry] O'Brien. Did he talk to O'Brien?

Fowler: I don't know whether he talked to O'Brien or not, but--

President Kennedy: Will you tell him in the future to talk to O'Brien? Christ, I'm the one who gets all the hell on these things. Caplin doesn't. So I had--the only problem--so make sure--then at least we've got responsibility if it goes wrong. Now, I think that we ought to consider tomorrow issuing a statement saying that--by the Secretary [of the Treasury], in which he says--or Caplin--that this matter is going to be reviewed, and there will be--no action will be taken until the review is complete. Then you could put it to rest for a couple of weeks, and then we could eat it if we had to.

Fowler: Well . . . there is, of course, this line to take--let me just cite you the New York situation--

President Kennedy: Yeah.

Fowler: --just to take one.

President Kennedy: Yeah.

Fowler: Actually, there are 776 people in that New York office. 602 of them are going to be retained. 174 are marked as surplus. No taxpayers' services are being transferred. And then, of course, this is all part of a program for economy and efficiency. Now, that's the general line of answer that would be given to [Nelson] Rockefeller to his telegram to you.

President Kennedy: Yeah.

Fowler: Question of whether we get out a press release on that, or whether--

President Kennedy: I don't care so much about Rockefeller. He's always yelling about economy and efficiency in the government.

Fowler: That's right. We could burn him.

President Kennedy: But, of course, the unfortunate thing is they're moving it to Massachusetts.

Fowler: Wh--

President Kennedy: That ties in--[recording skips]--but I'm more concerned, a little, about Scranton. That's got what, about 170 people?

Fowler: No, I think it'll turn out to be just about, maybe less than that. I don't have the Scranton figures. I've asked--

President Kennedy: Well, would you consider--in any case then, that you--an announcement--let's you and I talk about it tomorrow. But this is what--

Fowler: I would prefer--

President Kennedy: --we might have either Caplin or the Secretary [of the Treasury] say that this matter is going to be reviewed. There'll be no changes made until the review is completed. And then that would--that might--then we could always eat it if we have to. But let's consider that in the morning.

Fowler: All right, sir.

President Kennedy: I don't want to have a lot of people in Pennsylvania thinking we're screwing them for Teddy.

Fowler: Yeah, well, they--they couldn't really on the--on the Scranton--

President Kennedy: No, but you know how these emotional matters get going.

Fowler: They go--it goes to Philadelphia--

President Kennedy: I see.

Fowler: --and to Pittsburgh, the people from Scranton.

President Kennedy: They go to Pennsylvania? They stay in Pennsylvania?

Fowler: They stay in Pennsylvania? The--so--and there are just a few, and not--and they--we keep an office there--

President Kennedy: Yeah.

Fowler: --and actually, I think that when I get the facts in hand--

President Kennedy: Well, get the facts on Scranton. That's the one that disturbs me most.

Fowler: --we can deal with that one.

President Kennedy: Detroit we're going to take care of anyway, because we've got a commitment on that. But I'll talk to you then tomorrow.

Fowler: All right.

President Kennedy: Thanks a lot.

Fowler: Well, I'm on top of this just as fast as I can.

President Kennedy: OK.

Fowler: And have been for the last hour or two--

President Kennedy: Good.

Fowler: --when it hit me. I--I've been buried in the tax bill, so--

President Kennedy: Right. OK.

Fowler: --I just wasn't on top of it.

President Kennedy: Right, oh.

Fowler: Right, sir.

President Kennedy: Right, oh.

  • 1. "Tax Chief Answers Rockefeller Protests on Switch of Office," Wall Street Journal, 13 March 1963, p.3; "Tax Chief Explains Merger of Offices," New York Times, 18 March 1963, p.13.
  • 2. Mrs. Evelyn Lincoln was President Kennedy's personal secretary.
  • 3. Edward "Teddy" Kennedy, the President's youngest brother, had just been elected to the Senate to represent Massachusetts.