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January 24, 1983
Nancy is off to N.Y. Comes back tomorrow with Ron & Doria. N.S.C. briefing—not good news from Lebanon. The Israelis are becoming more intransigent. Habib is on his way back here. Met with Ec. Policy Advisory Board—as usual there were differing ideas about our budget & tax policies but altogether were more supportive of what we are doing than an outside group—Pete Peterson, John Connally, McNamara & Bill Simon who were all over the airwaves with proposals which are impossible to realize. Mr. Simon did not attend the meeting—he’s a member—he’s also a loose cannon. Mohammed Ali—called on me & gave me an autographed Muslim Prayer Book. Our people have been working all day on new budget figures. The outcome is an unexpected increase in our original figures, meaning higher deficits than anticipated in the out years. We’ll still be on a declining level on deficits but it’s disappointing. We can blame the recession because part of our problem is declining revenues. When we got our 1981-3 yr. tax cut we had to take a lot of ornaments demanded by Congress. The result is tax as a % of G.N.P. is about 18 1⁄2 and my plan called for 20.6%.