The Domestic Council and Office of Management and Budget were created on July 1, 1970. The result was that policy making on major domestic issues was consolidated into the Executive Office of the President. Henceforth, on domestic affairs—as had been the case on foreign affairs since creation of the National Security Council in 1947—policy decisions would be made by the President, with Cabinet Departments still having input, but becoming largely responsible for execution.

Washington’s Political Environment

When elected President in 1968, RN may have been the best prepared individual to assume that office in recent history: He had been involved in national affairs since 1946—as a Congressman, a Senator, Vice President for two terms and then as a private citizen. He had been a candidate for President or Vice President in four of the last five elections—spanning a period of sixteen years.

He had had lots of time to think about what he wanted to accomplish and how to go about getting it done. He did not lack for ideas or approaches; what he lacked was institutional support: he was the first President in 120 years to assume office without controlling either House of Congress. In fact, the Democrats controlled virtually everything in Washington, DC except the Presidency: they had vast majorities in both Houses of Congress—which they had essentially controlled since 1932; they had eighty percent of the Congressional staff; and virtually all of the career bureaucrats throughout the Executive Branch were reliably Democratic. Metropolitan law firms, lobbyists and think tanks were also uniformly Democratic.

Even President Nixon’s political appointees—except for the White House staff – had to be chosen with one eye on Senate confirmation. Thus, it was no accident that three of his Secretaries were former State Governors, without much experience in national affairs (Romney of Michigan, Hickel of Alaska and Volpe of Massachusetts).

Early White House Staff Organization

What President Nixon did with regard to his own White House Staff, however, was quite different—and virtually unprecedented: As his top three policy advisors, he appointed absolutely top people in their field—but ones who had not supported his run for the Presidency:

Henry Kissinger, the Harvard professor of international relations that Nixon picked to head his National Security Council, had long been a member of Governor Nelson Rockefeller’s inner circle of advisers. You would be hard-pressed to find a group within the Republican Party that was less in step with the Nixon wing than those beholden to his primary competitor, Governor Rockefeller.

Daniel Patrick Moynihan, also a Harvard professor, was the biggest surprise: He was not only a liberal Democrat; he actually had campaigned against Nixon’s election, and was opposed to the Vietnam War. He also had served in both the Kennedy and Johnson Administrations. Nonetheless, he had attractive ideas on welfare reform and agreed to head the Urban Affairs Council, Nixon’s first attempt to duplicate the National Security Council on the domestic side.

Arthur Burns, the renowned economics professor from Columbia University, was made Counselor to the President, a Cabinet level position. While certainly conservative, Burns was much older, associated with the Eisenhower wing of the party and also did not campaign for Nixon. He did, however, provide a counterweight to the far more liberal Moynihan.

Foreign Affairs-Kissinger and the NSC

The operations of Kissinger’s National Security Council are only relevant in the sense that they provided the model after which the Domestic Council was shaped.

The NSC had an interesting approach to obtaining Presidential decisions on foreign affairs matters: They would prepare NSDMs: National Security Decision Memorandums. Two things were rather vital in making such decisions: First, that the President get the benefit of input from all relevant points of view—including in any given issue, input from not only the NSC, but also the Departments of State, Defense, and perhaps Treasury, but also from the Central Intelligence Agency, the National Security Agency and Foreign Affairs Advisory Council. Of course, there might well be differences of opinion within each of these organizations, too. Second, it was equally important that the President’s decision itself be precise, well documented and understood.

NSDMs fit this need, especially for someone with a legal background like Richard Nixon: They were in writing, they gave background on the issue and why a decision need be made at this time (the famous “action forcing event”). His options were clearly indicated and his decisions were not only preserved, but could be circulated, if need be, on a need-to-know basis.

Domestic Affairs—Burns v Moynihan

Nixon knew Arthur Burns, then Chancellor of Columbia University, from their service together in the Eisenhower Administration and brought him to the Hotel Pierre in New York City to assist the transition team that was being assembled right after the election. Burns came on board as Counselor to the President with Cabinet Rank and head of the Council of Economic Advisors, which he held until he became Chairman of the Federal Reserve Board in January of 1971. Burns had several staff members, including Charles Clapp, Martin Anderson and Richard Burress. Their work on domestic issues tended to reflect their more conservative point of view.

In contrast, Pat Moynihan, the enthusiastic and innovative ‘idea’ man from Harvard, really came on board to chair the Urban Affairs Council, the first attempt to build a counterpart to the National Security Council within the President’s own staff. Pat was a charmer, full of Irish blarney. His staff consisted of Steve Hess, John Price, Charles “Checker” Finn, Richard Blumenthal, Dick Nathan and Christopher C. DeMuth . Naturally, their approach to most domestic problems tended to start from the more liberal side of the ledger.

At least initially, Nixon felt the exchange of opinions and clash of ideas would produce a more reasoned outcome—but it did not work out that way.

Papers were researched and drafted, proposals were debated, but no resolutions were achieved. Even in meetings involving the Presidents himself, it seemed like two giants were seated at opposite sides of the table—lobbing cannon balls toward each other. The first conflict was over welfare reform, Moynihan’s famous Family Assistance Plan, but expanded to include conflicts over aid to cities and immigration.

Ehrlichman was invited to attend some of these sessions by Haldeman to see if anything could be done to help achieve a better process of resolution. Especially after it became clear the President disliked refereeing the disputes—and began to avoid their meetings entirely. It was Ehrlichman’s suggestion that the approach to policy making on domestic issues emulate the process utilized by the NSC: In other words, domestic NSDMs.

Thus, Ehrlichman and his legal staff, as lawyers without a real ideological stake in the game, would attempt to draft issue papers which would bring together in one place the background, alternatives and possible options for Presidential actions.

The idea caught on—and was expanded to accommodate concurrent recommendations for modernizing the Bureau of the Budget, that had been drafted by the President’s Advisory Council on Executive Organization (the Ash Council), which President Nixon had established in April of 1969, chaired by Roy Ash (President of Litton Industries).

Reorganization Plan No. 2 of 1970

We in government often are quick to call for reform in other institutions, but slow to reform ourselves. Yet nowhere today is modern management more needed than in government itself.

President Nixon, Message to the Congress Transmitting Reorganization Plan 2 of 1970, March 12, 1970

Thus was born Reorganization Plan No. 2 of 1970, which was transmitted to the Congress on March 12, 1970, and which, unless sooner rejected by a Resolution of Disapproval, would become law under Chapter 9 of title 5 of the US Code, on July 1st, 1970.

The theory of the proposed reorganization within the Executive Office of the President was detailed in the Presidential Message which accompanied submission of the Plan:

Essentially, the plan recognizes that two closely connected but basically separate functions both center in the President’s office: policy determination and executive management. This involves 1) what government should do, and 2) how it goes about doing it.

My proposed reorganization creates a new entity to deal with each of these functions:

It establishes a Domestic Council, to coordinate policy formulation in the domestic area. This Cabinet group would be provided with an institutional staff, and to a considerable degree would be a domestic counterpart to the National Security Council.

It establishes an Office of Management and Budget, which would be the President’s principal arm for the exercise of managerial functions.

The Domestic Council will be primarily concerned with what we do; the Office of Management and Budget will be primarily concerned with how we do it, and how well we do it.

Role of the Domestic Council Staff

The Domestic Council would be chaired by President Nixon and include Secretaries of all the domestic agencies (Treasury, Interior, Agriculture, Commerce, Labor, HEW, and Transportation) as well as the Vice President, the Attorney General, the Postmaster General, and the Director of the Office of Economic Opportunity.

So far this is not all that different from occasional establishment of ad hoc Cabinet Committees on one topic or another. What was different about Nixon’s approach—and led to the basis of all of John Ehrlichman’s considerable power and influence—was the creation of a separate staff:

The Council will be supported by a staff under an Executive Director who will also be one of the President’s assistants. Like the National Security Council staff, this staff will work in close coordination with the President’s personal staff but will have its own institutional identity. By being established on a permanent, institutional basis, it will be designed to develop and employ the “institutional memory” so essential if continuity is to be maintained, and if experience is to play its proper role in the policy-making process.

There does not now exist an organized, institutionally-staffed group charged with advising the President on the total range of domestic policy. The Domestic Council will fill that need. Under the President’s direction, it will also be charged with integrating the various aspects of domestic policy into a consistent whole.

Among the specific policy functions in which I intend the Domestic Council to take the lead are these:

Assessing national needs, collecting information and developing forecasts, for the purpose of defining national goals and objectives.

Identifying alternative ways of achieving these objectives, and recommending consistent, integrated sets of policy choices.

Providing rapid response to Presidential needs for policy advice on pressing domestic issues.

Coordinating the establishment of national priorities for the allocation of available resources.

Maintaining a continuous review of the conduct of on-going programs from a policy standpoint, and proposing reforms as needed.

Overall, the Domestic Council will provide the President with a streamlined, consolidated domestic policy arm, adequately staffed, and highly flexible in its operation. It also will provide a structure through which departmental initiatives can be more fully considered, and expert advice from the Departments and agencies more fully considered.

Let us interrupt our review of the President’s message at this point—and in President Nixon’s words, ‘to make one thing perfectly clear’: the Transmittal Message did not mince any words about what was intended. In the months ahead, Cabinet Secretaries would complain that their memos to the President—almost always advocating some domestic initiative focused solely on and designed to grow their particular Department—could not even reach his desk without a cover memo from the Domestic Council staff discussing alternatives and indicating the reactions of other members of his Cabinet and White House staff. This was precisely the envisioned and intended role of the Domestic Council staff!

Role of the Office of Management and Budget

The other new entity, Office of Management and Budget (OMB) would be far more than a new name for the Bureau of the Budget. It would certainly absorb and continue its traditional functions of overseeing the preparation of the annual Federal budget and the Legislative Reference functions, but these would no longer be the primary focus, which would switch to Management:

While the budget function remains a vital tool of management, it will be strengthened by the greater emphasis the new office will lace on fiscal analysis. The budget function is only one of several important management tools that the President must now have. He must also have a substantially enhanced institutional staff capability in other areas of executive management—particularly in program evaluation and coordination, improvement of Executive Branch organization, information and management systems, and development of executive talent. Under this plan, strengthened capability in these areas will be provided partly by internal reorganization, and it will also require additional staff resources.

Let us briefly review the role of the Bureau of the Budget (BoB), OMB’s predecessor: First and foremost, it was responsible pulling together and documenting the annual Federal budget, the only comprehensive account of the proposed expenditures of the entire Federal Government. Usually transmitted to the Congress in February, several weeks following January’s re-convening of Congress and the Presidents’ State of the Union Address, the President’s budget proposal would be divided into sections for action by various Committees of the House and Senate. What the President proposed and what actually passed Congress, of course, might be considerably different—but the first shot, the base from which all budgetary debate commenced was the BoB Budget document.

The other coordinating function performed by BoB was that of Legislative Review. While various Cabinet Departments and agencies would testify at hearings on any number of proposals, the key phrase in the testimony—controlled exclusively by Bob—was the ‘official’ level of support from the Administration—and there were only three levels of BoB “clearance”: The proposal under consideration by this Committee was (1) a part of the Program of the President (i.e.: was actually proposed and supported by the President), (2) was consistent with the Program of the President (i.e.: while not specifically proposed by the President, its enactment could be seen as furthering his effort) or (3) not a part of the Program of the President (and, it would come as no great surprise, the testimony about to be offered would largely point out shortcomings the Administration felt were in that particular proposal.

It was through these two roles that BoB sought to maintain some semblance of order and control within the Executive Branch—at least as far as a President was concerned.

Contrast this for a moment with what was proposed as the role for the new OMB: Substantially greater oversight of Departmental and agency function, performance and executive talent. The intended result—announced in his Message and achieved when Reorganization Plan No. 2 came into law on July 1, 1970, was an awesome consolidation of authority—away from the Departments and agencies and into the Executive Office of the President. Not that there was anything wrong or sinister with this approach:

With this newly proposed authority, the President stood a better than even chance of exercising the oversight of the Executive Branch that he felt he had been elected to execute.

Congressional Response

The response within the Congress was not enthusiastic: hearings were held in by the House Committee on Government Operations, under its chairman, Rep. Chet Holifield of California. On May 8th, the committee passed a Resolution of Disapproval (with five Republicans dissenting) which set the stage for a showdown in the full House of Representatives.

Following a furious lobbying campaign, mainly from within the Bureau of the Budget, just five days later (on May 13th) the House—by vote of 193 to 164—rejected its own Committee’s recommendation and thereby declined to pass the necessary Resolution of Disapproval—paving the way for OMB and the Domestic Council to come into being. This is the only known instance under Title 5 (which has since been allowed to expire) of the House not following a recommendation of its Government Operations Committee.

Initial Leadership of Domestic Council and OMB

Ehrlichman was named Executive Director of the Domestic Council staff and Assistant to the President for Domestic Affairs on July 1, 1970—and his staff consisted of the following direct reports:

Jana Hruska, his personal secretary (and daughter of Senator Roman Hruska of Nebraska, ranking minority member of the Senate Judiciary Committee). Jana was the finest of personal secretaries: very competent and hard working, politically astute and very loyal.

Tod Hullin, his personal aid, whose father had been Ehrlichman’s law partner in their Seattle firm

Ken Cole, his Deputy, who had come in with Haldeman and had worked on the 1968 Campaign (in which Ehrlichman had been in overall charge of scheduling). Ken took Ehrlichman’s place as Executive Director following the 1972 election.

Along with Ken’s personal secretary, this group had the suite of offices in the West Wing directly over the Oval Office. Across West Executive Avenue on the first floor of the OEOB-near where John’s office had been as Counsel to the President-were housed his four Associate Directors:

Egil “Bud” Krogh, Jr, who also was from the Counsel’s office and was responsible for Crime, Drugs and the District of Columbia

Ed Harper, Bud’s roommate from Principia College, a Christian Science College in St. Louis, and was responsible for Federal budgetary matters.

Ed Morgan, a lawyer from the 1968 campaign and who had been in JDE’s Counsel office, was responsible for HEW and HUD

John Whitaker, a long time campaign aide, who was responsible for Natural Resources, including issues involving energy and the environment.

The Founding Director of OMB was George Shultz, who had joined the Nixon Administration as Secretary of Labor. He was followed, in June of 1972, by Casper Weinberger, formerly head of the Federal Trade Commission, who in turn was followed by Roy Ash in February of 1973. Deputy Directors during this era were Paul O’Neill, a career BoB employee and Fred Malek, who had headed the White House Office of Personnel.

These individuals, and their team of Associate OMB Directors, completely transformed the former Bureau of the Budget, and then went on to highly successful careers elsewhere in industry, as well as in the Executive Branch.


Each President absorbs information and governs differently: President Nixon preferred written presentations, devoid of personal salesmanship. Others prefer oral briefings or rely on delegation to trusted aides. Regardless of individual preference, three organizations have survived within the Executive Office of the President to provide policy staffing for the President: the National Security Council staff, the Domestic Council staff (now referred to as the Domestic Policy Staff) and Presidential appointees to the Office of Management and Budget.

Together they provide the resources for a President to direct actions of the millions of employees of the Executive Branch—and to lead the nation itself.