The bugging deal at the Democratic headquarters is still the main issue of the day. The P is somewhat concerned about it.
"Somewhat concerned"? Yeah, a little. This is a small excerpt from a long conversation between Haldeman and Nixon, one of several Watergate-related discussions Nixon would have that day:
Haldeman: Mitchell's concern is the FBI, the question of how far they're going in the process. He's concerned that, that be turned off [...]
Haldeman: John [Mitchell] laid out a scenario,...which would involve this guy Liddy at the committee confessing and taking, moving the thing up to that level, saying, "Yeah, I did it, I did it; I hired these guys, sent them over there, because I thought it would be a good move and build me up in the operation; I'm a little guy." [...]
Haldeman: The problem is that there are all kinds of other involvements and if they started a fishing thing on this they're going to start picking up tracks. That's what appeals to me about trying to get one jump ahead of them and hopefully cut the whole thing off and sink all of it.[...]
President Nixon: You mean you'd have Liddy confess and say he did it unauthorized?
That's the plan that Haldeman tells the Nixon about. To his diary, he says:
Mitchell and Ehrlichman and I talked about the whole thing again this morning, and Ehrlichman comes up with the possible scenario of moving the guilt up to Liddy. Having him confess and going from there. The problem is apparently that we can't pull that off because Liddy doesn't have the authority to come up with the amount of money that was involved and that's now known under the campaign spending act requirements. So it would have to go up to Magruder in order to reach a responsible point. And that they, I'm sure, won't want to do.
To state the obvious: Haldeman, Ehrlichman, and Mitchell knew perfectly well that they were concocting a false cover story, and Nixon, whatever he knew before June 17, knows it too; indeed, Haldeman tells him in that same meeting that he suspects that Mitchell "obviously knew something."
While the president, his chief of staff, the next most important man in the White House, and the president's close friend and former law partner who had been Attorney General and now headed the re-election committee were busy plotting out the cover story, John Dean was hard at work on a key component of making it stick. He was meeting with acting FBI Director Gray, and establishing a working relationship in which the FBI would keep Dean informed of everything happening in the investigation. So, for example, Gray let Dean know that Colson would be interviewed by the FBI the next day, which gave Colson plenty of time to rehearse his answers.