By 1060, many successful self-help programs had been initiated by OEO and the community action agencies, including Head Start, Family Planning, Community Health Centers, Legal Services, VISTA, Foster Grandparents, Economic Development, Neighborhood Centers, Summer Youth Programs, Adult Basic Education, Senior Centers, Congregate Meal Preparation, and others.

Picking up on the concept of using OEO and CAAs as "innovators and the testing ground" for new programs, and spinning off successful programs to be administered by other federal agencies, President Nixon's Administration saw the transfer of several large programs from OEO to the Department of Health, Education and Welfare and the Department of Labor.  Along with the program went administrative oversight responsibility for a substantial part of CAA funding.

At the start of his second term in 1973, Nixon did not request any funds for OEO's Community Action Program division.  Congress nevertheless provided funds.  Nixon appointed Howard Phillips as Director of OEO and told him to dismantle and close the agency, and not to spend the money Congress provided.

After a series of lawsuits, the Federal District Court in Washington, D.C., ruled that the President could not refuse to spend funds that had been appropriated by Congress.   Phillips resigned without having been confirmed by the Senate.