For more on this history see, Economists with Guns: Authoritarian Development and U.S.-Indonesian Relations, 1960-1968 by Bradley Simpson, Director, Indonesia-East Timor Documentation Project at the National Security Archive
The "paper of record" also lied to it's readers by asserting that Washington wasnt involved in the coup or the massacres:The New York Times: Aid for Indonesia
August 25, 1966
The staggering mass slaughter of Communists and pro-Communists -- which took the lives of an estimated 150,000 to 400,000 -- has left a legacy of subsurface tension that may not be eased for generations...
Washington wisely has not intruded into the Indonesia turmoil. To embrace the country's new rulers publicly could well hurt them. They themselves want to retain a neutralist posture. There is an urgent need for a large international loan -- perhaps as much as a half-billion dollars. It is vital that the United States play a positive role in building an international aid consortium.
The U.S. embassy's attitude [towards these killings] was clearly expressed when, almost a month after the mass killings had begun, Francis Galbraith, the deputy chief of mission (later to succeed Marshall Green as ambassador), reporting to Washington on his conversation with a high-ranking Indonesian army officer, said that he had "made clear" to him that:
The White House also authorized the CIA station in Bangkok to provide small arms to General Sukendro in order to:the embassy and the U.S.G[overnment] were generally sympathetic with and admiring of what the army is doing.
arm Muslim and nationalist youth in Central Java for use against the PKI.The Boston Globe: US ROLE IN A CIVILIAN MASSACRE
The circumstances of the slaughter have been clarified in a report by Kathy Kadane, of States News Service in Washington. Kadane stumbled across the subject in the late '70s and pursued it for nearly a decade. She obtained corroborating statements from embassy and CIA officials that they prepared a death list of 4,000-5,000 top party officials and then gave it to the Indonesian army. For months, they checked off names as they were killed.
A CIA spokesman denied involvement, but it is evident from statements Kadane obtained from involved officials, including former CIA director William Colby, that a shooting list was compiled by as many as six CIA and embassy officials.
Alienated from [Sukarno], the US cemented close ties with the Indonesian military. Meanwhile, the embassy team compiled the list for "operational planning," as Colby put it. The team pooled names from CIA sources, and from newspaper accounts and photos of PKI functions. The list included provincial and local officials and leaders of organizations such as labor, women's and youth groups. It extended from the national leadership to the village level.