THE PRESIDENT. Good afternoon. I have two brief opening statements to make.
The first one involves the major domestic programs that we will pursue in 1978. I would like to review briefly for you my proposals for reforming the tax system, for reducing taxes, for continuing to reduce the unemployment rate, and for preventing and controlling inflation.
These proposals are the centerpiece of the administration's economic program for 1978. Economic policy depends for its success on a very careful balance between different interests, between sometimes conflicting national needs, between doing too much on the one hand, doing too little on the other. To modify one element of a balanced plan can often destroy this balance and can aggravate our economic problems.
I want to emphasize four elements of our proposals that carefully preserve this balance.
First, there's tax reductions. We propose a net tax reduction of $25 billion designed to create almost a million new jobs by the end of 1978. (The President meant to say 1979.) 1 If they are enacted, the economy should continue to grow at a rate of about 4 1/2 to 5 percent, and unemployment should fall below 6 percent by the end of next year. For the vast majority of taxpayers, these reductions will offset the increase in rates that was necessary to prevent bankruptcy of our social security system. For 1978 there will be three times as much tax reduction as there is tax increase for the social security system. And the same ratio, 3 to 1, will prevail in 1979.
1 Printed in the transcript.
Second, our tax reform proposals allow us to have an immediate tax reduction while making substantial progress toward comprehensive reform, a simpler and a fairer tax system. Without these needed reforms, we would not be able to afford so large a tax reduction. They comprise about $9 billion in savings, at the same time providing equality and fairness.
Third is jobs. I've asked for over $700 million more in new funds for youth jobs and, in addition, have asked the Congress to continue the high level of public service jobs for 1979, which is about twice as much as a year ago. In addition, I will shortly forward to the Congress a $400 million program to encourage private businesses to hire the hardcore unemployed. We are balancing the need for public service jobs with the need for private opportunities to reduce unemployment.
And fourth, inflation: Our program is voluntary, requiring the cooperation of government, business, labor, and all our citizens. I've asked each group to hold its increases in wages and prices below the level that it averaged in increases for the last 2 years.
This fair and flexible program and voluntary program will not stop inflation overnight. But it's our best hope for bringing it under control. We simply cannot let inflation overtake us without taking action.
In sum, we proposed an economic program which is balanced. It will not please everyone. As I said in my State of the Union address, we cannot do everything for everybody. We must be willing to face difficult decisions.
In developing our economic program, we've made difficult decisions, and we propose an economic proposal or program that will sustain growth, that will increase employment, and reduce inflation.
SOVIET COSMOS SATELLITE
The other thing I would like to do very briefly is to outline the history of the Soviet satellite, the Cosmos 954. This satellite, which had a nuclear power source on it, was launched on the 18th of September, last year. It was obvious to us later on that the Soviets were having trouble controlling the satellite. On the 19th of December, we set up a small task force in the White House. On the 6th of January, we felt that control had been lost, and I decided personally to notify the Soviets on the 12th of January that we were aware of their problems, to offer our help in monitoring the path of the satellite, and to begin preparing jointly to predict where it would fall and also to prepare for handling it if it should contact the Earth.
The Soviets replied that it was designed so that it would be destroyed as it came back into Earth, and it was designed also so there was no possibility of an atomic explosion.
On the 17th and 18th of January, we notified the key congressional leaders, some of our allies around the world who were capable of joining us in a tracking effort. And the Soviets a day later, on the 19th, repeated their comment it will not explode.
On the 22d of January, we went back to the Soviets to ask them to give us an update to confirm the information we had from monitoring sources. And on the 23d of January, the Soviets notified us that it would probably enter the atmosphere the following day, which is the 24th.
Early on the morning of the 24th, I was notified that the satellite would enter the atmosphere quite early. We did not know whether it would hit between Hawaii on a very high curve up to the northern part of Canada or the western coast of Africa, because sometimes the satellites can skip from one place to another as they enter the atmosphere. It, as you know, entered the atmosphere in Canada.
I immediately called Prime Minister Pierre Trudeau, informed him about the approximate location, which later turned out to be accurate. And on the 29th, as you know, just recently, the remains of the satellite have been recovered.
The last satellite we put into Earth orbit with an atomic power source was in 1965. This satellite at the conclusion of its useful life was raised into a higher orbit that has a lifespan of at least 4,000 years.
I think we need to have more rigid safety precautions assured among all nations in Earth-orbiting satellites. In fact, we would be glad to forgo the deployment of any such satellite altogether and will pursue that option along with the Soviet Union.
The only time a satellite needs a longlasting power source that's free of the use of solar energy, which can be derived from the Sun, is when you go into deep outer space. For instance, if we send a probe to the outer planets, there would not be adequate source of energy from the Sun to trigger our solar cells, and we might need power from atomic sources then.
But I see no reason for us to continue with the option of nations to have Earth orbiting satellites unless much more advanced safety precautions can be initiated.
U.S. ARMS SALES IN THE MIDDLE EAST
Q. Mr. President, since I assume the subject will come up when you meet with President Sadat, could you give us a general outline of your view toward our helping Egypt acquire arms?
THE PRESIDENT. We have been, of course, facing the continuing prospect for a number of years of providing some weapons into the Mideast, heavily to Israel, also to Saudi Arabia, to Iran, and to some degree, the nonattack weapons to Egypt.
All these nations have requests to us for weapons. They've been committed to those nations to some degree by my two predecessors and reconfirmed in some instances by me.
The National Security Council will make a report to me early this week recommending from the State Department, from the Defense Department, from the national security adviser, what weapons to recommend to the Congress. After that point, the Congress will have a 30-day plus a 21-day period to respond affirmatively or not. I will decide later on this week what to recommend to the Congress.
The Egyptians have, in the past, requested F-5E fighter planes, one that is used extensively around the world for export purposes primarily, and Israel and Saudi Arabia have requested other weapons. They have some F-5's.
U.S. ATTORNEY DAVID MARSTON
Q. Mr. President, have you seen anything improper in the handling of the Marston affair? Have you learned any lessons from it and all of its ramifications, and do you contemplate any changes in procedures for appointing and removing U.S. attorneys?
THE PRESIDENT. In the first place, I see nothing improper in the handling of the case. I made a campaign commitment that any appointee to a position as U.S. attorney or a judgeship would be appointed on the basis of merit, and this campaign commitment will be carried out.
There has also been a statement made by me during the campaign that, all other factors equal, that I would choose someone for those positions, or even for the Supreme Court, whose basic political philosophy was compatible with mine. The fact is that at this point we have about one-third of the U.S. attorneys around the country who are Republicans. I think when I took office, only three Democrats were in office. And I don't think that Nixon or Ford appointed any Democrats during the 8-year period. So far as I know, they haven't.
I think that the Attorney General has handled the case as well as possible. I explained to you at the last press conference what I knew about the facts then, and so far as I know, there is no impropriety at all. I understand from the Attorney General that he has now received recommendations for five highly qualified nominees to take over that responsibility. He will begin interviewing them tomorrow. And the likelihood is that he would make a selection this week.
Q. Mr. President, but isn't it time to depoliticize the Justice Department, and in that direction, how about an end to the political firings of Federal judges and prosecutors wholly apart from seeing to it that their Democratic replacements are highly qualified?
THE PRESIDENT. Well, I think we've moved strongly in that direction. Obviously, a Federal judge is not subject to be removed. The Constitution gives the President a responsibility to appoint those officials if confirmed by the Senate. And, of course, a U.S. attorney can be fired or discharged from office only by the President himself. That does not apply to Federal judges. They, as you know, serve for life.
We have, I think, moved a great step in that direction. Over a period of many generations, the Members of the Senate have become heavily involved in recommendations for judges. Now, since I've been in office, we have set up selection boards for all circuit judges. And I think in 15 States the Senators—which is a new development—have now set up selection boards to recommend highly qualified district judges. But I agree with you that this is a move that we should make.
I think you will notice that when we have made selections for, say, circuit judges or when we've made two selections now for Director of the FBI, there were Republicans involved, I think, in both cases for the FBI.
Q. But how about setting up an independent blue ribbon committee that would monitor firings, as well as appointments, deciding each case on the merits, not on politics?
THE PRESIDENT. The Attorney General in 'the speech in May, and preceding that in March, advocated that this general procedure be followed. I don't remember the exact text of that speech. But I believe in every instance when the results have been made known that there has been no criticism of the person chosen. In some instances, U.S. Senators have specifically come forward and advocated that a Republican U.S. attorney be kept in office.
I remember once in particular in New York that Pat Moynihan said to keep the Republicans in office, and we've done so.
THE MIDDLE EAST
Q. Mr. President, on the Middle East, do you have a clear idea now from Prime Minister Begin as to whether or not he will authorize new settlements in the West Bank and in the Sinai, and do you believe that Israel over a period of time ought to phase out those settlements in return for real peace?
THE PRESIDENT. Well, I've covered this many times. Our position on settlements in the occupied territory has been that they are illegal, that they are an obstacle to peace. When Prime Minister Begin was over here and when Foreign Minister Dayan was here, this question arose. And my understanding of their commitment was that no new settlements would be authorized by the government, that any increase in settlers would be an expansion of existing settlements as much as possible within the aegis of the military.
The Geneva conference agreement is that civilians should not go in to settle permanently in occupied territories. I think the Israeli Government has not authorized the Shilo settlement other than as an archeological exploration project. And I've not yet heard from Prime Minister Begin directly, but I have had information that this is a policy of the Israeli Government, that this is not an authorized settlement.
U.S. ATTORNEY MARSTON
Q. Mr. President, just to sort of complete the record on that Marston case. On the morning of January 12, according to your statement at the Justice Department, you learned that a Member of Congress was of investigative interest to either the Justice Department or the U.S. attorney. Later that day at your news conference, you said, "As far as any investigation of Members of Congress, however, I'm not familiar with that at all, and it was never mentioned to me." Do you see any conflict there?
THE PRESIDENT. No, I don't. I think if you read the question to which I referred, it's obviously related to whether or not I had known anything about any investigation in November. And the answer was no, no discussion ever had been made. The only inkling I had at all that Mr. Ellberg was involved with an investigation was that Frank Moore mentioned, just as I was leaving my office to come over for the press conference, that his name had been raised in conjunction with an investigation. I was not told at that time and had no idea that he was being investigated himself, Eilberg.
Q. Mr. President, could you tell us-this question goes more to philosophy, I guess, than anything—could you tell us why you felt compelled to respond to a phone call from a Congressman in Philadelphia to, as you put it, expedite the removal of a U.S. attorney, one of more than 90 in the country? And secondly, do you really believe that these actions by your administration over the last 2 or 3 weeks with regard to Mr. Marston square, really square with the commitment you made in your campaign to remove the Justice Department from the spoils system traditional to American politics?
THE PRESIDENT. To answer your last question first, yes, I do think that our actions are compatible with my campaign statements, which I've said earlier. On an average day, I get either personal letters from Congress Members or telephone calls about 10 or 12 inquiries or requests for the replacement of a public official or the appointment of someone to fill a vacancy. In most instances, as relates to the Federal judiciary, the inquiries or recommendations come from U.S. Senators.
In historical terms, when both Senators are Republican Senators, then the Members of Congress and the Governors are consulted on who are qualified people and so forth. This was a routine matter for me, and I did not consider my taking the telephone call from Congressman Eilberg, nor relaying his request to the Attorney General, to be ill-advised at all. If it occurred now, I would do the same.
THE MIDDLE EAST
Q. Mr. President, do you have an overall view of the final borders you would like to see for Israel? Do you expect Israel to return to the 1967 borders in all aspects, especially in East Jerusalem?
THE PRESIDENT. No. I don't have a map or a plan that ought to be the final border delineation between Israel and her neighbors. I have always operated and made my statements under the framework and within the constraints of United Nations Resolution 242, which calls for Israel to withdraw from occupied territories.
Israel interprets this language differently, of course, from the Arab neighbors. The Arab neighbors say that Israel ought to withdraw from all occupied territories. Israel says that there's some flexibility there and that the thrust of U.N. Resolution 242 is an exchange, in effect, for portions of the occupied territory for guaranteed peace.
The three elements that I've pursued is, one, a delineation of final borders; secondly, a feeling or conviction on the part of the Israelis that their security was preserved, which would involve both their own military strength, the delineation of the borders, and the attitude now and in the future of their neighbors.
The second question, of course, is the definition of real peace. What does peace mean? Does it simply mean a cessation of hostility or belligerency, or does it mean open borders, trade, tourism, diplomatic exchange, the location of ambassadors, and so forth?
I've taken the more definitive definition as my own preference. And the other thing, of course, is to deal in all its aspects with the Palestinian question.
But I have never tried to put forward in my own mind or to any of the Mideastern leaders a map in saying this is where the lines should be drawn.
THE COAL STRIKE
Q. Mr. President, Energy Secretary Schlesinger has expressed some recent concern about the duration of the coal strike. I wonder what extent you share that concern and whether you might see the necessity to use Taft-Hartley.
THE PRESIDENT. Well, we are very hopeful that the coal mine operators and the United Coal Workers will expedite a resolution of their differences. This past weekend the news was not good. I see no immediate prospect of having to exercise the Taft-Hartley provisions. It only provides for the President the authority to intercede if the national security is in danger. And we certainly have not arrived at that point yet.
There are some things that we can do, and I've discussed them with the entire Cabinet this morning and, of course, with Secretary Schlesinger in particular. The gaseous diffusion plants for the production of atomic fuels, for instance, are heavy users of energy. We are reducing the power consumed by them.
There is a need for citizens who live in the heavily hit regions, because of the snowstorms, to cut down on consumption of energy because transportation won't let even the available supplies come into those regions. But I have no present intention at all of trying to intercede nor to exercise my authority under the Taft-Hartley Act.
Q. Mr. President, regarding your concern about satellites and the safety precautions, in taking this up with the Russians, will you try to dissuade them from their practice of putting nuclear reactors into space in the future?
THE PRESIDENT. Yes, certainly in Earth orbit. I think that this is something that we should explore. There are two factors though. One is to try to evolve a sure-fire safety requirement that would prevent a recurrence of any atomic active material reaching the Earth or the atmosphere where human beings might breathe it. If we cannot evolve those fail-safe methods, then I think there ought to be a total prohibition against Earth-orbiting satellites.
I would favor at this moment an agreement with the Soviets to prohibit Earth orbiting satellites with atomic radiation material in them.
SOVIET COSMOS SATELLITE
Q. Mr. President, do you have any idea what the deal is on that satellite up there? We get all these reports. One day it's not radioactive; the next day it is. Do you have any late information about just what the status of that thing is? Or whether there is any danger?
THE PRESIDENT. NO, I know nothing at this point that hasn't already been put into the press. One, I do know that they've located a crater, about a 9-foot dimension, that it is radioactive, and that a search group from one of our own helicopters working with the Canadians is at the site. But the configuration of the remains of the satellite or whether or not they are now retrieving it from the riverbed where it's located, I do not know.
Q. Mr. President, last August in your immigration message, you said you were not considering reintroduction of a bracero-type program for the temporary importation of farm workers.
Last week, Secretary Bergland down in Mexico City had an airport press conference at which he apparently gave some Mexican newspapers the idea that we were considering such a program and were considering importing 3 million braceros, and they've been writing a lot of stories about it. He has tried to deny it. Could you state your position on it, sir?
THE PRESIDENT. We have no plans whatsoever to reinitiate a bracero program. Our own proposal to deal with the undocumented workers or illegal alien question has already been submitted to the public, and that encompasses what we proposed. It does not comprise a bracerotype program.
SOVIET SATELLITE CAPABILITIES
Q. There are reports that the Soviets have or soon will have the capability to disrupt our sending of military orders by satellites. Can you tell us whether they are accurate or not?
THE PRESIDENT. My information is that that report is not accurate.
NAZI DEMONSTRATION IN SKOKIE, ILLINOIS
Q. Mr. President, there's a group of American Nazis in Skokie, a suburb of Chicago, which is contemplating a march that's in a predominantly Jewish neighborhood, and there might be victims there of the Nazi concentration camps from World War II. Do you have any plan to use the moral weight of your office to try to discourage this kind .of a march?
THE PRESIDENT. I deplore it. I wish that this demonstration of an abhorrent political and social philosophy would not be present at all. This is a matter that is in the American Federal courts, as you know, and under the framework of the constitutional guarantee for free speech. I believe under carefully controlled conditions the courts have ruled that it is legal and that they have a right to act this way.
We have the same problem, as you know, in other parts of the Nation—in the South with the Ku Klux Klan, and others. And I don't have any inclination to intercede further. I think it's best to leave it in the hands of the court.
PLANS FOLLOWING TERM IN OFFICE
Q. Mr. President, is it true that you plan to become a missionary after leaving office, and if so, how soon after leaving, for how long and where— [laughter] and if I can pursue it, have you discussed this with Mrs. Carter? [Laughter]
THE PRESIDENT. Well, I discussed it with my wife, who was a member of the Sunday school class that I taught yesterday morning.
I have, as a Baptist layman, been part of a group that advocated an expanded church mission program, but I've not decided whether or not I would want to be a missionary after I complete my term as President.
Q. Mr. President, on March 15th of 1976, you told the Chicago Council on Foreign Relations that the American people have had their fill of covert manipulation. The Executive order you signed last week, January 24, provides a procedure for the NSC to approve covert manipulation. Now, I'm wondering, if the American people have had their fill of covert manipulation, why you are continuing to provide this procedure for allowing it?
THE PRESIDENT. I don't believe that the Executive order would permit, as you call it, covert manipulations. It does permit the surveillance of certain groups in the United States. The only way that an American citizen can be put under surveillance, clandestine or secret surveillance, is as a result of an order by a Federal judge with a warrant.
If someone is strongly suspected of being an agent of a foreign power, working against the security of our country, then with the approval of the Attorney General to assure that it is a proper function and with my own approval, too, that is permitted.
But that's no departure from any past.
Q. I am talking about Section 1-302. It says the SCC, the Special Coordination Committee, "shall consider and submit to the President a policy recommendation, including all dissents, on [each] special activity." And then Section 4-212 defines special activities as "activities conducted abroad in support of national foreign policy objectives... which are planned and executed so that the role of the United States Government is not apparent or acknowledged publicly"—which seems to be a covert operation.
THE PRESIDENT. Well, covert, as you know, has a meaning of nonpublicized or secret. Under any circumstances where we feel that it's necessary to have a so-called covert action of any kind overseas, then it has to be decided in the White House. The President is notified and approves it personally. The Secretary of State and the Attorney General are involved, and the congressional intelligence committees are also informed. And so, this is a very careful prevention of any abuse if that should ever become necessary.
PARITY FOR FARMERS
Q. Mr. President, could I ask you about the farmers' demands for 100 percent parity? They've been outside the White House gates several times recently.
Have you ever stated that you are flatly opposed to 100 percent parity, and if so-if not, what are your views on that specific demand; secondly, what would 100 percent parity cost in terms of increasing the Federal budget; and thirdly, what would it cost the American consumer?
THE PRESIDENT. I would guess, to guarantee 100 percent parity for every farm product would cost $20 or $25 billion in the Federal budget. It would also mean that the price of American farm products would be extraordinarily high and that they would be noncompetitive in international markets.
I think the request for or demand for 100 percent of parity is not well founded. There needs to be some flexibility obviously, and that's what is provided under the 1977 agricultural act.
This act, I believe, will go a long way toward meeting the legitimate needs of the American farmer. It only became effective the first day of October 1977. It's not been effective yet for a crop season, and we, in implementing that bill, will have greatly expanded financial benefits for the American farmer, increased support prices and target prices.
Also, we've had a very fine and successful effort for foreign sales, and in establishing a reserve supply of feed grains and food grains primarily held and controlled by farmers, I think will bring some stability to the marketplace and prevent the wild fluctuations which hurt the farmer and consumer. But 100 percent of parity, in my opinion, would be too costly.
TAX REDUCTION AND REFORM
Q. Mr. President, your Treasury Secretary this morning told the Ways and Means Committee that you would rather swallow a cut in your tax cuts rather than increase the $60 billion deficit. How are you going to deal with Chairman Ullman's intention to trim the reforms and probably trim the tax cuts, too?
THE PRESIDENT. Well, you know, Chairman Ullman is obviously entitled to his opinion, and I have never claimed that we had complete compatibility of opinion between myself and the chairmen of the committees either in the House or Senate.
As I pointed out in my opening statement, our entire economic package is a well-balanced one, and without the tax reforms which comprise about $9 billion, it will not be possible to have even a $25 billion tax reduction without a very serious additional Federal deficit. I think the Federal deficit is enough. I wish it was much lower. And I intend to reduce it year by year until the end of my term.
We could have had about a $20 billion lower Federal deficit had we not advocated a tax cut. But there you have to balance off the advantages from a tax cut that's substantial and reducing the Federal deficit in a very rigid way. I think we made the right choice.
We also have to deal with the jobs programs, and we had an increase in Federal spending to put our people back to work, to cut down the unemployment rate. At the same time, we can't stimulate the economy too much or we'd run into increased rate of inflation.
So, those four factors have to go together, and I think we've put them together in a very careful way. If the Congress should change any of those factors, which I hope they will not, then we'd have to use our own influence in the Congress and with the American people to try to induce them to accept some reasonable alternative which would still keep a balanced economic package.
FRANK CORMIER [Associated Press]. Thank you, Mr. President.
THE PRESIDENT. Thank you very much.