THE PRESIDENT. Good afternoon, everybody. I have a brief opening statement concerning one of our most important domestic issues, and that is energy.
Last month, I sent to the Congress, as requested by the Congress, a standby gasoline rationing plan. This plan would give us the opportunity to anticipate and to plan for possible gasoline shortages in the future. Without the plan, it would take us 6 or 7 months to prepare such a plan if we were faced with a severe shortage of gasoline brought about by an interruption in supplies.
Tomorrow, the House commerce committee will have another very important vote to determine whether or not we will even have a standby plan to deal with such an emergency. It's imperative for our Nation's energy preparedness that the committee approve this standby gasoline rationing plan.
If, after the plan is evolved, it needs to be implemented, both the Congress and the President would have to approve before it goes into effect. It's a simple matter of common sense for us to do everything we possibly can to reduce our vulnerability to another oil embargo or a Middle East crisis or an interruption in our own domestic supplies. We do not face any of these contingencies now, but we must be prepared for the worst. We must make certain that gasoline can be distributed promptly and fairly in case of an emergency.
No one likes gasoline rationing, and we will avoid it if it is possible. But I will not hide from my responsibility to the Nation, and Congress likewise needs to shoulder its share of the responsibility.
It's not easy to vote for a rationing plan. I understand this. But the tough votes are never easy. The Nation's attention will properly be focused on the House commerce committee tomorrow, and I urge the members of that committee to place responsibility for the Nation's well-being above all other concerns and to vote to approve the standby rationing plan.
I also urge the Congress to pass the three other standby energy conservation plans that I submitted last month. I'm particularly concerned about the possibility that the standby plan for gasoline conservation might be killed. This plan would be implemented only in the States that fail to develop their own plans for conserving gasoline, and then only in case there are severe shortages.
But we face the possibility of gasoline shortages even as early as this summer, and common sense tells us both that my administration and the Congress must do our part if we are to be ready.
Now, Mr. Pippert [Wes Pippert, United Press International], I'd like to answer your questions.
OIL PRICE DECONTROL
Q. Mr. President, I'd like to ask you further about the fairness, the simple justice of your gasoline decontrol proposals.
THE PRESIDENT. Good.
Q. First, gasoline already is nearing a dollar a gallon at the pumps. And this will not keep the wealthy from driving, because they can and probably would pay $2 or $3 a gallon. But these prices put a tremendous burden on the ordinary person. Is this fair?
And secondly, you've used strong language in talking about oil companies and the excess profits that they stand to gain from decontrol. Yet an analysis by the Treasury Department shows that when its application on all categories of domestic oil are considered and an adjustment is made for using some of this tax to offset Federal income taxes, the net effect is that the new tax would recapture only about 10 percent of the windfall profits. Is this fair?
THE PRESIDENT. I think in both instances the answer is yes, it is fair, as well as we can devise an equitable plan to deal with an unfortunate subject.
The allocation of scarce supplies of energy must be done in the light of intense public scrutiny and after close consultation between myself and the public, and myself and the Congress. Any action that the Congress can take to make the rationing plans or the allocation plans or the conservation plans more fair, I would obviously be glad to accommodate these improvements.
Now, as far as the net effect of the windfall profits tax is concerned, we decided to decontrol in a phased way the prices of gasoline and other energy supplies based on oil in accordance with the congressional mandate, the congressional law that was passed and approved in a previous administration. I think this is necessary action to be taken. We also recognize that one of the purposes of such action is to increase domestic production. There cannot be a confiscatory tax to take away all the proceeds that would go to the oil producers as the decontrol takes place.
We tried to balance it as best we could, and I believe we've done an excellent job. Whenever a dollar is realized in increased revenue, resulting from decontrol of oil prices, under our proposal, the windfall profits tax proposal, the oil companies would retain 29 cents. That 29 cents out of each dollar is designed to be invested back into increased production of domestic oil and gas. The other part of the dollar would go for Federal taxes, local taxes, and the payment of royalties.
I might say this in closing: I don't claim that this is a perfect proposal. If, during the hearing process and during the passage of legislation, the Congress is able to make the tax more stringent, I would look with favor if the proposals are fair. If the Congress has an inclination to make the tax less stringent—in other words, to let the oil companies keep more of the profits—I would strongly disapprove.
TRADE WITH SOVIET UNION AND CHINA
Q. Mr. President, what are the prospects right now for an early extension of most-favored-nation trading status to the Soviet Union and China?
THE PRESIDENT. I personally favor the extension of the most-favored-nations treatment to both the Soviet Union and China if it can be done in compliance with existing law.
I think it's good for us, for our country, to be able to export more goods, to provide more jobs for our own people, and to improve the relationships between ourselves and foreign countries, including the Soviet Union and China, brought about by increased economic interchange or trade.
So, when the time comes that I think these requirements can be met, I would personally favor the extension of most-favored-nations to these two countries.
Q. Might that time come soon?
THE PRESIDENT. I hope so, yes.
STRATEGIC ARMS LIMITATION
Q. Mr. President, can you provide any more enlightenment on our ability to verify SALT; and are those within the administration who say this ability is, say, from 1 to 4 years away, are they wrong?
THE PRESIDENT. Well, the Secretary of Defense made a statement concerning 1 year. That was applying to specifically how rapidly we could overcome the setback resulting from the loss of our Iranian monitoring stations. But in the same brief statement, he replied to a news question that as soon as the SALT treaty is effective, when it's signed and ratified, we would be able to verify the treaty adequately.
There is no doubt in my mind that this is the case. I would not sign nor present to the Congress or to the American people any treaty which in my opinion could not be adequately verified from the first day it's effective. Many of the concerns that we have relate to very complicated questions. For instance, we can't guarantee that every time a test missile is launched by the Soviet Union, that every aspect of that flight can be completely comprehended by us.
There are limits on what we can do. But as the Secretary of Defense has testified publicly, in order for the Soviets to develop any kind of significant new missile, they would have to have like 20 to 50 test launchings. And during that process, it .is a very high likelihood that we ourselves would be able to detect any violation of the SALT treaty.
There's another factor that must be considered. If the only purpose of the Soviet Union in the long, tedious negotiations of a SALT treaty is to have a document that they can violate and that's their only purpose in existence, is to violate the SALT treaty, it would make our problem much worse. But there is an element of rationality and stability, because the Soviets know that if we ever detect any violation of the SALT agreement, that that would be a basis on which to reject the treaty in its entirety; there would be a possible termination of the good relationships between our country and the Soviet Union on which detente is based; and it might very well escalate into a nuclear confrontation.
So, the consequences would be very severe, and that is an additional constraint imposed upon the Soviet Union and on us that strengthens my statement that we can verify. But absent that very important factor, we can still verify to our complete satisfaction the SALT agreement through various means that we have available to us.
Q. Mr. President, you've been quoted by historian James MacGregor Burns as saying that even if the SALT treaty is rejected by the Senate, that you would abide by its terms. I would like to know how far you would go in this. Would you, for instance, abide by the limitations on the range of land- and sea-based cruise missiles? And more generally, don't you think abiding by a treaty that's been rejected by the Senate would amount to thwarting the will of the public?
THE PRESIDENT. I have no inclination to minimize the importance of the constitutional processes whereby treaties are negotiated by the Executive and ratified or rejected by the Senate.
My belief is that the treaty will be sound enough when it's completely scrutinized by the public and the Senate, that it will be ratified. If, because of some factor that I cannot anticipate, the treaty is not ratified, then I would do all I could, monitoring very closely Soviet activities, to comply with the basic agreements reached.
It would certainly not be proper for me, if the treaty were not ratified, to immediately launch our country into a massive nuclear arms race. And the constraints placed on me and the Soviet Union, monitored very carefully by each other, would be a basis on which to constrain ourselves and to avoid such a nuclear confrontation in the absence of a treaty. But I still believe that we will have the treaty.
Q. Mr. President, can you tell us, sir, how the list was arrived at concerning which Soviet dissidents would be released in exchange for the two Soviet spies? And in view of this exchange, you're now hopeful of gaining the release of other Soviet religious and political dissidents such as Mr. Shcharanskiy?
THE PRESIDENT. We've not forgotten any human rights activist in the Soviet Union who is being punished or imprisoned.
The recent exchange was the result of long and tedious and detailed negotiations extending, I would say, at least over a 6-month period. The final agreement was approved personally by me and, I presume, by President Brezhnev. The identity of the human rights activists who came here from the Soviet Union was one that was the subject of detailed negotiation, where the Soviets would put forward names and we would assess those names and repeatedly reject them because we did not think they were adequate.
In my final judgment, reached just a week or so ago, I felt that the list of names was a fair exchange and, therefore, approved them. And I cannot tell you any more detail than that about the negotiations.
STRATEGIC ARMS LIMITATION
Q. Have you considered taking your SALT case to the public next year to try to get a Senate that would approve the treaty?
THE PRESIDENT. No. I have every intention to conclude the SALT negotiations at the earliest possible moment. No one has ever seriously considered, in my administration, to my knowledge, any slightest delay in concluding the SALT treaty for political purposes or for any other purpose. And my understanding is that if the SALT treaty can be concluded fairly early, that it will be considered as a very top priority by the Senate, and the action by the Senate will be concluded this year.
Q. Mr. President, how do you respond to the statements by Jim Fallows, who was your chief speechwriter for more than 2 years, on a number of things, but specifically that while you hold specific positions on a number of individual issues, that you have no broad, overall philosophy about where you'd like to see the country go? And on another point, Fallows says that you signed off personally on the use of the White House tennis courts, but you told Bill Moyers that you didn't. What's the truth about that?
THE PRESIDENT. Let me say, first of all, that I think Jim Fallows is a fine young man. And he didn't express these concerns to me while he was employed by us. This is the kind of question that has to be faced by any President when someone leaves the White House. It's happened many times in the past.
Jim Fallows and I agree on most things. His assessment of my character and performance is one of those things on which we don't agree— [laughter] —and this is unfortunate, but understandable. He left the White House employment with a very good spirit of friendship between me and him, and with no insinuation that there were things about which he was disappointed.
The White House tennis court: I have never personally monitored who used or did not use the White House tennis court. I have let my secretary, Susan Clough, receive requests from members of the White House staff who wanted to use the tennis court at certain times, so that more than one person would not want to use the same tennis court simultaneously, unless they were either on opposite sides of the net or engaged in a doubles contest.
PRICE AND WAGE GUIDELINES
Q. Mr. President, you have said frequently in the past that you wouldn't hesitate to point out people, organizations that are not complying with your wage and price voluntary guidelines and that you think are helping to add to inflation. THE PRESIDENT. That's right.
Q. Yet, if I'm not mistaken, I have not heard you do so yet. Can you today tell us any organization, any labor union, any company that you think is letting the American people down in this regard?
THE PRESIDENT. Every week since we have had our voluntary wage and price standards in place, I have had a meeting with my top economic advisers—an early morning breakfast meeting once a week-at which time we discuss in some detail the degree of compliance both of the top businesses of our Nation and also the important unions of our Nation.
I think the last report that we had was that there were 13 companies who may or may not be out of compliance. We have inquired to the executives of those companies, telling them about our concern. This is done through the Council on Wage and Price Stability.
We then give them a chance to respond either to justify their price, which we think might be too high, or to change their prices if we can demonstrate to them that their prices are indeed too high.
Last week when we had this meeting that I'm describing now, there were four companies that we thought were out of compliance. The only one that we were sure had not at that time achieved compliance was Sears. I called executives of Sears and pointed this out to them, told them that I had seen the data and in my opinion they were not in compliance.
They asked for a chance to meet again with the Council on Wage and Price Stability personnel, and they modified their prices to come into compliance. I do not know at this point of any company where we can prove that they are out of compliance because they modify their prices, or either convince us that they indeed are meeting the guidelines.
Wages—this is a voluntary program, and I do not want to get involved in wage negotiations. Only Wayne Horvitz, who is the Federal mediator, is authorized by me to do so. But we make our position very clear when a major wage negotiation is approaching that we consider this or that demand to be either within or not within the guidelines, and we let this position be known publicly.
I think that this is the proper procedure, and we will continue to do so. It has applied in the case of the Teamsters. It's now applying in the case of the rubber workers. It will apply in the future in the case of the United Automobile Workers. And when they are doubtful about whether a particular proposal does come within the guidelines, they make an inquiry. But neither I nor the Secretary of Labor nor Alfred Kahn nor Barry Bosworth gets involved in the actual negotiations themselves.
We're doing the best we can. It's not perfect, but I think we've made a great deal of progress.
WINDFALL PROFITS TAX
Q. Mr. President, Senator Kennedy, in his speech this afternoon before the American Society of Newspaper Editors, says that you have been intimidated by the oil lobby into throwing in the towel on price decontrol without a fight and that your proposed windfall profits tax is but a token that is no more than a transparent fig leaf over vast profits by the oil industry.
Do you think that's unfair, that criticism is unfair?
THE PRESIDENT. That's just a lot of baloney. [Laughter]
I really can't believe that Senator Kennedy said this unless the phrases were taken but of context, because everyone knows who's in the Congress that decontrol is mandated in the present law, controls to be terminated in October of 1981. This is not a decision that I made. I am complying with an existing law. And in order to minimize the impact of decontrol, we are carefully and slowly phasing out controls over roughly a 28-month period.
I have made a proposal to the Congress which, in my judgment, is eminently fair. It lets the oil companies keep 29 cents out of every dollar of increased revenue which they derive from decontrol. As I said earlier in this news conference, if the Congress, including Senator Kennedy, wants to tighten up on that windfall profits tax with their proposals that I consider to be fair, I will gladly support such more stringent windfall tax proposals. I will not support any move in the Congress to make the windfall tax more lenient on the oil companies.
But I have a responsibility as President to make the best judgment on what needs to be done in the future and to comply with the Federal laws when I make decisions for the present. And I'm always amenable to proposals made by Senator Kennedy or anyone else to make the laws fairer or more stringent if the Congress thinks they should be made more stringent.
STRATEGIC ARMS LIMITATION
Q. Mr. President, on Capitol Hill today, a number of Republican Senators who say that they are uncommitted on SALT II were critical of Admiral Turner, the director of intelligence. They claim that he has been making speeches around the country in support of the treaty, and they feel that he should not get involved in what may become a partisan issue.
What is your understanding of Admiral Turner's role? Is he an advocate of SALT II? And if so, is this at your direction?
THE PRESIDENT. No. I've never asked him to make any such speech. I think, as is the case with almost every major official in the Federal Government—in the executive branch, at least—they are called upon to make speeches on matters of great moment and importance to the people. Even in the case of the CIA Director, responsible for intelligence, he's not confined just to expressing an opinion on collection techniques, most of which are highly secret in any case.
I don't know what comments Admiral Turner has made. I happen to know that he's basically in favor of the SALT treaty.
WINDFALL PROFITS TAX
I might say, to get back to the previous question about the Congress attitude toward the windfall profits tax, this is not an easy question to address, but we've made a lot of progress in the last 2 weeks.
When the windfall profits tax was first mentioned, when I started talking about it back in April, there was an almost unanimous opinion expressed on Capitol Hill that no windfall profits tax could be passed, and those of you in the media reported these comments, and now some of those very same people who said that it was not possible for a windfall profits tax to be passed at all are now quarreling about whether we should take from the oil companies 29 cents out of each dollar, or 25 cents or 24 cents or whatever.
But I think we've made great progress in the last 2 weeks in selling to the American public, and therefore to the Congress, the need for the windfall profits tax just because I have spoken out strongly and fervently and with deep feeling on the subject.
So, we're making good progress. And I'm eager to work with the Congress on how to make my proposals even better.
ENERGY, FOOD, AND HOUSING PRICES
Q. Mr. President, among the inflation figures, the most stubborn seems to be those of food, fuel, and housing, and those also seem to be the least susceptible to controls of any kind. Is there no hope for progress in this area until those prices become so high that people can't afford the things they really need?
THE PRESIDENT. There is some hope in the area.
Fuel, to a major degree, is affected by oil prices established by an international cartel over which we have very little control. However, we can reduce our dependence on foreign imported oil by the implementation of a sound national energy policy. I've worked on that for 2 years.
In food, I would say one of the major leading items in food price increases has been beef. And every agricultural economist, every farmer knows that the main cause for high 'beef prices is sustained high demand and very low sizes of American beef herds. It takes 5 or 6 years to slowly build up your breed cows, and then to have an increased herd to produce more beef.
One of the causes of the present shortage was the price controls imposed upon beef under the Nixon administration, and at the time, the farmers sold their brood cows and heifers instead of keeping them for future beef production.
Pork, because of the short gestation period of swine, and poultry, with an even shorter period of increase in production, can be increased fairly rapidly, and I've been very pleased at how fast those two items particularly are being increased. The production of fish for American consumption is a slower process, because it depends upon the habits and the number of fishing boats and fishermen available in that industry.
So, I think we've got a good prospect in the future for food prices to drop somewhat, or at least the price levels not to rise so rapidly.
This past winter and the previous winter, coincidentally, were two very severe periods of adverse weather, and this additionally affected food in the case of perishable vegetables and fruits.
Housing—we have had in the last 2 years a rate of housing construction of over 2 million per year in spite of high interest rates and high prices. And this has provided an increased demand for lumber, for plywood, for insulation materials, and for all other building materials that go into home construction. Recent statistics, unfortunately, show that the rate of construction of housing is dropping off. This will decrease demand if the trend continues to be less than, say, 2 million per year. And we are trying within the Federal Government to increase the rate of production of timber.
So, although we don't control these three items that you mentioned, there are elements that we can now detect that indicate some hope for the future after several months go by.
ISRAELI SETTLEMENT POLICY
Q. Mr. President, the Israeli Cabinet has recently approved two new settlements on the West Bank. In light of the enormous cost to the United States of implementing the Egyptian-Israeli peace treaty, isn't it reasonable to expect the Israelis to cease from settlement policy which violates international law? And secondly, why should the American people pay for policies of the Israelis that undermine the peace process and run counter to American foreign policy?
THE PRESIDENT. Well, the position of the United States historically has been consistent, and my own position on settlements in the West Bank, Gaza area and on the Golan Heights, and in the Sinai have my position has been consistent. The Israeli Government knows perfectly well, after hours of discussion on this issue, what my position is.
We do consider the creation of Israeli settlements in these areas as being inconsistent with international law, and, as I've said many times, they are an obstacle to peace. Knowing that, the Israeli Government still on occasion authorizes new settlements. They interpret the law differently from myself.
I hope that the Israeli Government will severely restrain any inclination, either approved by the Knesset or done without legal sanction, in establishing new settlements. But there is a limit to what we can do to impose our will on a sovereign nation.
Q. Mr. President, the administration position on the Rhodesian election has been, until now, that you are assessing the situation. Can you tell us, though, however, whether you personally are inclined to lifting sanctions against Rhodesia, recognizing the new government there, and if you do do that, what impact do you think that will have on your Africa policy? Won't it cause you severe troubles for what you've been trying to do on that continent?
THE PRESIDENT. I am constrained by the law to wait until after the new government is established before I make a decision on whether or not the recent elections have been adequate in my judgment to lift the sanctions. And we are now going through a very careful process of assessing the conduct of the elections themselves and also the consequences of the election.
I'm not going to comment any further on it than that, but I will say that we have not varied our position that the Government of Rhodesia ought to be established through democratic principles, the election should be held with all parties willing to vote or run for office being permitted to do so, and that this should be based on the one-person-one-vote principle.
We have worked in consonance with most other Western nations—all, so far as I know—and closely with the British, who have a legal responsibility for Rhodesia. We have kept the United Nations informed, and I think that our position is a proper one. But after the new government is installed in office, at that time I will make a judgment under the Case-Javits amendment and decide whether or not I think the elections were enough progress toward those principles that I've just described to warrant the lifting of sanctions. I cannot make that judgment at this time.
FRANK CORMIER [Associated Press]. Thank you, Mr. President.