The President's News Conference

THE PRESIDENT. Good morning, everybody.

I don't have a statement to make. I am prepared for questions.

Mr. Cormier [Frank Cormier, Associated Press].

GASOLINE TAX

Q. Mr. President, I have heard some people suggest--maybe you'd call them cynics--that your proposal for a standby gasoline tax is a bargaining chip to be traded later for something else that you really want. I want to know, are you deeply committed to the tax idea or are you a little queasy about it?

THE PRESIDENT. I am deeply committed to the standby gasoline tax as part of a comprehensive and well-balanced overall energy program. In my opinion, the gasoline tax is a good idea. As a matter of fact, it will help greatly families who participate in the program by cutting down on gasoline consumption.

When the 5-cent gasoline tax is put into effect, if people don't conserve, then that means that the Federal Treasury will receive about $6 billion in additional income. This will be refunded directly to every person in the United States on their income tax as a direct tax credit.

A family of four, for instance, would receive $100 either reduction in their tax payment or, if they don't pay taxes, they would get that much of a refund in any case. So, a family with a car that gets, say, 27 miles per gallon, travels 10,000 miles per year, would pay $91 more in taxes. They would get back a credit of $500 if the 25-cent tax goes into effect.

So, the benefits are great for families that conserve. The taxes will not be severe when they go into effect. And if the people conserve, the tax won't go into effect at all. So, I am deeply dedicated 'to the gasoline tax and will fight for it until the last vote in the Congress.

TAX CREDITS FOR BUSINESS

Q. Mr. President, the Senate has voted to increase the business tax credit to the tune of billions of dollars. And you have approved millions of dollars in a tax break for the oil drillers, which is contrary to the tax reform law. What's the average taxpayer supposed to think about all this?

THE PRESIDENT. As you know, I am not in favor of continuing the business tax credit that the Senate voted yesterday. This will be taken up either this afternoon or early next week. I intend to meet with Senator Long later on today to discuss the effects of this tax bill. My own position against the business tax credit has been very clearly expressed, and I'll have to decide at the time the bill gets to my desk, if it passes, whether I can accept it or not.

I believe that there have been erroneous reports made about the intangible drilling tax, to which I think you also referred.

The first part of the sentence, which has not been adequately emphasized, is that we would like to do away with the special provisions under the tax shelter laws that permit doctors, lawyers, wealthy farmers, and others to invest in exploration for oil and receive benefits. But the present law does permit the intangible tax credit for corporations. It does not permit the same tax credit for legitimate partnerships or individuals who have a full-time profession of drilling oil. That needs to be equalized.

Mr. Sperling [Godfrey Sperling, Jr., Christian Science Monitor].

GASOLINE RATIONING

Q. Mr. President, if the energy crisis is of wartime proportions, as you have indicated, why not rationing right now? I have a follow-up.

THE PRESIDENT. There is a provision now in the law that permits me to impose gasoline rationing in case of a national emergency, and that would be a part of the overall energy package. If I feel at any time that the Nation's security is in danger, for instance, if there should be an embargo imposed--and I see no likelihood of this--then gasoline rationing would be a viable alternative.

Q. Are you saying there, Mr. President, rationing would be a fallback position if milder measures proved out to be not sufficient?

THE PRESIDENT. That's correct. If the energy package that I have proposed to the Congress is adopted, I don't see any reason in the future of ever having rationing. However, it's going to take us quite a while to build up to a billion-barrel oil reserve supply which could tide us over 10 months even with an embargo. And until this is done, we are vulnerable, and we are getting more and more vulnerable every year. But if the entire package is put into effect--and I certainly hope and expect it will--then I see no reason for gasoline rationing.

Q. Mr. President, since the first surge in gasoline prices caused by OPEC, American consumers have adjusted to the higher prices and are consuming as much now, if not more, than they were before. If your package goes through intact, as you have said, and in 1981 you see that Americans are not conserving, in fact, have adjusted again and are willing to pay the new higher price, then would you invoke rationing?

THE PRESIDENT. Well, there are some constraints built into the energy package that don't presently exist. Americans have adjusted to the increase in the price of gasoline, but we still have an average efficiency of automobiles in the American fleet, which only gets 14 miles per gallon, and this is a gross waste of fuel.

Another thing that we have now, of course, is a much heavier dependence by industrial users on natural gas and oil than is necessary. Many of them can shift toward coal. When they do, this will relieve the pressure on scarce supplies of gas and oil.

We also, of course, will increase the overall price of oil further than it has been now. We don't pay the OPEC price in this country. Much of the oil that's presently known to exist, which had been discovered 'before the OPEC prices went into effect, now is sold at a price of $5.25, which is a very low and an artificially low price. The difference between this very low price and the world price will be increased in the form of taxes which would be refunded to the American public.

So, what we are doing in effect, to express it in general terms, is we are raising the price of fuel for everyone. We have an additional tax for those who deliberately waste fuel. We refund all these collected taxes, and they will be of great benefit to Americans or families who conserve fuel. And the overall impact will be to reduce consumption substantially below what it would have been. Just to give you one statistic, we would have been using imported oil at the rate of 16 million barrels per day by 1985. If this plan goes into effect, that 16 million barrels per day will be reduced to only 6 million barrels a day.

RAPID TRANSIT

Q. In your effort to reduce consumption of gasoline, however, the program seems to place very little emphasis on, if any emphasis, on rapid transit and mass transit. Why not?

THE PRESIDENT. Well, I think that this is a separate item that will be handled under the Transportation Department. We do intend to continue with our efforts toward rapid transit. It's not part of the energy package as such.

We have already embarked upon a massive rapid transit effort in this country. It will be continued and I think would perhaps be expedited.

We are now approaching the time of completion of many portions of the interstate highway system, and the pressures for that construction cost will lessen.

As I mentioned in my energy speech, though, we have one problem, and that is the maintenance of highways that are already constructed. As we reduce the consumption of gasoline, we'll have to make that up to States so they can continue an adequate maintenance program, because they'll sell less gas in those States and they'll collect less gas tax.

But we will not ignore the rapid transit systems, and I think there will be a substantial shift toward increasing use of the public transportation systems, rapid transit, as the price of the gas guzzler automobiles goes up and as the price of fuel goes up.

HYDROELECTRIC POWER

Q. Mr. President, in neither of your addresses this week did you place much emphasis on the question of capping the unexploited hydroelectric power sites in the country, and in your administration's fact sheet there was mention only of Army Engineer add-ons to existing projects. Do you have any plans for encouraging either the private utility companies or State power agencies where they exist to exploit these untapped hydroelectric sources where they are economically and environmentally feasible?

THE PRESIDENT. Well, when they are economically and environmentally feasible, yes. But I think the fact is that in the historical development of our Nation the obviously beneficial sites where dams might be constructed and hydroelectric power might be derived have already been utilized or construction plans are well on the way. This now comprises about 4 percent of our Nation's energy supplies-hydroelectric power. I don't see any possibility of increasing that substantially as a percentage of our total use.

ENERGY TAX REVENUES

Q. Mr. President, a minute ago you said that all the money would be refunded in the form of direct tax payments, yet some of your advisers said that some of the refunds would be in the form of other payments. What percentage of the rebates would be used by you to pay the cost of federalizing the welfare program and other payments, rather than direct refunds?

THE PRESIDENT. We still have to have some flexibility about exactly what we do. I can't certify today that every nickel of the taxes collected will be refunded to consumers.

There will be, for instance, for those who use fuel to heat their homes--oil-at the time they pay their fuel bills, that increase in the price will be part of that settlement and they won't have to pay the higher price for fuel as it relates to home heating.

This is particularly important in the New England States. If we do refund, however, all the wellhead tax which goes on one step at a time for 3 years, this will bring in enough money to give a credit, a tax credit, by 1980 of about $188 per family. And as I said before, for each 5 cents that we add on to the gas tax if it is imposed, because of continued waste that will be about $100 per family; that's if all the tax is refunded to the family.

That's our present plan. But, of course, we'll have to work on that with the Congress in the months ahead.

Q. Can I ask a follow-up?

THE PRESIDENT. Please.

Q. As you developed this energy program, however, was it in your mind that a substantial portion of the additional tax revenues that would come in to the Government, by some estimates as .much as $70 billion a year by 1985, would be used for other domestic social welfare programs, the federalization of the welfare program, and other unemployment programs, a substantial portion to be used ultimately for those purposes?

THE PRESIDENT. Well, we considered a lot of options. Those that you mentioned were among the options that we did consider.

We also thought about the possibility of refunding part of the gasoline tax through the payroll deductions for social security. The judgment that was made just in the last few days was that it's better to keep the social security question separated from the energy tax.

But all those options have been considered, and I have described my present thinking about it now. But I don't know what I and the Congress will work out during the next 2 or 3 months ahead.

If a better option should arise, then this will be debated openly and we will make a judgment accordingly. My present inclination is to see that the gasoline taxes, to a substantial degree, and the fuel tax increases, to a substantial degree, are refunded directly to the people of the country in the form of tax credits.

ENERGY PROGRAM AND THE ECONOMY

Q. Mr. President, can you explain to us just how you have had to reassess the economic impact of the energy plan, the impact on inflation and general economic recovery?

THE PRESIDENT. Yes, I can do that, I believe. We've run a series of computer model analyses to try to predict as 'accurately as we can what the impact of the overall package will be if it's passed without change. There are varying results. The variations are not very substantial.

There's a general consensus that there will be some inflationary impact. I think the inflation would come .along if we didn't have an energy package. But with the energy package intact, the inflationary impact would probably be less than one-half of one percent per year.

Secondly, as far as economic stimulus is concerned, will it hold down our increase in our gross national product or will it cost the American people jobs? The most conservative and unfavorable analysis shows that it will have no adverse impact. Some computer model studies show that it will actually increase the number of jobs several hundred thousand and have a beneficial effect on our economy.

So, to summarize, it will have some inflationary impact. It will definitely not have an adverse impact on jobs or economic growth. It might have some 'beneficial impact on jobs and economic growth.

Q. Mr. President, how can you possibly achieve your goal of coal conversion .by major utilities in areas like New York, for example, where the clean air standards already are not being met and where the utilities in these areas have indicated very strongly that they intend to fight any move to force them to install machinery like scrubbers, for example?

THE PRESIDENT. The requirement for installing scrubbers to provide for clean burning of coal will be applied uniformly throughout the country so far as I know. That is .a separate item that's now being addressed by the Congress.

In some areas where the air pollution is extremely bad--you've mentioned New York; there might 'be other places--then we will consider making exceptions and permit utilities to continue to use either perhaps oil instead of coal. But that would be a rare exception based only upon the proven need to maintain the present high level .of air pollution without any increase and hopefully over time to reduce it.

DEREGULATION OF NEW NATURAL GAS

Q. Mr. President, now that you have asked Congress to continue regulation of all natural gas except deep well gas and to extend the regulation to the intrastate market, would you concede that your campaign promise to the Governors of Texas, Oklahoma, and Louisiana, that you would work with Congress to deregulate natural gas or new natural gas has gone down the drain?

THE PRESIDENT. NO. I think if you would read the statement that I made to the Congress the other night, I specifically said that I will continue to work with the Congress toward deregulation of newly discovered natural gas. What we have done so far--I think I went on to say when economic circumstances permit. What we have done so far is to set the newly discovered price of natural gas at the same price as its equivalent in energy of oil, which is the international price. So, this is a substantial move, and I believe that my campaign commitment which never put any tie limit is indeed intact.

Q. Does that mean that you foresee a recommendation to eventually take the cap off of gas; that is, as long as there is a cap on it, it would seem to be regulated? And I wondered if that might be the eventual thing?

THE PRESIDENT. I think that would still have to remain for future analysis. I believe that in the definitions that have been given at least by some of the natural gas producers, setting the natural gas prices at its equivalent in oil, is an adequate level of deregulation. Others, of course, want complete deregulation of oil and gas.

I don't think it's possible for us to do that in the immediate future. I think the adverse impact on consumers and on our economy would just be too severe. I can't answer the question any better trail I see what events bring in future months.

THE ENERGY PROGRAM

Q. Mr. President, in your fireside chat on February 2 you said, and I quote, "We will ask the private companies to sacrifice just as private citizens must do."

We know what you are asking private citizens to do by way of curbing motorboats, recreation vehicle usage, curbing their freedom to use their automobiles. Would you please enumerate what the private energy companies, the oil companies, will be asked to sacrifice that they don't already have?

THE PRESIDENT. Well, in the first place, there will be a move throughout the industrial world in our country away from oil and gas, toward coal. There will be a substantial additional tax placed on oil and gas that applies to industry that will not apply to the homeowners.

As far as the oil companies are concerned, there's a prohibition against their deriving additional income as they produce oil from the presently discovered supplies compared to what the world market price would bear. And this preempts that increase in the future by taxing the oil for the difference and returning the tax not to the oil companies, but to the American consumer.

As far as the consumers are concerned, those who conserve substantial amounts of energy will derive a substantial financial benefit. And I think that as we shift towards more efficient automobiles and as we shift toward lesser use of gas and heating oil for homes with better insulation, the cost to the consumer will be minimal, if any, and those who do conserve will derive substantial financial benefits.

ZAIRE

Q. Mr. President, are we going to transfer American battle tanks to Zaire? And if so, why?

THE PRESIDENT. No. No decision has been made about that. The news stories that have come out recently about the possible sale of tanks to Zaire are a result of a study that was done a year or so ago before I became President.

This question has never come to my attention since I have been in office until this morning. I have made no decision about sending tanks to Zaire. And I think it's highly unlikely that I would advocate such a sale.

FORMER PRESIDENT FORD

Q. Mr. President, do you agree with Vice President Mondale that former President Ford's criticism of your anti-inflation package was unseemly and unfair?

THE PRESIDENT. I haven't seen Vice President Mondale quoted on those lines. I think that the expression specifically that I heard Senator Mondale--Vice President Mondale make, was that I believe that President Ford said that had he been in office for 2 months, he would have had a SALT agreement.

Well, you know, the fraternity of Presidents and former Presidents is a very small one. I think there are only three of us. And historically in our country there's been a substantial effort by former Presidents to give support and counsel and advice and criticism in private whenever there was disagreement.

I don't feel threatened by President Ford's criticisms. I don't feel disturbed about his comparison between what he would have done, had he stayed in office, compared to what I have done. I am doing the best I can.

I have a good relationship with President Ford. And he has told me that his criticisms would be private and that his advice and counsel and help would always be available to me. So, I don't feel concerned about it. But I have to say that Vice President Mondale has a right to express his opinion.

Q. Do you feel that the former President has violated his promise by making his criticisms in public then?

THE PRESIDENT. No, I don't feel he has.

OIL COMPANY DIVESTITURE

Q. Mr. President, during the campaign you said that you favored legislation that would prohibit ownership of competing types of energy. You mentioned oil and gas--or oil and coal?

When the energy package came out, there was no mention of legislation. And many who look at the situation believe that you cannot accomplish horizontal divestiture without legislation. How do you think you can accomplish it based upon the lack of success by the Justice Department?

THE PRESIDENT. Well, my position has been that unless I was personally assured that adequate competition existed under existing antitrust laws and revelation of financial information, that I would favor horizontal divestiture and divestiture on a vertical basis at the wholesale and retail levels of oil distribution.

The proposal that I made to the Congress the other night is, I think, a very strong and beneficial move to require the energy producers, the oil companies and others, to report to the public their profit and loss on each individual component of energy production: extraction from the ground, including exploration, refining, and distributing, and also break apart their domestic operations from their foreign operations.

I think when this information is analyzed, it will be almost instantly obvious that unfair competitive procedures are in effect within the energy-producing area, and the antitrust laws can take care of it.

If I ever feel convinced that there is still an absence of competition within the energy field after this proposal is put into effect, I would not hesitate to recommend divestiture.

MEDIA COVERAGE OF THE PRESIDENT

Q. Mr. President, we are having repeated opportunities, which we enjoy, to ask questions of you and the American people to hear from you. But is there a chance that there could be some overkill here with the American people and especially with Congress in terms of getting your program on energy through?

THE PRESIDENT. Well, there may .be overkill in having too much access to the press. [Laughter]

You know, attendance at the press conferences is voluntary---[laughter]--and I promised during the campaign that I would have these press conferences at least twice a month. And my own inclination, my commitment, is to continue them.

It's a coincidence that this week we have had such a heavy exposure, and it has caused me some concern. But this is my first and only speech to the joint session of the Congress. I think Jody Powell has suggested to the television networks, for instance, that only one network cover these press conferences. This is something we have never asked for. The only time I have ever requested television or network coverage was for my speech to the American people Monday night about the energy problem.

But I can't disagree with you. There is a danger of overexposure of me in my presentation to the news media and to the American people. But I think this is an extraordinary week and I doubt that it would be repeated in the future.

PEOPLE'S REPUBLIC OF CHINA

Q. Mr. President, speaking just for myself, I like to have frequent press conferences although they are sometimes a little tiring.

THE PRESIDENT. I know. [Laughter]

Q. But to take up another foreign policy question, your son Chip was on a trip to China, has come back. I think you sent a message with him and may have gotten a message back. I wonder if you could tell us about that communication, and, specifically, are you planning a trip to China or are they planning, any of their leaders, to come here in the near future?

THE PRESIDENT. The nature of the message is one just of friendship ,and good will and a mutual agreement that it's in the best interests of the world and our own countries to increase communication, trade, and, ultimately, through compliance with the Shanghai agreement, to normalize relationships with China.

I don't anticipate any trips outside the country this year except my trip early next month to London. And I'll go to Geneva to meet with President Asad of Syria.

The Chinese Government have always taken the position that their leaders coming to our country would not be appropriate so long as there is an Ambassador here which represents the Republic of China on Taiwan. So, I think even from the first visits there of President Nixon and Kissinger, this has been the Chinese position. I would certainly welcome the Chinese leaders to come to Washington to meet with me as I would other leaders of nations, but I think I have described the situation now as best I can.

THE MIDDLE EAST

Q. Mr. President, you have 'had your attention taken away from one of the alternatives that you 'have been working on, the Middle East peace, recently. But I wonder if there has been any progress, movement, or additional flow going on privately during this time, if you could tell us about it?

THE PRESIDENT. Well, yes. I've continued my own study of the Middle Eastern question. As you know, I have met now with the Prime Minister of Israel and also with President Sadat of Egypt. Today I'll be meeting with Deputy Prime Minister and Foreign Minister Khaddam of Syria. And early next month I'll meet with President Asad from Syria on a brief trip to Geneva. King Hussein will be here Sunday and Monday to meet with me. And I'm trying to learn as best I can the attitudes of the different nations that are involved in the Middle Eastern dispute and to try to at least observe and analyze some common ground on which a permanent settlement might be reached.

I think it's best until I meet with all these leaders to minimize my own statements on the subject. I have outlined as best I could some of the options concerning borders, Palestine, the Palestinian people, the definition of permanent peace---those are the three major issues. But now that the foreign leaders know my own suggestions, I am trying to get responses from them before I make further comments about it.

COSTS OF THE ENERGY PROGRAM

Q. Mr. President, we, in getting ,briefed by Dr. Schlesinger, didn't get much in the way of costs as far as your energy package went, and some of these figures are kind of impressive that I have been hearing about.

Is it true that you are going to spend about $13 billion on the stockpile of strategic oil, and it looks like about $5 billion to $10 billion in credits for corporations, tax credits for corporations? I don't know how much for individuals. But what's the total overall package cost, either by year or 5 years?

THE PRESIDENT. I'll try to give you the total cost as best I understand it.

All the way up through 1985, the total net outlay from the Federal Government, as best we can determine it--and a lot of this is conjectural, but it's based on computer analysis--would be $4 billion. That's a cumulative figure. That's outlays compared to receipts or revenues.

But with that $4 billion, we would have purchased and placed in storage a billion barrels of oil for a reserve in case we have an embargo or an emergency need for extraction of that oil.

So, as you can well see, we'll have, at present prices, $13 1/2 billion of oil owned by the Government. The total outlay, including that purchase, would only be about $4 billion.

NATURAL GAS PRICES

Q. Mr. President, you said that you would like to see natural gas in the intrastate market regulated at $1.75. That would mean a rollback in natural gas prices in the intrastate market. Would you be willing to compromise at a higher price in exchange for going into the intrastate market?

THE PRESIDENT. No. I think that the figure is based on equating the natural gas price throughout the Nation with its equivalent cost for the same amount of energy in oil. And as that price of oil increases over a period of time, because of inflation or otherwise, then we hope that the natural gas price both within a State and transported across State lines will stay compatible with the price of oil.

ZAIRE

Q. Mr. President, you described-Senator Clark has described Zaire as a military dictatorship. How can you regard this as a defender of human rights?

THE PRESIDENT. I have never defined Zaire as a defender of human rights. I know that there are some problems in Zaire with human rights as there are here and in many other countries. But our friendship and aid historically for Zaire has not been predicated on their perfection in dealing with human rights. I think, as you know, our military aid for Zaire has been very modest.

We have observed some stabilizing of the situation in the southern part of Zaire lately, and I think our policy even in spite of the invasion from Angola by the Katanfans has been compatible with our past policies.

Q. Are you sure there are no Cubans in that group, Mr. President?

THE PRESIDENT. I am sorry?

Q. Cubans. We hear reports from King Hassan and General Mobutu that there are Cubans there.

THE PRESIDENT. Let me--I can't certify to this because we don't have observers all over the Shaba region. Our best information is that the Katangans have been trained within Angola by the Cubans. We have no direct evidence at all that there are Cubans within Zaire.

INTERNATIONAL COOPERATION ON ENERGY

Q. What will you seek to accomplish, Mr. President, when you go to London, in the energy field, and to what extent is cooperation among the major industrial countries in the West an important factor in the success of your own energy plan?

THE PRESIDENT. I think it's accurate to say that we've now taken the leadership in moving toward a comprehensive energy policy for our Nation.

I would hope that the other nations around the world would do a similar thing. There are other aspects of the energy question, though, that must be addressed. One is atomic energy, reprocessing of spent nuclear fuels, a move toward nonproliferation of atomic explosive capability. So, there will be a very complicated interrelationship involving trade.

I think to the extent that we do conserve in our own country it would make it easier for our European allies and for Japan to meet their own energy needs. We now sap so much extra oil from the international supplies that it makes it more difficult for them.

'I think this will, over a period of time, reduce the intense competition that's inevitable for dwindling supplies of oil in the face of increasing demand.

MR. CORMIER. Thank you, Mr. President.

THE PRESIDENT. Thank you very much.