The President's News Conference

CIVIL SERVICE REFORM

THE PRESIDENT. Before I became President I realized and was warned that dealing with the Federal bureaucracy would be one of the worst problems I would have to face. It's been even worse than I had anticipated. Of all the steps that we can take to make government more efficient and effective, reforming the civil service system is the most important of all.

The civil service reform proposals which I submitted last month will return the civil service to some system of reward and incentive for the tens of thousands of superb public servants who want to do a good job for the American people. This will also give managers a chance to manage. It will reward excellence, good service, dedication, and will protect employees' vital and legitimate rights.

It will also expand the protection against political abuse that employees need in order to do their jobs well and will make our civil service one of the most dependable and one of the most effective and honest in the whole world.

Nearly everyone in our country will benefit from the civil service reform proposals. For those in private business, it will mean faster government action, less intrusion in the private sector of our economy. For taxpayers, it will mean that we get more for the money that we pay. For those who depend on government for help, it will mean better services to them, quicker, more effective.

And most of all, for the civil service employees, for the Government employees, it will mean that they can do their jobs better and more effective. They only have one life to live, and sometimes in a sacrificial way they want to dedicate their lives to public service, and this will let them do a better job.

When criticism and debate in the Congress lead to a stronger plan, then I'll support those changes. But I will object very strenuously to weakening our proposal. And I do object also very strenuously to false accusations, specifically one that's been raised recently that this will intrude into the privacy of public servants and injects politics and possible abuse into the system to damage those who serve the Government. In fact, to the creation of a merit protection board and an office of special counsel, political abuse is specifically removed.

I know that everyone wants a better government, particularly those of us like myself who are responsible for leadership and management of the United States Government.

In a way, I believe that our Nation is being tested these days. We have a period of relative calm, free from great crisis or threat to our national security, and we are being tested to see whether or not we can take advantage of this opportunity for improvement.

It will reveal, I think, whether we can deal with conflicting, narrow special interests and act in the national interest of our country.

Civil service reform is now before the Congress. It will test me and the Congress as well, and I believe that the Congress will give the right answer to the question: "Can we have a better government?" I think we can.

QUESTIONS

OIL IMPORTS

Q. Mr. President, where do you stand now on the possibility of imposing, by Executive order or administrative action, oil import fees, and how soon might you act? I understand a couple of your advisers are suggesting a May 1 deadline.

THE PRESIDENT. Well, no one has suggested a deadline that early. As a matter of fact, we have just finished the fourth major element of a five-part, comprehensive fuel or energy program with natural gas deregulation. And now this is being recommended to the complete conference committee.

The next step is the crude oil equalization tax, which will be addressed by the Finance Committee in the Senate and the Ways and Means Committee in the House, representatives of them in a conference committee.

I've talked to the chairmen of both those committees about the crude oil equalization tax, the fifth element of our major proposals.

It's too early, I think, to consider administrative action. I still hope and expect that the Congress will act and will complete the fifth element of our energy plan and present the entire package as it should be to the Congress in one body.

ENHANCED RADIATION WEAPONS

Q. Mr. President, President Brezhnev has offered to not build the neutron bomb if you agree or the U.S. agrees to do likewise. Is that the word you're looking for to halt the program?

THE PRESIDENT. No. The Soviets know and President Brezhnev knows that the neutron weapon is designed to be used against massive and perhaps overwhelming tank forces in the Western and Eastern European area.

The Soviets, over a period of years, have greatly built up their tank forces and others, stronger than have the NATO Allies. The neutron weapons are designed to equalize that inequality, along with many other steps that our country is now taking.

The Soviets have no use for a neutron weapon, so the offer by Brezhnev to refrain from building the neutron weapons has no significance in the European theater, and he knows this.

We are strengthening NATO in other ways. Ourselves, our NATO Allies will meet here in Washington the last of May with a recommitment, which is already well in progress, for a long-range strengthening of NATO in all its aspects.

But this statement by Brezhnev concerning the neutron weapon has no significance at all.

Bob [Bob Jamieson, NBC News].

MIDDLE EAST ARMS SALES

Q. Mr. President, are you going to heed the calls of the congressional leadership of your own party and delay the formal submission of the package sale of warplanes to the Congress or break it up in any way?

THE PRESIDENT. Well, I've not been asked by the leadership in the Congress to delay. I have had one Senator who came to see me about holding off on this proposal. Secretary Vance and I have been in close communication, both with one another and with leaders in the Congress, for a number of weeks concerning the arms sales package that will be presented to the Congress very shortly. This package will be presented in individual, component parts to the Congress. It's the only legal way to do it.

The Congress will act on those major sales proposals individually to Israel, to Egypt, and to Saudi Arabia. Each one is important. Each one completes a commitment that has been made by either me, or, even in the case of the Saudis and Israel, our predecessors for these sales.

I look upon them as a package, and if the Congress should accept a portion and reject another, then my intent is to withdraw the sales proposal altogether. But the Congress will not receive nor act on these proposals as a package. They have to act, according to the law, on individual items.

These proposals are in the national interest. I think it's important to our country to meet our commitments. The one that's perhaps the most controversial is the sale of F-15's to the Saudi Arabians. This was a promise that was made to the Saudi Arabians in September of 1975, to let them have a choice of F-16's or F-15's. They want these weapons for defensive purposes.

I recommitted this Nation to provide these planes both last year and again this year. And my deep belief is that, since in the Middle East our preeminent consideration is the long-range and permanent security and peacefulness for the people of Israel, that to treat the moderate Arabs with fairness and with friendship and to strengthen their commitment to us in return is in the best interests of our own country and of Israel.

We are negotiating or discussing these matters with the Congress. But there will be no delay of the sales proposal beyond the point where it can be completed by the time the Congress goes into recess-maybe 2 or 3 days, no longer than that.

Q. Mr. President, do you think it proper or do you think it right for the Foreign Minister of another government to interfere in the legislative processes of this Government? I'm talking particularly about your Middle East arms package here, legislation which you've said is in the best interest of the United States. Do you think it's right?

THE PRESIDENT. Well, I have made my decision about the arms sales package after very careful consideration, a close study of decisions and opinions expressed by my predecessors in the White House, careful consultation with the State Department and our Defense Department, our military leaders, and I made my recommendation to the Congress—I will make it shortly—on what I consider to be in the best interests of our own Nation with a well-balanced and friendly attitude toward our allies and friends in the Middle East.

In each one of these instances, the arms sales proposals were made as a result of requests by the governments involved. And I think that's the basis on which the decision should be made, by my making the request to the Congress, by Congress considering my request for approval of the sales on the best interests of our country as judged by me and the Congress.

TAX REDUCTION

Q. Mr. President, many Democrats in the House Ways and Means Committee, including the chairman, are urging you to scale back your net tax cut to something under $20 billion. And the Federal Reserve Chairman today suggested that you delay the effect of whatever tax cut until next January 1st, all because apparently they feel that it's inflationary now, looking down the road.

Will you consider either of those suggestions?

THE PRESIDENT. No. A $25 billion reduction in taxes on the American people would not be inflationary. It is, in my judgment and the best judgment of the economic advisers who work with me, about the right figure. We only have about an 82-percent utilization of our production capacity now. We do not have excessive demand as a cause for inflationary increases in prices of our products.

We have a cycle of wage increases, price increases that kind of grow on one another. And I don't believe it would be advisable and I do not intend to change my recommendation that the net between the tax reforms and the tax reductions would approximately equal to $25 billion.

I think that the best time to make it effective is the 1st of October. I hope that the Congress can act rapidly enough to make the reduction effective then.

The last quarter's results of growth in our national products showed some leveling off. It needs to be kept strong and vigorous. If this tax proposal does not go through, by the end of 1979 it would cost every family in America, on the average, $600 in income, about $40 billion in reduced income, because of a constrained economy that did not continue to grow.

And if the tax reduction of $25 billion was eliminated, it would mean that we would have a million more people out of work by the end of the first 12 months after the tax reduction than we would have otherwise.

So, for all those reasons and others, I think the $25 billion in tax reduction on our people, which is needed and which would help them, is about the right figure.

MIDDLE EAST ARMS SALES

Q. Mr. President, just to follow up on the Middle East thing, I would like to pursue it just a little bit more maybe from a slightly different angle. The Israeli Foreign Minister, Mr. Dayan, has suggested that Israel might be willing to give up its own fighter planes in your package if the sales were stopped to Saudi Arabia and Egypt.

Now, in the light of your own professed interest in cutting back on foreign arms sales, would you consider withdrawing the entire package to prevent a new escalation of the arms race in the Middle East?

THE PRESIDENT. No, I would not. As I said earlier, the process through which we sell arms—and this sales proposal would be completed 5 years in the future, by—I think the last deliveries would be 1983—is initiated by a request from governments, foreign governments, that we permit the sale of arms to them. As I said earlier, we committed ourselves to help Saudi Arabia with arms sales to protect themselves in September of 1975.

At the same time, approximately, in the fall of '75, our Government committed to help Israel with their proposal by making arms sales available to them. Obviously, if any nation withdrew its request for arms sales, that would change the entire procedure.

I have never heard of Foreign Minister Dayan's statement that they did not need the weapons or would withdraw their request for weapons until today. Mr. Dayan is on the way to our country. He will be meeting shortly with the Secretary of State and others, and I think only after very close consultations with them can we determine whether or not Israel desires to go ahead with the arms sales commitment that I've made to them.

But I do not intend to withdraw the arms sales proposals after they are submitted to the Congress, and I do not intend to delay.

Q. If Mr. Dayan did in fact tell you that Israel would withdraw its request, would you then be willing to pull back the whole package?

THE PRESIDENT. I can't imagine that happening, and I would rather not answer a hypothetical question of that kind.

MIDDLE EAST PEACE NEGOTIATIONS

Q. You mentioned that Mr. Dayan is coming. I just wonder, sir, do you have any reason at all to feel optimistic that the negotiations between Israel and Egypt can somehow be brought off dead center?

I know Mr. Atherton's been in Cairo, and you've had consultations. What is the outlook now?

THE PRESIDENT. Yes, I have reason to be optimistic, but I can't predict success anytime soon. This has been going on for 30 years.

I think compared to a year ago, for instance, remarkable progress has been made. After the visit of President Sadat to Jerusalem, there was a remarkable sense of excessive hope or euphoria that swept the world, that peace was imminent. Since then, I've met extensively with President Sadat and with Prime Minister Begin and also with the Foreign Ministers of the two countries involved. And there's still hope that we can move toward a peaceful settlement.

I think if there were not hope, that Foreign Minister Dayan would not be coming to Washington to meet with our own officials to explore further avenues for progress.

As you know, since Prime Minister Begin was here, Ezer Weizman, who is the Defense Minister of Israel, has been to Egypt twice (once) ¹ to meet with President Sadat. So, discussions are going on and explorations are continuing.

¹ Printed in the transcript.

And I am firmly convinced that both the Israelis and the Egyptians want peace. They both are concerned about the terms of peace. After years of hatred and even active combat, there's still an element of distrust about the future intentions of each other.

But I am hopeful that we can continue to make progress. My commitment is deep and irreversible. As long as I'm in the White House as President, I will continue to pursue, without any slacking of my interests or commitment, the avenue toward peace.

And I anticipate that now and in the future there will be temporary periods of discouragement and withdrawal of the negotiating parties. So, I think every evidence that I have both publicly and privately known is that both sides want peace and the progress toward peace is steady.

VIEWS ON THE CONGRESS

Q. Mr. President, last week you used very strong language to criticize Congress for wasting a year on energy legislation, and you also urged Congress to be more responsive to the public desire for tax reform.

Since this allegedly laggardly, unresponsive Congress is controlled by the Democrats, and since congressional elections will be held this fall, doesn't this constitute an attack on members of your own party?

THE PRESIDENT. Well, I wouldn't characterize it as an attack. I think it was an accurate description of the fact that for 12 months Congress had had a very good energy proposal before it and had not acted conclusively on it.

The day after I made that statement, the negotiating team within the conference committee did resolve to their own satisfaction the question of the regulation and pricing of natural gas, one of the most difficult political questions that ever addressed Congress. This has been kicking around now for at least 30 years. I think Truman vetoed the first natural gas deregulation bill. I think it's a step in the right direction.

Now, out of the five major categories of proposals I made to the Congress a year ago, four of them have been resolved at least at the conference level, and now the remaining issue is the pricing of oil.

We, last year, imported $45 billion worth of oil, too much, and I believe the Congress is beginning to see that the public supports action on the energy legislation and that when they do act it will help our whole economy.

I think that one of the reasons that the stock market has gone up, I think almost 75 points in the last 2 weeks, unprecedented rise, is, among other things, a new commitment to fighting inflation and the apparent willingness of Congress now to act on the energy legislation—those two things.

So, I'm not attacking the Congress, but I reserve the right to point out the inactivity of Congress, which I think on occasion does inspire them to act more rapidly.

UNEMPLOYMENT

Q. Mr. President, a few days ago you met with some top executives of big corporations to discuss inflation. Did you discuss unemployment at the same time? If so, could you tell us about that as it relates to unemployment?

THE PRESIDENT. Yes, we did discuss unemployment. I pointed out to the executives who were here that in the last, I'd say, 12 months, because of the good action on the part of the Democratic Congress in putting into law our stimulus package, that we had had a dramatic drop in the unemployment rate, and that a year ago, they, around that table, including myself and the members of my Cabinet who were there, had been almost completely committed or concerned about unemployment. That is now going in the right direction. I think the last 3 or 4 months show that the unemployment rate is at 6 percent or a little above, almost 2 full percentage points less than it was 15 months ago, when I became President. This has got to continue.

We also discussed the fact that the focusing of Federal programs concerning reducing unemployment can now be placed upon those who are most difficult to employ—minority citizens, women, and others who are the last ones hired and the first ones fired, and the young people who also have a very high unemployment rate.

So, we are not slackening off at all on the employment question. The programs that we put into effect are still in effect. They are getting more and more specifically effective with different groups as time goes on. My belief is that the unemployment rate will continue to decrease, particularly among those groups that I've just described and, at the same time, we can tackle inflation with a much higher concentration of our own effort and commitment and public awareness.

The two are not in conflict. We've seen that when the last administration, which happens to have been Republican, concentrated on inflation by letting unemployment go up, it did not work. So, I believe the best thing is to do what we've already done, and that is to try to hold down inflation and bring down unemployment at the same time. That's what we are trying to do.

LOBBYING ACTIVITY IN CONGRESS

Q. Mr. President, in view of the increased lobbying on the Hill, witness the Panama Canal and your civil service reform and all of this, can you support Senator Kennedy's new expected legislation on lobbies?

THE PRESIDENT. I strongly support the lobby control legislation that's now before the Congress. I'm not sure that I know exactly the terms of Senator Kennedy's own bill. The Congress will vote this week, the' House of Representatives will vote this week, on a very effective lobby control bill, a lobby reform bill, and I support that strongly.

It was one of the themes that I pursued during my own campaign for President. We've been actively involved in drafting it in the strongest possible terms, and I do support it.

INTEREST RATES

Q. Mr. President, were you surprised last week when the Federal Reserve raised the short-term interest rate, and have you any reaction to it?

THE PRESIDENT. I didn't have any prior knowledge that the Federal Reserve was going to raise the interest rates. I do get a report frequently and regularly about the supply of money and how much it is increasing. I understand after the action was taken, because of an explanation by the Chairman to Charlie Schultze, that the reason they did raise the interest rates was because the money supply was increasing more rapidly than they desired or thought was advisable for our country. And obviously, as you know, the Federal Reserve Board is completely independent of me. They have no reason to consult with me before they make a decision, and don't do it as a matter of policy.

But I think that the interest rates ought to be kept as low as possible, and as you know, I can help to control that by the form of economic proposals I make to the Congress, the budget levels and so forth. And the Congress can help to determine that by the rate of taxation and the size of the deficit, and the Federal Reserve primarily by controlling in indirect means the supply of money.

But that's an independent action. I did not know about it ahead of time. I understand the reason that they did it. I would like to do everything I can—I know that Bill Miller would, too—to hold down interest rate levels.

MIDDLE EAST ARMS SALES

Q. Mr. President, your spokesmen have said that there will be written assurances from Saudi Arabia and Egypt that they will not use the warplanes against Israel in any future conflict. And further, various administration spokesmen have pointed out that the Saudi Arabian Government will be dependent on the U.S. for technical support for these planes, and this support could always be cut off in the event that a future conflict would start and that the Saudis desired to use the weapons against Israel.

Is it your understanding that both types of assurances will be in effect?

THE PRESIDENT. Well, we would not sell the planes to the Saudi Arabians if we thought that the desire was to use them against Israel. I'm completely convinced that the Saudis want their airplanes to be used to protect their own country.

The Saudis have informed officials in our Government that they do not desire to deploy them at Tabuk, which is the airfield nearest to Israel, and I know for a fact that the configuration of the weapons on the F-15 that the Saudis have offered is primarily a defensive configuration. And for those reasons I feel sure that the problems that you described are adequately addressed in the proposals that I've made to the Congress and in the statements that the Saudis have already made.

NEW YORK CITY

Q. Mr. President, the long-term loan package for New York City is in a great deal of trouble on Capitol Hill. I'm curious, sir, just how much of a commitment are you prepared to make to push for that legislation in the coming weeks?

THE PRESIDENT. Well, it's one of the major goals of our administration to have economic aid for New York City. The Secretary of the Treasury, Mike Blumenthal, has discussed this since the first day, first few days that we were in office, with the mayor of New York, Beame, and now Koch, and also with Governor Carey and other officials in New York—the labor leaders, the bankers in New York City, and others. We've also had close consultations with the committees in Congress.

We have proposed a package that I think would alleviate New York City's short-term and long-term financial problems. But a major part of the responsibility has got to fall upon the people in New York City itself.

Unless New York is willing to commit themselves and to prove to us that they can and will balance the budget through careful consideration of how money is expended to the levels of taxation involved, unless the leaders in New York City, both in and out of government, prove to us and the Congress that they will operate or cooperate together to put New York City back on a sound basis, I don't think it's possible for the Congress to pass the New York City legislative proposal that we have already submitted to the Congress.

I think that, so far, indications are that all persons involved—ourselves, the congressional leaders, and the New York City officials in and out of government—are committed to this common goal. So, I believe the Congress will pass the legislation. I think the proposal we made will help to solve New York City's problems without costing the American taxpayers anything. And I believe that it will bring all of us together in a much more cooperative way.

Judy [Judy Woodruff, NBC News].

TAX REDUCTION AND REFORM

Q. Mr. President, if I could just follow tip on an earlier tax question, how unfair do you think the tax burden is that this country now places on the middle class? And if you do think it's unfair, then why are you so insistent on pushing tax reforms that most people believe are going to hit the middle class the worst and on resisting a rollback in social security taxes that would also penalize the middle class?

THE PRESIDENT. Well, let me answer your last question first.

One of the things that we had to do last year was to bring the social security system out of near bankruptcy into a sound economic position. Two of the three major reserve funds for the social security were on the verge of bankruptcy, and the Congress had to increase the social security payments to keep the social security system sound. They acted courageously and properly in that respect.

In order to make sure that the taxpayers in all categories, with very few exceptions, have a net reduction in their taxes this year, even after paying increased social security benefits, that's where the tax reduction proposal comes in.

If the Congress should not act in accordance with my request and lower income taxes, then there would be a net increase in taxes paid by the middle-income groups.

Another factor that has not yet been adequately publicized is that those very people who pay high income taxes, those $20, $25, $30,000 citizens having that much income per year, will also get greater benefits when they retire. So, in a way it's kind of an investment for them.

We have a lot of abuses in the system that ought to be eliminated. Last year, for instance, one medical doctor, a surgeon, owns a yacht, and he took a $14,000 tax credit, tax exemption, for entertaining other doctors on his yacht. This is legal under the present law. Most American citizens don't have a yacht, and when they go for a small pleasure ride, if they do have a small boat, they can't deduct it as an income tax deduction. And when that doctor didn't pay his $14,000 in taxes, other average, working American families had to pay his taxes for him.

We've another instance that I recall from the statistics I've read, that one businessman charged off 338 lunches last year, more than $10,000 in 'so-called business lunches, more than many American families make in all. And the average, working American had to pay that guy's taxes for him. I think that's a gross abuse of the average American family. And that's the kind of corrections that we're trying to put in.

On Capitol Hill now there is concentrated an unbelievable number of highly qualified, very intelligent, very effective lobbyists trying to induce the Members of Congress to preserve those special privileges for people who have them because they are so powerful and so influential, now and in the past, that they could carve out for themselves some special deal in the income tax laws of our country at the expense of the average American family. That's where tax reform comes in.

So, tax reduction is important to make sure we don't put an extra tax burden on our people, even counting social security. Tax reform is necessary to let our tax code be simple and fair for a change. Both those changes, both those recommendations are urgently needed.

FRANK CORMIER [Associated Press]. Thank you, Mr. President.