The President's News Conference

LEGISLATION IN THE 95TH CONGRESS

THE PRESIDENT. I have a brief statement to make to begin with.

As all of you know, we are approaching the end of the 95th congressional session with a great deal of work still to be done. We are searching for a fair tax bill that would be simple, equitable, progressive in nature. The Senate, after it completes its deliberations on the tax bill, will take up the full employment and balanced growth legislation, which expresses in clear legislative terms a commitment that has been longstanding in our Nation, that any American has a right to a job and this right must be balanced with stable pricing structures.

The passage of this legislation was very greatly needed, and I hope the Senate will act expeditiously on it. The House has already passed it overwhelmingly.

The most important bill left in the House is on energy. We've been working on a comprehensive energy policy for our Nation now for 18 or 20 months. The most important single element in the energy package is natural gas—a difficult, complicated, highly debated question.

In addition to that, we will have bills designed to conserve energy, to shift to coal—a more plentiful supply of energy-utility rate reform and, also, energy taxes and credits to encourage people to take actions to make their houses more efficient and their businesses more efficient and to save energy throughout the Nation.

The most important single portion of this legislation is on natural gas. Because of our excessive dependence on foreign oil, we've seen the value of the dollar decline. Large sums of American money have gone to foreign nations unnecessarily, and the excessive imports have caused at least 1 percent to be added to our inflation rate.

The vote on these bills in the House will come at the end of this week. The natural gas bill will result in a decrease by 1985 of 1.4 million barrels of imported oil per day. I believe that this vote is the most important that will be cast by the Members of the Congress during this year, and it will be a measure of the effectiveness of the Congress, of our government, and also a measure of achievement for the year. I sincerely hope that the House Members will vote affirmatively on the natural gas legislation and other packages of the energy policy for our country at the end of this week.

Mr. Cormier [Frank Cormier, Associated Press].

QUESTIONS

TAX LEGISLATION

Q. Mr. President, you mentioned taxes. Almost certainly the tax bill you get from Congress will significantly exceed your own goals. Do you think that a tax veto is inevitable?

THE PRESIDENT. Well, the goals that the tax bill will exceed—I presume you mean the amount of money that it will cost the Treasury, right?

The House bill is within the guidelines that I established for the cost to the Treasury. I think it would not be excessively inflationary. The Senate is still deliberating on the tax bill so far as I know, unless they've just recently finished it, and what they are considering would not be satisfactory in its present form. If the House and Senate conferees, the rest of this week, can get together and take the best elements of both the House bill on the one hand and the Senate bill on the other and combine them, then we can have an acceptable tax bill to present to me and which I will sign.

The bill must be simple, fair, equitable, progressive in nature, that is, putting the tax burden where people can most afford it and a substantial reduction in tax burden on our people. If it meets those requirements, then I will sign it. But at the present time, the issue is still in doubt.

Q. Would you hesitate to veto it if it doesn't meet those criteria?

THE PRESIDENT. No, I would not hesitate to veto it if it does not meet those criteria.

EGYPTIAN-ISRAELI PEACE NEGOTIATIONS; ISRAELI OCCUPIED LANDS

Q. Mr. President, are the separate peace talks that open on Thursday between Israel and Egypt linked in any way to negotiations on other Arab lands under Israeli occupation? And have you ever answered King Hussein's questions concerning the clarification on the sovereignty issues?

THE PRESIDENT. The two discussions on the Sinai, which relates to Egypt and Israel only, on the one hand, and the West Bank, Gaza Strip discussions on the other are not legally interconnected. But I think throughout the Camp David talks and in the minds of myself, Prime Minister Begin, and President Sadat, they are interrelated. We have been trying to induce the Jordanians, and to some lesser degree, so far, the Palestinians who live on the West Bank, Gaza Strip area to participate in the talks.

We hope that they will both participate, along with the Egyptians and the Israelis. There's no doubt in my mind that while the negotiating teams are in Washington, we will discuss both the Sinai questions leading to an Egyptian-Israeli peace treaty and also the questions concerning the West Bank and Gaza Strip.

I have not yet responded to the questions that King Hussein sent to me. I saw him on one of the television programs reading the questions. They're in the process of being assessed by the State Department, and I presume when they get to me—

Q. They were given to you privately, were they not?

THE PRESIDENT. No, they were not. I've not yet received them personally. But I do know basically what's in them. It's important that this be done expeditiously, and I will not delay it, but it'll be several days.

ARKADY SHEVCHENKO

Q. Mr. President, what is your view of the Shevchenko defection case, in which a high-level Russian defector had his whereabouts revealed by a paid woman companion who says that the funds for her companionship came from the CIA?

THE PRESIDENT. If the figures the woman quoted were accurate, which they aren't, it would be highly inflationary— [laughter] —contrary to my policy there.

But Mr. Shevchenko, I understand, had large sums of money paid to him by the United Nations when he terminated his service there and, I understand, had other bank accounts as well. I've also heard that he's writing a book, or more than one book, and will receive in the future substantial advanced payments for that authorship.

The payments that we have made to him, the CIA, I'm not familiar with completely-I'm sure that Admiral Turner would be glad to answer that question. But they don't equal what the woman said was paid for her services or favors.

RESIGNATION OF PAUL WARNKE; SALT NEGOTIATIONS

Q. Mr. President, does Mr. Warnke's resignation have anything to do with the idea that perhaps he's not the right man to try to sell this treaty to the Senate? And second, to the SALT treaty, can you say today that you will submit a SALT agreement to the Senate for ratification, or are you still holding out the possibility that you might just do it in an executive capacity?

THE PRESIDENT. Mr. Warnke came to help us with the SALT negotiations as Director of the ACDA organization with the understanding that he would only stay for a limited period of time.

At that time, last year, we thought that we would have a SALT agreement in 1977. Several months ago he told me that for personal reasons he would still like to step down. Quite early this past summer I induced him to stay on. He will be the head of the Arms Control and Disarmament Agency until after Secretary Vance's upcoming trip to Moscow, after which he will step down. I wish he would stay on. He's a very good man, and he will be available to testify to the Congress even after he returns to private life.

I have not yet decided how to submit the agreement or the treaty to the Congress. I think it would depend upon when it was concluded, but my preference would be to submit it as a treaty.

(2. But you don't rule out the other, sir?

THE PRESIDENT. My preference is to submit it as a treaty.

RHODESIAN SITUATION

Q. Mr. President, will you see Ian Smith now that he's in the United States? And there's a second part to that question. Are you aware of any agreement Henry Kissinger made with Smith, such that the United States would give Rhodesia full diplomatic recognition and an end to sanctions in return for a trend toward majority rule?

THE PRESIDENT. I'm not familiar with that executive agreement. I do not intend to see Mr. Smith. He's had a meeting with the Members of the Congress who invited him over and also had, I think, a 2-hour meeting with Secretary Vance. There's no reason for me to meet with him.

I think that the essence of it is, what we're trying to do is to end the bloodshed in Rhodesia. We've not caused the bloodshed. We've not caused the war. But we have put forward publicly, without any secrecy about it, along with the British, to the frontline Presidents, to the patriotic front, to the Smith regime, our proposals that there be all-parties conferences where people that are in dispute can get together and talk and try to work out a means by which free and democratic elections can be held in Rhodesia, so that anyone who is qualified can run for office and let the people of Rhodesia decide what kind of government they want.

This is a proposal that Mr. Smith and his regime have not been willing to accept. But this is what we propose. If the parties in dispute prefer a different proposal and agree upon it, we would have no objection to that.

REVELATION OF CLASSIFIED INFORMATION; SALT NEGOTIATIONS

Q. Mr. President, we are currently prosecuting a former CIA warrant officer for allegedly selling a manual on one of our spy satellites to the Soviets. Can you tell us whether or not the Soviets having that manual has in any way compromised U.S. security, and whether or not it has affected our SALT negotiations because it might make it more difficult for us to verify their strategic weapons systems?

THE PRESIDENT. I would not want to comment on that particular case. Whenever the Soviets discover any information about our classified material, it's obviously potentially damaging to our country. It has not affected our SALT negotiations. I stated publicly, I think for the first time a President has done so, down at Cape Kennedy, Cape Canaveral, two or three Sundays ago, that we did have aerial surveillance. And I think that it's important for the American people to know that in the past and present and in the future, that our aerial surveillance capability would be adequate to affirm that the agreement on SALT, those in existence and those in the future, would be adequate.

So, the revelation of any secret information or classified information is something to be avoided. It has not affected the SALT talks. Our ability to verify compliance will be adequate in the future.

VASCHENKO FAMILY

Q. Mr. President, a family of Russian Pentecostals, the Vaschenkos, are seeking asylum and are lodged in the U.S. Embassy in Moscow. They said in letters that have been smuggled out that the embassy is bringing subtle, emotional pressure to expel them into the hands of the Russians, probably at great risk. Did you direct the embassy to seek their ouster, or are you willing to give them asylum and visas?

THE PRESIDENT. They are Russian citizens, as you know, and have been in the embassy in the Soviet Union, in Moscow, the American Embassy, for months. We have provided them a place to stay. We provided them a room to live in, even though this is not a residence with normal quarters for them. I would presume that they have no reason to smuggle out correspondence to this country since they have the embassy officials' ability to transmit messages. I have not directed the embassy to discharge them from the embassy,

no.

INFLATION

Q. Mr. President, the current underlying inflation rate is between 7 and 8 percent. Under your new anti-inflation program to be revealed soon, could we expect that rate to drop very much next year?

THE PRESIDENT. Well, I would hope so. I've been working on the anti-inflation package for a number of weeks, as you know, as you may know. I think that when the Congress completes its work, then I'll be able to put the final touches on the anti-inflation program and reveal it to the public and pursue it aggressively.

My best effort at this moment in dealing with inflation is to be involved in the passage or the modification of laws during these last few days of the congressional session. And this is what I've been trying to do, sometimes with private meetings with conference committees, sometimes with individual Members of Congress, on a rare occasion with a veto of a bill that I found to be unacceptable.

But I would hope and I believe that the anti-inflation proposals that I make, along with a tight constraint on budget spending by the Congress and myself, would be adequate to bring down the inflation rate next year.

EQUAL RIGHTS AMENDMENT

Q. Mr. President, when do you think the ERA amendment will be fully ratified?

HE PRESIDENT. I don't know. We've been very pleased to have the Congress extend the time for 3 years. But that's a decision on ratification for the States to make. So far, 35 States have ratified it. Three more need to do so to make 38, or a three-fourths majority. But I'm not qualified to predict when those three States might take that action. I hope without delay.

DEPARTMENT OF EDUCATION

Q. Mr. President, how high a priority do you still set on the creation of a department of education—first, at this session of Congress and, if it doesn't happen at this session, then the next one?

THE PRESIDENT. I have advocated and have worked hard this year for the establishment of an independent department of education. I don't think that education in our country has gotten an adequate hearing in my own administration or previous ones, because it has been a part of HEW, with health and welfare the dominant portions of that Department.

I think at this point, it's unlikely that the bill will pass this year. The Senate did pass the bill. The House was not able or willing to take it up. But I still have it as an important goal of mine to establish this department.

I think it's important that a more efficient delivery of educational opportunity to children in our country be achieved. I think the primary control of the schools, obviously, ought to be at the local and State level, but I think it'll make it more effective.

Q. In that connection, does it trouble you that the Congress appears to be wanting to drop Headstart from that department?

THE PRESIDENT. I think that issue has already been resolved. We don't want to do anything to weaken Headstart, and I believe it's been a belief on the part of those who've managed Headstart in the past that it ought not to be part of the education department. And when I was a young man, just home from the Navy, I headed up the Headstart program in Georgia the first year, believe in it, and want to strengthen it, not weaken it. But I don't believe that it's likely that Headstart will be a part of the new department of education.

EGYPTIAN-ISRAELI PEACE NEGOTIATIONS

Q. Mr. President, to follow up Helen's [Helen Thomas, United Press International] opening question on the Middle East, you said there was no doubt that the subject of the West Bank would come up in the talks as well as that of Sinai. One of the Egyptian delegates has indicated that the Egyptians might be unwilling to sign a peace treaty without evidence of Israeli flexibility on the future question of settlements on the West Bank. Have the Israelis given any indication yet—for example, have they yet responded in this question of the exchange of letters and come around to the U.S. position on the future settlements in the West Bank?

THE PRESIDENT. I don't believe that your opinion accurately expresses what President Sadat has told me. I don't think he would let any single element of the West Bank, Gaza Strip settlement prevent a conclusion of a treaty between Egypt and Israel.

And I think the Israelis have been very forthcoming, in my experience with them at Camp David over long days of negotiation, concerning the West Bank and Gaza Strip. I think they're acting in good faith to set up an autonomous governing entity in the West Bank, Gaza Strip, to withdraw their military government very expeditiously. And I think the settlements issue still remains open, but it's subject to a negotiation.

And last time I had a press conference, I read the statement that Foreign Minister Dayan made in Israel—which I think is adequate—combined with a cessation of settlement activity altogether, between now and the time the self-government is set up.

The role of our Government—our position has always been that the settlements in occupied territory are illegal and are an obstacle to peace. I've not changed my opinion. But to summarize, I don't believe that this one issue, if unresolved expeditiously, would prevent the peace treaty between Israel and Egypt.

IRAN

Q. Mr. President, I'd like to ask you about Iran. How do we view the situation involving the Shah there now? Is he secure? How important is it to U.S. interests that the Shah remain in power? And what, if anything, can the United States Government do to keep him in power?

THE PRESIDENT. The strategic importance to our country, I think to the entire Western World, of a good relationship with a strong and independent Iran is crucial. We have historic friendships with Iran. I think they are a great stabilizing force in their part of the world. They are a very important trade partner. They've acted very responsibly.

My own belief is that the Shah has moved aggressively to establish democratic principles in Iran and to have a progressive attitude towards social questions, social problems. This has been the source of much of the opposition to him in Iran.

We have no inclination to try to decide the internal affairs of Iran. My own hopes have been that there could be peace there, an end to bloodshed, and an orderly transformation into more progressive social arrangements and, also, increased democratization of the government itself, which I believe the Shah also espouses. He may not be moving fast enough for some; he may be moving too fast for others. I don't want to get involved in that specifics.

PRESIDENT'S POPULARITY IN WESTERN STATES

Q. Mr. President, could I just ask you a political question? You've been making a rapid rise in the polls lately, but some Democrats out in the West don't seem to believe that. Governor Lamm said something to the effect that you're about as popular in the West as Sherman in Georgia— [laughter] —and he said he was not even sure you would feel welcome there, was not sure it would be of benefit to Democrats out there even if you came out to campaign for them. I was just wondering, sir, how do you think that situation has developed?

THE PRESIDENT. I don't think my popularity with Governor Lamm has fluctuated very much since I've been in office. It's always been about the same as you've just described. [Laughter] But I've been to Colorado to campaign in his presence and, also, for Senator Haskell and the congressional delegation, and was well received there.

I think it's accurate to say that most of the Western Governors and, I think, most of the Members of the Congress from the West have been strongly supportive of the basic positions that I've taken on issues that were highly controversial. And I feel at ease and I feel very welcomed when I go there.

Obviously, public opinion polls go up and down. They went up substantially at the end of the Camp David agreement; I think it's inevitable that they'll go down somewhat. But I can't modify my own positions on issues or my basic commitments to the American people on the basis of public opinion polls. And if I happen to be unpopular with a particular Governor or a group of people, I'll just have to accept that and do the best I can.

TAX LEGISLATION

Q. Mr. President, I know you've answered one tax question, but what do you think of the $142 billion, 5-year tax cut bill passed by the Senate? Do you think there are enough safeguards in it against inflation? And what do you think of the concept of passing annual tax cuts so far for as long as 5 years ahead?

THE PRESIDENT. I'm really not qualified to answer that question, because I've not studied the actions that the Senate has taken in the last few hours. It would be very difficult to consummate as farreaching and as controversial and as innovative a concept as that in the last few hours of a congressional session.

This is something in which the House has not been involved, and for that to be analyzed completely as to its impact on the American taxpayers in such a short time would be very difficult.

In general, I believe that the Senatepassed bill has a much greater tax reduction than I can accept and has some features in it which I cannot accept.

My hope is, as I expressed originally, that the House and the Senate conferees, over the next 2 or 3 days, can reach an agreement, extracting the most acceptable elements from the House bill, combining them with the most acceptable elements of the Senate bill, so that I can sign the final bill as passed.

If not, then there will be no tax bill this year, because I will veto it. The only option would be for the Senate and the House to come back in a special session after the election, which I would not favor personally.

If this should occur, and I hope it won't occur—a veto—then, of course, early next year tax reduction would again be at the top of the agenda so that it could be passed as soon as possible, making some provisions of it, as appropriate, even retroactive to the first of the year.

But my hope and expectation is still that the House and Senate conferees can meet and resolve the differences between them. I will be meeting tomorrow with the chairmen of the two committees from the House and Senate, and, hopefully, the three of us can agree on an acceptable package.

RHODESIAN SITUATION

Q. Mr. President, a followup on the Rhodesia question. You indicated that if an all-parties conference would take place, this would be an advantage to possibly settling the problems in Rhodesia. Would you host such a conference in the United States?

THE PRESIDENT. I have no preference about where it should be held. I think it would be better, perhaps, to hold it where the parties to the conference prefer.

Two or 3 weeks ago, I instructed Secretary Vance to propose to the frontline Presidents and others that an all-parties conference be held in New York. This was not acceptable to some of them, and the idea was not carried to completion.

But the important thing is to get the members who are in dispute, who head armed forces that are killing each other in Rhodesia, Zimbabwe, and the surrounding areas, and bring them to a table to talk about the differences and try to resolve them.

I believe that this is the best approach. And, as I say, we are not wedded to a particular plan, although I think that the Anglo-American plan, so-called, has been accepted in its basic elements by all the frontline Presidents and, on occasion, major parts of it by the Smith internal group and also the patriotic front. It's a good basis for negotiation.

So, we're doing the best we can to end the bloodshed and to bring peace without any tendency to force people to come to a certain place or to force people even to accept the elements of the settlement that we think are best.

FEDERAL BUDGET

Q. Mr. President, there was a time when you spoke of a balanced Federal budget by 1981, and now the Senate is talking of that as a factor in whether or not there would be a gigantic tax cut. If and when do you ever see a balanced Federal budget, and how important is that any more as a long-range consideration?

THE PRESIDENT. I still have a balanced budget as a goal, an important goal. You have to judge very carefully how much you can reduce taxes, which takes money away from the Federal Government that it could use to balance a budget on the one hand, and how much that tax reduction would stimulate the economy to bring in additional revenues at a lower tax rate.

I've been trying to bring' the Federal deficit down. As I've said many times, when I was running for President in 1976, the deficit was $66 billion. The Congress is very likely to pass a budget this year of about $38 billion deficit. So, we've cut down the deficit $28 billion already, in just 2 years. And I would hope that this trend would continue downward. The 1980 budget deficit, I hope, would be even less—you can't predict what the economic forces will be—and then the following year, I hope to get it down further.

I would certainly like to have a balanced budget, but it depends to a great degree on the strength of the economy and what tax reductions we give. By the end of this year, if things go well on the tax bill, we will have reduced taxes on the American people $25 billion. Had we not given a tax reduction, of course that would be additional revenue to help balance the budget. So, you have to balance the budget itself on one hand, how much deficit you have, against tax reductions to the people to keep jobs available and the economy growing. That's a very difficult thing to do. We are just doing the best we can. It's unpredictable what will occur.

VALUE OF THE DOLLAR

Q. Mr. President, I'd like to ask you about the future of the dollar, sir. Do you feel that the inflationary—anti-inflationary steps that you plan to take after Congress leaves, combined with making good on the pledges at Bonn which would occur if Congress acts on your energy plan, would that in sum be sufficient to turn the dollar around, or do you feel you have to do more than that in order to stem the erosion of the value of the dollar against other currencies?

THE PRESIDENT. Well, you have to do more than any two particular items. I think the most important thing the Congress can do is to pass an energy package to give us an identifiable American energy policy. I think this would restore confidence in our Government, confidence in our people—more than anything I can think of, among foreign nations who trade with us and who trade in our currency and therefore cause it sometimes to go down in an unwarranted degree.

Obviously, controlling inflation is another very major step forward that we can take to strengthen the dollar. We have done other things as well. We're trying to increase our exports to reduce our balance of trade deficit. We have sold additional amounts of gold, which is predictable policy now, and I think this helps to strengthen the dollar.

And one of the most important things that is occurring outside of our control, but modified in a beneficial way at Bonn, was to strengthen the economies of our major trading partners, notably Japan and Germany. As their economies are stronger, they can buy goods more from other countries, including ourselves.

So, I think all these factors combined would lower our trade deficit and lead to a stronger dollar.

MR. CORMIER. Thank you, Mr. President.

THE PRESIDENT. Thank you, Frank.