The President's News Conference at Austin, Texas

[Held with Secretary of Defense Robert S. McNamara]

THE PRESIDENT. There are two or three brief announcements before we get into the subject of today's meeting.

MEETING WITH EUGENE BLACK

[1.] First, I plan to see Mr. Eugene Black some time either this week or in the early part of next week. ¹

I expect I will do it in Washington. As soon as the date is clear, I will inform you.

¹Eugene R. Black, adviser to the President on Southeast Asian social and economic development and former president of the World Bank. On December 16, 1966, the White House announced that Mr. Black, following a tour of Asia, had reported that the outlook for the Vietnamese economy was highly favorable and that "even in the midst of war the foundations of future economic progress are being laid in Vietnam" (2 Weekly Comp. Pres. Docs., p. 1799).

LATIN AMERICA

[2.] Last weekend I assured Secretary Gordon and Ambassador Linowitz ² that I wanted to see them as soon as they returned from the trip they are making in this hemisphere. We talked about developments in Latin America.

²Lincoln Gordon, Assistant Secretary of State for Inter-American Affairs and U.S. Coordinator, Alliance for Progress, and Ambassador Sol M. Linowitz, U.S. Representative to the Council of the Organization of American States and Representative to the Inter-American Commission, Alliance for Progress.

As you know, Ambassador Linowitz recently visited Costa Rica where he met informally with the foreign ministers of the Central American countries.

Assistant Secretary Gordon and Ambassador Linowitz will be traveling to South America between now and December 18 to consult with leaders on the Alliance for Progress, and the proposed meeting of Presidents of the American Republics.

They will have a stay of some length in Mexico and visit with the President of Mexico.

I discussed that with the President of Mexico and asked that he see them upon their return from South America. Then they will either come to the ranch or report to me in Washington.

FUNDS FOR RESIDENTIAL MORTGAGES

[3] The Federal Home Loan Bank Board has told me that it has reviewed its financial position and has determined that the home loan banks can increase their lending to member savings and loan associations and savings banks by $500 million over the next few months for investment in residential mortgages.

As you know, we released $250 million for special assistance in the purchase of mortgages the other day.

These additional Home Loan Bank Board funds will help to case the shortage of money for investment in home mortgages that has depressed the housing and construction industry in recent months.

The home builders have been especially eager to see some step along this line taken.

I am informed that a large part of the availability of funds reflects the improved flow of savings in Federal Home Loan Bank member institutions as a result of the better competitive environment following the establishment of new interest and dividend rate controls. This was the result of legislation we recommended and Congress passed at the conclusion of the last session.³

³ See Item 473.

The Federal Home Loan Bank Board has scheduled a meeting for this Friday, December 9th, with its 12 regional bank presidents and their credit offices to give effect to this program.

REVIEW OF DEFENSE BUDGET

[4.] We met sometime after 9 o'clock this morning with Secretary McNamara, Under Secretary Vance, Mr. Rostow, the Chairman of the Joint Chiefs, and the Chief of each Service.

We reviewed the anticipated expenditures in Vietnam and in the Department of Defense for the balance of this year; that is, from December through June 30.

We are generally agreed on the best estimates that can be made at this time. We do not think they will be changed materially between now and my State of the Union Message.

We expect to submit a supplemental budget, as we have stated on many other occasions, as soon as the Congress gets back. The precise amount will be given in the State of the Union Message, but it now appears that it will be somewhere between $9 billion and $10 billion additional for fiscal 1967 in expenditures. That will give us a defense budget of somewhere between $67 billion and $68 billion for this entire fiscal year.

As you know, when we submitted the budget, we stated that if hostilities had not concluded in Vietnam we would have to submit a supplemental, and we would do so. Based upon the Chiefs' recommendations, supported by Under Secretary Vance and Secretary McNamara, that supplemental will be transmitted to the Congress in the amount of the best estimate we can give now of somewhere between $9 billion and $10 billion. It will be perfected throughout this month, and any adjustments that can be made will be made. But we think that is a safe and reasonably accurate figure.

We reviewed the plans for the fiscal 1968 Defense budget, and the recommendations made by the individual Services. We had each Chief comment on those recommendations, particularly where there was any difference of opinion between them and the Secretary of Defense.

We found, generally speaking, that the leaders--that is, the Secretary, the Under Secretary, and the Chiefs--were in general agreement. There are a few specific items that are yet to be resolved.

They spoke with frankness and candor, giving me their view-point. We will be reviewing this data from now until the budget goes up.

This represents the fifth meeting, I believe, that I have had with Secretary McNamara. We will have other meetings before he leaves for the NATO meeting, and after his return.

The Chiefs have returned to Washington. I expect to be conferring further with General Wheeler and the individual Chiefs before the budget is finally transmitted.

We made substantial progress today. Mr. McNamara, Mr. Vance, and Mr. Rostow made valuable contributions to my understanding of the needs for the balance of this year and next year.

If you have any questions of any of us, we will be glad to take them.

QUESTIONS

1968 DEFENSE BUDGET

[5.] Q. Mr. President, can you tell us at this time or give us some indication as to what the level of the Defense budget for fiscal 1968 might be?

THE PRESIDENT. No.

Q. Mr. President, do you plan to use the same technique as this year; that is, to count on a supplemental if the war is not finished, or do you anticipate that it will continue through fiscal 1968?

THE PRESIDENT. No, I think we will review every request on the basis of a full year's operation and ask for all the funds that the Chiefs, the Secretary, and the President agree will be needed without a supplemental.

TAX INCREASE DECISION

[6.] Q. Mr. President, now that you have the Defense spending figure for fiscal 1967 and also the investment plan survey by the Commerce Department, does that give you any more help in deciding whether you have to seek a tax increase next year?

THE PRESIDENT. I think your question answers itself. The answer is yes. It gives me help. If you are trying to find out if a decision has been made, it has not been.

Q. Does it make it more or less likely?

THE PRESIDENT. I will not go into that speculation until we make the decision. People might get the wrong impression.

I haven't made a decision. I don't want to convey the impression that I have.

QUESTIONS TO SECRETARY MCNAMARA

Q. Mr. President, is Mr. McNamara open to questions?

THE PRESIDENT. Yes, and Mr. Vance and Mr. Rostow.

MILITARY OPERATIONS IN NORTH VIETNAM

[7.] Q. There are wire reports from Vietnam that we bombed three targets in North Vietnam since last Friday that we had not bombed before. Is this part of a new program that we decided upon?

SECRETARY MCNAMARA. No. These targets are part of the same target system that our military efforts have been directed against for over a year, the lines of communication and the supporting facilities supporting the flow of men and materiel from North Vietnam to South Vietnam.

The targets you referred to were petroleum depots, which are the foundation of the movement of men and materiel to the south; a vehicle park; a vehicle maintenance depot, which was a storehouse for the trucks used in those movements, the Army trucks used in those movements; and railroad yards through which the materiels were flowing.

Q. Mr. Secretary, is the apparent intensification of the air war posing any policy problems for us, that is, striking at the airfields in North Vietnam?

SECRETARY MCNAMARA. No, I don't think it is fair to characterize it as an intensification. There was some very bad weather for an extended period of time, and the result was that there was a very substantial decrease in the number of sorties. Then all of a sudden the weather broke and an increase compared to the recent past. I think that is what has given the appearance of an intensification, whereas there was no intensification.

Q. No, sir. I meant by them--

SECRETARY MCNAMARA. I understand what you meant. The point is that the number of sorties that had been operated for a period of weeks had been low, and, hence, the MIG response had been, in a sense, low. Then as the weather cleared and the sorties reverted back to a normal level, the MIG response reverted back to the levels that we had experienced in prior periods.

Q. Then you don't regard our plane losses as unusual or abnormal?

SECRETARY McNAMARA. No. They fluctuate day by day. The plane losses for a period of 4 weeks, for example, in relation to the number of sorties I think would be substantially the same as we have experienced in prior periods.

WEAPONS SYSTEM PROPOSALS

[8.] Q. Secretary McNamara, can you give any information on what has been decided on the Poseidon? Will we go into that program, the antimissile? Will it be advanced to the next level of development, and on the manned bomber?

SECRETARY MCNAMARA. As the President mentioned, he is considering a number of specific weapons system proposals for fiscal 1968. No final decision has been made on several of these. Therefore, it is inappropriate, I think, to speak of any particular system at this time.

COST OF VIETNAM WAR

[9.] Q. Mr. Secretary, could you give us an estimate of the monthly cost of the war in Vietnam now with this supplemental figure?

SECRETARY MCNAMARA. No. It is very difficult to give monthly figures. The President has referred to them in the past and I have nothing to add to what he has said.

Q. Do you see a leveling off of the cost of the war in the year ahead?

SECRETARY MCNAMARA. I think there will be a leveling off in the rate of buildup, if you want to call it that.

I have spoken before, after discussions with the President on the fiscal 1967 supplement and the fiscal 1968 budget, about the leveling off that we see in the buildup rate, both in Vietnam and in our total force.

In that sense, therefore, I believe there will be a leveling off toward the end of the fiscal year in the rate of expenditure associated with the Vietnamese operations.

Q. And fiscal 1968, Mr. Secretary?

SECRETARY MCNAMARA. And fiscal 1967, in the rate of expenditures associated with the Vietnamese operations.

THE PRESIDENT'S COMMENDATION OF THE

JOINT CHIEFS AND THE DEFENSE SECRETARIES

[10.] THE PRESIDENT. Before we ended, I commended the Joint Chiefs of Staff and the Secretary and Under Secretary for the performance of their men in Vietnam.

I commended them for the economy and efficiency with which the Department was operating in that theater.

I did that based upon reports that I received from our people in the field; in particular, General Westmoreland, who has assured me that in all of his experience in the military field he has never observed an army that was provided for better, that was better trained, that had better equipment, and had it when it needed it, where it needed it.

I attribute a good deal of that to the civilian management of Secretary McNamara and Under Secretary Vance, and the Service Secretaries, and also to the very outstanding administration of the Chiefs themselves.

We went into some detail during the lunch hour on problems of administration. You and the country ought to know that I think we have a very high caliber of men in the Joint Chiefs of Staff, who have done an exceptionally good job, particularly from the standpoint of efficient administration and economy.

THE PRESIDENT'S VIEW OF THE OUTLOOK

FOR 1967

[11.] Q. Mr. President, some time ago I believe you were quoted as saying you could see the light at the end of the tunnel. I may be paraphrasing it.

Does that light look stronger to you now and do you see it coming out of the tunnel in 1967?

THE PRESIDENT. I would not speculate on that.

FURTHER QUESTIONS TO SECRETARY

McNAMARA

1968 DEFENSE BUDGET

[12.] Q. Mr. Secretary, does it appear now that the Defense budget for the next fiscal year will be higher than this year's, counting in what you will request in the supplemental?

SECRETARY MCNAMARA. As the President indicated, the total for fiscal 1968 has not been determined. I do not want to talk in numerical terms.

I will simply tell you that as best we can see it now, the total Defense budget for fiscal 1968 will not take a significantly different part of the total national income than it did in fiscal years 1961, 1962, and 1963.

Q. What were those figures?

SECRETARY MCNAMARA. About 8.9 percent.

Q. Of the gross national product?

SECRETARY MCNAMARA. Yes.

SUPPLIES TO THE VIETCONG

[13.] Q. Do you see any slowing down of supplies to the Vietcong? There have been reports that the Red Chinese are stopping Soviet supplies from moving over the mainland.

SECRETARY MCNAMARA. I have seen the reports. But we have no way of knowing what Soviet supplies are moving through Red China.

AIR LOSSES

[14.] Q. Mr. Secretary, these air losses in the last few days, are they due almost entirely to MIG's, and, if so, do we know who is flying the MIG's?

SECRETARY MCNAMARA. No, the number of losses to MIG's is very small.

My recollection is--check me on this-that one aircraft has been lost to MIG's in the past 2 weeks.

UNDER SECRETARY VANCE, That is correct.

Q. Are these mostly SAM's?

SECRETARY MCNAMARA. No, they are mostly ground antiaircraft caused.

Q. Are they conventional?

SECRETARY MCNAMARA. Yes.

ESTIMATES OF SOVIET STRENGTH AND OBJECTIVES

OF U.S. STRATEGIC NUCLEAR FORCE

[15.] Q. Mr. Secretary, is that a paper in your hand that you would like to read to us?

SECRETARY MCNAMARA. No. I anticipated a question, as a matter of fact, and since it has not come, I wasn't going to volunteer the answer.

Now that you raise the possibility, let me mention one matter that did come up that we have been queried on in the Pentagon. I thought you might possibly ask it here.

Since it was a major point of discussion with the President, I was prepared to respond to any question that came on it. It is an important matter.

I dictated a statement following our discussion this morning, which I think perhaps Mr. Christian ⁴ can have reproduced by the time we leave here, on this matter.

⁴ George Christian, an assistant press secretary.

This is the question of the changes in the Soviet intercontinental ballistic missile. There has been some speculation on those systems.

These, of course, are one of the factors that we consider in developing our own strategic nuclear force. Each year we review the latest intelligence estimates on this subject.

We have done so again this year. I would like to comment on these estimates to you.

In order to put them in perspective, I would like to tell you something about the objectives of our strategic nuclear force, last year's estimates of the Soviet force, the way those estimates have changed, and the effect, if any, that that will have on our force planning.

I am going to refer to a set of notes here that, as I say, I dictated. I think by the time you leave, Mr. Christian can make a set of them available to you.

The objectives for our strategic nuclear forces are two. These are the same objectives we have had in recent past years. They are the objectives we will have as a foundation for the force planning in fiscal 1968.

First, to deter a deliberate nuclear attack upon this country and its allies, and to accomplish this deterrence by maintaining a clear and convincing capability to absorb a first strike against us and survive with sufficient power to literally destroy the attacker, either a single attacker or any combination of aggressors.

That is the first objective. It is by far the most important one and the one we must absolutely meet without any question, regardless of cost.

The second objective, of course, is that in the event deterrence fails in the event of an attack on this Nation, to limit the damage to our people and our resources, and the people and the resources of our allies.

The deterrent portion of our force is called our "assured destruction force," or our assured destruction capability, and the remaining force.

That required to reduce the weight of an enemy attack or to reduce the losses associated with one is called the "damage limiting force."

The national intelligence estimates which are prepared annually and revised more frequently, if necessary, of the Soviet forces are one of several factors we examine in determining our own force structure.

In my statement to the Congress last February--and, as a matter of fact, in the unclassified edition of that statement which ran to something on the order of 200 pages--I emphasized that our estimates of Soviet strength, Soviet nuclear strength, in the years immediately ahead were, of course, much more certain than our long-range estimates.

Specifically, I said this--and I am going to read you a paragraph of the material that was presented to Congress last February and that was made public at that time:

"In order to assess the capabilities of our general nuclear war forces over the next several years we must take into account the size and character of the forces the Soviets are likely to have for the same period.

"While we are reasonably certain of our estimates for the near future, our estimates for the latter part of the decade, the decade of the 1960's, and the early part of the decade of the 1970's, are subject to great uncertainties.

"As I pointed out in the past, such projections are at best only informed estimates, particularly since they deal with the period beyond the production and deployment lead times of the weapon systems involved."

Then I went on to point out that we planned our offensive force of missiles and bombers to hedge against the several different contingencies, including two possibilities in particular:

First, that a Soviet ballistic missile defense might be greater than expected by the intelligence estimates; and, secondly, that the Soviets might embark upon any one of several possible offensive buildups, including variations in their targeting doctrine, variations in the technological sophistication of their weapons systems, and variations in the speed of deployment of those systems.

I told Congress, and again I am quoting from the material we presented last February to the Congress which was made public at that time, that: "We have given special attention to an analysis of Soviet threats over and above those projected in the latest national intelligence estimates.

"We have done so because an assured destruction capability, a capability to survive the first strike and survive with sufficient power to destroy the attacker, is the vital first objective which must be met in full, regardless of the cost, under all foreseeable circumstances and regardless of any difficulties involved."

I added that after giving this special attention to an analysis of Soviet threats beyond those projected in the intelligence estimates, we had decided to accelerate the developments of the Poseidon missile. Now, that is a development of last year and does not relate to any action we may take in fiscal 1968.

Further, we have decided to move ahead on new penetration aids to insure greater capability for penetrating any defenses that might be put in place.

Thirdly, we have decided to complete the development of and to produce and deploy Minuteman III, which, although it bears the same name as Minuteman II and I, has a much greater operational capability.

We took those three steps not based upon the national intelligence estimates of what the Soviets would have in the future, but based upon the recognition that possibly the Soviets would develop a force in excess of those national intelligence estimates.

We have said repeatedly in the past that the United States has an intercontinental ballistic missile force three to four times that of the Soviet Union. That is still true today.

Our short-range intelligence estimates of the Soviet intercontinental ballistic missile force have been remarkably accurate. Evidence indicates that the Soviet intercontinental ballistic missile strength today is almost exactly--I mean within a few missiles, five to ten missiles, of what our intelligence people predicted it would be a year ago.

We also believe that last year's intelligence estimates--1965--of the intercontinental ballistic missile force which the Soviet Union will have a year hence will be accurate.

Our latest information confirms these estimates of last year for mid-1967.

Additionally, we now have evidence indicating that we were very wise to plan our intercontinental ballistic missile program on the assumption that the national intelligence estimates for the future beyond mid-1967 might be low, and despite the lack of any solid proof a year ago that the Soviets might decide to step up the pace of their intercontinental ballistic missile deployment. We think they are doing that now. We think they have been doing it for the past year. Evidence, therefore, now suggests that in mid-1968 there will be more Soviet ICBM's than were predicted a year ago in the national intelligence estimates.

I want to emphasize that we had anticipated that development in our planning, and this new intelligence estimate, therefore, has no impact, no basic impact, on our offensive strategic force requirements.

In summary, therefore, I think these three major points should be clearly understood by the American public:

First, even if the new intelligence estimates for mid-1968 prove accurate, the United States, without taking any actions beyond those already planned and already financed in the fiscal 1967 program, will continue to have a substantial quantitative and qualitative lead over the Soviet Union in intercontinental ballistic missiles at that time.

Secondly, that the United States has as many intercontinental ballistic missiles today as the latest intelligence estimate prepared within the last 3 or 4 weeks gives the Soviet Union several years hence.

Thirdly, that our strategic forces have today, and they will continue to have in the future, the capability of absorbing a deliberate first strike against this Nation and surviving with the sufficient strength to retaliate in such a way as to inflict unacceptable damage upon the aggressor or any combination of aggressors.

This is the foundation of the deterrent power on which our national security depends.

I have gone to some length to discuss this matter because the power of our strategic missile force and the associated bomber force, the power of that force to survive a strike and to survive with sufficient capability to destroy the attacker, is the deterrent of an attack on this Nation, is the foundation of our security, and has the first claim on our resources, regardless of the amount required.

That is the policy we have followed in 1967; that is the policy we are following in developing the 1968 program.

I apologize, Mr. President, for taking this much time.

NIKE X

[16.] Q. There is apparently going to be considerable pressure in the new Congress to go ahead with Nike X because of the advance in the Soviet antimissile system.

Has your position changed any about the Nike X?

SECRETARY MCNAMRA. As I said earlier, I don't want to comment on any specific weapons systems for 1968.

THE PRESIDENT'S HEALTH

[17.] Q. Mr. President, how are you feeling, sir?

THE PRESIDENT. Fine.

THE DEFENSE BUDGET

[18.] Q. Will the supplemental be just to fund the day-to-day cost of the war? Is there something new?

SECRETARY MCNAMARA. The supplement to the fiscal 1967 budget will be related solely to the funding and financing of operations in Vietnam.

Q. Mr. Secretary, what was the original budget figure?

SECRETARY MCNAMARA. $58.5 billion, if I recall the figure correctly, for fiscal 1967.

MORTGAGE ASSISTANCE FUNDS

[19.] Q. Mr. President, the $500 million that the Federal Home Loan Bank Board said it could make available, is this coming from the same source as the $250 million?

THE PRESIDENT. No. The $250 million will be used in the same field.

They are from different sources. One is from an appropriation of Congress. The other is from the Federal Home Loan Bank Board.

It makes a total of $750 million available in this field thus far--these two announcements,

Q. Are there any plans to release the other $750 million that Congress appropriated?

THE PRESIDENT. Why don't you write a story on this $500 million, and not overdo it today, and we will see.

The answer is no, we have no plans at this time.

QUESTIONS ON THE SECRETARY'S STATEMENT

[20.] Q. Mr. Secretary, the statement that you read really touched on most of the points that are made against advancing the antimissile missile program. Is that not so?

SECRETARY MCNAMARA. No. The statement I read had to do with the Soviet offensive force and the degree to which that offensive force might knock out our bombers or our missiles before they had an opportunity to retaliate in response to an attack on us, and, therefore, the need for possible additions to that force. What I said was that last year, as always, we made a prediction of Soviet forces in the future.

The national intelligence estimate is the basis for that. We use that as the foundation of our force planning.

However, last year, recognizing that the Soviets might produce and deploy missiles in excess of the number included in the national intelligence estimate, we took account of that and actually expanded the fiscal 1967 budget to finance these three additional actions, the development of the Poseidon, the additional penetration aids, and the deployment of Minuteman III, in order to take account of this bare possibility that they would go above the national intelligence estimate.

They appear to have done so. Frankly, the amount by which they have accelerated has not been as great as we took account of in this greater than expected case.

It does not relate to antiballistic missiles, however.

Q. There have been a lot of stories on "we won't if you don't." Do you have any reason why the Soviet Union is now beginning

SECRETARY MCNAMARA. No, I can't explain their actions.

AUDITING OF VIETNAM CONSTRUCTION

CONTRACTS

[21.] Q. Sir, there have been comments in Congress, notably by the Morse subcommittee, that there has been insufficient financial surveillance over some of the Defense construction contracts in Vietnam. Could you comment?

SECRETARY MCNAMARA. We have an auditing system at work. It has been at work since the construction started. The audits on the whole have been comprehensive. I think they have shown, as you might expect, that in the rush of putting in place the tremendous infrastructure that we have--wharves, ports, depots, air bases-there has been some waste, but, on the whole, I am pleased with the performance of our civilian contractors and our military construction battalions.

I think that the program is .properly controlled.

VIETNAM COSTS

[22.] Q. Mr. Secretary, how much of the $58.5 billion do you attribute directly to Vietnam?

SECRETARY MCNAMARA. I have nothing more to add on the cost of the military operation in Vietnam than what the President has said previously.

Reporter: Thank you, Mr. President.