BALANCE OF PAYMENTS
THE PRESIDENT. Good morning, ladies and gentlemen.
I hope all of you had a good Christmas. I wish for each of you a Happy New Year.
[1.] I have asked you to come here today for a brief announcement, the details of which will be carried in a more lengthy statement which will be available to you later.1
1 See Item 2.
The statement that I will make here concerns a firm and decisive step that the United States Government has taken today to improve our balance of payments situation.
I am taking a series of actions that are designed to reduce our balance of payments deficit by $3 billion as a target in the year ahead, 1968.
There are a good many details connected with each of these five specific actions. I counsel you to follow those details in the more formal statement.
But to roughly outline for you now those five decisive steps, I will say that the first is an Executive order 2 that I signed at 10:45 this morning that will give to the Secretary of Commerce, delegate to him, authority the President presently has to regulate foreign investment.
2Executive Order 11387 "Governing Certain Capital Transfers Abroad" (4 Weekly Comp. Pres. Docs., p. 26; 33 F.R. 47; 3 CFR, 1968 Comp., P. 90).
We anticipate that foreign investment abroad, which was in the neighborhood of some $5 billion this past year, as a result of the restraints effected by this mandatory program, contrasted to the voluntary program which we have just had--our target is to improve our balance of payments situation by an additional $1 billion, as a result of tightening up on foreign investment abroad. The specific areas of the world which will be affected can come in the detailed statement.
Second, the Federal Reserve Board will exercise authority in connection with loans to be made abroad, some $9 billion last year.
We have, as a target to improve our balance of payments situation, as a result of the authority I delegate to the Federal Reserve Board, and the authority it already has--the regulation will follow that authority-to save an additional half billion dollars by tightening up on the loans made abroad. That will be $1 1/2 billion.
I am directing the Secretary of State, the Secretary of Defense, and other appropriate members of my Cabinet to make a thorough, detailed study to effectuate every possible restraint we can in aid and in defense expenditures abroad, with a target goal of $500 million of improvement from our present defense, aid, and other expenditures abroad.
That would make $2 billion.
In addition, we now have a deficit of about $2 billion each year in our tourist account. We have appointed a committee headed by Mr. Robert McKinney, of Santa Fe, New Mexico, and I am asking him for a report on tourism in the next 90 days.3
3For the President's statement on February 19, 1968, upon receiving the report of the Industry-Government Special Task Force on Travel, see Item 83.
In the meantime, the President is appealing to all American citizens to help their country in this situation by deferring any travel outside the Western Hemisphere that is possible to defer.
As I say, we have a net deficit of $2 billion in our travel-tourism account. We hope that our target of saving $500 million in tourism will be a realistic one. That will depend on the cooperation we get from the citizens themselves, and from the Congress, which will be asked to enact certain legislation in that field.
That makes $2.5 billion.
We have sent representatives of the President to various countries today to exchange views with our friends in the world about our trade situation, our imports into this country and our exports out of this country. We expect to formulate a program. Our target is to improve our trade balance by a minimum of $500 million to $750 million. The details of that program will be announced following these consultations.
If it is necessary, as a result of the nature and scope of the program we feel desirable, we will ask the Congress to act in that field.
In the last two fields--tourism and trade-we may and very likely will have a message later to the Congress in that connection.4
4 See Item 88.
So, in summary, through this series of five direct actions, we are determined to improve our balance of payments situation in the neighborhood of $3 billion, and to bring it as closely into balance as is possible in the year 1968.
I will be glad to take some limited questions from you on this or on other matters.
I have staff here to give you a detailed backgrounding on all the problems relating to these five specific steps--Mr. Rostow, Mr. Califano, and Mr. Goldstein 5 from my Washington office have come here this morning.
5Walt W. Rostow, Joseph A. Califano, Jr., and E. Ernest Goldstein, Special Assistants to the President.
While I don't want to cut off questioning, I am very anxious for this very important story to go out, and I am very anxious for you to have all the information you need in connection with it. I'll be glad to take a limited number of questions.
If Mr. Rostow, Mr. Goldstein, and Mr. Califano will come up here now, I will take questions on this or any other subject for a period of a very few minutes, and then I'll yield to them.
QUESTIONS PEACE IN VIETNAM
[2.] Q. Do you see any prospects for peace or the end of the Vietnam war this year, the new year?
THE PRESIDENT. We are very hopeful that we can make advances toward peace. We are pursuing every possible objective. We feel that the enemy knows that he can no longer win a military victory in South Vietnam. But when he will reach the point where he is willing to give us evidence that would justify my predicting peace this year--I am unable to do so--that is largely up to him.
FOREIGN TRAVEL
[3.] Q. Mr. President, can you tell us what type of legislation you are considering in the tourism field? For instance, cutting off customs exemptions, or what type of things?
THE PRESIDENT. I think we had better wait until we have that program completely formulated. I think that there are several items that are still under consideration. We believe that the most effective action that could be taken would be for the citizens themselves to realize that their traveling abroad and spending their dollars abroad is damaging their country. If they just have a trip in them that must be made, if they could make it in this hemisphere, or see their own country, it would be very helpful.
We are going to try to make that appeal to them. But we are going to support it to whatever extent is necessary to try to reach our target goal of $500 million improvement in the tourism situation.
GOLD COVER ON DOMESTIC CURRENCY
[4.] Q. Mr. President, do you plan to ask Congress to remove the gold cover on domestic currency?
THE PRESIDENT. We have made no recommendation on that in this message at all.
THE POSSIBILITY OF WAGE AND PRICE CONTROLS
[5.] Q. Mr. President, Secretary Wirtz said the other day that if you don't have a tax increase, then you will have to face up to the question of wage and price controls, How serious do you regard that prospect?
THE PRESIDENT. I think we are going to have a tax increase. 6 In this statement this morning, I ask both the employers and employees to exercise the utmost restraint in connection with their negotiations. Now, I do not hold to the view that wage or price controls are imminent at all. And I might say that statement was made without my knowledge. I don't know how accurately he is quoted. But the Government has not given 6 The Revenue and Expenditure Control Act of 1968 was approved by the President on June 28, 1968 (see Item 343). any consideration at this time to action of that type.
6The revenue and Expenditure Control Act of 1968 was approved by the President on June 28, 1968 (see item 343).
REPORTS OF POSSIBLE PAPAL PEACE MISSION
[6.] Q. Mr. President, when you were in Rome, did you and the Pope discuss his sending a peace mission to Hanoi?
THE PRESIDENT. The answer is no, although I don't want to get into the process of eliminating what we discussed and what we didn't discuss.
But we did not discuss specifically his sending any mission. We discussed a number of subjects where--if he decided, if His Holiness decided, he wanted to act in that area--that could call for such action. But we did not specifically discuss it.
Q. May I follow that up a bit? The Foreign Minister of North Vietnam, according to some reports---
THE PRESIDENT. We are familiar with those reports. As of now, they are just reports. We are evaluating them. They come from a newspaperman who has written in this field heretofore. We have found it advisable to carefully check the statements in the report. We are doing that now.
THE PRESIDENT'S CAMPAIGN PLANS
[7.] Q. Mr. President, it is 1968 and a presidential election year. Perhaps you would like to make an announcement of some kind on that subject. But if not, maybe you could go over with us your own thinking on the factors that will go into the decision for you as to whether you are going to run or not.
THE PRESIDENT. Thank you very much, Mr. Pierpoint,7 for your invitation. I have no doubt but what I will do that, but if you can just restrain yourself for a little while, we will do it at a later date. This is balance of payments morning. I will have something to say in that field during the year 1968.
7 Robert C. Pierpoint of CBS News.
BALANCE OF PAYMENTS; THE NEED FOR MORE STRINGENT MEASURES
[8.] Q. Mr. President, does your statement contain, and if not we would like to have it in your own words, just why
THE PRESIDENT. My statement is my own words, Mr. Frankel. 8
8Max Frankel of the New York Times.
Q. No, that is not what I meant. If it does not say, could you tell us exactly what makes these more stringent measures necessary and why you think the voluntary program of restraints failed?
THE PRESIDENT. Well, generally speaking, our balance of payments has had a deficit for the last 17 out of the last 18 years. In 17 of the last 18 years we have had a deficit. The first three quarters of this year, that deficit was within bounds. In the last quarter, it goes much further than we would like to see it go. It makes it very evident to me that those who are determined to preserve the soundness of the dollar and our entire fiscal situation--that direct, additional actions are necessary in this field where we have, as I say, had a deficit in 17 of the last 18 years.
For that reason, we have promulgated this program and we are placing it into effect. We believe that these actions will result in a reasonable balance in the coming year.
PRINCE SIHANOUK'S REMARKS ON U.S. MILITARY ACTION
[9.] Q. Mr. President, the Cambodian Prince Sihanouk is quoted as saying he would like to meet with an envoy from the United States to discuss possible U.S. military action against the North Vietnamese seeking sanctuary in Cambodia. Can you tell us anything official regarding this newspaper report?
THE PRESIDENT. I can say that we have read with a great deal of interest--and I might say pleasure--the quoted statements by Prince Sihanouk. We are studying those statements very carefully, and confirming them.
When we have anything to announce on it, I will be in touch with you. I would say that we are quite encouraged by the reactions of Prince Sihanouk as reflected by the newspaper story. Any further announcement will be made after we have gone into it more thoroughly 9 and more definite statements can be made.
9 On January 4 the White House announced the appointment of Chester Bowles, U.S. Ambassador to India, as the President's special emissary to meet in Phnom Penh with Prince Sihanouk (4 Weekly Comp. Pres. Docs., p. 35).
Mr. Davis? And then I believe Dan Rather 10 asked a question.
Dan, do you want yours, and then I will go to Mr. Davis?
10 Saville Davis of the Christian Science Monitor and Dan Rather of CBS News.
MEETING WITH POPE PAUL
[10.] Q. Thank you very much.
Mr. President, Newsweek magazine has described, as I read it, your meeting with the Pope as somewhat less than cordial. Could you clear us up on that without getting into specifics of what you and the Pope discussed?
THE PRESIDENT. I tried to clear Newsweek up on it, but I couldn't do it. It is just made out of whole cloth. It just didn't happen. The people who participated in the conference from our side were startled and shocked at their information. We told them it was just completely untrue. So that is our version. You can take Newsweek's or ours, whichever you want.
Mr. Davis?
EFFORTS TO CONTROL INFLATION
[11.] Q. Mr. President, since one of the leading factors in the foreign confidence in the dollar is the degree of the control of inflation in this country, do you anticipate that the tax increase and other measures of the sort will keep the rising of prices in this country sufficiently stable in the coming year?
THE PRESIDENT. We are very concerned with that, Mr. Davis. Prices have risen more than we would like to see them rise. We still have the best record of any industrial country in the world. But we are not happy with the record we have ourselves.
This statement, to some degree, deals with it. We have asked the Government officials responsible for supervision in this field to exert renewed efforts in an attempt to ask employers and employees to keep their negotiating agreements within the ball park so far as increased productivity is concerned, and not let the increases in one field go above increased productivity in the other. We are hopeful that that action will be successful.
BALANCE OF PAYMENTS DEFICIT FOR 1967
[12.] Q. Mr. President, you spoke about the balance of payments deficit in the last quarter. What is your estimate of that for the year as a whole?
THE PRESIDENT. I have that statement in the detailed statement, but I think it will be somewhere in the neighborhood of $3 1/2 billion to $4 billion.
Q. That is for the year as a whole?
THE PRESIDENT. That is correct.
Now let's not prolong this thing if you want to get this story. There are a lot of details, just as I have repeated here, that these men are waiting to tell you. I want to answer any question you have that is really important to you; otherwise, let's go on with the purpose of the conference.
WAGE AND PRICE GUIDELINES
[13.] Q. Mr. President, you are urging employers and employees to keep within the ball park. Is there any specific figure, such as a guideline estimate, specifically?
THE PRESIDENT. I would refer you to my statement in the lengthy statement which you will see as soon as you get a chance to get to it. We want very much to try to emphasize the necessity of following guidelines. The guideline is the increased productivity. We feel that you can justify only the increased productivity.
IMPACT ON 1969 BUDGET DEFICIT
[ 14.] Q. Sir, I was just wondering if you have any idea now as to what the likely deficit in your fiscal 1969 budget might be since this could have an impact?
THE PRESIDENT. No. A lot of things could have impacts. But I think we have covered in this detailed statement about as much as we can. If you have any further questions after you get that and file your story, submit them to Mr. Christian 11 and we will try to work it out.
Thank you very much.
11 George E. Christian, Special Assistant to the President.
Merriman Smith, United Press International: Thank you, Mr. President.
FURTHER REMARKS BY THE PRESIDENT FOLLOWING HIS NEWS CONFERENCE
[During a briefing subsequent to the President's news conference, the following exchanges between the President and reporters took place.]
LEGISLATION ON TRAVEL ABROAD
[15.] Q. You are asking people not to THE PRESIDENT. We will have legislation toward that end?
THE PRESIDENT. We will have legislation in that direction. We would also like to have voluntary action upon the part of all of our citizens. We believe we can have both. We think that we can announce, number one, that it is important to the country that every citizen reassess his travel plans and not travel outside of this hemisphere except under the most important, urgent, and necessary conditions.
Second, we think that we can develop certain legislation that will insure and guarantee our reaching our goal of a half billion dollars to three-quarter billion dollars of the reduction from the $2 billion deficit we already have.
It must be obvious that our people are traveling a good deal when you consider all the travel that comes here and deduct it from what we travel abroad, and we still have a $2 billion deficit.
Now we have a target of reducing that by a half to three-quarters of a billion dollars. We don't mean to threaten anybody with anything. We do expect that it will be necessary to have certain adjustments made in our present travel policy, and we will ask the Congress to do it. But we want to do that in concert with the Congress, after discussing it with them, and after reaching agreement with them.
Q. Mr. President, I am just curious as to whether the nature of this legislation will affect travel itself or the amount spent on travel?
THE PRESIDENT. I wonder if you can wait until we talk to the Congress about that. I think it will affect both. But let's don't tie it down and get hard on it, fixed, right here on January 1st, when Congress doesn't come back until January 15th. We would like to explore with them, give them our views of the most effective way of achieving this target, get their views, and try to get something that would be acceptable to both the executive and the legislative branches.
But we don't want to imply a threat to anyone on anything. We are too happy this New Year's, to get into that field.
Q. Thank you, Mr. President.
THE PRESIDENT. You can be sure, though, that we will ask Congress for legislation primarily to do with tourism and trade.
The other three, direct investment, bank loans, and reducing our own defense expenditures and aid expenditures abroad, the President can do, and he has done it. That is that.
One thing that is positive I would like to leave with all of you. This President, this administration, and we think the Congress, including Democrats and Republicans, are determined to achieve our goal of trying to bring our balance of payments in better equilibrium. We have outlined it here to the extent of some $3 billion.
It is pretty difficult to estimate a quarter of a billion here where we may fall short and a quarter of a billion we might exceed. [p.7] But we have a target and we are going to put all the muscle that this leadership, this Government has in the executive branch and the legislative branch behind the dollar, keeping our financial house in order.
MINIMIZING FOREIGN EXCHANGE COSTS
[At this point the President responded to a question relating to discussions to be held with NATO allies on minimizing foreign exchange costs.]
[16.] THE PRESIDENT. They have made arrangements to offset our expenditures to the extent that we could work them out with the British and the Germans as a result of the McCloy mission.12 That is not included here.
12John J. McCloy, Chairman, General Advisory Committee, United States Arms Control and Disarmament Agency, conducted negotiations early in 1967 with NATO countries relating to the costs of U.S. forces in Europe.
These steps have been under consideration for some time. Before they are effectuated, we want to exchange views with all the leaders of the world. I have been in communication with them myself.
In addition, I will have representatives communicate with them in various parts of the world.
I have this balance of payments program announcement behind me now. We will be working in the days ahead on the budget. Mr. Schultze will be here tomorrow. He will be accompanied by Mr. Cater, Mr. Gardner,13 and some other people. I will ask George to give you the announcement.
13Charles L. Schultze, Director, Bureau of the Budget, S. Douglass Cater, Jr., Special Assistant to the President, and John W. Gardner, Secretary of Health, Education, and Welfare.
In addition, we will be working all the time we are here on appointments, on budget reductions, and on the budget for next year.
As all of you know, because of the late adjournment date, we are behind on the reductions on which they resoluted in the last few days, as well as getting to work on the new budget.
NOMINATION OF GARDNER ACKLEY AS AMBASSADOR TO ITALY
[17.] I am naming Mr. Gardner Ackley, the present Chairman of the President's Council of Economic Advisers, as the new Ambassador to Italy. We have received word from the Italian Government this morning clearing the agreement. When the Congress resumes its deliberations, his name will go forward to the Senate.
I consider Mr. Ackley one of my most trusted and closest friends and advisers. While he has been on the Economic Council now for several years, he agreed to stay on an extra year, which ends in January. I have asked him to take this post to Italy. Because of his interest in that field and his knowledge of the political and economic conditions in Italy, and his interest in that area, he has agreed to accept. The Senate willing, he will be going to that post as soon as he is confirmed.
Thank you very much.
Reporter: Thank you, Mr. President.
Note: President Johnson's one hundred and sixteenth news conference was held at the LBJ Ranch, Johnson City, Texas, at 11:07 a.m. on Monday, January 1, 1968.
Lyndon B. Johnson, The President's News Conference at the LBJ Ranch Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/237585
