The President's News Conference

THE PRESIDENT. Good afternoon. I have a brief statement to make before I take questions.

ENERGY AND TAX REFORM LEGISLATION

Action on a national energy policy is a test of the ability of our democratic system to respond to a recognized threat before it seriously damages our Nation and our economy, and we will all be measured by the courage which we are able to muster to face up to this energy problem.

The debate that's now going on concerning the National Energy Plan is not a contest between the executive branch and the Congress nor between the House of Representatives and the Senate. It's a test of our national will.

We must protect the American people and also avoid unfair windfall profits. We must also meet our stated objectives on conservation, on production, and on the shift of consumption to other sources of energy other than gas and oil. And we must not let the formation of a national energy policy break our budget.

Nothing less is at stake than the ability of our own Nation to act independently as a country. We cannot allow uncertain foreign oil supplies to obtain a stranglehold over the United States. We cannot continue to import ,$45 billion worth of oil annually, almost half the total amount that we consume and about how much we waste that we don't need to waste.

And we cannot let this excessive dependence on foreign oil continue to increase our trade deficit, to drain off purchasing power of our economy, and also to affect our economic stability.

Both the Congress and I know that enactment of comprehensive energy legislation must be our top priority.

Now, as you know, I had planned to send by now to the Congress a major tax reform package. Although most of the work has already been done, I've decided to submit that program after Congress completes its work on both social security and also energy legislation.

The Congress right now needs an opportunity to concentrate its attention more fully on the entire energy package, including the tax proposals.

I will have more time working with my staff and with the Congress and with labor and business leaders to evolve the difficult answers to complicated tax proposals. We have an early need to simplify the tax system, to provide more equity to modify the tax rates and to improve capital formation.

The tax reform proposals will be a major element in a comprehensive economic program designed to promote a strong economy and to deal further with reducing inflation, which has recently been on the way down, to reduce unemployment, which is also going down quite slowly, and to do this both immediately and in the years ahead.

The principal component parts of this program have to be carefully integrated also in our budgetary proposals for fiscal year 1979. I prefer to make these final decisions on the tax reform program after the Congress has completed action on the energy program, particularly its tax components, and social security, which has heavy tax connotations.

Both of these proposals can be assessed, obviously, after the Congress adjourns. By the end of the year we will have more information also on the state of the economy, to know how much of our tax reform proposal should be devoted to stimulating the economy.

We have a full agenda this year, and I have discussed this delay in the tax reform proposal until after the Congress adjourns with the leaders of Congress. And I might say they unanimously agree with this delay.

Mr. Cormier [Frank Cormier, Associated Press].

QUESTIONS

TAX REFORM

Q. On taxes, Mr. President, depending on economic conditions, might you in the end give higher priority to a stimulative tax cut and seek action on that first before the broad overall reform program?

THE PRESIDENT. No. I think the tax reform package has got to fulfill three basic elements. One is improved equity, which means more progressivity and an end to many of the unnecessary tax incentives and loopholes; secondly, to create investment capital; and third, greatly to simplify the entire tax structure. The degree to which we will have tax cuts to stimulate the economy can only be assessed after we see how much of a drag on the economy the increased social security taxes might be and the rate of growth in the economy.

We've just gotten returns this morning, for instance, from overseas balance of trade. We had the highest rate of exports last month in the Nation's history. And imports were reduced somewhat. Obviously, the trade imbalance comes from energy imports.

We also have had a substantial decrease in the last couple of months in the inflation rate, but a very slow decrease in unemployment.

So, I would say that the rate of tax reduction and stimulation from the tax reform measures could only be assessed at the end of this year.

ARTHUR BURNS

Q. Mr. President, what is your reaction to Arthur Burns' criticism of your economic policy, and do you plan to reappoint him as the Fed Chairman?

THE PRESIDENT. I haven't decided about reappointment, but as you well know, Mr. Burns is a very able and outspoken and independent man. And the Federal Reserve System is legally an independent agency.

I, as President, the Congress, and the Federal Reserve System all have independent roles to play in the evolution of tax law, budget proposals, and of course, the supply of money primarily from the Federal Reserve Board.

I think Mr. Burns' primary concern is that we have created uncertainty in the business community by our major proposals, and this is a concern which I share. But when I'm faced with the problem of whether to ignore a depleting reserve, for instance, on social security and letting the integrity of the social security system be threatened on the one hand, or proposing bold measures to correct the social security problems--and I, of course, propose those corrections to the Congress.

I think we had delayed too long the addressing of the energy crisis, and these weeks, when there is a time of uncertainty, creates a dampening effect on the economy and on the attitude of businessmen toward future investment. But the alternative was to ignore the energy problem additionally for months and perhaps years.

The same thing applies to welfare reform; the same thing applies to tax reform. I believe that these kinds of criticisms that might have come from Mr. Burns, that the volume of proposals might have created uncertainty, are just honest differences of opinion. And I think I've made the right decision. I agree with Mr. Burns that the profitability of our free enterprise system--the business profits ought to be up, and one of the things that I hope to do with the tax reform proposals and others is to improve capital retention so that new investments can be made to provide new jobs.

I might say in closing that I welcome his public criticisms, and I think that I can understand his point of view. I have a luncheon meeting monthly with Mr. Burns, which is an innovation since I've been in office, and we exchange our views very frankly with each other. Sometimes there's a sharper disagreement at our private luncheons even than there is in public. But we're working toward the same goal, and I respect him very much and the right of him to make his independent judgments of what I do.

SOUTH AFRICA

Q. Mr. President, on the subject of sanctions against South Africa, could you share your thinking on the course the United States should follow in this situation?

THE PRESIDENT. Yes. Our hope has been and our goal has been to work harmoniously with South Africa in dealing with the threats to peace in Namibia and in Zimbabwe in particular and to encourage South Africa to move toward the elimination of some of those racial problems which they've had historically, to do away with apartheid, to give an equal opportunity for employment, job promotion, education, and the participation in the political and economic affairs of South Africa for all its citizens.

The crisis was engendered last week when South Africa took away the rights of the free press and eliminated many of the organizations themselves who had been working toward improved equality for the citizens of South Africa. I think it's important that we express in no uncertain terms our deep and legitimate concern about those actions of South Africa.

We are working in harmony with our Western Alliance friends. We are working in harmony with leaders in Africa and throughout the rest of the world. My decision has been to support strong sanctions against the sale of weapons to South Africa. This will be carried out immediately by us.

My prediction is that the United Nations will adopt such a resolution and it will 'be overwhelmingly supported by the nations of the world. This will be joined with a direction from me that this be carried out. It would include prohibition against the sale of spare parts to weapons. And we will also, of course, assess other actions that might be taken in the future.

We don't know yet what the negotiations might bring between us and the nations that I described to you. But this is an appropriate action, in my opinion, and we still hope that South Africa will not sever themselves from the rest of the world community, that they will cooperate with us in bringing peace, that they will move in a rapid but evolutionary way toward restoring--or granting for the first time those human rights that we hold so dear.

ENERGY LEGISLATION

Q. Mr. President, there's talk on Capitol Hill that the administration would accept a bill that sets the pricing of natural gas at $1.85 per mcf. And you've said that you would only sign a bill that's fair to consumers. If the Congress were to pass a bill setting the price at $1.85, would you sign it? And I have a followup.

THE PRESIDENT. Judy [Judy Woodruff, NBC News], I don't want to get into the role of saying I will or will not sign a bill that has this or that in it. As you know, the negotiations on the House and Senate side both are very sensitive at this point. .And we had prospects several months ago, in June and July, of having a complete failure in the House. They debated and worked and very courageously came out with an acceptable package fairly close to what we proposed.

I still stand behind the proposals that we made to Congress in April. I believe that's the best approach. The price for natural gas that we put forward was $1.75. It involves a slow but predictable increase in the price of natural gas that would be compatible with world prices, and it had an accurate, I think an adequate description of the definition of new gas.

We also proposed to include both intrastate and interstate gas in this new program. That's still my position, and that's what I'm going to fight for and work hard for in the conference committee, and then when the conference committee comes back to the House and Senate.

I've not had any secret or private agreements with anyone to modify our own original proposal. We stuck with that proposal throughout the House deliberations, and because of that tenacity that we demonstrated, I think it kept our whole program together. And that's my present stance, and that's my future stance.

I have told Members of the House and Senate who come to see me, I've told labor leaders, business groups, and also consumer groups that before I modify at all our own official position on these very controversial energy policies, that I would consult with them ahead of time. It obviously might be necessary to do some compromising; otherwise, the conference committee report could not function. But my position is still completely compatible with what we proposed to the Congress back in April.

I outlined in my opening statement the three basic principles. One is to protect the interest of American consumers and not to permit windfall profits for the oil companies; secondly, to meet the conservation and conversion goals, and also production goals; and, thirdly, not to seriously unbalance the Federal Government. Within that framework, which is quite constrictive, we will work with the House and Senate leaders.

Q. What about a bill that included any amount of plowback to the oil industry? Could you accept that sort of bill?

THE PRESIDENT. I am not in favor of any plowback to the oil industry. There were proposals made in the Ways and Means Committee starting out at about 80 percent plowback, going all the way down to 20 percent. We opposed all those, and eventually the House rejected this proposal. That's still my position.

STRATEGIC ARMS LIMITATION

Q. Mr. President, the other night in Los Angeles you said that for the first time the Soviet Union has agreed to cut back on or decrease the number of nuclear weapons. And you suggested that a new strategic .arms agreement may be in sight, perhaps even in the next few weeks.

Can you tell us anything more about that? Can you tell us what kind of decreases may be in the works and any other specifics about the kind of thing that is shaping up?

THE PRESIDENT. Well, the negotiations between us and the Soviet Union have been characterized in recent weeks by, I would say, constructive cooperation from both sides. My own comments have been mirrored by the comments made by Foreign Secretary Gromyko and also by President Brezhnev.

I would guess that we have a fairly good prospect within the next few weeks of a description of the general terms for a settlement. The details, the exact procedures by which we might verify and so forth, would take a long and tedious negotiation.

As you know, the SALT I agreement, the so-called interim agreement, provides for a heavy disparity between us and the Soviets, with the Soviets having a right to have about one-third more launchers than we have and about one-third more submarines than we have, about one-third more submarine missiles than we have.

The Vladivostok agreement, which, as you know, has never been ratified, set a 2,400 limit on launchers, 1,320 limit on MIRV'd missiles. We hope to reduce those levels, and there's general agreement now that those levels will be reduced.

Also for the first time we have discussed in very strong terms and are close to an agreement on how many land-based ICBM MIRV'd missiles will be permitted. This is a new development. But we've not yet reached final agreement between ourselves and the Soviet Union.

But I think, as I said in both Iowa and Los Angeles, that within a few weeks we'll have a demonstration of real progress. The detailed signing of a treaty will take longer than that.

RICHARD HELMS

Q. Mr. President, Attorney General Griffin Bell said recently he had reached some decision in his own mind as to whether or not it is proper and practical to seek an indictment against former CIA Director Richard Helms. He also discussed some of the ways that he thought might be used to keep sensitive material of national security value from being revealed at any trial that might ensue.

Have you reached any conclusion in your own mind on this matter? And is the issue of revealing national security material sufficiently resolved now so that the judgment can be made on the merits of a possible indictment itself?

THE PRESIDENT. I don't know. The Attorney General has not informed me about what his decision is. In fact, I had not known he had made a decision until I saw it in the press. I would presume, though, that before that discussion is put into final form, that he would discuss it with me. He has not yet done so.

ASSESSMENT OF ADMINISTRATION POLICIES

Q. Mr. President, Mr. Rhodes, the Republican leader of the House, says that your administration is inept. And as you know, a lot of people have been suggesting that you have not been able to cope with all of these problems and with all of these initiatives.

Assuming you don't think there's a word of truth in any of that, would you tell us why you think the perception is abroad to that extent, and whether you believe that there's anything to the idea that people still think, as a Georgian, that you don't belong here?

THE PRESIDENT. I remember in this room last May someone asked me if my administration was all image and no substance, or all style and no substance. Lately the criticisms have been that there's too much substance and not enough style.

My own attitude toward leadership and politics, when I was Governor of Georgia and since I've been President and during the campaign itself, was to try to analyze the most difficult questions that face our Nation and not to be timid or reticent about seeking solutions for them, recognizing that some of them are historic in nature, some of them have very difficult aspects that almost defy solution, but that they're all important to our country.

The Mideast question is maybe a thousand years old or more, but we're working hard to try to solve it under the most difficult of circumstances.

To put a limit on the spread of atomic weapons is something that has defied solution for the last 35 years. And to work harmoniously with the Soviet Union in reducing strategic weapons with which we could destroy each other is one that has been addressed by all of my predecessors, not yet successfully by any of us.

The energy policy of our country has escaped political decision for years because, perhaps, it is so difficult. The welfare problem is predictably controversial. The social security system was going into bankruptcy, had not something been done about it. Our Nation is now taking a leadership role in Africa.

And I believe that any one of these questions could be assumed difficult and controversial and not easy of solution, but I could not bring myself as President, responsible for our people's security and for the welfare of our citizens, for the redressing of some longstanding problems, to delay them simply to avoid controversy.

It might take us 3 or 4 more years to reach a final conclusion on welfare reform or tax reform, but I think it's better to get it on the table, have an open debate, let the people be involved in it, let the Congress start learning about it, let me learn more about it, let the private sector of our country become involved in the debate, the universities, the economists, the business leaders, the labor leaders. And I don't see anything wrong with it or anything that I would have done differently.

The fact that the easy solutions have not come forward immediately don't concern me, because they are not questions that can be resolved easily.

But I think that in the long run, certainly in retrospect after this year goes by, there will be a general realization that none of these questions should have been delayed.

I was thinking the other day about what new major innovative proposals might be forthcoming next year and the year after. I can't think of any. I think we've addressed all of the major problems already. There may be some new ones that evolve in an unpredictable way that we'll have to address. But I think most of the major debates now have already been initiated, some will be concluded this year, some have already been concluded by Congress this year, and I think we'll have additional success next year. So, I feel good about it.

Q. Do you think the people will hold that against you?

THE PRESIDENT. The Georgians don't hold it against me. [Laughter] No, ! don't think being from Georgia is something that is of genuine concern to people. That might be a contrived additional reason not to want me to be in office.

SOUTH AFRICA

Q. Sir, in addition to the mandatory arms embargo which you mentioned, what other unilateral steps do you think the United States will be taking outside the boundaries of a resolution, such as the Ex-Import Bank, commercial sales guarantees, things of this kind? And are you ruling out for now any trade embargo of a general nature or investment embargo?

THE PRESIDENT. We are not deciding at this point on any sort of general trade embargo or investment embargo.

The additional steps that might be taken beyond an arms embargo that would be mandatory have not yet been decided.

G. GORDON LIDDY

Q. Mr. President, when he got out of jail recently, Gordon Liddy expressed gratitude for his early release, and he said that he felt himself bound to carry out any orders from the Commander in Chief. Given that situation, and in order to put the record straight at long last, do you think it would be proper for you to instruct him to say what he was doing in the Watergate, what he was looking for, who authorized the burglary, and any other information he might have?

THE PRESIDENT. Well, I've not had any contact with Mr. Liddy at all, either before or after he was released from prison. And my remote assessment of Mr. Liddy is that he will not voluntarily release the information that he has about the Watergate situation.

ASSESSMENT OF ADMINISTRATION POLICIES

Q. Mr. President, if I could follow up on Sam Donaldson's [ABC News] question, Pat Caddell and Jerry Rafshoon were in to see you a couple of weeks ago-they're supposed to have spent about 2 hours with you. There's speculation that they may have asked to see you to express some sort of reservations they had about the way things were going in general around the Carter administration and perhaps even to make some recommendations about changes.

Could you tell us a little bit more about that meeting and whether, as a result of that or anything else, there are any organizational or personal changes in the wind here at the White House?

THE PRESIDENT. Well, the meeting resulted from my own initiative. I invited them to have lunch with me, along with my wife, and we did discuss some of the poll results which, the way I look at them, are fairly good. They varied greatly from one pollster to another. I think the Roper poll shows that I was below 50 percent, the Gallup poll about 60 percent. Of course, I would like to have higher than either one of those. But I think that the controversial nature of some of the things that we've put forward inherently cause concern about me and reduce my standing in the polls.

Although I didn't want the prediction to come true, when I announced that I would put forth an energy package, I predicted that my poll rating would drop 15 percent. There is a general feeling in this country of optimism about the future, as revealed by Pat Caddell's poll and others. The economy has some very good attributes in it that ought to be recognized more vividly. The inflation rate is coming down fairly rapidly. We have an underlying inflation rate, though, of about 6 percent.

The unemployment rate is coming down slowly but, I think, surely. The balance of trade is better than it was. We have a high rate of business investments.

I think we have a lot to be proud of in this country. I don't believe there's any other nation that has a stronger underlying economic base and more to be thankful for than our Nation does. But most of what I hear as President, in delegations that come to see me and large group meetings that I have, is complaining and expressions of despair, quite often in hopes that as the Government makes decisions, that the squeaking wheel will get more grease and that they'll get more benefits from Federal Government policies.

But I think the general sense of the polls that we discussed at that luncheon meeting was that there's an inherent optimism in our country, there's a concern about the multiplicity of programs that we are addressing at this point, and the fact that the American people can't understand all that many proposals at one time.

And one of the things we discussed is what I said earlier, that I would think that after this year, as far as I can see in my own plans, most of those modern problems would be addressed. But it was a friendly meeting and there was nothing to be concerned about.

HUMAN RIGHTS

Q. Mr. President, at a press conference earlier this year, you mentioned the Palestinians have a right to a homeland and to compensation for losses they have suffered. From your perspective, do the Palestinians have any other legitimate rights?

THE PRESIDENT. Well, the Palestinians have rights, as I described in my United Nations speech, as do all human beings. The Palestinians are one major group of refugees that have been created in the Mideast. Obviously, there are Jewish refugees also. But I think all human beings have the same basic yearning for freedom, for human self-respect, for a home in which they can live, for a right to raise a family, to have education, health care, food. So, I would say in that respect they have the same rights as others do.

Q. Mr. President, could I raise another policy issue for a second?

THE PRESIDENT. Let me get Ms. Compton [Ann Compton, ABC News]. I promised her.

SOUTH AFRICA

Q. Mr. President, is there any grounds for criticism of your approach to the South African problem that you are meddling in internal affairs? Do you worry about getting to a point, responding to what's going on internally in South Africa, the United States is trying to dictate its internal policies?

THE PRESIDENT. No. I don't believe-there are certainly grounds for criticism, but I don't think that this is a legitimate criticism of us. We have not tried to tell South Africa what to do about their internal affairs. We've never laid out any specific action they should take nor any time schedule that they should follow.

We have worked harmoniously with South Africa in some ways in trying to evolve a solution to the Namibian question, formerly Southwest Africa, over which South Africa still has control, and to try to get them to work with the Rhodesian Government in changing Zimbabwe to a majority rule government with predemocratic elections.

I do feel that it's proper for us to deplore, not only in South Africa but in other nations as well, blatant deprivation of basic human rights.

In my speech in Los Angeles, I pointed out for instance in Czechoslovakia that recently there have been four people tried there as dissidents. Their only crime was that they dissented from what government action has been taken.

But I think it's proper for us to either enhance or reduce our trade with a country depending upon its own policies that are important to us and to the world. I think it's important for us to decide when we should and should not sell weapons to other countries, when we should and should not invest in another country, when we should and should not encourage government programs, loans, and grants to apply to another nation. I don't look upon that as an interference in the internal affairs of another country.

MR. CORMIER. Thank you, Mr. President.

THE PRESIDENT. Thank you, sir.