Business Council Remarks at a Meeting of the Council.

THE PRESIDENT. I understood this is where I was supposed to come to restore business confidence. [Laughter]

I'm glad to be with you. John deButts and many of you have been very close friends of mine since I've been in the White House as President, and I've relied upon many of you already to give me advice, to give me your counsel and sometimes, of course, your criticisms, and I've learned from it.

This is a time in our Nation when it's very important for us to realize the strength that we have and to seek as much as we possibly can a common purpose and to probe for a partnership between the leaders in our free enterprise system and the leaders in our freely elected government offices.

One of the things that I thought I might do to restore confidence is to point out to you how hard I work and how much I do each day. [Laughter] Tomorrow I hope to meet with three world leaders. I already have appointments with two of them. I'll be meeting with Prime Minister Begin tomorrow morning for an early breakfast and to negotiate with him on questions involving Middle Eastern peace.

I'll be having lunch tomorrow with Prime Minister Manley of Jamaica, and I'm seeking an appointment with Senator Russell Long for tomorrow afternoon. [Laughter]

I was looking over the history of the Business Council this afternoon, and I noticed that President Lyndon Johnson said about you that he knew of no other organization that offered to do more for our Nation and asked for so little in return. And that's a tremendous--and I'm sure it was a heartfelt feeling on his part.

I've never asked any of you to come to the White House or to join in an unselfish undertaking involving handicapped people or veterans or the evolution of programs that you didn't respond with enthusiasm and with effectiveness.

My own responsibilities are quite diverse, as you know. I think we are making good progress. We've been negotiating very intimately and productively with the Soviet Union on some of the historically intransigent problems. We've made remarkable progress so far in evolving the terms of a comprehensive test ban.

We have tried for the first time, really, to put an absolute lid and to roll back the level of nuclear weaponry. We're negotiating with the Soviet Union on how to prevent an arms buildup and a military race in the Indian Ocean. They've begun, as a matter of habit, to inform us before they fire their own test missiles so that there will be no misunderstanding between us. And I have high hopes that next year we'll be successful in bringing to a conclusion a SALT II agreement. We will have part of it on a 3-year basis, part of it will be more permanent, several years, and we will lay out the groundwork for a SALT III agreement with much more drastic reductions.

We've been involved, I think for the first time, in seeking a comprehensive settlement of the Middle Eastern question. And there have been some very notable results. I've met with all the leaders in the Middle East. As a matter of fact, I've met this year already with 68 heads of nations to negotiate with them and to seek a common purpose between themselves and us. And I can see very clearly that those who could not bring themselves to negotiate with each other, deep within their own hearts and representing their own people, wanted to have peace and to shift the tremendous financial burden from the always escalating arms race to the economic well-being of their own people.

I tried to convince Prime Minister Begin that President Sadat's interests were the same as his, and vice versa. And I'm very grateful for the courage of these two men and hope that we can extend their own negotiations to find a comprehensive and a permanent peace that will ensure the well-being of the people in the Middle East.

We have sought out common interests with our European allies. And we've tried to escalate, particularly within the State Department, a high degree of attention to economic problems on an international basis. There's remarkable harmony now among the different departments of our government that deal with the economic problems, between Treasury and Commerce, Labor, and State Department, and others, including Agriculture and Labor.

We have a weekly Cabinet meeting where we spend several hours discussing the major problems that confront our country. And when Bob Strauss goes to Japan to negotiate better trade terms with that nation, he speaks with a sure sense that the other members of the Cabinet and myself, the Vice President, understand his position and support it, and this gives us, I believe, a much more firm and secure base for representing our Nation.

We have very little disharmony among our heads of departments in other controversial areas. The Joint Chiefs of Staff meet with me frequently, along with the national security adviser and the Secretary of Defense, to talk about SALT questions, and the Secretary of State is present.

We try to iron out our differences, as you try to iron out your differences in a meeting of your boards of directors, so that everybody has a chance to speak and so that your company's position or your firm's position can be clear, not only in the minds of those who listen but also within your own leaders' minds.

We've had, I believe, a good year so far. Twelve months ago, the rate of increase in our gross national product was only I percent, the inflation rate was 10 percent, the unemployment rate was 8 percent.

We have had some degree of success this year, not because of who was in the Office of President, but because of the sense of purpose in our Nation. And we are getting past the despair that was engendered by the Vietnam war and by the Watergate revelations and by the CIA problems, and there's a resurgence, I believe, of commitment to the basic principles on which our Nation has stood. We've got a long way to go. We have had, though, progress in the most tenacious and difficult problem areas.

The unemployment rate is still too high. And there are pockets of unemployment among particular constituency groups that are embarrassing to our country--35- or 40-percent unemployment among young black men, and very high areas in our Nation where the unemployment rate for all citizens is entirely too high. That's in spite of the fact that we've had 4 million net increase in employment this year in our country. We haven't had that high an increase in total employment since the Second World War. But there's a balance between slow, steady progress on the one hand, and very difficult, very tenacious problems that still wait to be resolved.

I realize that among those jobs in our country, five-sixths of them are in the private sector. We've had a net reduction, almost a steady reduction in the last 20 or 25 years, in employment within the Federal Government. The increase has been, in government, in the local and State levels. But most of the increase, of course, comes within the private industrial and employment sector.

Housing starts now are at a very good level, about 2.2 million. This is something that gives us encouragement, but also reminds us that we have a long way to go.

We have had a fairly steady progress for the last 2¼ years in our economy. I meet every week with not only my Cabinet members in joint session but also privately with Charlie Schultze to give me economic advice. And today, in preparation for my visit with you, we have analyzed some of the long-range trends.

There are no serious or major imbalances or distortions in our economy that quite often have prevailed in a period of recovery from the depths of a recession or depression. We've got a fairly well balanced economy between business debt and cash availability, between inventory and sales. Most of oar major lending institutions don't have a complete dearth or shortage of funds to lend for sound loans. We have also experienced, I believe, some increase in involvement of other nations in redressing the international imbalances.

As you know, our country still imports too much oil. This year $45 billion worth of oil will be imported by the United States, in spite of the fact that we are one of the world's largest oil producers. We have facing us this year an adverse balance of trade of about $30 billion. If it weren't for the oil imports, we'd have a very substantial positive trade balance.

In the last 12 months our agricultural exports have been the highest on record, about $24 billion. We are the world's greatest food producer. But in spite of the tremendous exportation of agricultural products, our oil imports are twice as much as total farm exports.

I've tried to address some of the more longstanding and difficult financial questions that have been avoided in the past. And I'm beginning to see much more clearly now why they were avoided by my predecessors. [Laughter]

We've made a lot of progress on evolving a comprehensive energy policy. I doubt that the Congress of the United States has ever addressed a more complicated, more difficult, more politically challenging, more divisive issue in the history of our Nation.

Many friends that have come over here to talk to me from Germany or Italy or France can't understand why we can't very rapidly pass an energy legislation. Well, we're not just a consuming nation, we're not just a producing nation. And that dichotomy in our own constituencies almost guarantees a sharp division.

I met late this afternoon with some of the House and Senate energy conferees, not to negotiate with them, but to encourage them to stick with these difficult problems, since they've made so much progress already, before they adjourn.

The Senate conferees--there are 18 of them--they've been divided 9 to 9 ever since the conference committee started. They've never gotten one Senator to change a position, even when repeated efforts to put forth a compromise have been made.

I think you all know that the Congress has put a great deal of time and effort on this question. I presented to the Congress and to the people, April 2d, an energy package that I thought was adequate, well-balanced, protected the consumers, encouraged production, did not create a heavy strain on our budget in the future. And the House passed a bill very similar to what I introduced the first part of August, and we still don't have that legislation through.

Three of the five major items have already been resolved in principle, and I think they are fairly safe to prevail. We still have the questions, though, of natural gas and how to control the consumption of oil. But we are making some progress.

The other question that we've tried to address is to bring some integrity back to the social security system. This is a matter that's very disturbing to us all, and it's also been highly controversial.

But we have made good progress this year. And I think, when you assess what the Congress has done, you will also be pleased.

We've tried to commit ourselves and retain our commitment to the principles of free trade. One of the unanticipated pressures on me as President has been for evolving various methods of protectionism to erect tariffs or quota barriers against foreign imports. Our country lives on international trade, and this is an easy political question to be demagoged. But I hope that you all will help me to convince the public that this is not in the best interests of our Nation.

There are a lot of things, obviously, that the Government can do. I think that we need a substantial permanent tax reduction next year for business and for individuals. I see the major redressing of our problem with unemployment being in your hands, in the private business sector.

The major means of redressing the permanent underlying inflation rate lies in your hands and in those of people who work for you to increase productivity and, therefore, reduce the basic underlying cause for sustained inflation.

I believe that we have in your hands the possibility of helping to redress our balance of trade by producing highly competitive and quality goods for us to export. We can do a lot in partnership with you. The unnecessary paperwork and regulations and intrusion into the business lives by Government needs to be reduced.

We have here tonight with us the administrator of the Occupational Safety and Health Act. I think it's accurate to say that 12 months ago this was one of the most despised and condemned programs in Government. But Dr. Bingham has brought forward revisions in those administrative procedures that have helped to remove this burden on your shoulders.

This past week, she and Ray Marshall announced the elimination of 1,100 of the OSHA regulations. And we are trying to reduce our total paperwork burden on the business and professional community. Health, Education, and Welfare have already reduced their paperwork requirements 27 percent, and we've set a goal for the whole Nation and for the whole Government to do the same. And we are making some progress. We are trying to make weekly reports changed into monthly reports, monthly into quarterly, quarterly into annually, and some of the reports we are trying to eliminate all together. But we are probing to do a better job with your Government.

I just want to say a couple of other things, and then I'd like to answer a question or two, if you'd let me.

I'm a businessman like yourselves. When I was beginning my Carters Warehouse and producing certified seed and buying and storing and ginning cotton and shelling peanuts, you were the leaders in our Nation that I looked to and admired. I recognized then and now the present achievements that you've already realized and the tremendous beneficial impact that you have had and can have on our country. I've tried to bring into the White House some of those business principles that I learned, as many of you did, the hard way.

I try to evolve with my Cabinet members and other advisers long-range goals and describe them as clearly as I can to the public--what we hope to achieve under conditions that we spell out clearly as a target for maximum unemployment and the maximum inflation rate, a sustained growth in our national product, the percentage of personal income that's collected by the Federal Government in taxes, the percent of our Nation's productivity that's collected and spent by the Federal Government, to provide some stability--so that we can all work toward those same goals. And every decision that I make in my budget hearings, . in my evolving and proposing legislation to the Congress, in the signing or modification or vetoing of bills, is determined to a major degree by my commitment to meet those goals.

This is not always possible, of course. I intend to devote most of my State of the Union speech in January to the major purpose of my administration in 1978. It will be concerning our economy and how to restore confidence and how to redress many of the problems that I've described tonight as a national commitment next year.

I think the Nation is ready for this, and I believe the lowest unemployed American, up to those who are proud to receive the minimum wage on a part-time basis, to the leaders of our top businesses and industries--we can harness our own efforts in the private sector with those of us in the public sector to try as best we can to realize the benefits of the finest economic system on Earth.

There's one thing that has concerned me a great deal since I've been in office, and that is the tendency on the part of us all to emphasize the negative aspects in our Nation's economic system. We've got the greatest country on Earth. We've got the best economic system on Earth. It's been stable and part of our lives for 200 years. God has blessed us with unequaled natural resources. We have access to two oceans without constraint on our international commerce through the sea or through the air.

We have got a diversity of population that brings to us the best from every nation on Earth. And we have an underlying commitment of entrepreneurs and a sense of basic human freedom and a sense of self-respect and personal responsibility that sustains us in times of trial, in times of tension, in times of despair. But we all have too much of an inclination to deplore and to emphasize temporary aberrations that can always be described as catastrophes or insurmountable obstacles. And this creates a sense of discouragement and a lack of commitment to aggressive redressing of those transient problems that is discouraging to me as President.

I just hope that all of you will join me when there is good news to acknowledge it, and when you have a chance to speak to those who look to you for leadership, to point out the things of which we can be proud and for which we can be thankful.

The Presidency, as has often been said, is kind of a lonely job. There are times when a decision has to be made just by me. I use my advisers as much as possible; I have to consult constantly with the Congress; I work closely with my Cabinet, with my White House staff. But eventually the time comes when a decision on international affairs or defense or the wellbeing of our people or economics has to be made by the President.

I have a sense of confidence about it. I never lacked confidence when I ran my campaign. I learned a lot about this Nation which strengthened my confidence in it. I don't have a lack of confidence now. And the primary reason for that is that I know that I have a partnership with you. We have the same goals in mind. We have the same interests at heart. I can only be successful if you are. You can only be successful if I do a good job as President.

I thank you very much for what you've contributed to our country. I hope that I can perform my job in such a way that will make you proud.

Thank you very much.

QUESTIONS

MR. DEBUTTS. Ladies and gentlemen, the President has graciously agreed to answer two or three questions if you have them.

THE PRESIDENT. I might be taking my political life in my hands. [Laughter]

If anybody does have a question, I'll be glad to try to answer it. If not, that's a very gracious way to treat a guest. [Laughter]

Yes, sir?

Q. [Inaudible]--I would like to ask you one question.

THE PRESIDENT. I cannot answer the question you asked me in the receiving line. That was a decision my daughter made. [Laughter]

Q. No, this is different.

THE PRESIDENT. Okay, good. [Laughter]

Q. I'm a great believer in the free market system. I think that the Government is trusted to stay out of the free market system, but some of the policies of this administration, and some that you appear to support, I must say bother me, and that's in the agricultural field.

THE PRESIDENT. Yes.

Q. Peanuts, for example, which you're very familiar with, which has been under Government control. In fact, we just bought most of the peanut oil surplus. We're not allowed to buy it on the free market. We got rid of most of the agricultural subsidies, and now they're starting to come back. Sugar is back. Wheat is back. And I suspect that we're going to have others.

I get very concerned when I see the subsidy structure coming back again after we got rid of it in the last administration.

THE PRESIDENT. I don't know of any new subsidy programs that we've commenced. I was not involved because of a conflict of interest in the decisions made about peanuts. But it's a much looser structure than it was a year ago. The new legislation opens up additional production and has a much less constraint on peanuts themselves. We did not change the basic format of legislation on the production of other crops either. We did raise--I think the Congress raised perhaps more than I asked for--the target and support prices on grain. But I agree with you that we ought to have as little Government interference as possible. We do have high surpluses on hand, not brought about by legislation, by new legislation, because the bill, as you know, was not in effect this year.

The high surpluses on hand of agricultural products in most instances is because of fairly good weather on a worldwide basis. And we do have reasonable reserve supplies of soybeans, of wheat and corn. But we're trying to keep as much of that reserve in the hands of farmers themselves as possible.

We're trying to compensate for it by reducing the acreage planted next year in those two or three crops, and we're trying to escalate our effort on foreign sales. But I don't disagree with the philosophy that you've expressed. There have been no new and innovative programs in the agricultural subsidy program. And we have maintained those, however, that were there before.

Q. Mr. President, we've all been told why you reconsidered the timing on your tax proposal. Could you give this group tonight any estimate of when you might come forward with a tax proposal?

THE PRESIDENT. Yes. We evolved the tax proposal in a way that I think you would have done had you been in office. We began this year, after we put together the energy package and the welfare reform proposal and the social security proposals, to put down in a tabular form all the tax reform proposals and changes that were advocated from all sources.

We consulted with many of you, through Bert Lance, through Mike Blumenthal, Juanita Kreps, and others, to get your advice and your counsel, along with those of labor leaders.

Those educators who are involved in economics and my own staff--and we put this program on the schedule to be revealed to the public and presented to the Congress in September or October. We anticipated at that time that the Congress would adjourn the 23d of October, after the Congress had finished work on social security and energy--that was my plan. When it became obvious that the Congress would not finish as scheduled, we put the tax reform proposal in abeyance, until I can see what impact on the economy will be felt by the increases in social security payments and also by the final results of energy.

We've also been trying to estimate the inherent increased income tax rates brought about by the effects of inflation as individual taxpayers are put in a higher and a higher income tax bracket. With no additional purchasing power, of course, their rate of taxation goes up. And so there will be combined, I think, a moderate but an adequate program for tax reform to make it more equitable.

We intend to have it a little more progressive in nature, and the overall effect on it will be permanent, not temporary, tax reductions, both for business and for individuals.

My plan now is to complete the income tax reform proposals, tax reduction proposals and present them in January.

Maybe one more question and then I probably need to go.

Q. Mr. President, for many years my gravest concern has been inflation.

THE PRESIDENT. Yes; mine, too.

Q. I come from the natural resources part of the Nation where we are engaged in coal mining, copper mining, oil production, and oil refining, and all of the things that go with this and with protection of the natural land and the environment.

THE PRESIDENT. Yes.

Q. Now I have to say this, that the requirements that are imposed upon us by the Government in connection with all of those things are the maximum, most expensive requirements that could possibly be imposed and that the inflationary situation would be improved if instead of that, more consideration was given to the cost of doing many things which have to be done but which could be done less expensively if we were allowed to experiment in smaller ways.

I wonder if you share at all this kind of thinking.

THE PRESIDENT. Yes, I do. One of the initiatives that I've taken is to direct the Council on Wage and Price Stability to analyze the inflationary impact of the major decisions made on regulation of industry and business. This includes, obviously, the pollution decisions, the occupational, safety, and health pro, visions, and also the matter of strip mining laws. We tabulate those, and that's part of the discussions that we give to the Congress when we have new proposals to put forward and, obviously, part of the considerations within our own decisionmaking process.

At the present time about, I believe, six percent of all industrial investment is in pollution control devices. I would not advocate to the Congress that we lower the standards on air and water pollution. And I supported and was glad to sign the strip mining law this year.

We can, however, encourage business in its attempt to overcome that drain on capital investment funds by modifications in the income tax laws and rates, by more rapid depreciation for those investments, and also by some modification in investment tax credits--maybe concentrated on those items that don't contribute to business profits, but do contribute to a better life for the people who live in those communities.

I think that's the only way I can explain our attempt to at least partially compensate for that drain on capital that is needed for business investment in the future. I think, though, that there is a growing realization in the Environmental Protection Agency, EPA, that predictability has been lacking in the past. And if a business executive who does have to spend substantial amounts of money for new equipment for meeting air and water pollution standards, if they have some long-range realization of what will be required and the regulations won't be changed every year or two, that that in itself would be of help.

I particularly would be eager for you, through Secretary Kreps or through any member of my staff, to point out now or in the future particularly onerous requirements on you that you think are unfair. And that applies to almost any aspect of Government regulation or decision that affects your lives.

I called in, for instance, all the State school superintendents and some of the leading presidents of our university systems, and they gave me lists of reports and regulations that they thought were both onerous and unnecessary. And we were very glad to get those.

Bert Lance and Jim Mcintyre took those recommendations, assessed them; a few of them were found to be required by law. We have presented those to the appropriate congressional committees and asked them to remove those requirements.

Others could be changed by Executive decision. This constant admonition from leaders like yourselves, or complaints about the way government programs are administered is exactly what we need.

I would like to say one thing in closing, and then I have to leave. My own administration has a heavy commitment to the autonomy and responsibility of the members of the Cabinet. In the past there have been Presidents, both Democratic and Republican, who operated the Government in an administrative way out of the Oval Office. I have no inclination to do that.

I do work very closely with the members of the Cabinet in evolving basic policy, and I demand from them that they keep me informed about what's going on. But there has never been and never will be an occasion when any of my staff members in the White House try to run the affairs in administering the major departments of Government.

So, I would urge you to get personally acquainted, if you're not already, with the Cabinet officers who have a direct responsibility, from the government point of view, in your own professional lives and deal directly with them. They have, I think, an unprecedented degree of independence and autonomy. And I think only in that fashion can you hope to have a constant dialog with them that permits you to tell us when we can take action to improve Government administration.

In most instances the Congress and my predecessors in the White House, when they passed laws, obviously had the best interest of our Nation at heart. But quite often the intent of Congress is lost over a period of years, as it sometimes is in your own firm, by subordinates who get preoccupied with their own responsibilities and forget if they ever knew the purpose of the legislation they are administering.

If you find something to be irrational or improper or unnecessary, that unnecessarily encroaches on your own effectiveness, I hope you'll let either my Cabinet officers or me know, and I'll do the best I can to correct it. I feel like this is a responsibility that you have, and if you will let me have those recommendations, I'll do the best I can to comply with your request.

I want to say again, in closing, that I am honored to be invited to come. Every President has come to speak to you, including Franklin Roosevelt, and since his time. I've got a lot to learn, and I'm learning rapidly. I've had some good teachers.

As I said, I feel at ease with the job. I learned a lot about our country during the long, tedious 2-year campaign. And I had a chance to meet many of the top business leaders. The first year I stood outside the factory gates and shook hands with the workers coming to and from their shops; the last half of the year, quite often, I would get invited inside the factories and get a chance to meet their employers. [Laughter] And I'm glad to meet the top tonight, to meet the top business executives of our Nation.

Thank you very much.