Interview With the President Remarks and a Question-and-Answer Session With a Group of Editors and News Directors.

THE PRESIDENT. I want to welcome all of you to the White House. Some of you have been here before. I think you've had a chance to meet with some of our staff this morning. And I hope that the day will be fruitful for you.

One of the most important things to me as President is to have a means by which I can understand the problems and the questions that arise throughout the country-sometimes removed from Washington itself---to get a different perspective and also, of course, during my news conferences, that have been held and will always be held, I hope, twice a month, to receive questions from the Washington press corps.

The number of issues that confront me are very voluminous. I'd just like to outline a few of them for you in preparation for your questions.

ADMINISTRATION POLICIES

This morning I concluded my own talks with the Prime Minister of France, and this is a final meeting with him. He'll now, this afternoon, meet with economic advisers, the Secretary of State, Secretary of Defense, Secretary of Energy, and others so that we, in shaping our own policies for the future, will know the special problems of France, and vice versa. These discussions which I have had with many foreign leaders have been very helpful to me.

As you know, I've never served in Washington before January. I've got a lot to learn about the processes, and I've gone out of my way this year to expand my own circle of knowledge outside just domestic issues.

Last week, I met with, I think, 19 heads of state of the Latin American countries. And I think we have a new relationship with them, brought about primarily by the prospect of the ratification of the Panama C. anal Treaty.

We are continuing our negotiations with the Soviets on the SALT question; also, on a comprehensive test ban of nuclear weapons. And as you know, the Soviet Union in addition is a cochairman, along with us, of the Mideast talks that we hope will take place before the end of this year.

This coming week, I'll have the first of a series of foreign ministers who will come and meet with me from the Middle Eastern region--Foreign Minister Dayan from Israel. And during the following weeks, I'll meet with all the others. These meetings that come to me directly are preceded, of course, by long discussions with the Secretary of State and others.

We have, in addition, many other defense matters that have come to my desk. Quite often, we have foreign matters that don't relate to the prospect of war or the issue of peace. A recent one, concluded last week, was with the Canadians, on a means by which we might bring natural gas down to our country. And this is the biggest construction project ever undertaken in the history of the world, and I think we arrived at a common purpose there.

We have already implemented the construction of a new Department of Energy. I approved it this week. Dr. Schlesinger has been working on this ever since I've been in office.

We have finished in the House, I think, substantial legislation to set up an energy policy that might guide the new Department in its functions. We are running into additional problems in the Senate. The political pressures are enormous from the oil companies and others on the subject of energy. I think the House took very courageous action in this respect, and my hope and expectation is that the Senate will do the same.

Welfare reform has been presented to the House and to the Senate this week in its final, legally drafted version of legislation. And before the Congress adjourns this year, hopefully in October, I will present to them my tax reform package as well. This will take a great deal of debate and study, along with welfare. And that, obviously, can't be concluded during this calendar year.

We have, I think, been fairly successful so far. We've been learning, and I think that we put together a good organization here.

I've obviously been concerned recently about the Bert Lance case, and I've not let it interfere with my own functions. I don't think Bert has let it interfere with his functions as the Director of the Office of Management and Budget.

This is an agency with which I'm most intimately involved, personally, on a multiple basis every day. And because of my own engineering background and my habits acquired while I was Governor, I set very specific and rigid time schedules for the accomplishment of each component part of a major undertaking. And I can assure you that there has been absolutely zero slippage in the Office of Management and Budget because of this series of allegations that are now being answered by Bert Lance to the Senate--I hope, successfully.

We've initiated this year--and this is the last point I'll make--a brand new budgeting system that I used in Georgia, called zero-based 'budgeting. It's a massive undertaking for a bureaucracy of our size to completely change its mechanism by which next year's budget will be prepared. But the fiscal year '79 budget will be prepared in its entirety using the zero-based budgeting technique, where you don't make any assumptions that present programs or expenditures are sacred. You don't just deal with the new additions next year for the budget considerations, but you start from zero and analyze the entire appropriation of funds.

The reorganization effort is on schedule, and I think by the end of the 3-year period that's been given me by the Congress, we will complete it to the satisfaction of the people of our country.

I'll be glad now to answer any questions that you might have.

John [John McCormally, Hawk Eye, Burlington, Iowa].

QUESTIONS

BERT LANCE

Q. Mr. President, you say you read the editorials, so I might as well get what's coming to me. [Laughter] We are very well aware of your concern for the need for fairness to Mr. Lance, and you're respected for that by the people who support you the most; those same people are the most concerned about the success of your Presidency. And on another issue, recently you remarked that life isn't always fair. I wondered if you are confronted with the problem of whether a resolution may be necessary which is not altogether fair to Mr. Lance, but which is necessary for the larger concerns of the Presidency?

THE PRESIDENT. Yes, that's something I'll have to balance. And as I said yesterday in a telephone talk to the news programers of television and radio stations, I don't know of anything illegal that Bert Lance has done. I don't know of any unethical conduct on his behalf. And I'm keeping an open mind about this entire subject until the Senate goes through its present procedure of analyzing in detail all of the new charges and allegations and claims and statements that have been made about Bert Lance.

He's now being given a fair chance to say these are all of the charges, this is my answer to them. And of course, I will certainly have an eagerness to learn of any reason for me to change the assessment that I've just made. But I want to be fair about it, and I have a sure sense of the basic fairness of the American people.

The facts, if divulged, will be conclusive, I think, in the shaping of public opinion. And one problem about the whole incident that I can't comprehend, perhaps, adequately, is--let's leave Bert Lance out of it for just a moment; just take any of you, or myself. If a series of, say, incorrect allegations are made day after day after day with the highest possible publicity, the lead story on every television network every night and the headlines in the Washington Post and other newspapers every day, and then all those allegations are proved to be false, how much of those allegations remain to damage the character of the person who might be totally innocent?

And then you say, well, this person is damaged so that he can't perform his functions adequately, when the damage has been caused either erroneously or falsely. Well, if that was the only factor, then my decision would be easy. But if I also have confidence that as the American people learn--and it might take a while--that the allegations were basically false and have successfully been answered, that the character of the person, say, yourself, would be restored, then my decision would 'be a different one. And I really have been concerned about this matter, as you know.

I don't know an easy answer. But at this point, I have no evidence to indicate that Bert's done anything illegal or unethical. I wish that every one of you could read the FBI report which has been the subject of many references. Bert has an ability, under the law, to get the FBI report under the Freedom of Information Act and make it public.

They interviewed, I guess, a hundred people--three of those people were in the Comptroller's Office; three additional ones were in the Department of Justice. And the FBI questioned them about these same allegations, and the response of those, I think, all men, six men, were unanimously almost effusive in their recommendation of Bert. But now their testimony under the pressure of Senate interrogation is a little bit different. But at the time that the Senate investigated first, I think the information was offered to them. Obviously, a lot of new questions have been raised. But in general, I'm still keeping an open mind about it.

Q. Mr. President, I am from New England, and we don't engage in overdrafts, as Mr. Lance calls some of his actions. When you were a businessman in Georgia, did you ever become involved in overdrafts? He gives the impression that it's a common practice in the State of Georgia.

THE PRESIDENT. There are several people here, I think, from Georgia. I don't think that this is---

Q. But did you, in your business--

THE PRESIDENT. Well, I can't say that I depended on overdrafts to run my business, but as I have said in one of my regular news conferences that was televised nationwide, yes, I've had overdrafts. Let me add one other thing.

There is a fairly common practice--and I am not trying to criticize banks, because I don't know how wide the practice is-but there's a general sense at home, not because it's in the South, but because I live in a small town, that if you have several accounts and a substantial balance in all those accounts, but then you become overdrawn in one of those accounts, then that's not considered to be an illegal or an unethical act.

I run, I would say in my business, six or seven individual accounts, different aspects of my farm or my warehouse business. Also, I have a personal account. I never write any checks. I haven't written three checks in the last 5 years. My wife does all the check writing. But if we should have $50,000 or $100,000 in my warehouse account, and in my own personal account my wife should buy a dress and give a $25 check to pay for it and the check bounced 'because we were overdrawn, they would not send for the sheriff or call me on the phone to say, "You've disgraced yourself by having an overdraft." They would say, in effect, "We'll honor this check. We'll put a notice in your mailbox, and then you can shift some money from your warehouse account over into the personal account."

But I don't excuse overdrafts. You know, it's obvious that I would rather my own life have been completely free of any overdraft. But I can't say that it's an acceptable thing. But I still don't believe that it's an unethical or illegal thing in the banking circles in which I've had to operate.

ENERGY

Q. Mr. President, people in the Northeast are as concerned about energy as anything. I know that Secretary Schlesinger yesterday told the Senate Finance Committee that he wasn't sure how you were going to react to the idea of diverting the wellhead tax to energy production rather than tax rebates. I wonder, can you tell us today how you feel about it?

THE PRESIDENT. My preference is to have the wellhead tax receipts go to tax rebates. There are some alternatives that obviously will .be considered by the Congress with or without my approval, and I can't say that my own position will prevail ultimately. But there are different ways to use wellhead taxes. My preference is, as we presented it to the Congress, the rebates. One reason for that preference is that it's fair. Another one is that it doesn't create a tremendous withdrawal from the national economy of substantial amounts of money. If you have increased wellhead taxes and immediately return that money to people in better paychecks on a 2-week basis, then there's not a shock to the country. If you withdraw that money and wait 3 months, 6 months, or a year before it gets back into the economy, you have a tremendous dampening effect on our national economy, which is bad.

Now, if some of the wellhead tax should be shifted to enhance the effectiveness of the energy goals, then I can't see anything very bad about that. If you had better rapid transit systems, better insulation of homes, more research and development, for instance, for new energy sources, that would be one thing. But the constant threat is that because of political pressures, that money is going to be returned to the oil companies under the guise of enhancing production.

I think the oil companies have enough cash flow right now-- certainly the majors do--to have an adequate degree of exploration. In fact, that exploration, in my opinion, is adequate at this point. And I'm just as afraid that there is a threat that the wellhead tax is going to be given to the oil companies to reward them financially.

I think that our package has a gracious plenty of incentives for enhanced exploration and enhanced production of oil in this country. We have by far the highest price for newly discovered oil in this energy package of anywhere on Earth, and I don't think the oil companies deserve to get this money taken out of the consumers' pockets and put in the pockets of the oil companies.

TAX CREDIT FOR HOMEOWNERS

Q. Sir, in light of the fact that many people are having a hard time affording a home these days and some are depending, apparently, on the mortgage tax deduction which you have proposed to eliminate or reduce, do you have any idea what the impact is going to be? Have you done any studies on whether this is going to be preventing many people from buying homes?

THE PRESIDENT. In the first place, I have not decided on any specifics of a tax reform package at all. I've certainly not decided on eliminating credits for interest paid on homes or property taxes paid for homes.

During the political campaign, I promised that there would not be a reduction in the stimulus for American families to own their own homes, and if there should be any change it would be compatible with that commitment of mine.

Now, I have some doubt about whether this same level of interest rate deduction should be applicable to a $500,000 home or a second or third or fourth home for very wealthy families, as contrasted with the average American working family who's trying to pay for one home in which they live.

Also, you have to remember that if the credit is on a percentage basis, then a family that has a $15,000 income, if given a certain amount of credit for interest, only gets, say, 20 percent of that interest payment credited on their tax. But if you're in the 70-percent bracket, you get 70 percent of any interest that you pay on your home.

So, equalizing those homeownership credit incentives is part of the package. But it will not hurt the average family in trying to purchase or pay for their own dwelling place.

Q. What limit do you propose, sir?

THE PRESIDENT. I don't know the specifics yet.

BERT LANCE

Q. Mr. President, do you think Bert Lance has strengthened or weakened his position since yesterday morning?

THE PRESIDENT. I've not had a chance to watch the television programs, except that my staff puts together an 18- or 20-minute recap on some of the highlights. And I see those on occasion. I spent all yesterday and today in my regular business and meeting with Prime Minister Barre.

But my assessment from the brief time I've watched it, and also from my own staff, is that he has enhanced his position, because he was in a situation where, literally, for weeks, all kinds of allegations or charges were made, including criminal violation of the writing of checks to avoid paying of taxes, which is fraudulent and illegal. He was alleged to be an embezzler by a convicted felon. And on that basis, the chairman and the minority leader of the Senate [committee] had called for his immediate resignation, and he had not had a chance to answer those charges.

Now that he has answered the charges--I hope and believe successfully--I think he's certainly enhanced his position.

PUERTO RICO

Q. Mr. President, I'm from San Juan, Puerto Rico. Buenas tardes.

THE PRESIDENT. Muchas gracias.

Q. Would you object to a U.N. fact finding team going to Puerto Rico to look into the idea, the charges that have been raised, that we are a colony of the United States?

THE PRESIDENT. Yes, I would object to that. I don't have any objection to any analysis of the question, but I think my own statement and the statement of all the leaders of our country that whatever Puerto Rico's people want t° do is acceptable to me. If the Puerto Rican people want to be a commonwealth, I will support it. If the Puerto Rican people want to be a State, I will support it. If the Puerto Rican people want to be an independent nation, I would support it.

Q. But the U.N. has no jurisdiction?

THE PRESIDENT. I don't think the U.N. has any jurisdiction. And particularly when this question is raised by Cuba, a government that has no respect for individual freedom or individual liberty and permits no vote of any kind in their own country, to accuse us of trying to subjugate the people of Puerto Rico, to me, is absolutely and patently ridiculous.

TRAVEL TO LATIN AMERICA

Q. Are you planning a trip down that way or the Caribbean way in the Latin American trip?

THE PRESIDENT. I would like to come down there as soon as I can. An important goal of my administration is to build up a renewed understanding and trust and communication with the nations and the people who live south of here in our hemisphere. My wife's already visited seven nations, as you know.

Q. She is coming to San Juan in 2 weeks?

THE PRESIDENT. Yes, she's coming there in 2 weeks to make a speech to a news group. In addition to that, Andy Young has been down to visit several of the countries in the South. Assistant Secretary Todman has been down. Very shortly, I think next month, the Secretary of State will come down to Latin America. And I hope to come, too. I don't have any specific date yet.

NATURAL GAS PIPELINE

Q. Mr. President, you mentioned the pipeline from the North Slope. The Governor of our State, California, Governor Brown, has been running around saying that you have given California a finger instead of a leg regarding the western leg that goes into California. Would you comment on that?

THE PRESIDENT. Well, I would like to say one thing to start with, that the people of California are my constituents just as much as they are the Governor's constituents, and I have just as deep a concern about the future prosperity and good life of the people of California as the Governor or anyone else.

I've never had any disagreements with Governor Brown. So far as I know, he's never mentioned the western leg of the pipeline to me. If he corresponded with some of my staff members and I'm not familiar with it, then, of course, that would be understandable.

I've been with him several times this year, both in California, and he spent a night with me at the mansion. We've had long discussions, but I did not know he was dissatisfied with the arrangement at all.

One of the problems, however, with the El Paso route, which was the alternative, was the reluctance of California to provide some means by which oil or natural gas could come into the State to be used there and also to be transported to other parts of the country. I don't say that in a spirit of criticism, because I'm concerned about environmental questions and possible oil spills and, also, the deterioration in the quality of air, because of heavy shipping transport, as well.

But I would expect that Governor Brown and I and other State and Federal officials would eagerly search for a basis on which we could assure California adequate energy supplies in the future.

My decision to go with the Alcan route was one of great importance to our country. But certainly none of the factors involved was to damage California people whom I care about very much.

BUSINESS TAXES

Q. Mr. President, I appreciate the honor of being here and meeting you. I've been an admirer of yours. The one thing that concerns me and, I think, concerns you and the country, is the tax reforms that are getting into the magazines, et cetera.

You see what's happening to the stock market. I, like you, was a poor boy in Washington that became affluent. Now, I don't like to see small business--which, I believe I read in Fortune, contributes 90 percent of the gross national product-now, where you make statements that capital gains might go to 50 percent, more social security taxes to a small businessman, it's killing the American incentive. And I do hope that you will give it serious thought to keep venture capital going, not for the big corporations. We support the big corporation.

THE PRESIDENT. Well, one of the major Considerations in evolving the tax reform package is obviously to provide adequate incentive for business expansion. And I believe that when the tax reform package is made public, that there will be a sigh of relief and also a removal of the inevitable uncertainty about what the terms of the tax proposal might encompass.

Also, of course, through long weeks of House and Senate hearings, any possible improvements on the tax reform package would be explored.

We have met with many leaders--I have personally--representing small businesses, large businesses, the professions, labor, consumers, tax experts, in trying to evolve a good package. And I think it will be good. We hope that there will be equity. We hope that there will be a reduction in tax rates. We hope that there will be simplicity, and we hope that we can provide an adequate assurance of improved venture capital in the future. And we hope that there will be substantial tax reductions.

Those are about five factors that I hope will be in the tax reform package and which I can predict to you with great assurance will be in the tax package.

Q. With the 15-percent tax investment credit, you cut the unemployment rate to 4 percent.

THE PRESIDENT. That sounds very good.

DON TUCKER

Q. Mr. President, do you plan to withdraw your nomination of Don Tucker to the CAB, and do you think the Lance matter has hurt that?

THE PRESIDENT. I haven't any intentions to withdraw the nomination. I understand that there has been some concern raised within the committee. I have not received that report; I've just read about it in the news. But I will look into it, and if there are some provable allegations there that I didn't know about when the recommendation was made, then I would certainly reconsider. But I don't have any intention now, knowing what I know, to withdraw the recommendation. Don Tucker is speaker of the house in Florida. He's been recommended strongly by the two Senators in Florida. He's been recommended strongly by Governor Reubin Askew from Florida. And I don't even know what the reason for the hesitancy in the Senate staff is at this point.

SUGAR PRICE SUPPORTS

Q. Mr. President, during the House-Senate conference committee on this year's agriculture act, an administration spokesman said he felt that tariffs should be used--or tariffs would be used to maintain the price of sugar, rather than a price support program of Government subsidies.

Yesterday, Secretary of Agriculture Bergland announced that a payments program, very similar to the one declared illegal by the Comptroller General, was going to be proposed. Why are you insisting on Government subsidies rather than tariffs or import restrictions to support the price of sugar? And, secondly, do you think that sugar prices should be supported at all?

THE PRESIDENT. Yes, I think that sugar prices ought to be supported. I think that a 13 1/2-cent sugar price is about the minimum that would be advisable, both for domestic producers and also for imported sugar. We have supported the new farm bill which provides price supports until the international sugar agreement can be implemented.

I did this reluctantly, as you may know. We did not support the de la Garza amendment in its original form and-accepted it only if the conferees would agree that the price support mechanism would be terminated at the time an international sugar agreement was reached, if the international sugar agreement encompassed a price of about 13 1/2 cents.

Tariffs are a terrible thing to impose, because many of .our friends in Latin America depend heavily upon sugar. One of the most democratic nations in the world derives almost its entire income from the export of sugar. And for us to put an obstacle to their shipment of sugar to our country would, I think, almost destroy their economy, their government, probably shift it toward a complete dependence on totalitarian assistance and would not be fair, as well.

We've tried to avoid a protectionist policy since I've been in office. And I think the best way to do it is through international agreements that, in effect, set minimum and maximum prices for commodities whose prices, without constraint, fluctuate so wildly.

We've seen this happen in the case of coffee. We've seen it happen in the case of sugar, where it went almost up to a dollar and then dropped down to about 8 cents. Well, we can accommodate that. It's devastating to a sugar farmer or to the sugar producers, but our national economy is so varied that we can accommodate it. But for a country where 85 percent of all their exports is sugar, this is devastating.

So, I don't like tariffs as such. They would particularly be damaging to our closest friends and allies in this hemisphere. They also, I think, would cost the American taxpayer a great deal more. And I think that an international agreement on sugar of about 13 cents would be the preferable approach, and until that can be put into effect, I have reluctantly agreed to support the price support aspects of the new farm bill.

THE MIDDLE EAST

Q. Mr. President, Jim Wisch, with the Texas Jewish Post, Dallas and Fort Worth.

First of all, on behalf of the American Jewish Publishers Association, I want to thank you for the profound message you sent from your wife, Rosalynn, and yourself to the American Jewish community. It was indeed very sincere. And with regard to your sincerity, which was recognized by all editors across the country, regardless of their background, I want to point up to you your profound statement on the Mideast which we published right before the election, which was highly informative and set out many things that you had proposed to do.

I just returned from the Mideast, where I had a long, long conversation with Ambassador Lewis. And it seems to me there's a great deal of apprehension going on amongst American Jews and Jews of the world, and somehow it rests upon what some of your decisions are going to be.

I think this apprehension could be cleared, because I think there may be a disagreement, perhaps, in semantics rather than in objectives. And I wonder if you had been concerned about your popularity or your interpretation vis-a-vis your embracement of the PLO, and that your regard for them has given them a propaganda ploy where they have become recalcitrant they still employ Chapter 16, the complete destruction of Israel. Now, people think that you are pushing Israel to sit down and recognize the PLO, regardless of that point in the PLO's platform. 242, your resolution, which you so eloquently described last July, says that nobody can sit down unless it's a face-to-face discussion and they recognize the entity of each nation as being a sovereign nation like we are doing with Panama.

And in view of this regard, I wonder if you plan to clear this up or elucidate or however you plan to handle this.

THE PRESIDENT. With all due respect, that's one of the most distorted assessments of my own policy that I've ever heard.

Q. It is not my assessment[laughter]--

THE PRESIDENT. I understand.

Q. But it's incumbent upon me to bring it to you.

THE PRESIDENT. I've never endorsed the PLO. Our Government has had no communication, at all, directly with the PLO. The only communication has been when representatives of the PLO have been to Arab leaders immediately prior to a Cy Vance visit with them or their visit to our country and have delivered messages to us indirectly.

Our agreement with the Israeli Government several years ago, before I became President, was that we would not communicate with the PLO as long as they did not refute their commitment to destroy the nation of Israel and did not accept the right of Israel to exist. Our public position is the same as our private position. There is no difference between them.

We have said that if the PLO would accept publicly the right of Israel to exist and exist in peace, as described under United Nations Resolution 242, that we would meet with them and discuss the future of the Palestinians in the Middle East. We have never called on the PLO to be part of the future negotiations. We have said that the Palestinian people should be represented in the future negotiations. That is one of the three major elements of any agreement that might lead to lasting peace--one is the territorial boundaries; the other one is the Arab countries accepting Israel, to live in peace as neighbors; and the third one is some resolution of the Palestinian question.

I've never called for an independent Palestinian country. We have used the word "entity." And my own preference as expressed in that talk that I made in New Jersey, I think, and now, is that we think that if there is a Palestinian entity established on the West Bank, that it ought to be associated with Jordan, for instance. I think this was the case among many Israeli leaders as their preference in the past.

So, we have been very cautious, very careful, very consistent in spelling out our posture on the Middle Eastern settlements. When we have gone around, for instance--I haven't, but Cy Vance has gone around to Israel, to Jordan, to Syria, to Egypt, to Saudi Arabia--to talk about a future Middle Eastern conference and, hopefully, a settlement, we have taken the same exact written set of principles so there would be no difference among them, and discussed it with Sadat and Hussein and Asad and Fahd and with Mr. Begin, so that there would never be any allegation on any part of theirs that we took one position with the Israelis and a different position with the Arabs.

Sometimes the Israelis would say, "We don't accept this principle number 4." Sometimes the Arabs would say, "We don't accept principle number 1." But we've tried to negotiate in good faith.

I might say one other thing. We are not just an idle bystander. We are not just an uninterested intermediary or mediator. Our country has a direct, substantial interest in a permanent peace in the Middle East. And I sincerely hope and I believe that the nations who live there also want to have a permanent settlement and a permanent peace in the Middle East. And the principles that I described in that speech, the principles that the Vice President described in a speech he made in California earlier this year, and the principles that we espouse in our public and private conversations with Arabs and Israelis and with Prime Minister Barre, yesterday, from France, and others who are interested, are exactly the same. We've never deviated.

We have learned a lot. And as we've learned, we've added additional new items onto our basic proposal. But ultimately, the Middle Eastern settlement has got to be an agreement among the parties involved.

Now, I hope that all the countries are eager to negotiate in good faith. I hope that none of them are putting up deliberate obstacles to prevent a Geneva conference from being convened. That's my hope and that's my present expectation.

Q. Thank you, sir.

THE PRESIDENT. I'm sorry that I have to leave. I've enjoyed it. You asked superb questions, and I always appreciate your coming.