The President's News Conference

THE PRESIDENT. It's nice to be back home. It's nice to start a new year. I have a brief statement to make before I answer questions.

ENERGY LEGISLATION

Much has been said about the messages that I carried on behalf of the American people to leaders of the nations which I visited on the recent trip. But it's also important to focus on the message that I received from them and brought back home.

They are looking to our country to see whether we have the will, the resolve to deal squarely with our energy problems, which are also becoming their problems. It's clear that our willingness to curb the enormous American national appetite for imported oil will be a consideration, for instance, in future OPEC oil prices.

As a nation, we are increasing our demands for foreign oil. We may have conservation forced on us by unexpected and rapid increases in oil prices in the future. Our consumers and our industries will pay more and more to foreign countries, and with those dollars that go overseas we are, in effect, exporting American jobs.

In Paris and in Brussels, our own allies expressed concern about whether we can and will enact strong energy legislation. If our own economy is not strong, if our strength is being sapped by excessive imports, then we can't provide the kind of leadership and stability on which the economic well-being of the Western democracies rests so heavily.

The United States has had and is still faced with a very large trade deficit which has led recently to exchange market disorders and exchange rate speculation. It's clear that our heavy dependence on imported oil is a main part of our trade problem and that our failure to adopt a comprehensive energy program has badly weakened confidence in our ability to deal with that problem.

Almost every foreign leader stressed the importance of our energy program in terms of our responsibilities for international monetary order and the maintenance of the integrity of the dollar.

We all recognize that while the energy program will not reduce our oil imports overnight, that it will reduce our dependence on foreign oil over the long pull and also permanently. It would improve our trade position, our national economy, the strength of the dollar in a fundamental way.

I believe that we do have the resolve and the national will to deal with the energy problem. The debate in the Congress

has been long and divisive and arduous. It has at times tried the patience of all of us. And delay has deferred action, unfortunately, on a number of other important national priorities.

But when we do succeed—and I believe we have an excellent chance to succeed early in this session—we will have accomplished something in which we can take pride, not just here at home but before the other nations of the world as well.

Thank you. I'd like to answer any questions you might have.

QUESTIONS

ENERGY

Q. Mr. President, in connection with energy, has there been any kind of a compromise reached on natural gas pricing? Do you think you'll get an energy program? And if you don't, what unilateral steps will you take? And I have a followup.

THE PRESIDENT. A followup to all three of those questions?

Well, there was a substantial amount of progress made by the conference committees just before Christmas. I think that many of the consumer-oriented House Members were willing to accept a compromise that was acceptable to many of the Senators. The problem has been and still is that there are nine Senators for and nine Senators against any sort of proposal that has been made up until this time.

Dr. James Schlesinger has been out on the west coast to meet with the chairman of the committee, Senator Scoop Jackson. I have talked to Senator Jackson on the phone. And he's told me that he has a redetermination to exert his own leadership and profound influence in bringing about a resolution of the present deadlock.

My guess is that the Congress is beginning to realize—many of them have long realized—the importance of this legislation. It will be the first order of business. It's the first priority for this year's work. And it is holding up other very important matters that the Congress is interested in.

So, I think the answer to your second question is that, yes, there will be a compromise reached. It will be acceptable to me and to the country. And I think it will come very early in this session.

The third thing, what will I do if the Congress does not act, is something that I'm not yet prepared to answer. There are authorities that I have and Dr. James Schlesinger has as head of the Energy Department that would be much more unsettling to our Nation's economy—the imposition of import charges on oil that we hope to avoid, and I think the Members of the House and Senate want to avoid those kinds of disruptive actions just as much as we do.

The present laws are inadequate to deal with the increasing problems of the energy demand, which are met so excessively by imports of oil. I think we do need to have passed adequate incentives. What we have proposed to the Congress would give oil producers for new oil the highest price in the world, and it would mean that in natural gas, there would be a substantial increase in prices to the producers, compared to what we have had in the past.

I think our proposal is fair and well balanced, and I think there's a growing consensus within the Congress that this is a basis on which to reach an agreement. And I hope to avoid having to take administrative action that would be damaging to the economy in order to protect us in the future.

Q. My followup was simply, were you surprised at the NAACP's opposition to your program, and do you think it'll have an impact?

THE PRESIDENT. I was surprised. I talked to the president of the NAACP this morning, Benjamin Hooks. He said the major thrust of their report was that they want to have a sustained growth in the economy and therefore provide additional jobs for people in our Nation. But I disagree strongly with the conclusion the NAACP reached, that the way to do that was to channel enormous sums of money, $40, $50, $60, $70 billion into the pockets of those who own the major oil companies, out of the pockets of consumers.

I want to have a strong economy, too. But I don't think that's the right way to do it.

SOVIET INVOLVEMENT IN AFRICA

Q. Mr. President, everywhere you traveled, except Poland, we were told that you and the leaders talked about Soviet and Cuban penetration in the Horn of Africa, but we only got very generalized and vague statements on this. Can you enunciate the depth of our concern, and what can we do about it except jawbone?

THE PRESIDENT. We've taken a position concerning Africa that we would use our influence to bring about peace without shipping arms to the disputing parties and without our injecting ourselves into disputes that could best be resolved by Africans, both those parties that are in dispute and the Organization of African Unity. The Soviets have done just the opposite.

They, in effect, contributed to the war that's presently taking place between Somalia and Ethiopia. They sold excessive quantities of arms and weapons both to Somalia and to Ethiopia. The war began using Soviet weapons, and now they are shipping large quantities of weapons, some men, and they are also dispatching Cubans into Ethiopia, perhaps to become combatants themselves. We have expressed our concern to the Soviets in very strong terms.

We have shared the concerns that we feel with the leaders that I have visited, both the cumulative group of countries that join with us in the NATO alliance, and specifically with France, the Middle Eastern countries, and India. We've had unanimous response from them sharing our concern about the Soviet Union's unwarranted involvement in Africa. I am very concerned about the loss of life now.

Our hope is that the Somalians might call publicly for negotiations to begin immediately to resolve the Ogaden dispute. One possibility, of course, would be to go to the Security Council of the United Nations or to the permanent members of the Security Council. But the basic negotiation ought to take place between those two nations themselves.

So, I think that there are things that we can do to express our concern publicly, to offer our good services in support of the African nations who are responsible, to support the Organization of African Unity, and in the United Nations to let our voice be heard. But I hope that we can induce the Soviets and the Cubans not to send either soldiers or weapons into that area and call for and achieve a rapid initiation of negotiations.

INTEREST RATES

Q. Mr. President, on another subject, will Miller, as head of the Fed, mean lower interest rates?

THE PRESIDENT. Well, I want lower interest rates, and I know the Fed does also, I'm sure, including Chairman Burns and certainly William Miller, who will be Chairman in the future, I hope.

We have here a problem in stabilizing the value of the dollar, which is the basis for most international trade on the one hand, of preventing excessive inflation, which is compatible with that, and still having interest rates low enough to encourage businesses to invest in stocks, to encourage them to create jobs with expansion, and to make sure that we have an economy that's stable and predictable.

So, I think that both Chairman Burns and Miller would like to have lower interest rates.

I hate to repeat myself again, but I think that until the question of energy is resolved, the uncertainty about this subject and the realization that our excessive imports of oil or adverse balance of trade is going to be permanent, those two things are going to contribute to the deleterious effects of increasing interest rates and also uncertainty in the stock market.

Mr. Bradley [Ed Bradley, CBS News].

U.S. ATTORNEY DAVID MARSTON

Q. Mr. President, you promised during the campaign to appoint U.S. attorneys strictly—without any consideration of political aspects or influence—strictly on the basis of merit. May we first of all assume that is also your standard for removing political attorneys, U.S. attorneys, and if so, why are you removing the U.S. attorney in Philadelphia, David Marston, who on the surface seems to have a credible record, which includes the prosecution and conviction of a number of prominent Democrats?

THE PRESIDENT. Well, the answer to the first part of your question is certainly yes. I intend to make sure that all the appointments that are made to Federal judgeships and also to U.S. attorneys are made on the basis of merit. And I think until each appointment is observed very carefully—who was in office compared to who is the replacement for that person in office—that it would be hard to criticize a particular instance.

I have recently learned about the U.S. attorney named Marston. This is one of hundreds of U.S. attorneys in the country, and I was not familiar with the case until it became highly publicized. The Attorney General is handling the investigation of the replacement for Mr. Marston. I think the focusing of attention on this case will certainly doubly inspire him to make a selection that will be admirable and a credit to him and to me, and I've not interfered in it at all.

Before I first heard about Mr. Marston, the Attorney General had already decided to replace him. We have encouraged the Members of Congress, Democratic Members of Congress, not to be involved in trying to influence the Attorney General about who should be the new U.S. attorney there.

I'd be glad to answer a followup question.

Q. Is it the Attorney General's feeling, sir, that he has not done a good job?

THE PRESIDENT. Well, I can't say that Mr. Marston has or has not done a good job. He was appointed at the last minute under the previous administration. He was not a practicing attorney, had never had any prosecuting experience. And the only criticism that I've heard about him was that he had a very heavy commitment to calling press conferences and so forth when he obtained evidence or when a grand jury took action in an indictment. I think this is not unique in the country.

I've not discussed the case with the Attorney General and asked him specifically what was wrong with Marston. I don't know who he will recommend to me for the replacement. But I can assure you that when the replacement is announced, that there will be the emphasis on the quality of the replacement, his qualifications compared to the incumbent. And I have absolute confidence that the Attorney General will do a good job in that respect.

FUEL PRICES

Q. Could I have a followup on energy? You have said that you want a fair energy bill from Congress.

THE PRESIDENT. Yes, I do.

Q. And you've indicated, repeated today again, a warning about funneling undue amounts of money from the pockets of the consumers to the oil companies. Yet your Energy Department has told some northeastern Congressmen that it will no longer continue weekly monitoring of home heating oil prices, that it will not monitor fuel prices at the refinery gates, and that if the prices to consumers do go up unduly this winter, they'll take action next winter. Now, how does that protect the consumers against a ripoff?

THE PRESIDENT. If what you say is true, then I don't see that it does protect the consumers adequately. I'm not familiar with that statement, but I will find out an answer for you and let you know the answer. ¹

¹ On the following day, the White House issued the following announcement:

The President said during his press conference that he would look into a question concerning monitoring of home heating oil prices by the Energy Department.

In July 1976, price controls on home heating oil and diesel fuel were lifted. A one season price monitoring system was instituted by the Ford administration for the 1976-1977 winter season to ease the transition to the free market.

That monitoring system expired, and work has been underway on a new system for some time. In accordance with Federal rulemaking procedures, a proposed regulation outlining the new system was published in September. Public hearings were held, and the final regulation establishing the new system is expected to be signed this week.

In the meantime, the Department has continued to monitor home heating oil prices through the Energy Information Administration. No significant increases in home heating oil prices have been detected in this heating season.

U.S. ATTORNEY MARSTON

Q. Mr. President, if I could pursue the Marston question-

THE PRESIDENT. Please do.

Q.—one step further. There have been reports that, first of all, Mr. Marston is in the midst of an investigation which involves two Democratic Congressmen from Pennsylvania. And there have been reports that at least one of them has sought to contact the White House or you yourself to, in effect, get Mr. Marston off their backs. I wonder if you are aware of any such contacts or intents, however informal, and what your reaction to such a contact would be.

THE PRESIDENT. The only contact I've had with any Congressmen directly was, I think, Congressman Eilberg called me and asked that we look into it. At that time, the Attorney General had already decided to make the change. When I talked to the Attorney General about it, before Eilberg had let his views be known on the telephone call, he said that the replacement would be made and that he hoped that the Democratic Congress Members who had shown an interest in it would not be involved in trying to decide who would be the replacement.

And this has been an assurance given to us by Mr. Eilberg. As far as any investigation of Members of Congress, however, I'm not familiar with that at all, and it was never mentioned to me.

Q. Could you tell me, sir, what reason Mr. Eilberg gave for asking you to look into it? And what do you mean by "it"?

THE PRESIDENT. He wanted the replacement process to be expedited. The decision had already been made to replace Mr. Marston, and I think the Attorney General can answer your question better specifically. And my importunity to Mr. Eilberg was that it would be better if the Congress Members would let the Attorney General make the selection on the basis of merit alone. And that was Mr. Eilberg's comment to me, that he had no interest in who would be the replacement at all, but he thought that because of the confusion there that the decision that the Attorney General had already made ought to be expedited. And I feel the same way. I have complete confidence that the replacement will be chosen on the basis of merit and not politics.

TAX CUT

Q. Mr. President, with signs now that the economy is improving, why should the tax cut that your administration is proposing be any larger than an amount necessary to compensate for the increased energy taxes and social security taxes?

THE PRESIDENT. Well, the tax proposal that I intend to make to the Congress will have an effective date of October 1. We anticipate, if projections hold true, that the first two quarters of 1978 will show very good economic progress in the growth rate, in the controlling of unemployment and inflation. But we believe that by the end of the third quarter, October 1, there will be a need to sustain the economic growth that we think we'll experience.

We are not trying to deal with an economy that's tottering or on the verge of collapse or in any danger. We have basically a very strong national economy.

The goal that we've set for ourselves for 1978 is a 5-percent growth rate. We were very fortunate in 1977 in reaching the goals that we set for ourselves, both in unemployment, as you know, and also in the growth rate. But we believe that a substantial tax reduction is needed for that purpose.

There are two other reasons. One is I want to reduce the portion of our gross national product that is collected and spent by the Federal Government. In my opinion, it's too high. It's approaching 23 percent. And by the time I go out of office, I would like to have that down to no more than 21 percent. And also with the encroachment of inflation, it moves people into a higher tax bracket with paying a higher percentage of their income in taxes just because their dollars that they earn are cheaper and they get more of them.

So, with inflation, you have, in effect, the imposition of higher and higher tax rates to the American people if the laws don't change. So, for that reason also, I want to reduce the rate of taxes paid by the American people.

So, I think that a substantial tax reduction is needed in 1978, and I believe the Congress will agree. So, we intend to do all three things, to compensate for increases in social security tax, to keep the economy moving strongly, and also to compensate for the effects of inflation.

STRATEGIC PETROLEUM RESERVE

Q. Mr. President, when talking about the aggravation of oil imports, the U.S. Government's strategic petroleum stockpile—I think your decision is to acquire 1 billion barrels of oil—

THE PRESIDENT. That's correct.

Q. — on the world market. Now, the GAO and others have recommended that we use oil we already own, in the Elk Hills Naval Petroleum Reserve, and that would save, I think, as you're going now, to about $20 billion you're going to spend in foreign oil. We could reduce this by half, a $10 billion saving if we used our existing naval supplies. Why don't we do that?

THE PRESIDENT. Well, we are, in effect, increasing the production of American oil to cut down on the amount that we have to purchase. At Elk Hills, at Teapot Dome, we're trying to increase the importing of oil to the continental United States from Alaska. We're trying to maintain the production of oil, sour oil, to some degree in California, in addition to reducing overall consumption of oil and energy and shifting to coal.

And at the same time, it's very important to us to have stability in the world oil market and protect us from some interruption in the future over which we have no control.

So, we've set a goal for ourselves that by 1985, we'll have a billion barrels of oil stored in a secure place in salt domes in the United States so that we can have an 8- or 10-month supply in case overseas oil is interrupted in coming to us.

So, the sum total of what we propose is to do exactly what you describe. Whether domestic oil actually goes into the supply system of our country and foreign oil goes into the underground storage is really of no consequence, because the overall consumption of oil plus the import or use of oil to build up our reserves is the factor that controls how much we import.

Q. Well, my question is—what it goes to the point of—the $10 billion savings. We already own the Elk Hills naval oil reserve.

THE PRESIDENT. Well, when we sell that oil, if it's on the commercial market, the Federal Treasury gets the money back for that oil. So, there's just really swapping dollars. It may be very difficult to transport the oil from Elk Hills and identify a particular gallon or barrel of oil that has to go into a salt dome in Louisiana.

Q. Well, they talked about swap arrangements, particularly with Japan. Japan would be very happy to have that very sweet Elk Hills oil, and they'd give us their Mideast oil.

THE PRESIDENT. I understand. But we're trying to do what I've just said, build up the adequate supply of oil for reserve and cut down consumption and imports at the same time.

Sarah McClendon [McClendon News Service].

U.S. BORDER PATROL HELICOPTER

Q. Who did you say? [Laughter] I thought you were looking over there.

Sir, I have a question I want to take up with you. On January 5, a helicopter, a border patrolman on board, was shot at from the Mexican side of the border, and according to Immigration Service, no plans are being made to make a formal, big, major protest on that through the White House or the State Department to the Mexican Government. The families and the border patrolmen are very concerned. They think if you don't make a major protest, you'll get this again.

THE PRESIDENT. Thank you very much. I will certainly look into it. We have only recently begun to use helicopters on the border patrol. We have in Mexico, however, in close cooperation with the Mexican Government, used our helicopters for the detection of poppy fields that produce heroin and other hard drugs in Mexico.

And my understanding was that the helicopter fired at was in the process of trying to destroy heroin poppy fields.

Q. No, sir, it was on this side of the border. The helicopter shot at was on this side of the border, was shot at from the Mexican side.

THE PRESIDENT. I understand.

Q. This has happened before with airplanes, but not helicopters. It's very dangerous with the helicopters.

THE PRESIDENT. Yes, until this past year we have never used helicopters for that purpose. But we are now.

U.S. ATTORNEY MARSTON

Q. Mr. President, to come back to the Marston matter for a minute, without gainsaying yours and the Attorney General's intention to appoint someone at least as qualified as he is, it's still not clear to me why he's being removed in the first place. Could you expand on what you've said already a little bit?

THE PRESIDENT. Well, I think I've covered that at least as far as I am able to. I've never looked into Mr. Marston's qualifications. I depend upon the Attorney General to assess the quality and the performance of duty of the U.S. attorneys around the country. And when he decides that a U.S. attorney needs to be replaced, then he makes the judgment about who ought to be the replacement.

He made, quite early in this past year, a decision that Mr. Marston should be replaced. I've never asked him to delineate all the reasons. And my only involvement in it at all was to expedite the process.

As I've told you, I have complete confidence in the Attorney General's judgment. I think he will recommend to me someone who will make me and him proud and particularly since there's been such a large focusing of attention on the case the last few weeks. And why the publicity has accrued to that case, I'm not sure. But I want to make sure now that when this selection is made, it ;rill be a superb person. And I hope and expect that it will be a man who's at least qualified, perhaps better qualified, than Mr. Marston, or perhaps a woman.

SMOKING

Q. Your Secretary of HEW wants to spend $23 million to persuade Americans to stop smoking, while there are people on your staff, Mr. President, who smoke in public like chimneys. Could you explain this apparent contradiction? [Laughter]

THE PRESIDENT. Well, I don't see the contradiction there. I can't deny that the Secretary of HEW, who's responsible for the Nation's health, points out, as have his predecessors for 15 or 20 years, that smoking is a danger to health. The U.S. Surgeon General, as you know, years ago confirmed this in tests. Now, I happen to think that that's his responsibility. And it's not his responsibility to tell a particular American citizen whether they can or cannot smoke.

Q. I understand, sir. But would you ask your White House staff to set a national example? [Laughter]

THE PRESIDENT. No, sir.

THE MIDDLE EAST

Q. When you were in Egypt meeting with President Sadat, President Sadat emerged from that meeting saying that your views and his on the Middle East were essentially identical. Does that mean that you think the Israelis should withdraw from all 20 settlements they have in the Sinai plus their West Bank settlements before there can be peace in the Middle East?

THE PRESIDENT. Well, it's not for me to decide the specifics of an ultimate settlement, either between Israel and Egypt, or Israel and Jordan, or Israel and the other nations involved or the Palestinians.

I think that it's accurate that President Sadat and I see the Middle East question almost identically. I've not been involved and don't intend to get involved in the military settlement that's now being negotiated in Cairo. The position of our Government is now and has been that Israeli settlements on occupied territory are illegal and that they contravene the Geneva conference decisions that were made.

The U.N. Resolution 242 is the basis for the ultimate decision. All the nations involved have espoused 242, and 338 later on, which set up the Geneva conference with ourselves and the Soviets as chairmen. We have in that language that says Israel will withdraw from occupied territories.

Combined with that requirement, though, is that Israel will have secure borders, including a realization of security from the attitude of her neighbors. So, this is an extremely complicated subject, as you well know. I can't say that on every specific instance that President Sadat and I will agree on details. We didn't discuss those details.

And I think that it's best for us just to add our good offices when we can, support both men as they go to the negotiating table. Secretary Vance will be in Jerusalem with the foreign ministers of the two countries involved, and our position on the settlements has not changed.

FRANK CORMIER [Associated Press].

Thank you, Mr. President.