The President's News Conference

INTERNATIONAL ECONOMY

FRANK AUKOFER. Oddly enough, we have questions that don't relate to what your speech was about, Mr. President.

The first question, which has been in the news much lately is—this comes from James Cary of the Copley News Service—what are you going to do about the deteriorating dollar and the basic cause of its collapse, soaring foreign oil imports? And a related question, by Joseph Slevin of the Slevin Economic Report, saying that European financial officials say the U.S. should defend the dollar more vigorously.

THE PRESIDENT. Thank you, Frank. I spent a lot of time studying about the American dollar, its value in international monetary markets, the causes for the recent deterioration as it relates to other major currencies. I can say with complete assurance that the basic principles of monetary values are not being adequately assessed on the current international monetary markets. There are three that I would like to mention specifically.

First of all, the attractiveness of investment in our own country compared to other nations is rapidly increasing. One of the reasons is the higher interest rates that can be paid on investments in our country.

Another one is the rapidly increasing consumption of oil that occurred during 1977. This caused us a great deal of concern. In 1978, we will not have that circumstance. Present trends and future projections show that at the worst we'll have a leveling off of imports of foreign oil, one of the major causes of legitimate deterioration in the quality of the dollar.

And the other point is the degree with which American economic recovery or growth compares to potential purchases of our own goods. In this last year, our own rate of growth was about 3 percent greater than the average of our major trading partners. That difference will be substantially less in 1978. We will still have adequate growth, but our major trading partners will have better growth than they had last year.

So, these three basic causes in 1977 for some lowering in the dollar's value will be much better in 1978. We do move aggressively and adequately to prevent disorderly market circumstances when that need is obvious to us. We'll continue to do that. But my own belief is that these basic principles that assess the legitimate value of the dollar have not been adequately observed recently. My guess is that in the future over a longer period of time, what I've just told you will be observed, and the dollar will remain in good shape.

THE COAL STRIKE; ADMINISTRATION'S PERFORMANCE

Q. We have a number of questions on coal. This one from Richard Strout of the Christian Science Monitor. Do you feel that the administration waited too long before intervening in the coal strike?

THE PRESIDENT. No. [Laughter]

Q. On another subject— [laughter] recent public opinion polls—this from Judy Woodruff of NBC—show a continuing decline in the rating people give you for your job performance as President. How concerned are you that your administration is perhaps developing a reputation for fumbling and ineptitude because of incidents like the Marston firing or for a failure to exert leadership because of the stalemate on the energy bill?

THE PRESIDENT. I might say that we have had to deal, and have decided to deal, with some longstanding, very difficult, controversial issues that in some instances had not been adequately addressed by my predecessors. I say that without criticism.

But obviously we needed a comprehensive energy policy years ago. No one has ever proposed it to the Congress from the White House until last April 20. This needs to be acted upon immediately by the Congress. The House completed its action last August. We still have not been able to break a deadlock in the Senate energy committees. Hard work is going on on that right now. It's one of the contributing causes to the lowered value of the dollar overseas. I think if we can get a resolution of the natural gas issue alone in the conference committees, immediately there would be a restoration of confidence in our Nation's will to act on a difficult question and our competence to deal with those complicated issues.

Obviously, we have addressed other measures that are difficult as well. We've had remarkable success, I think, in the last year in holding down the increase in inflation, in reducing substantially the unemployment rate, in having a carefully predicted increase in our gross national product. We've got a good record on budget preparation, cooperation with the House and the Senate, and we have learned in this last year.

There is some criticism that we acted too late in the coal strike and too early by others. My own deep commitment is that whenever the collective bargaining system can function, government ought to let it function. And I think, had we precipitously imposed our will in the coal strike deliberations, that effort would have been counterproductive. I don't know what the miners will do this weekend. I hope they'll vote affirmatively on the negotiated settlement. But I think it was not an exhibition of irresoluteness on our part. It was a carefully balanced judgment about what we should do.

We have addressed some questions on the Middle East that in the past had too long been ignored, trying to bring about a comprehensive settlement there. This is a very difficult, complicated issue over which we don't have control. We have encouraged direct negotiations with Israel and the major Arab countries. We've been successful in seeing that occur because of the action by foreign leaders, between Begin and Sadat, something that was hoped for for generations, or at least for decades. We've seen a recognition of Israel's right to exist by Egypt, and progress has been made; obviously, not yet have we been successful.

So, I think that the polls show that my own personal popularity is very high. The assessment of how successful our administration has been is disappointing, but it's a partnership between us and Congress, between us and the nations in the Middle East, between us and the coal miners and the coal operators. And government doesn't have the unilateral, autocratic control over some of these very difficult issues.

So, I'm concerned that there has not been a resolution of all of these major confrontations and disputes. But we're making good progress, and I'm not disappointed at the progress that we have made. I'm certainly not disappointed at our willingness to tackle issues that have historically been difficult to resolve.

NEW YORK CITY

Q. You mentioned your predecessors; this question relates to one of them. It's from Paul Healy of the New York News.

Mr. President, 2 years ago President Ford said from this podium that there would be no emergency Federal financial aid to New York City, prompting the famous Daily News headline, "Ford to City: 'Drop Dead.'" Yet President Ford later supported a loan program to the city that seems more generous than the one outlined on Capitol Hill today by Secretary Blumenthal. What is your response to this?

THE PRESIDENT. In the first place, as you know, the Congress moved well to prevent bankruptcy of the New York City government. We've had very close personal consultations with the mayor and other city officials, the banks, the unions, the Governor, and the congressional delegation here in Washington.

Yesterday afternoon I talked to the mayor, Mayor Koch, to the Governor, Governor Carey, and to Senator Moynihan, yesterday and this morning to Secretary of Treasury Mike Blumenthal. I think the proposal that has been put forward is basically adequate. It's obviously not everything that the New York City officials would want.

We believe in sharing the responsibility between the Federal Government—with the guaranteed loans—and those other entities that I described, local lending institutions, the unions' trust fund, the city government, and the State government.

This does provide a long-range guarantee of loans. It's not month by month or even year by year. Secretary Blumenthal recommended a 15-year period during which we would guarantee up to $2 billion in loans. I think it's a very reasonable and also very adequate proposal, and it's one that we are not presenting to the Congress idly. We intend to fight for it. And I know that there's a great deal of concern in the Congress that this might be a proposal that's too generous. I think it's adequate, not overly generous, and one that's worthy of our support. And it will get our support.

THE MIDDLE EAST

Q. Later this month you'll be meeting with Prime Minister Menahem Begin from Israel. Dick Ryan of the Detroit News asks: What do you hope to achieve during your meetings with the Prime Minister?

THE PRESIDENT. This will be my third meeting with Prime Minister Begin since he's been the leader of Israel. In addition, I communicate with him fairly frequently by personal letter, by diplomatic message, and on occasion by telephone. And both our own Secretary of State and other officials and his secretary of state and other officials come here frequently. Defense Minister Weizman will be here shortly to consult with me and with the Secretary of Defense, Secretary of State, and others.

We are looking for some common ground on which the Egyptians, the Israelis, the Jordanians, the residents of the West Bank and other areas can agree.

This is a difficult and sensitive question. As you know, the Gaza Strip has had an affiliation in the past with Egypt, the West Bank with Jordan, both now occupied by Israel. And we hope to search out at the top level of government some resolution of the differences on specifics relating to the Sinai and also on a statement of principles relating to the occupied territories of the West Bank and the Gaza Strip, hoping at that time that Egypt and the Jordanians and the Palestinian Arabs who live in the West Bank, Gaza Strip would be satisfied to conclude perhaps some agreements and to proceed with further negotiations leading to an ultimate resolution of the issue, based on United Nations Resolution 242.

One of the crucial elements of any progress in the Middle East is a cleaving to the commitment that U.N. 242 is a basis for continued negotiations and a solution. The abandonment of that would put us back many months or years. So, this is what I hope to accomplish with Prime Minister Begin, to frankly discuss with him my previous agreements and discussions with President Sadat, to encourage direct negotiations to be resumed, and to search out common ground, based on advice given to me by Secretary of State Vance and also by Mr. Atherton, on the latest possible language changes that might be necessary to let Egypt and Israel agree. So, this is what I hope to accomplish, and I believe the personal discussions will be good.

I would much prefer that the personal discussions be carried on between Sadat and Begin. But in the absence of that possibility at this moment, we hope to restore it and act as an intermediary.

CIVIL SERVICE REFORM

Q. There are several questions here related to the civil service reorganization. This is a combined question from Mary McGrory of the Washington Star and Mark Goodin of the Houston Post.

The first part is, what sort of protection will the Office of Special Counsel provide for whistleblowers? And the other part is that Frank Snepp, the ex-CIA agent, is the most famous whistleblower of all, writing a book exposing incompetence and treachery. After a report to the Inspector General produced no results, you're prosecuting him. How does this encourage whistleblowing?

THE PRESIDENT. Well, I'd like to respond to those completely unbiased questions. [Laughter] I don't look on Frank Snepp as one of the greatest whistleblowers of all times. He signed voluntarily a contract, later confirmed this agreement with the Director of the CIA, that before his book was published that it would be examined to assure there were no revelations of secret material. And I have not read the book; don't know the substance of it. I don't believe that he has revealed anything that would lead to an improvement in our security apparatus or the protection of Americans' civil rights.

But the Attorney General has decided that when a contract is signed that it ought to be honored. If everyone who came into the CIA or other highly secret organizations in Government felt free to resign because of a dispute or to retire at the end of satisfactory service and then write a book revealing our Nation's utmost secrets, it would be very devastating to our Nation's ability to protect ourselves in peace or war and to negotiate on a confidential and successful basis with other government leaders.

So, I believe-that this is important as a distinction to be drawn. The Special Counsel will be there, independent from me, to protect through the courts, if necessary, those who are legitimate whistleblowers and who do point out violations of ethics, or those who through serious error hurt our country. And this is a function that's not presently extant. I think it will be a step in the right direction, and there will be presentation after investigation to both the public and, if necessary, to the mechanism by which employees' rights are protected and, on an appeal basis, to the courts themselves.

SOVIET INVOLVEMENT IN THE HORN OF AFRICA

Q. Mr. President, this is from Warren Rogers of the Trib of New York. With the Soviets active now in the Horn of Africa, and with other strains in U.S.-Soviet relations, what hope do you have for early resumption of SALT talks?

THE PRESIDENT. The SALT talks have never been discontinued or delayed. They are ongoing now, and the Soviet involvement in the Horn has not interrupted that process. We do not initiate any Government policy that has a linkage between the Soviet involvement in Ethiopia-Somalia dispute on the one hand and SALT or the comprehensive test ban negotiations on the other.

Obviously any negotiation, if concluded successfully at the executive level, would have to be ratified by the Congress, who would be heavily influenced by opinion of the American people. And the fact that the Soviets have over-armed to the teeth, the Somalians who then use Soviet weapons to invade Ethiopia and now are overarming Ethiopia and directing their military effort has caused a threat to peace in the Horn area of Africa.

We have added our own importunities for a peaceful resolution and our own caution comments to the Soviets. They have assured me directly through Foreign Minister Gromyko that the Ethiopians would not cross the Somalia border. We have sent a delegation to meet with President Mengistu, who assured me personally that they would not cross the Somalia border.

We have three hopes there that we trust and certainly hope that the Soviets will honor.

One is a Somalian withdrawal from the territories which they occupy in eastern Ethiopia, in the Ogaden area; secondly, a removal from Ethiopia of Cuban and Soviet troops; third, a lessening of the tensions that exist between those countries and an honoring of the sometimes arbitrarily drawn international boundaries in Africa.

And we would hope that the OAU, the Organization of African Unity, would become more successful in their efforts to resolve this dispute in a peaceful way. But at this time, Somalia is the invading nation. We have refused to send any weapons into that area or permit third countries who bought weapons from us to transfer them into that area, and I think our policy is completely accurate.

The Soviets' violating of these principles would be a cause of concern to me, would lessen the confidence of the American people in the word and peaceful intentions of the Soviet Union, would make it more difficult to ratify a SALT agreement or comprehensive test ban agreement if concluded, and therefore, the two are linked because of actions by the Soviets. We don't initiate the linkage.

U.S.-BRITISH AIR SERVICES AGREEMENT

Q. Mr. President, we have several questions related to the Braniff Airways lowcost service between Dallas and London, one from Ross Mark .of the Daily Express of London, and another from Roy Bode of the Dallas Times-Herald.

First of all, have you received a recommendation from the CAB for retaliatory action, and do you plan to take such action against the British carrier? And secondly, do you believe that the British Government is abiding by its commitments in the Bermuda II airline agreements?

THE PRESIDENT. I have not received a recommendation from the CAB at this moment. When the recommendation gets to me, I, by law, will have to act and will act immediately.

I don't know enough about the issue, the details of the British Government ruling, to know whether or not they have violated the agreement that was concluded this past year. My guess is, knowing the British, that they have not violated the agreement specifically. But, as you know, an agreement can't be that detailed to anticipate every individual ruling that will be concluded by the CAB on our side or its equivalent agency on the British side. I don't know much about the issue yet.

But if there is a violation, we would express our concern directly to Prime Minister Callaghan. And when the CAB gives me a report and a recommendation, the chances are that I would honor it.

We have had notable success in 1977 in increasing competition, particularly in international routes of air carriers. We have encouraged the additional competition of American airlines in this area, as well. We hope to get the Congress to act on substantial deregulation in the airline industry within our country. I believe that we've made notable success already, and we have withstood a tremendous pressure from the British to have more Government protection, which would be contrary to competition in the agreement that we reached last year.

SOCIAL SECURITY FUNDS

Q. At the risk of showing favoritism, I'll ask a question from Jack Cole of the Milwaukee Journal. Would you support legislation to reduce social security payroll taxes by transferring the hospital care and disability portions of the program to funding by general Treasury funds?

THE PRESIDENT. I don't think that 1978 is the time to further modify in any substantial way the social security law which was just passed this past year. Our own recommendation to Congress in 1977 did involve some transfer of funds and some use of general funds from the Treasury if the unemployment rate and/or the inflation rate caused excessive drains on the reserve funds. I think the Congress was very courageous and acted properly in increasing social security payments into the funds to maintain the integrity of the system itself.

Had they not acted, we would be in a crisis stage right now. We are convinced that the recommendations that I have made to the Congress to lower income taxes will compensate in almost every instance for the increase in social security tax payments that were passed by a previous administration, and also increased this past year.

So, I don't think 1978 is the proper time to change it. I think that the principles of partial use of general funds under certain circumstances is a sound one that we did advocate, and transfer of moneys from one fund to another is a principle which we would also espouse when the time comes, if it does, for additional changes in the social security law. That's what we recommended last year.

HAMILTON JORDAN

Q. Mr. President, we thank you very much for appearing here today, and I have one final question for you for which I'll take full responsibility.

In view of the 33-page, so-called Jordan report, is there any truth to the rumor that you're planning a White House conference on etiquette in singles bars? [Laughter]

THE PRESIDENT. This is a matter that had not previously come to my attention until just before this press conference. [Laughter] I've known Hamilton Jordan a long time, and I have discounted the story because they said he was drinking amaretto and cream. [Laughter] The White House conference is certainly worthy of consideration. My own personal advice would be that perhaps in the future Hamilton might substitute peaches for the amaretto. [Laughter]