The President's News Conference

IMPACT OF CONGRESSIONAL APPROPRIATIONS

ADD-ONS ON THE BUDGET

THE PRESIDENT. [I.] Ladies and gentlemen, we had some meetings yesterday and today. We had some earlier in the week that may be of interest to you. I thought if you would like, I will review them very briefly with you.

Within the last week, I have talked to the Democratic leaders concerning the congressional add-ons to the authorization and appropriation bills recommended in the President's January budget. At their suggestion we had a bipartisan meeting yesterday afternoon and reviewed in some detail some of these specific add-ons and the potential add-ons.

At the suggestion of Senator Dirksen, Mr. Ford, Mr. Mansfield, the Speaker, and Mr. Albert,¹ we asked the chairmen of the subcommittees on appropriations of the House and Senate, full committees of the House and Senate, the ranking minority members, and other members of the appropriations committees to come and meet with us this morning.

¹Senator Everett McKinley Dirksen of Illinois, Senate Minority Leader, Representative Gerald R. Ford of Michigan, House Minority Leader, Senator Mike Mansfield of Montana, Senate Majority Leader, Representative John W. McCormack of Massachusetts, Speaker of the House of Representatives, and Representative Carl Albert of Oklahoma, House Majority Leader.

I pointed up to them that we have had relatively few appropriations bills arrive at the White House. But up to this point the add-ons amounted to a little less than $1 billion. However, the budget statisticians and estimators indicated a potential add-on of between $5 billion and $6 billion to the President's budget, which would throw that budget somewhere up in the neighborhood close to $120 billion without any Vietnam supplemental.

If we carry on the war at the present rate that it is going--if the war goes beyond June 1967, as you have been told several times and Secretary Rusk and Secretary McNamara has testified before the committees--there will be a substantial supplemental for Vietnam. But we can say at this time, while last week we took steps to reduce what could be a potential reduction of $1 billion in air ordnance, this morning the Secretary had to take an increase in, we will say, 105 millimeter ammunition. While last week he might have found a reduction in some item, this week he will have increased petroleum charges because of the increased number of sorties. So we cannot tell about that at this stage.

We have ample funds to carry us through next spring--some date then. We have authority to use them. There is now $100 million available--somewhere in that neighborhood. We are looking at it very carefully. We won't know when we will make a request for additional funds for Vietnam. That will depend on developments, circumstances, and studies that are now being made.

We do know that the Congress is now acting on the appropriations bills. Other than the Defense Department, there are indications that there will be very excessive add-ons that will total between $5 billion and $6 billion.

COURSES OF ACTION TO PREVENT

OVERHEATING THE ECONOMY

[2.] So I outlined to them the alternatives. I want to stress to you that is an alternative--I want to repeat--an alternative now in dealing with the economy that is heating up.

There are three real alternatives to deal with it, according to the economists. One is price and wage controls. Few, if any, recommend that alternative number one.

Number two, the alternative of reducing expenditures. The votes would indicate, from the increase in the pay scale yesterday that I signed, the military authorization that has been passed, the military appropriation bill up today, that there are going to be no reductions today. The Congress itself is voting those unanimously. Therefore, you have to look at the nonmilitary items.

In the budget estimates there are only $23 1/2 billion of items that are reducible. You take out the compensation, the social security, the contracts that already have been awarded, the civilian and military pay, the interest on the public debt, and those items, and you only have $23 1/2 billion that is reducible.

It appears that might be increased by some $5 billion or $6 billion. The HEW appropriation bill is about half a billion dollars as it passed the House. The Agriculture appropriation bill is a little under $100 million as it passed the House. Water pollution is a little under $276 million as it passed the House. Military medical benefits are $213 million.

There are indications that the inability to finance the sale of properties under HUD could run over half a billion dollars. The interest on the public debt would be up about $150 million over the estimate. The pay raise is about half a billion dollars.

So there are some of the items that I called to their attention and asked that they carefully review them.

So, alternative number one--controls-seems to have no support.

Alternative number two--reducing nondefense expenditures--is a matter we discussed with them, the possibility of doing that. They are going to evaluate that very carefully and see what the Congress can do, because if the Congress is unable to do that, that carries you to alternative number three. This would either mean a substantial deficit and deficit financing, which we would prefer not to have, or a tax bill.

THE NEED FOR RESTRAINT IN CONNECTION

WITH APPROPRIATIONS INCREASES

[3.] Now, before we can determine whether we will have a deficit or a tax, we have to see what happens to their ability to restrain these add-ons. If we can stay within the budget, we would like to. We are going to make that attempt.

So the purpose of the meeting was to ask them to see what they could do to restrain them. I reported to them that for the third consecutive year our deficit, the 1966 deficit, was less than we anticipated. We anticipated that deficit would be $5 billion 300 million when it was submitted to Congress 18 months ago. That estimate was revised last January. It was estimated we would have a deficit of $6 billion 400 million.

Actually, we have reduced the nondefense expenditures this year by $600 million. We have substantially increased the military expenditures and the revenue. But the deficit that was estimated 18 months ago at $5.3 billion and 6 months ago at $6.4 billion, is today, at the end of the fiscal year, final, $2.3 billion--the lowest deficit in the last 3 years.

This marks the third straight year in which the actual deficit has been lower than what the President has predicted in his State of the Union Message.

I think it demonstrates that we are maintaining a very strong and healthy economy. For that reason, I want the Members to work with us to try to continue that strong and healthy economy and that is only possible if revenues can approximately match expenditures. In this year, our revenues have considerably exceeded our estimates. I am very proud of this fiscal achievement.

I hope Members of Congress will do what they can to be helpful. We will be in constant touch with them and make whatever decision is needed to be made down the road.

OTHER MATTERS DISCUSSED AT THE MEETINGS

[4.] I think, in summarizing, I would include other things that we talked about. I gave them the weekly report from Ambassador Lodge and General Westmoreland which comes to us. It is a secret report. It gives the developments from the military standpoint.

I reviewed with them the estimates on farm income that the Council had just reported to me. The revised data for the first quarter now shows that the realized gross income was $48.4 billion. That is up from the earlier estimate of $47 billion, up $1.4 billion.

Q. Is that at the annual rate, Mr. President?

THE PRESIDENT. For the first quarter, that is, the farm income rose even higher than we had thought. The revised data for the first quarter showed realized gross income of $48.4 billion, up from the earlier estimate of $47 billion. It shows for the first half, as a whole, that the gross farm income was up 8.1 percent from 1965; up 28.1 percent from 1960; net farm income was up 10.2 percent from 1965, or 39.6 percent from 1960. Net per farm was up 13.6 percent from 1965 and up 67 percent from 1960.

We reviewed the price structure, the farm products, the processed foods, the industrials, Consumer Price Index, and so forth.

Q. Mr. President, were those figures of gross income up and so forth in billions or in percentages?

THE PRESIDENT. These are in percentages.

SUMMARY AND INVITATION TO QUESTIONS

[5.] So I want to emphasize what the meeting was about this morning. It dealt with two things, very simple: The add-ons that had been made up to now, which are short of a billion dollars, to the budget. The potential add-ons which could be between $5 billion and $6 billion, for nonmilitary-I mean non-Vietnam.

And those items I told you are education, health, agriculture, pollution, and general over and above the budget. That is it.

I will take your questions within a reasonable limit.

I gave you this briefing because I did conduct the meeting this morning myself. I thought I could give you a summary a little better directly than through somebody.

I have a Security Council meeting now. So you follow the questions and take a reasonable time.

QUESTIONS

MEETING ON BIPARTISAN LEADERS

[6.] Q. Mr. President, what specifically did you ask the bipartisan leaders, the group this morning, to do?

THE PRESIDENT. I asked the chairmen of the committees to meet with the chairmen of their subcommittees and their ranking minority members and scrutinize every proposed add-on to the budget.

Of course, the desirable thing would be to keep the budget to $113 billion. But we have already added a billion dollars, so we can't do that--through appropriations it is now $114 billion. But, in any event, I pointed up there has been a billion dollars added on.

The bill I signed yesterday was within our guidelines. We had hoped that this inflationary pressure would not hit us in July, but would hit us in January. This started the $500 million earlier than we had hoped. It has cost us. But that is already a fair accompli. There was one vote in the House against it and none in the Senate. Representative Fogarty voted against it.

I talked to the leadership about it. I think they would like to be helpful, but the sentiment was not there.

NEWS CONFERENCE PLANNED

[7.] Q. The North Vietnamese Ambassador to China said--

THE PRESIDENT. I would like to get in the war picture and Vietnam tomorrow, if I could. I have the Security Council waiting for me. I don't want to go into general questions.

Incidentally, if that meets with your pleasure, we will have a press conference at 4 o'clock tomorrow, if we can arrange for the East Room.² You can have radio and television.

²See Item 338.

PROSPECT OF TAX INCREASE

[8.] Q. In the three alternatives, Mr. President, it seems to me unless we can keep the add-ons reasonable, there will have to be a tax increase.

THE PRESIDENT. No. There are three alternatives. The first one appears out. From there we don't know. I wouldn't make the mistake of saying the President intimated anything. I think it is a very serious error. We don't know. The President doesn't know. He would like to be positive this is the course. The first thing we are going to do is: We are going to see what can be done to reduce expenditures. Once we look at that and we look at the Vietnam expenditures, the thing will shape up a little better.

POTENTIAL APPROPRIATIONS ADD-ONS

[9.] Q. Mr. President, you listed some figures here, half a billion dollars HEW, $300 million, $276 million water pollution, and that kind of thing.

THE PRESIDENT. Those are founded figures.

Q. These are proposed add-ons?

THE PRESIDENT. These are add-ons that have passed the House or that have been in committee. They are the things that appear to the budget people as likely add-ons. These figures I believe are rounded, so I want to make that clear. I don't want to get my credibility involved here.

CONGRESSIONAL REACTION

[10.] Q. Mr. President, did you get any encouragement from the leaders?

THE PRESIDENT. I found every man present very cooperative and very anxious to work nonpartisanly to maintain a sound fiscal situation. They were very cooperative, helpful, and courteous. They made good suggestions. There are a lot of demands for these appropriations.

We know that for too long we have delayed educating our people. We know that for too long we have delayed facing up to our pollution problems. We know that for too long we have not faced up to our health dangers.

But we have made recommendations in the budget. We have gone just as far as we think we can go in the light of the economic situation as we see it. It is $113 billion. What we are talking about is not the $113 billion, because if we cut everything out of it that is not frozen, we couldn't cut but $23 billion. That is all you have to work with. What we are talking about is the potential $5 billion or $6 billion that is being considered.

Q. Mr. President, do you think it is fair to say that what you told these gentlemen adds up to saying if they don't cut back these add-ons--

THE PRESIDENT. No. I would stop you there. I wouldn't say I made any ultimatum to them at all. We haven't reached that point. What I said is, "Fellows, you go and see if you really want to add to this $113 billion, and we hope that you won't. We recommend that you don't."

But to trace it beyond that will get you in water over your head, because I don't know exactly how deep that water is myself until we can see what the add-ons are, until we see what the Vietnam expenditures are. I have seen the best intentioned people send the stock market down. I don't want to do that.

POSSIBILITY OF SPECIAL SESSION OF CONGRESS

[11.] Q. Mr. President, do you see any possibility of a special session of Congress for a supplemental for Vietnam?

THE PRESIDENT. That hasn't been discussed with anyone. I haven't heard it mentioned.

PROBLEMS IN FORECASTING EXPENDITURES

[12.] Q. On the ammunition that Secretary McNamara is having to order as of today, does this wipe out the savings that he had?

THE PRESIDENT. I was trying to use that as an illustration to you. No, it won't. It is just one item out of hundreds that he deals with. I was trying to illustrate to you the problems of saying concretely what will happen a year from now. He knows what he plans for if the thing would be ended June 30th. We have asked for that. But if it is projected further, we don't know. That changes from day to day.

For instance, this January the best estimators we had thought it would be a $6.4 billion deficit. But it is now $2.3 billion, That is how much change there is. Thank goodness it is down. All three deficits have been down.

When we came in in November, following the budget that started in July under President Kennedy, we had an $11 billion. plus deficit estimated. The next budget was $5 billion-something, and we reduced that to $3 billion-something. This one was first estimated at $5.3 billion and revised to $8.4 billion. It has been reduced to $2.3 billion.

Next year is going to be the really tough year, because of these potential add-ons. The budget last year that went up was $99 billion-something. The Vietnam expenditures carried us to $106.9 billion, from $99 billion. The budget this year went up to $113 billion.

But these potentials look like it can run up to--we don't know. It depends on the Congress.

DEFICIT FOR 1967

[13.] Q. What is the deficit estimate for 1967?

THE PRESIDENT. It depends on Vietnam.

Q. What went up with your budget?

THE PRESIDENT. $1.8 billion.

Merriman Smith, United Press International: Thank you, Mr. President.