The President's News Conference

THE PRESIDENT. [1.] I have summoned you to this hastily called, impromptu press conference for the purpose of giving you some information that I think you will be interested in. That information is that we are signing a continuing resolution providing funds for the operation of the Government for another 3 weeks.

I have a brief statement here. It will be distributed to you shortly. If you want to follow it as we go through, I will go slowly enough so you can make some notes on it.

REDUCTION IN FEDERAL SPENDING; THE TAX BILL

I have signed House Joint Resolution 853. ¹ This measure provides continuing appropriations for 3 more weeks until October 23, 1967, for those agencies whose regular appropriations for fiscal 1968 have not as yet been enacted by the Congress. Four have been enacted.

¹ Public Law 90-102 (81 Stat. 256).

Of the 14 major appropriations bills recommended in January, 10 are still pending in the Congress. My recommendations on each of these bills are unmistakably clear. They have been before the Congress for 9 months.

Over the past several days, the House has debated this continuing resolution. I have signed it here.

During that debate and during hearings before the House Ways and Means Committee, there have been numerous statements calling for unspecified reductions in fiscal 1968 expenditures.

Just a few days ago, in fact, a majority of the Members voting in the House expressed the desire for unidentified reductions in Federal expenditures--many wanted a $5 billion reduction in fiscal 1968.

A reduction of $5 billion in fiscal 1968 expenditures would require appropriations cuts of up to $10 billion, a reduction many times larger than the entire Congress by its specific appropriations actions to date has been willing to make.

Against this background, it is essential for the Nation and the Congress to recognize these key facts about the budget:

First, the budget I submitted last January for fiscal 1968 represented the best judgment of the President, his economic and budget advisers, and his Cabinet and the directors of the independent agencies.

That budget was carefully drawn, fiscally responsible, and prudent. It represented a reduction by the President of $27 billion from the requests made by the civilian agencies and the military services. I believed then and I believe now that at that time the administration's budget represented the best allocation of Federal resources to meet the Nation's needs.

Second, last July and August it became apparent that revenues would be lower than anticipated and that defense expenditures, always difficult to estimate in the middle of a war, were rising.

I immediately consulted with the congressional leadership and the Chairman and the ranking minority member of the House Ways and Means Committee. After those consultations with the bipartisan leadership of both Houses, I reviewed the request made in January for a tax increase. That January request was raised to provide for a total tax of about one penny on each dollar of income.

I stated then, and I state now that this tax will be less of a burden, in my judgment, on the average American family than the inflation tax that will come if the Congress refuses to face up to its responsibility.

All taxes are burdensome, but the cruelest tax of all is the inflation tax that will follow inaction of the Congress.

Third, at the time of my tax message, I directed a review of each appropriation bill as it was passed in an effort to eliminate amounts equivalent to those that might be added by the Congress as well as to recommend "every possible expenditure reduction--civilian and military--short of jeopardizing the Nation's security and well-being."

That is a quote from my tax message.²

² For the message and related news conference, see Items 329 and 330.

I did this only because it appeared that the Congress was unlikely to make any substantial reductions in the budget in overall amounts and in certain areas might actually vote to increase it. In fact, some of the first bills reaching me this year--the Government employees insurance bill, which I vetoed, the veterans benefit bill--contained large increases.

Moreover, the House will have before it shortly the civilian pay bill.³ As reported out of committee, that bill already exceeds my 4¼ percent pay raise recommendation and will add at least $63 million to my fiscal 1968 budget and some $35° million to $400 million to the fiscal 1969 budget.

³ For the President's remarks upon signing the Postal Revenue and Federal Salary Act of 1967, see Item 546.

Fourth, of a total budget expenditure of over $136 billion recommended in the January budget, $115 billion or more are for national security or expenditures fixed by law (such as veterans benefits and medical payments) and binding contracts already signed as authorized by the Congress over which the President has little or no discretion. Only the Congress can repeal or amend the laws under which most of these funds must be spent.

There remains some $21 billion in expenditures. The expenditures in the major civilian appropriation bills subject to reduction are as follows:

Enacted: Million

Treasury, Post Office ............... $900

Interior and related agencies ..... 700

Secretary Barr,⁴ speaking for the Treasury, reported to the Treasury and Post Office Committee this morning in connection with that bill. The Interior Secretary reported to his appropriate subcommittee his views yesterday or the day before.

⁴ Joseph W. Barr, Under Secretary of the Treasury.

The other bill is the legislative appropriation bill. That is a matter for Congress.

Pending: Not received or signed

Billion Agriculture and related agencies. $3. 1 HUD and independent offices. 2.9 NASA 3.6 Labor-HEW 3.6 Public works, including AEC 2. 2 State, Justice, Commerce, etc 1. 6 Transportation 1.1 Foreign assistance and related agencies, excluding military aid 1.0 Other items awaiting authorization 9 Total major civilian bills $21. 6 Fifth, the executive branch cannot spend 1 dollar, hire one employee, or let one contract without appropriation or authorization by the Congress. If a majority of the Members of the House and Senate desire wholesale cuts in Government spending, the course is through the normal appropriation process--the careful examination by the Congress of specific appropriations for specific programs. This has been a procedure woven deeply into the experience and tradition of the American Government.

Those House Members who now urge unidentified budget reductions can specify where to cut, and by how much--just as the President did in reviewing agency budget requests and preparing his budget for the Congress in January.

The Congress has ample opportunity to cut specific programs in the 10 major appropriation bills still pending in the Congress. We will try to come into agreement with the legislative branch on the three bills already acted upon by the Congress and the President.

I would interpolate that we have done that in the two instances and the legislative appropriation bill is a matter for them. We have gone before them and submitted our views.

The historic power of the Congress over the appropriations process is a sound tradition. The appropriation process is far preferable to a procedure which imposes an overall expenditure limitation inconsistent with prior and subsequent appropriation action and which explicitly assigns to the President blank check power to make wholesale reductions in expenditures without the approval or checks by the Congress.

I am deeply concerned about the cost of the delay in enacting a tax bill, not only in the approximate $20 million that we are losing each day now in revenues, but also in sharply rising prices and interest rates. For example:

--3-month Treasury bills have risen from a 1967 low of 3-33 percent to 4.52 percent yesterday.

--6-month Treasury bills from 3.71 percent to 5.06 percent.

--12-month Treasury bills from 3.80 percent to 5. 15 percent.

--1-year Federal agency paper from 4.35 percent to 5.60 percent.

--AA corporate bonds from 5.22 percent to 6.33 percent.

--New municipal bonds from 3.4° percent to 4.19 percent.

Failure of the Congress to act on the tax legislation is costing not only the Federal Government, but millions of Americans, many millions of dollars in interest rates-when they buy their homes or their automobiles or borrow money to send their children to college. And continued failure to act will cost many millions more in inflated prices as each week passes.

The President cannot take over the appropriation process. The executive branch cannot impound appropriations until both Houses of the Congress are in agreement and have passed the appropriations to be impounded.

This is not a problem of parties or politics--and should not be permitted to become a partisan matter. For it involves the fundamental powers--and responsibilities-of the legislative and executive branches in our democracy.

It is my considered view that it neither is necessary nor wise to delay action upon the tax measure until the final passage of all the appropriations acts and the announcement of any additional reductions or deferrals by administrative acts consistent with the pledges that I made in my tax message.

There may be some differences between the Congress and the Executive on how much of a tax increase or how much of a definable expenditure reduction is appropriate.

But I would hope that the administration and those responsible for the legislative process could develop an appropriate procedure for resolving any differences that might exist.

The Secretary of the Treasury and the Director of the Budget have been ready all this week--and stand ready today--to work with the House Ways and Means Committee and the House Appropriations Committee, and other appropriate congressional committees to this end.

They are ready to explore the various alternative procedures pursuant to and consistent with my tax message that lead to a resolution of this impasse involving the appropriation process in the House Appropriations Committee, the taxing process in the House Ways and Means Committee, and the actual expenditure of appropriated funds involving the President, the Director of the Budget, and various department and agency authorities.

The American taxpayer is entitled to an efficient and responsive Government. He is entitled to have the House and the Senate coordinate their efforts and make the wishes of the Congress on appropriations bills known in a clear and a timely manner.

Whatever the wish of the Congress, I ask that it act promptly. I pledge to do my best to cooperate wherever I can in good conscience.

I shall be glad to take any questions on the subject to clarify the statement or explore it further if you want to.⁵

⁵ For the President's statement on December 19, 1967, upon signing House Joint Resolution 888 providing further continuing appropriations for fiscal year 1968, with provisions for reducing Government spending, see Item 556.

QUESTIONS

[2.] Q. Mr. President, have you, yourself, decided how much could be squeezed out of that $21 billion that I think is called inflatable sometimes?

THE PRESIDENT. We do not know what will be in those bills until they come to us.

As a hypothetical example, let us take appropriation bill "A". This is not an actual case, but let us assume the budget request was $5 billion. Let us assume the House carefully pruned and cut it to $4 billion and the Senate added to it, making it $6 billion. We do not know whether we are cutting $4 billion or $5 billion or $6 billion. Obviously, if the $6 billion came to us and we had only asked for $5 billion to begin with, we probably would be able to reduce it by a billion dollars or more.

But if the $4 billion came to us and it had been cut already a billion dollars, you would have an entirely different proposition.

Also, some items may be added to that which we think are not necessary--and some that we think are highly necessary may be taken from it--which would create other problems.

There would not be any great delay, however, if the House and Senate consider these matters and make their decisions. The general process is for them to decide how much they want to cut or how much they want to increase.

Now if the House by a majority vote--as it did the other day in recommitting this resolution--feels very strongly on reductions-the House has passed these bills now and we are prepared to go before them and say, "Here are the reducible amounts. After you tell us how much we will be allowed, we will either sign the bill when it comes to us or veto it, and give you a chance to override the veto."

I am glad to say we haven't had to veto any. A good many bills are in Congress and could come to us in a reasonably short time. We hope they do. We hope they will come containing the judgment of the Congress, so it wouldn't be necessary to take any further action.

[3.] Q. Mr. President, has Congress explained to you why they want you to specify the reductions or do you have a theory on it, rather than for them to do it?

THE PRESIDENT. I don't think the Congress has stated any position to me on it. There have been individual statements by individual people. I do not know that they are all in agreement.

For instance, members of the Senate Appropriations Committee could feel quite differently from members of the House Ways and Means Committee, or members of the House Ways and Means Committee could feel very differently from members of the House Appropriations Committee, or the House Labor and Education Committee.

So it is a matter for them to come to an agreement among themselves first. We cannot impound funds from an agreement reached by the House and Senate until the House and Senate agree. A good many of these bills are still in conference and they have not resolved the differences between themselves.

[4.] Q. Mr. President, your statement speaks as if there is something of an institutional breakdown between the Executive and legislative, and I think you also called for some better procedure for resolving this.

Do you have any specifics in mind for a different procedure? Has there been an institutional breakdown that needs to be remedied with a substitute procedure?

THE PRESIDENT. Did you say I thought there had been?

Q. I interpreted from your remarks that you had seen this as a breakdown.

THE PRESIDENT. I don't believe I said that.

Q. You spoke about mixing up the appropriations process.

THE PRESIDENT. I said they have a difference of opinion that they have not resolved yet. The bills have been there for 9 months. When they act upon them, we want that to represent the majority judgment of the two bodies. Then we will immediately act upon them by signing or vetoing them.

[5.] Q. How much more would the inflation tax cost them than the 10 percent surcharge?

THE PRESIDENT. I don't believe the extent of that can be predicted. I believe the testimony before the committee--if you will recall when the first witnesses appeared--indicated that at least some of the members of the committee felt that the economy 'might be sluggish and there might be reasons for not enacting a tax bill in that amount at that time because of the sluggish economy.

I believe as the testimony developed, most of the members indicated that they got away from that viewpoint.

Then they got to the viewpoint of restraining expenditures. We--as we said in our message--are very anxious to have them act upon these and restrain any expenditures that they feel ought to and can be restrained. We want to do the same thing.

We believe both of them are important. We believe if you don't have restraint on expenditures and you don't have a tax bill, you will see an increase in the cost of living and in the Consumer Price Index, as we have been seeing with each report.

You will see an increase in interest rates. You will see a slackening off in the housing market, and these attendant developments that will follow inaction on the tax bill and inaction on restraints on appropriation bills.

There is a great deal of uncertainty when you are trying to let contracts, trying to make plans for a program and you are trying to operate in far-flung places in this country, all 50 States, when after 9 months you don't have a decision on how much it is appropriate to spend there. So we think two things are important:

It is important to make a decision on the tax bill and it is important to make a decision in the appropriations bills.

Both of those decisions are pending in the Congress. Once they are made, whatever confirmation we have to take in connection with them--we can't veto a bill that doesn't come to us or we can't sign one that doesn't come to us--as soon as they come, we will have very prompt action within a period of a relatively few days.

We believe if neither action comes, we will have increases in the cost of living, the cost of money, a general weakening of the dollar, and general inflation that we will all have to bear, particularly those in the lowincome group.

[6.] Q. Mr. President, you have given us two examples, at least, of what you think will be the rather immediate effect if no tax increase is granted, or if your increase is not granted. One is the increase in the cost of money and the other is the slowdown of building of houses. Can you give us any other example of immediate effects as it affects the ordinary person?

THE PRESIDENT. Yes. I believe it results in a general inflationary spiral that has a tendency to increase prices across the board. It results in a higher cost of living for every family's cost of living. I think it will be reflected in all of the prices that you pay.

[ 7.] Q. Mr. President, at this point, what date would you hope the tax surcharge would go into effect?

THE PRESIDENT. The date is recommended in the message. I believe that is the better part of wisdom. It might have to be delayed a few weeks, a few days, on account of the collection problem on personal incomes, having passed the October 1st deadline. But as near those dates as possible.

We would not have an insurmountable problem on corporation taxes, but you might have to add just 30 days or a month and a half on personal.

[8.] Q. Mr. President, is this your reply to the Ways and Means Committee?

THE PRESIDENT. No. This is a statement. We do not want to reply and get into fights. They have not given us anything to reply to. The Congress has not sent me any message or bill or direct communication.

This is a statement. As I pointed out--I guess you had not come in when we signed this bill--that explains what this bill contains, a resolution for 3 weeks and the problems connected with the appropriation bills to which this referred.

This gives the Executive viewpoint on what we believe to be the importance from the national interest standpoint of acting in the Congress on appropriations bills and on the tax recommendations.

[9'] Q. Mr. President, what happens after 3 weeks? This is continuing authority or why did you pick 3 weeks?

THE PRESIDENT. As the bills are passed, they come here, they are acted upon, and we sign them. This resolution applies only to bills which have not passed. I believe the House has passed all but three. Most of those bills will be acted upon by the Senate between now and October 23. Some of them will be down here and will be signed.

[10.] Q. Mr. President, when the Ways and Means Committee decided to put aside the tax bill until--as I recall they said--some understanding is worked out between Congress and the White House on spending reductions, did we understand you correctly that they did not communicate this action to you?

THE PRESIDENT. The Secretary of the Treasury was at the committee session representing the administration. He had certain proposals that he desired to make along the lines of my tax message and along the lines of what I said in this statement--that we will try to have the administration and the Congress agree on the restraints that the Congress desires put into effect.

I think it was the feeling of some of the members of that committee that they felt they should act upon the motion and consider any further agreements at a later date. We were ready that day, and we have been ready every day since--the Secretary of the Treasury and each department head--to appear before the Appropriations Committee or the Ways and Means Committee to express our views and to go as far as we can in carrying out the decision of the Congress.

Q. Mr. President, I am not sure I understand what you meant by that last thing there. Do you mean by what you said that various Cabinet officials are ready and willing to go up and talk about specific cuts in their departments?

THE PRESIDENT. We have done that on the two bills we have received. When we receive the others, we will be delighted to do that. We have said that.

Q. What do you mean? Are they standing by ready to talk to Appropriations or Ways and Means?

THE PRESIDENT. Yes. I mean just what I said.

[11.] Q. Mr. President, am I correct in interpreting your statement here to mean that the administration at this point feels that the budget as submitted in January is correct and does not recommend any cuts in it?

THE PRESIDENT. That is correct.

[ 12.] Q. What about this process?

THE PRESIDENT. I don't want to leave you unclear. We have said that was our judgment when we made those recommendations. As each bill comes to us, we don't know what that bill may contain. They may substitute an amount that we request for the Job Corps in the form of a school program.

Our judgments on that could be quite different, although the amounts might not vary a great deal. We cannot really make an intelligent decision here until a decision is made by the Congress on the bill itself.

You may get the House form or the Senate form or the conference form. We said in our tax message that when we got them, we wouldn't know whether the Congress would add to them or subtract from them. In any event, we will look at what Congress appropriates.

We will try our best to save every penny we can and operate on the lowest possible amount consistent with security and the national interest.

[13.] Q. Mr. President, if the Congress voted your bills as submitted, would this mean you would sign them as is?

THE PRESIDENT. Yes. It would mean that I would sign them as is.. If they didn't change any items in them and we found that the situation on that particular item was the same as it was when we recommended it-as is generally the case--we would spend it that way. But if we found that the situation had changed and we had more in some cases--we have had to cut back on various items, maybe planes, or maybe ammunition or maybe personnel or things of that kind with changing conditions--we would cut back.

As a matter of fact, I believe in the last 2 years Congress has authorized and appropriated about $31/2 billion more than the Executive has used.

[14.] Q. Mr. President, Secretary McNamara announced today that he was deferring certain military construction. Is this in line with what you said about not being able to act on a bill until Congress passes it and sends it down to you?

THE PRESIDENT. I think that each agency understands that it can spend only at the rate of last year's appropriation and only until October 23d. Each Cabinet head is very careful not to obligate or to contract expenditures over and above the amount appropriated last year or beyond the date of October 23d.

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