The President's News Conference

ENERGY LEGISLATION

THE PRESIDENT. Good morning, everybody.

Back in April when a national energy policy was presented to the Congress and to the people, I said that because of the importance of it that this was a moral equivalent of war. I haven't changed my mind. In fact, the seriousness of the energy crisis is even more acute than it was then.

But as is the case in time of war, there is potential war profiteering in the impending energy crisis. This could develop, with the passing months, as the biggest rip-off in history. And the issues involved here are extremely important. We live in a nation and we believe in the free enterprise system where market forces determine prices. But the oil and gas industry is not part of that system because prices are not free. They are heavily influenced by decisions made outside our country by the OPEC nations, and they are heavily influenced by some control over the rate of production by American companies. And there's an inevitable increasing shortage of oil and gas, which we all recognize, I believe, without dispute.

Prices have gone up drastically in the last few years. They are going to go up some more. That also is inevitable. But the question is: Who will profit from these prices and to what degree?

The package that was presented to the Congress in April is fair. It's well-balanced. It assures that the American people are not robbed. It also ensures that the oil companies get enough incentive to ensure adequate exploration and production. But the oil companies apparently want it all.

And we are talking about enormous amounts of money. Never before in our history has this much money been involved in a decision controlled by Government policy and by legislation.

The struggle is intense. It's going to go on for a long time. But the basic question is going to be resolved within the next few weeks in the Congress.

Now, the oil companies deserve incentive, and our proposals have been both fair and they have been adequately generous. In 1973, for instance, just before the OPEC price rise and the oil embargo, the oil and gas industries had an income of $18 billion. Under our proposal, by 1985 their annual income would be,..bout $100 billion, an enormous increase. What the oil companies and gas companies are now demanding--and making some progress-is $150 billion. The difference will not encourage increased production of oil. But that difference will come out of the pockets of the American consumers and go into the pockets of the oil companies themselves.

Our proposal, if adopted, would give the oil companies, the producers themselves, the highest prices for oil in all the world. But still they want more.

If we deregulate natural gas prices, then the price will go to 15 times more than natural gas prices were before the oil embargo. These billions and billions of dollars are at stake; whether that money should be given partially to the oil companies to encourage production and partially to the American people in a fair way or whether it should all be grabbed by the oil companies at the expense of the American consumer.

There is one other point I want to make very briefly. The international circumstances of the energy crisis are now being recognized as being very, very serious. Dr. Schlesinger just returned from a meeting with the nations who comprise the International Energy Agency, almost all the developed nations in the world, the industrialized nations in the world. We now consume about 23 million barrels of oil a day. The prospect is that we might go to 36 million by 1985, a demand that simply cannot be met.

So, all the countries, including us, have resolved to cut down our consumption, not below what it is now, but below the anticipated amount, to about 26 million barrels a day.

We believe that production can meet those demands. But the biggest single question in international councils is the will of the American people. Do we have the will as a nation to cut down our enormous oil imports?

I have confidence in the American people, looking to the future, but past performance has been very disappointing. We were shocked in 1973 when the oil embargo was imposed on us and prices went up. We began to move to cut back on imports. Imports this year will be about $45 billion in oil, 87 percent more than just 4 years ago. We import more oil than all the European countries combined, in spite of the fact that we have enormous production in our own country, which they don't have.

So, I cannot overemphasize the importance of this question to the present and future security of our country, our independence, our economic structure, and also the fairness of a distribution of increased prices, which are inevitable.

It is absolutely important that the legislation be passed. The House has done a good job. They have come forward with legislation that I can accept.

It's up to the Senate. I have confidence in the Senate. And I believe that we'll come out of this legislative session with a reasonable policy established for our country.

It's the most important domestic issue that we will face while I am in office. And I attribute the highest possible importance to it in my own administration.

I'm going to devote most of my time the next few weeks while the Congress is in session trying to make sure we have a fair and adequate energy package. And I hope that the American people will join in with me to encourage the Congress to act accordingly.

QUESTIONS

SENATE ACTION ON ENERGY LEGISLATION

Q. Mr. President, you have struck out against the oil lobbies, but not against the Senators in your own party who may be listening to them and who have decimated your energy program. You say you have confidence in them. Also, your administration undercut a filibuster against the natural gas deregulation, and one Senator called your credibility into question. Who is to blame?

THE PRESIDENT. I think at this point no one is to blame. With the encouragement and cooperation between the White House and the Congress, the House of Representatives has passed an energy bill which is not completely adequate as we proposed it, but is a major step forward. The Senate has not yet decided.

There are five major component parts of the energy legislation. The Senate has acted on four of them. The other one involves pricing and tax. Those questions have not yet been resolved.

The present proposal by the Senate leaders--and I have no alternative except to go along with it, of course--is that there will hopefully be a bill passed by the Senate. I don't think it's accurate to say that it will be in final form. And then that bill will be transmitted to the conference committee, the members of which have already been appointed. Then the negotiations between the House and the Senate will take place and the agreed upon compromise, hopefully compatible with what we recommended, would go back to both Houses for rejection or acceptance.

The filibuster was not initiated by me. It was not terminated by me. And I believe that that was a step in getting the House and Senate to a conference. But I still believe that if the American people can recognize the importance of this issue, as the House Members have already done, that we will have acceptable legislation this year.

TAX REFORM

Q. Mr. President, are you or your people giving even tentative thought now to the possibility of an economy-stimulating tax cut next year, quite apart from tax revision?

THE PRESIDENT. Yes, but the tax revision, tax reform, tax cut will all be one .package. Tax reform is long overdue. It is, as I have discovered recently, an extremely complicated matter. Scars are left over from previous tax reform efforts, Some of which have been successful.

But I would say that the tax reductions, which may come next year or perhaps later--I think next year--will be tied integrally with an overall tax reform package.

Q. Would they be motivated by the state of the economy, Mr. President?

THE PRESIDENT. Yes, the rapidity with which tax cuts would be instituted would certainly be motivated by the state of the economy, whether or not it does need stimulation early or whether that stimulation would come late. The major unresolved question is how much impact this year's stimulus package is going to have in a beneficial way to keep our economy moving. I have good hopes about it. But we won't really know until about January or February.

REDUCTION OF OIL CONSUMPTION

Q. Mr. President, I take it from the strength of your opening statement that if Congress doesn't come up with an energy bill that you like, you would move administratively to do what you could to cut down on oil consumption.

Secretary Schlesinger has already talked about an import tax on foreign oil. And I would like to ask you if that is your view and also if you would then move to gasoline rationing administratively or some other measure?

THE PRESIDENT. We are considering all those options. And without knowing the form of the congressional action, it's hard for us to say now. If the bill in my opinion is not a substantial step forward, then I would not accept it after it's passed. And I say that very reluctantly, because it would mean that a substantial part of an entire year's work by the executive and the legislative branches of Government would have been wasted in the energy field.

I hope and believe that I can sign the bill as introduced to me. In the absence of new legislation, there are many options that will be considered within the present authority of the President and the new Department of Energy. Those that you mentioned are among the options, but we certainly have not decided on which option to choose.

Q. Mr. President, gasoline rationing is one of the options that you would seriously consider?

THE PRESIDENT. That's one of the options, yes.

RELATIONS WITH THE SENATE ON ENERGY

Q. Mr. President, Speaker O'Neill said yesterday that if you had made a mistake with your energy package in the Senate, it's perhaps that you didn't follow it along with your lobbyists on the Hill step by step as you did in the House. I'm wondering if you feel that your inexperience in Washington and the inexperience with the so-called outsiders you brought with you to Washington has caused your programs to suffer?

THE PRESIDENT. Well, to tell you the truth, I had more experience when the bill got to the Senate than I did when it got to the House first. We did put in an enormous of time with the House Members. I did myself with breakfast meetings two or three times a week and bringing the different subcommittee members and full committee members over.

The reason that I did that, more than I did with the Senate, was because this was when the bill was first introduced, not only to the Congress but to the people of our country. And there were many questions about the ultimate impact of the legislative proposals that we put forward. In the process, though, of the House meetings with me, with Dr. Schlesinger, and others, and the House debates and news coverage, of course, the Senate Members naturally became better acquainted with what our proposals were.

I think that in retrospect it would have helped had I had more meetings with the Members of the Senate. But the fact that I did not meet with them personally doesn't mean that they didn't have an adequate awareness of what our own proposals were and what their impact might be, because Dr. Schlesinger and all of his people have spent full time there, and I have met several times with the key leaders of the Senate about energy.

So, I don't deny the fact that that may have been a factor, but there are reasons for my having spent more time with the House in the initial stages of energy debate than I did with the Senate after the debate had been carried on in the House.

OIL COMPANY DIVESTITURE

Q. Mr. President, if you are serious about the oil industry and the oil lobbies working contrary to what you perceive the public interest to be, you've got a club in the closet, and that's divestiture. Why don't you move to break them up?

THE PRESIDENT. Well, there's a matter of raising too many issues at once. And I'm not trying to threaten anybody or use a club. It's obvious that the influence of the oil companies, both in the legislative process, in the executive branch of Government as well, in the economic structure of our country is enormous.

Part of that is inevitable, and part of it is not to be deplored--it's appropriate. There is a concern to me. For instance, in the uranium industry, which is another major and future alternative for large portions of our energy supplies, the oil companies already own about 50 percent of the uranium deposits. They have substantial holdings in coal.

But whether or not divestiture is needed is a matter on which I have not yet decided, and I don't think that now is the time to go into that detailed study or analysis.

URBAN POLICY

Q. Mr. President, last week you visited the South Bronx and took a tour of that area. Right now you have a task force under Mrs. Harris developing an urban policy. Sir, did your visit to the South Bronx and what you saw there--the vacant buildings and the unemployed people--have any impact on your thoughts on what kind of urban policy we should have and what you are going to present to the Congress?

THE PRESIDENT. Yes, it certainly did have an impact on me and my own conscience. It was not the first time I had been to the South Bronx. I went there as a candidate.

And I think it's important in two ways--three ways. One is to let me understand, personally, the devastation in the South Bronx, and similar places like it throughout the country--that's not unique. It's good for me to consult with my Cabinet officers. And they are now visiting the South Bronx and other similar areas. I think when I am in Detroit later on this month I'll also talk to families who live in this kind of devastated area.

It's important for me to demonstrate accurately my deep concern about this urban deterioration. And it's also important, through the news media--the radio and newspaper reports, the television pictures--to let the American people know that such places exist in our country.

I think the bill that I signed this week, the Housing and Urban Development Act of 1977¹ will provide us with a base or a framework on which we can make substantial improvements in the urban areas.

¹ For the President's remarks on signing H.R. 6655 into law, see page 1777 of this volume.

The formulae that are being put forward now--and the Congress is accepting them--will orient more and more of the rehabilitation money of all kinds to the more blighted areas of our country, both rural and urban.

So, it's an educational process for me, an assurance to people who live in those areas that we do indeed care, and also an educational process for the people of the country who don't know about these instances.

BRIGADIER GENERAL TORRIJOS OF PANAMA

Q. Mr. President, Panama's General Torrijos will come to this country late this week in an atmosphere in which a lot of confusion has been generated over the language of the treaty and how that will be used.

How are you going to use his visit? What is he going to do here? And will you perhaps get into the language of the treaty itself in terms of trying to clarify what he thinks?

THE PRESIDENT. I think the language of the treaty is adequate. I've had a chance to meet with General Torrijos at length on his other visit here and also to meet on one occasion with both the negotiators from Panama and our own country when the negotiations were at a crucial stage. Both General Torrijos and I are faced with a difficult political problem-as he described it accurately, to sell the same product in two different markets.

We are determined that the canal will be open, neutral, and free for use as long as it is there beyond the end of this century.

We do not have any inclination to intervene in the internal affairs of Panama. And when we say in this country, "We reserve the right to take action to keep the canal open," when they say in their country, "We do not intend to permit the United States to intervene in the internal affairs of Panama," we are both right. But the language didn't go into that much detail.

We agreed for expeditious passage of American and Panamanian ships through the Panama Canal when necessary. That language to me is adequate. But that particular phrase, "expeditious passage," has been interpreted differently here than it has in Panama.

I want to be sure that the American people, when the Senate votes ratification, and the Panamanian people, when they have a plebiscite or referendum on the same treaty the 23d day of this month, both understand the terms of the treaty very clearly.

So, General Torrijos and I will be meeting tomorrow to make sure that we have a common agreement on what the treaty means, and we may or may not issue some clarifying statement. But it's a constructive proposal, because both of us want to be sure that our people don't labor under any misapprehensions about the intentions or interpretation of the other country.

HUMPHREY-HAWKINS BILL

Q. Sir, obviously you have made statements regarding your energy proposal and it being the most important issue you will face during your term. But full employment, national full employment, is a topic you discussed with the Congressional Black Caucus numerous times. Have you made a final decision regarding the Humphrey-Hawkins bill?

THE PRESIDENT. During the campaign I promised to support the Humphrey-Hawkins bill, but expressed some concern about the detailed factors included in the Humphrey-Hawkins bill at that time and did not approve the version as it then existed. It's been constantly amended over the last 2 or 3 years since introduction.

My staff have recently been working with Congressman Hawkins, with Senator Humphrey on the telephone, with their staffs, and others, to evolve a full employ. meet bill that we could indeed support without equivocation or hesitancy. We are making good progress about that. And I would guess that within the next few days we would be prepared, if things go well, to announce our support of the Humphrey-Hawkins bill.

PANAMA CANAL TREATIES

Q. Mr. President, back on the canal issue, if you cannot come to some mutually agreeable statement with General Torrijos tomorrow, aren't the canal treaties doomed?

THE PRESIDENT. Well, I think it would be very difficult to get ratification of the treaties if there is any doubt that General Torrijos and I, the Panamanian people and the United States citizens, agree on what the canal treaties mean.

I don't believe there's any need to amend the treaty language. To me it's clear because I've been involved in the discussions with the negotiators and also with General Torrijos. But it may be necessary, after he and I discuss the situation, to issue some clarifying statement. I've not talked to him personally the last few clays. I did extend an invitation by letter. He has been in the Middle East, the Scandinavian countries, Europe, and he's coming back here tonight, I think.

But I did extend a written letter to him asking him to meet with me. He was eager to do so. And we will be meeting tomorrow. But I think the clarification is crucial. A written agreement or modification to the treaty may or may not be necessary. I don't think we need to modify the treaty itself.

ENERGY LEGISLATION

Q, Mr. President, what was the moral equivalent of war last spring has now become the object of most of the attention of your administration until Congress is out--a last-ditch effort perhaps to salvage what you can in the Senate.

Certainly that's not entirely the fault of the oil lobbies. Shouldn't the administration and people in the Senate, like Russell Long, take some of the blame?

THE PRESIDENT. Yes. I take my share of the blame. I don't know how to define it. I think that Senator Russell Long is working long and hard to come up with an acceptable energy package. And my own hope is that before this year is over, legislation at least equivalent to what the House passed will be in its final version.

But I'm not trying to blame all the problem on the oil companies. The grabbing for the financial rewards is what I deplore in the oil companies. And that is a major issue on gas deregulation and also in the price structure for oil.

Part of the blame falls on me, my predecessors, and the American people. We are simply wasting too much energy. For the same standard of living, we use twice as much energy as is used in Japan, West Germany, Sweden, and other countries of that kind. So, we've got to cut down on our waste through conservation measures, voluntary action, and also a realization of the seriousness of this question.

And I am also concerned as Commander in Chief of our country about the serious security implications of becoming increasingly dependent upon foreign oil supplies which may for some reason be interrupted. So, I consider this to be a crucial issue, not just economically, not just who gets the gross profits, but also for our own Nation's security.

U.S. STEEL INDUSTRY

Q. Mr. President, you have a special meeting here today on the steel industry, and also you have a special task force working on the domestic steel problem. But what do you see, offering on a more immediate basis, to stop the loss of jobs in the U.S. steel industry--perhaps through some sort of voluntary quotas with other steel-exporting countries?

THE PRESIDENT. Well, steel imports are just one part of a fairly large number of problems that affect the United States steel industry and which, I might say, affect the steel industry all over the world.

I met with the Prime Minister of Luxembourg the other day, and he said, "The biggest single problem that I have is the low quantity of orders for my steel products and the relatively low price." The Luxembourg steel industry is in just as bad a shape. The rest of them are, too.

One of the things that have taken place already is a voluntary reduction in exports to our country 'by some of the other steel producers in West Germany and Japan. But that's an exceptionally artificial and simplistic approach to the problem of the steel industry.

Our analysis has shown that reduction in imports would not materially increase the supplies or the demand for steel among our own American suppliers, that any benefit to them financially would probably come from greatly increased prices, which would have to be paid for by the American consumers. It's an extremely complicated question.

The general, overall world recession or slow growth means that you are just not building as many things all over the world that require steel.

But my hope and expectation is to learn as much as I can, personally, about the steel industry, all of its problems, and then to propose to the Congress and to the steel industry itself and to negotiate perhaps with other countries that export steel to us a resolution of these problems.

It's longstanding. It's historic. The trends have been there, of course, long before I came in office. But this afternoon will be the first time I will meet with steel producers, steel laborers or workers, and the interested congressional Members.

I have a task force headed by Mr. Solomon in the Treasury Department. And he's working on a multidepartmental basis to give me specific recommendations for Government action. This will be coming to me later on this month. So, we are acting very rapidly on it to try to deal with the longstanding, chronic problem that exists not only in our own country but also in other countries around the world.

ENERGY SHORTAGE

Q. Mr. President, you touched on this just a moment ago, but I wonder if you would elaborate. You talk about energy being a crucial issue yet it does not seem to have caught on in the country

THE PRESIDENT. I know.

Q. ---as an issue. Do you have any views on why that is?

THE PRESIDENT. Well, you know, it caught on in the country in 1973 when our oil imports were reduced substantially and there were waiting lines at the gaspumps and the price rose quite rapidly. That was just the first warning sign of an inevitable shortage of oil and natural gas. It aroused the American consciousness this past winter when natural gas supplies were scarce, and we had schools close down, factories shut; transportation was interrupted. These are just the first warning signs. It's going to get worse instead of better. And I don't think there's any responsible international economist or analyst who doesn't agree with this fact.

Now, there are several ways that it can be dealt with. One is to increase production, which we are trying to do on a worldwide basis. Another one is to cut down on consumption. Another one is to develop alternative or new kinds of energy supplies. But there's no doubt that the American people at this point simply do not recognize the seriousness of the present problem and the future problems, because it doesn't touch them individually yet.

But I don't want to see the American consciousness raised because of a devastating crisis that they have to experience. We are trying to prevent the crisis, not just react to one.

DOMESTIC POLICY PROPOSALS

Q. Mr. President, you are now focusing on energy, but some of your critics have been saying that you are doing too many things and all at the same time. What is your response to that?

THE PRESIDENT. Well, I think if anyone analyzes already what the Congress has done in response to my request and on their own initiative, and the major legislation that they have presently before them, they would see that we have made substantial progress.

I doubt that anyone would want to eliminate a particular proposal that we have put forward--the establishment of the Department of Energy, reorganization of the executive branch of Government, or reform to our very complicated and wasteful welfare system, and so forth.

I don't think we are dealing with too many issues. The fact is that these issues are difficult, they are controversial, they are complicated. And I think we are making fairly good progress. But in my mind, on domestic affairs, there is no doubt that the energy question is the most important.

ROBERT H. MENDELSOHN

Q. Mr. President, if I could have a clarification here. I wonder if you could clarify the ethical standards of the administration. Is it now and has it been---

THE PRESIDENT. Did you say "ethical standards?"

Q. The question was asked about this two press conferences ago. Is it now and has it been the position of the Carter administration in the past or present that illegal, unethical, and/or improper conduct as well as actual, potential conflicts of interest and the appearance of impropriety would not be tolerated?

THE PRESIDENT. That's correct.

Q. That being the case, in light of the fact that the California Fair Political Practices Committee decided to charge a campaign committee of Robert H. Mendelsohn, the Assistant Secretary of the Interior for Policy, Budget, and Administration-designate, with illegal conduct, which you said you would not tolerate, in connection with accepting a total of $16,500 in watered campaign contributions-by the way, the reports were signed by Mr. Mendelsohn and sort of a pro forma campaign treasurer who said that he really didn't know anything about the details and Mr. Mendelsohn knew all about the finances, or indicated that-why are you continuing to support the Mendelsohn nomination, especially in the wake of the trauma we have just been through on Watergate?

THE PRESIDENT. I have to say I am not familiar with that case. And I don't know if what you've described are just allegations or whether improprieties have been proven.

Q. It is the report of the committee--

THE PRESIDENT. But I'm sure that if any of those allegations are proven, that neither I nor the Secretary of Interior nor the congressional committee who will confirm his nomination will approve of it.

FRANK CORMIER [Associated Press]. Thank you, Mr. President.

THE PRESIDENT. Thank you very much.