The President's News Conference

THE PRESIDENT. I have one opening statement.

[1.] The welfare and economy of the American public would be seriously damaged by the strike now being threatened by the flight engineers union against three major airlines, TWA, Pan American, and Eastern. This action would create and have a significant impact upon our economy, and we have made every effort during the past months to bring about a happy solution.

This dispute stems from the recommendations made last year by the special commission I established that flight crews on jet aircraft be reduced from four men to three men. No one has questioned either the wisdom or the necessity of that recommendation.

The commission also recommended that all presently employed flight engineers are to be given prior job rights on the three-man crews, and that any changes made in the transition would in no way prejudice their representational rights. The companies agreed to pay all costs of training the flight engineers to enable them to serve on three-man crews,

The Air Line Pilots Association, in a related dispute involving Pan American Airways, agreed that arbitration was the responsible means of settling this matter, and the airline companies in this dispute have accepted my request made in accordance with the applicable provisions of the Railway Labor Act that all issues be voluntarily submitted to the final and binding judgment of a three-man arbitration panel composed of outstanding public, labor, and management leaders.

But the flight engineers union has ignored this request. They are threatening to strike for still more job and representational security, for wage increases of more than 20 percent over a 3-year period, for reduction in working hours--from 85 hours a month to 75 hours a month--and other demands.

Eighteen hundred men are threatening a strike which would cause the immediate layoff of some 60,000 employees, the immobilization of 40 percent of the Nation's airline service, and the loss of over $1 million a day from international flights, which our balance of payments cannot afford.

We have been, under the Railway Labor Act procedures, seeking a settlement for 17 months, but the flight engineers have not accepted the decision of the National Mediation Board. They have rejected the report of the special Presidential commission on jet crews. They have refused to accept the careful recommendations of the three Presidential emergency boards. They have failed to cooperate with the long and thoughtful mediation efforts offered by the National Mediation Board, the Secretary of Labor, and the Special Mediation Panel. And this morning they rejected my request to submit these issues to arbitration.

A strike could have, as I have said, a significant impact on our economy at this time. I strongly urge the flight engineers to meet their public responsibilities, to reconsider their action, and to either submit this case to arbitration or agree with the carriers on some other means of settling this dispute without any interruption of operation.

Q. Mr. President, should the flight engineers not meet your request, would you then be prepared to go to Congress with a request for emergency seizure powers?

THE PRESIDENT. We would have to wait until--I am hopeful that the flight engineers will heed my request and submit this matter, as I have said, to arbitration, or find some other satisfactory method of settling it peaceably. We have been working, as I have said, for more than a year, because of the responsibilities placed upon us by the Railway Labor Act which covers the airlines. And I am very hopeful that the engineers will reconsider this matter. If they do not, of course, we then will have to consider what would be the proper action.

[2.] Q. Mr. President, following up your recent statements on the economy, particularly your speech at Yale the other day and the Solicitor General's yesterday, is it the Government's intention to play an active role in major labor and industry wage and price discussions and, if so, how would this role be played?

THE PRESIDENT. No, I think that--I have not read the speech of the Solicitor. My speech at Yale, I think, was quite clear. It dealt mainly, chiefly, with another subject, which was that we should attempt to engage in a dialog on the very intricate questions which are involved in the management of a very complicated economy such as ours, in order to maintain full employment and keep our economy moving.

As far as the--we have attempted to indicate, of course, through the Council of Economic Advisers and by other means, our concern that we follow policies--particularly in those basic industries which affect our competitive position overseas--that we follow policies that permit us to continue to compete, and to continue to keep our economy moving. But these--this is a free economy in the final analysis and we have to attempt to work out the solutions on a voluntary basis.

[3-] Q. Mr. President, India is reported leaning toward the purchase of MIG aircraft from the Soviet Union, and the equipment to manufacture such aircraft in their country. Does the United States have any alternative plan or offer to such an arrangement, and what effect might this have on the tensions within the area?

THE PRESIDENT This is a matter which is being considered in this Government, and also being considered with other governments. It is a matter on--Ambassador Galbraith is returning to India at the end of the week and will, I am sure, be reporting to us on the situation as well as giving our views.

It would seem to me that we should keep it at that level at the present time.

[4.] Q. Mr. President, in a note to the Japanese Government today, Soviet Premier Khrushchev said that it is a criminal act that "a certain element is trying to prepare for a surprise attack on us, by trying to attain the upper hand in the application of nuclear weapons." Would you address yourself to that remark?

THE PRESIDENT. No, I haven't seen that statement. We are not preparing, if he is referring to us and I don't know who else he might be referring to, but the United States is not, quite obviously--it has not been our policy, we made it clear what our policy is, which is to build for our own security. The United States has gone to great lengths, as far as nuclear weapons, to secure effective means of control over their testing. The world knows the history of how this present series of tests began, and our great reluctance to commence them. And we have been engaged for many, many months in Geneva in the test ban discussions and also in the disarmament conference to secure some effective means of bringing an end to the arms race, including the nuclear arms race, and also bringing world tensions under control.

We are seeking to do so in Berlin; we've been seeking to do so in Southeast Asia. And I'm confident that if there is good will on both sides, that there can be a lessening of tensions- But there has to be good will on both sides.

[5'] Q. Mr. President, this is a question about a recent report called "Does Overpopulation Mean Poverty?" It recommended expanded Government research on fertility control and expanded technical assistance to underdeveloped countries seeking to solve problems of overpopulation. What is your attitude toward those recommendations?

THE PRESIDENT. I haven't seen those recommendations. I've said from the beginning that these were matters which every country must decide for itself. This is not a matter-as it goes to basic national feelings, personal feelings. This is a matter which each individual, each family, each country must determine. It cannot be determined by the actions of another country.

[6.] Q. Mr. President, in your Yale speech you spoke of deficits as not being necessarily inflationary or harmful. As you know, the attitude about deficits among the American people is largely an unfavorable one. I wonder in light of that if you can elaborate on why you think that deficits may not be bad or harmful.

THE PRESIDENT. Well, it depends. As I tried to say at Yale, the key word is "necessarily." I think there has been a feeling that deficits bring inflation with them. And I attempted to make the point at Yale that we had had surpluses in the 3 years after the war, rather large budget surpluses, and still had very sharp inflation; that we had had deficits in 1958 and in 1962, and that there had been a stable price level. The largest deficit was in 1958, $12 1/2 billion. The point I am trying to make is that what we must be concerned about is trying to maintain the vitality of our economy. And that the administrative budget, which is the budget people talk about, is not wholly revealing of the amount of money that the Government takes in. If the administrative budget were balanced, the Federal Government would be taking in about $4 billion more than it was spending. On the cash budget side--these are all rather complicated subjects because of the trust funds and all the rest--that has a deflationary impact on our economy.

Now, we have to realize that we had a recession in 1958 and a recession in 1960. We do not want to run through in this country, which is the--on which so much depends, which is the source of strength for the free world--we do not want to run into periods of recurrent recession. One of the ways that has been considered to avoid this is by following a budget policy which is related to the economy and not related to what I called rather formal traditional positions which may not be applicable to the present time. And I thought the experience of Europe, which has had a decade of unequaled progress, partly because they have managed their economy with some skill, partly because they are in a different period of growth, partly because of the Common Market, that it had some lessons for us. These are the matters, I said at Yale, that we should be talking about: how we can manage our economy, what should be our budget policy, what should be our fiscal policy? And the automatic response that a deficit necessarily produces inflation is not necessarily true.

[7.] Q. Mr. President, a lot of people seem to feel that the idea of a Democratic administration trying to win the confidence of business is something like the Republicans trying to win the confidence of labor unions. Do you feel, sir, you are making headway in your efforts? Have you seen anything to indicate that business is coming around to your point of view on the economy and that the confidence you asked for is being restored in the market place?

THE PRESIDENT. Well, as I said, what is necessary is not really whether some businessmen may be Republicans--most businessmen are Republicans, have been traditionally, have voted Republican in every presidential election. But that is not the important point--whether there is political agreement.

The important point is that they recognize and the Government recognizes, and every group recognizes, the necessity, as I have said, of attempting to work out economic policies which will maintain our economy at an adequate rate of growth. That is the great problem for us. They feel, as I said, that they would be happier if there were a Republican in the White House, but there was a Republican in the White House in 1958 and we had a recession, and there was in 1960. So I think that what we have to realize is, is that I could be away from the scene, which might make them happy, and that they might have a Republican in the White House, but the economic problems would still be there. So that what I hope is that we can address ourselves to those and not to a political matter because, after all, the presidential race isn't until 1964 and at that time it would seem to me to be the appropriate time to argue politics.

Right now we should be concerning ourselves with the real problems of our country, which are of great interest to me economically-which are to them, which are to labor, which are to all American people.

Q. Mr. President, there is a feeling in some quarters that big business is using the stock market slump as a means of forcing you to come to terms with business. One reputable columnist, after talking to businessmen, obviously, reported this week their attitude is now, we have you where we want you. Have you seen any reflection of this attitude?

THE PRESIDENT. I can't believe I'm where business--big business, wants me. [Laughter] I read that column in the St. Louis Post-Dispatch, as a matter of fact, and I found that Mr. Childs made the point that some, as I believe his phrase was, rich men were quoted as having said what you have said. I cannot believe that anybody thinks that in order to take some political--gain some political benefit, it would be a source of pleasure to them to see the stock market go down or see the economy have difficulties. I don't believe that anyone who looks at our problems at home and abroad could possibly take that partisan an attitude. So I don't accept that view. I know that when things don't go well they like to blame the Presidents, and that's one of the things which Presidents are paid for. But I think what we want to be concerned about, as I have said before, is not a personal dialog as much as it is a dialog on the problem of what tax policies, what budget policies, fiscal policies we should pursue. Because if it were merely a matter of the party, or of personalities, we would not have had our experience that we had in the late fifties. So that shows there's something more substantive here. And this is what concerns, I think, all of us--or should.

[8.] Q. Mr. President, Senator Mansfield a few days ago suggested a review of far Eastern policies because he said they seem to him either marking time or, at worst, on a collision course. Do you think such a review is necessary?

THE PRESIDENT. Well, we've been reviewing it. As you know, we've been attempting in the case of Laos to work out a policy which would prevent either one of those situations. Whether we shall be successful or not, only time will tell.

I know that we have put large sums of money, and the situation there is still hazardous. What is true there of course is true all around the world. This is a period of great tension and change. But if the United States had not played a part in Southeast Asia for many years, I think the whole map of Southeast Asia would be different. I am delighted--as you know, I have the highest regard for Senator Mansfield, and I think we should constantly review, and I think as he suggested, we should make judgments between what is essential to our interest and what is marginal. We have been attempting with great difficulty to carry out a policy in Laos which would permit a neutral and independent government there. In Senator Mansfield's speech he used the examples of Burma and Cambodia. Those were the examples that were also used at the Vienna meeting by Chairman Khrushchev and myself in which we stated the kind of government that we both said we hoped would emerge in Laos. That is the commitment that was made by the Soviet Union and by the United States.

Now we've moved to a different plateau and we are going to see whether that commitment can be maintained. But on the other hand, if--and I am sure Senator Mansfield-and I know Senator Mansfield does not think we should withdraw, because a withdrawal in the case of Viet-Nam and in the case of Thailand might mean a collapse of the entire area.

[9.] Q. Mr. President, the Senate passed a number of restrictive amendments on the foreign aid bill besides that limiting aid to Yugoslavia and Poland. Do you think this reflected a growing disenchantment in the Senate on the whole question of foreign aid, and do you think such actions as that contemplated by India in purchasing jets from the Soviet Union has anything to do with that disenchantment?

THE PRESIDENT. Oh, well, it's a--we've carried it a long time--and Senator Mansfield's speech showed it's a--the world is still with us, and still uncertain, and all of our effort and all of our sacrifice has not produced the new world. But it is not going to.

What we are attempting to do is to maintain our position. There have been a good many changes in the Communist bloc in the last 10 years, and some of those have been-should encourage friends of freedom. So what we want to do is maintain our position and that of our associated nations with us in this effort, and not to desist in 1962 because the race is not over and we have not been completely--we have not come to home port. We are still at sea. Now, I think we ought to stay there and continue to do the best we can.

There was, as has been revealed in the press, Mr. Kennan--Ambassador Kennan--who has been very realistic in his appraisal of our relations with Yugoslavia, is extremely disturbed about what has happened. He feels, and the story quoted him in the paper as saying, that this has been a great gift to the Kremlin at this particular time. And Mr. Cabot, our Ambassador to Poland-both of these men are long experienced, Mr. Kennan probably the longest experienced, almost, of any American, in his studies of the Soviet Union--both of them regard this action as a major setback and as a great asset to Moscow. I don't think we should do those favors to them if we can help it.

Q. Mr. President, in this same connection, you have had a great deal of trouble with the Democrats on other parts of your legislative program. Have you arrived at any new formula for 'persuading them to come along?

THE PRESIDENT. Oh, I think the Democrats--except for a few Democrats who have habitually voted with the Republicans--the Democrats have done pretty well today, for example, on the debt limitation. Every year during, I think, President Eisenhower's administration, except 1953, he had to ask for a change in the debt limit. Every time I voted for it, to give him that power. Today on the final roll call on a measure which instead of giving us our request of 308 would have rolled it back to 285 billion, which would, of course, have meant that every defense expenditure--space, agriculture, veterans, and every other commitment of the Government--would have been in great difficulty and would have been, of course, extremely difficult for us to maintain our--meet our obligations. Every Republican in the House except nine voted against us. Now it passed, however, because the Democrats met their responsibility. They did in the House on the tax bill; they have on the trade bill. I think that we do expect, however, that all these matters will not be made matters of party loyalty and we have to get some support from the Republican side, and on occasions in the Senate we certainly have gotten it.

We now have a farm bill upcoming next week. That farm bill can save $1 billion a year to the taxpayers of this country; over a period of 4 years, $4 billion. Now this is a vote which is in the best interests of American agriculture and is in the best interests of the country, and is in the best interests of the economy of the United States. I hope that this will not be made, as it's indicated, a party issue on which every Republican will then vote against us and we will find ourselves with a very close vote on a matter which has the first chance of bringing some order out of what is a very chaotic situation.

If we fail and our farm bill is defeated, we go back to the program which is in permanent legislation, the Benson program, which has brought us great so-called--which has brought us tremendous surpluses and expenditures of over $61/2 billion by the Government every year.

So there is a very good chance, and I think that we have a right to expect that on these matters of great national import, that at least we will receive some help from across the aisle, because on other occasions many of us voted to give assistance to the President of the United States when he was a member of the opposite party.

On the question of aid to the Poland-Yugoslavia matter, I voted twice to give President Eisenhower the flexibility he felt he needed in order to conduct foreign policy. He bears a great responsibility and the Congress does also, but I thought that he should have that power, if the situation required it. I would hope that those who are on the opposite side would also, at a time particularly when there are so many things which are encouraging in the world to us, would be willing to sustain us in giving us a similar power.

Q. Mr. President, on the farm bill: you have said, and others in the administration have said repeatedly, that the present programs, because of their expense, cannot go on indefinitely. If Congress should refuse to enact your current program, would you feel required to request the Congress to repeal the existing price support program without controls?

THE PRESIDENT. Well, the choice, it seems to me, is very clearly--the satisfactory provision is the one that we have suggested. Now, if we fail there, of course, then we have, as you have said, the permanent legislation in which we have price supports and no controls, which of course will pile our surpluses up bigger and, I think, depress our farm income. We would then have to consider what appropriate legislation would be asked for. But the bill we have sent is the one we need. We don't want a bill which has no support for the farmers; we don't want to go to the Congress and say, "Now that you have refused to permit us to have a balance between supply and demand of the kind you have in tobacco and cotton, now we are going to pull out and have no support for the farmers." So that this is the best solution--the one we have before the House next week, and which has already passed the Senate.

[10.] Q. Mr. President, in regard to the Hong Kong refugee problem, yesterday the Colonial Secretary said that food and clothing relief would not resolve the colony's problems, nor would immigration, but that Hong Kong would welcome the assistance of other governments in building hospitals, schools, and clinics, and so forth. Is the administration considering this type of assistance?

THE PRESIDENT. Well, we have contributed very heavily, as you know, toward food. I am not aware that any request has been made for additional assistance, but we would certainly be prepared to consider it, and we-along with other governments.

[11.] Q. Mr. President, proposals for a Senior Service Corps, patterned after the Peace Corps, for the older members of our population have been discussed by your Council on Aging at its first meeting. How do you view this?

THE PRESIDENT. I think--at the Council on Aging that's one of these things they're looking at, and I think they're going to make a report to me very shortly. And I think that they'll give us some recommendations on it.

[12.] Q. Mr. President, do you feel the Latin American countries are making the contribution that they should within the problems they face on the Alliance for progress?

THE PRESIDENT. Some countries are making a major effort, in some countries the effort is slower. As you know, in nearly every country they're dealing with staggering problems, including exchange problems, which are partly induced by the decline in the price of the raw materials they're getting, so that Latin America faces--in many of the countries, they're making a real effort. They face great problems, and I'm hopeful that the United States will be persistent in supporting the Alliance for Progress and not expect that suddenly the problems of Latin America, which have been with us and with them for so many years, can suddenly be solved overnight merely by, within a period of a few months. It's going to take a long time, but at least in some countries they are making progress towards it.

[13.] Q. Mr. President, in reference to your exchange of letters with Chairman Khrushchev on Laos,1 with both of you suggesting that this might lead to settlement of other international problems, could you comment on two aspects of that: one, is the Laotian formula in any way applicable to divided Berlin, or divided Germany, and secondly, if it is not, is there still a hope perhaps that this might be a step toward another summit meeting for settling outstanding problems?

THE PRESIDENT. No, I don't see the parallel. The situation is different in Berlin than it is in Laos, quite obviously. Obviously if we can solve by peaceful means and not only get an agreement, but make it work, and both parties demonstrate a sincere commitment to a solution of what has been a difficult problem over a period of time, then it would encourage us to believe that there has been a change in atmosphere, and that other problems also could be subjected to reason and solution. That is why I regard the Laos matter as so important. We have to wait now and see whether we can make this agreement, which has been signed, make it work. If we can, then it will be an encouraging step forward to more amicable relations between the Soviet Union and the United States, and we can discuss other problems. There is nothing on a summit as yet.

[r4.] Q. Mr. President, President Chiari of Panama said at his press conference this morning that the bi-national commission which will be set up to consider points of difference between Panama and the United States would have the power to consider renegotiating of the Panama Canal treaty. I was wondering if this was your attitude also or what your attitude is towards this interpretation of your talks?

THE PRESIDENT. Well, I haven't seen--I would rather not comment on the statement until I have seen President Chiari's statement in total. I think the communique 2 describes quite clearly the responsibilities of the commission, and it is going to get to work right away. I would have to look at his statement and read it in detail before I could tell about his interpretation.

[15-] Q. Mr. President, about a year ago you sent to the Congress a greatly expanded space program, and I was wondering if you could give us your own assessment of how we stand technologically, how you think the American people as a whole have responded to the space effort, and when you plan any major realignment such as a bigger military role.

THE PRESIDENT. Such as a what?

Q. Such as a bigger role for the military in space.

THE PRESIDENT. Starting at the end, the military have an important and significant role, though the primary responsibility is 1 Item 2392 Item 242. held by NASA and is primarily peace, and I think that that proportion of that mix should continue. I think the American people. have supported the effort in space, realizing its significance, and also that it involves a great many possibilities in the future which are still almost unknown to us and just coming over the horizon. As far as where we are, I don't think that the United States is first yet in space, but I think a major effort is being made which will produce important results in the coming months and years.

[16.] Q. Mr. President, in. view of the Common Market retaliation, would you perhaps be prepared to concede that it was an error to raise the duties recently on carpets and glass?

THE PRESIDENT. No.

Q. Do you have any intention of rescinding it or will it stand?

THE PRESTDENT. No, it is going to stand. Carpets and glass were a unanimous recommendation of the Tariff Commission. They were very hard hit. We were quite aware of the fact that actions would be taken by the Europeans. If we had had passage of the Trade Act, we could have then offered an alternate package which I think would have prevented retaliation. Retaliation is not the most satisfactory device, but as you know, we were limited under present law, and, therefore, not able to be as forthcoming as we might have hoped. But there was a particularly drastic situation facing us in carpets and glass, and the Tariff Commission found unanimously that relief should be granted and we went ahead and granted it, and I would not change it.

[17.] Q. Mr. President, I wonder if you think the Congressmen yesterday were justified who said that there had been pressure put on them to get them to vote for the rise in the debt limit and that this pressure had come from the Defense Department to people in districts with large defense contracts; who were told that these defense contracts under negotiation might not be completed if they did not vote for the debt limit?

THE PRESIDENT. Well, I think--I'm sure-I hope that it was explained to every one what the effect would be if we did not--if we had to have a stretch out--were not able to pay our bills. And that would have been the situation. I recall very clearly in the fall of 1957, in my own State of Massachusetts, when there was a stretch out and the contractors and others had to assume the--pay their own bills. It not only had a very drastic effect on them, but according to Brookings Institution and a good many other studies it was one of the factors which helped lead to the 1958 recession. This would have taken, in effect, in a period of 4 months, $2 billion out of our economy at a time when we need money flowing into our economy. So they were only being informed of what was a fact, which was that we could not pay the bills in some of these areas if we were not given the kind of flexibility which had been requested of the Congress. It's the same flexibility, as I have said, that President Eisenhower requested and which he received, and which we have now received.

[18.] Q. Mr. President, while most of business certainly doesn't oppose your income tax reduction plan, many businessmen have said if you really want to give business and the economy a shot in the arm, that you should give them a better break on depreciation, tax write-offs, and so forth. Now I know that a new schedule is coming out, I think within the month, but in addition to that, do you contemplate anything in this area that will help?

THE PRESIDENT. We are going to, as I said before, by the 6th of July come forward with the quicker depreciation write-offs under schedule f for $1,200 million. That could have been done any time in the last 15 to 20 years. We have been working on it now for a year. That is going to be important.

In addition, under the tax bill itself, it provides very important assistance to business if we are able to secure its passage by the Senate. And, of course, the third provision of the tax bill is the standby tax authorities in case unemployment begins to move up, which will permit us to have a temporary tax reduction in many brackets. All those I regard as very important.

Reporter: Thank you, Mr. President.