The President's News Conference

THE PRESIDENT. While they are taking their pictures, I will say this will be on the record for direct quotation. A transcript will be furnished immediately after the conference so you will have it for your stories, if you desire it.

Because we will not have pictures during the course of the conference, and no recording will be made, no requests of equal time will be honored.

MEETINGS AT THE WESTERN WHITE HOUSE

[1.] In respect to the California schedule, we plan on this trip to have a major meeting on national defense policy in terms of our national defense budget in which Dr. Kissinger, Secretary Laird, and Secretary Packard will participate on Monday. In the balance of the week, we are having meetings of the Domestic policy Council with particular relationship to the problems we will confront in the 1972 budget.

These will be the first meetings on the '72 budget and will be mainly planning meetings in which we will take a long view with regard to what the budget may be.

We look forward to your questions.

QUESTIONS

THE BUDGET

[2.] Q. Do you expect to balance the budget, Mr. President? Do you expect to have a balanced budget or do you think you will be working with a--

THE PRESIDENT. As you know, our budget for the year 1970 will not be in balance; and our budget for the year 1971 will not be in balance. We announced that in February. That would have been the case even without the additional problem we confront of the Congress not enacting the tax legislation that we have requested and the Congress adding to appropriations requests above the amounts that we recommended.

As far as 1972 is concerned, whether that budget can be balanced will depend upon two factors: one, the restraint that the Congress shows now in this session with regard to spending, because what happens now will have a great delayed impact on the 1972 spending programs; and second, the economic situation. We expect the economy to be moving upward for the last half of this year and to continue to move upward during fiscal 1972. But those are the two major items that will determine whether the budget in 1972 will be balanced.

Our goal in a period when the economy will be working at full employment, which is a goal we think we can achieve during fiscal year 1972, is, of course, to operate with a balanced budget.

SECRETARY ROGERS' PARTICIPATION IN THE

CALIFORNIA MEETINGS

[3.] Q. Mr. President, won't Secretary of State Rogers take part in the Monday meeting?

THE PRESIDENT. No. The Secretary of State is going to be at the Bohemian Grove¹ over the weekend and will not be there for that meeting. That meeting is solely with regard to the Defense budget and its implications. It does not have to do with Defense policy insofar as it would affect foreign policy.

¹ A redwood grove owned by the Bohemian Club of San Francisco. Secretary Rogers was a speaker during the Club's annual encampment.

The Secretary of State, however, will participate in other meetings later in the week over the weekend. I think he is coming to California on Thursday or Friday, later in the week.

THE DEFENSE BUDGET

[4.] Q. Mr. President, do you anticipate being able to cut the Defense budget some more in fiscal '72?

THE PRESIDENT. It would be very difficult. I know that it is fashionable to suggest that as we face these increased spending programs in the domestic field, that Congress seems intent upon enacting, that we can just take it out of Defense. Well, there is very little left to take out of Defense.

I do not mean that some efficiencies may not be brought about. But I do suggest that when we look at the Defense budget we find that our national priorities have already changed.

I was looking at the percentages just this morning and found that in 1962, during the Kennedy administration, 48 percent of the budget went for Defense and 29 percent for non-Defense programs. By 1968, it was still 44 percent for Defense and 34 percent for non-Defense programs. Now it is 41 percent for non-Defense programs in our '71 budget and 37 percent for Defense purposes.

As these priorities have been reordered, it has meant that the Defense budget has been cut. It was $1.7 billion less in 1970 than in the previous year. And our budget for 1971 is, as you know, $ 5 1/2 billion less than for last year.

We will still try to cut in Defense as well as in other areas. But to suggest that the money for big, new domestic spending programs can come out of substantial cuts in Defense, I think is not realistic.

PARIS PEACE TALKS

[5.] Q. Mr. President, in your television conversation a couple of weeks back, you said that Ambassador Bruce would be receiving new instructions for the negotiations in Paris.

Does that mean that our negotiating positions in Paris are going to change, and if so, could you tell us what the new instructions will be?

THE PRESIDENT. Well, I, of course, wouldn't tell you what the new instructions were because Ambassador Bruce, as the negotiator, must reflect those instructions at a time and in a way that he thinks would be helpful to negotiations.

I will only say at this time that we are giving Ambassador Bruce great latitude to discuss all of the proposals that we have made both in public and in private sessions to the North Vietnamese and the VC, in addition, to discuss the proposals they have made and also to recommend to us any new approaches that he believes might be helpful in pursuing the negotiations.

With regard to the specific matters that Ambassador Bruce will discuss, these are subjects we are planning to take up in our meeting with him and Ambassador Bunker tomorrow, but we would not, in advance of the negotiation---of course, it would not be helpful to his negotiating position to indicate what he was going to do.

TAX REDUCTION POSSIBILITIES

[6.] Q. Mr. President, Mr. Weinberger said last week that he would like to see some part of any savings, any surplus, go into a tax reduction. Is that realistic in the foreseeable future?

THE PRESIDENT. Well, Mr. Weinberger was speaking of the long run, I think, Mr. Theis [J. William Theis, United Press International], rather than the short run. I had a long talk with him and, of course, with Mr. Shultz, who have their new responsibilities in the budget area, and when we speak of the possibilities of tax reduction, I think it would not be fair to the American people to suggest that we can have a tax reduction in 1971 and in 1972.

Looking beyond that time, the international situation might change, our economic growth might exceed the present estimates, and under those circumstances we, of course, might consider tax reduction. But it is not realistic to suggest that there would be one in '71 or '72.

THE GOVERNMENT OF SOUTH VIETNAM

[7.] Q. Mr. President, is there a significant difference between this Government's view of the political future of the Saigon regime and President Thieu's view of it as he expressed it in his interview yesterday?

THE PRESIDENT. No, there is not. I understand, I think, why President Thieu indicated concern about the use of the word "coalition." Coalition is a code word in international settlements, and wherever there have been coalition governments that include Communists it usually means that the Communists have, of course, prevailed and eventually expelled, if I may use that term too, expelled the non-Communists from the government.

Now, I stated the position with regard to coalition government at considerable length in San Clemente on July 1. That is this Government's position; that is the Secretary of State's position. In the negotiations there will not be an imposed coalition government on South Vietnam. The government of South Vietnam must be one that is chosen by the people of South Vietnam. It will be one and should be one that reflects the political forces in South Vietnam. How those forces would be represented in Parliament, for example, or in other respects is something to be worked out by the people of South Vietnam and by the elected representatives and elected leaders of South Vietnam. But under no circumstances does this Government stand for the proposition that we would attempt to negotiate an imposed coalition government on South Vietnam.

Q. Could I follow that up for a moment? When you used the expression "free decision," did you mean to imply this could be reached through something other than elections, because President Thieu seems to suggest that the only way the political outcome in South Vietnam will be determined is through elections?

THE PRESIDENT. No, I was referring to the fact that free decision did reflect elections.

Q. It was equivalent?

THE PRESIDENT. Yes. There should be free elections. But as President Thieu has indicated, the Communists can participate in those elections, they can participate in the election supervisory bodies, and he has also indicated that he would accept the result of the plebiscite, whatever that result might be.

Once the election has been held, then what government comes out of that election is something to be worked out by the elected officials. But it should not be determined in advance of the people indicating what kind of government they want.

Q. Mr. President, if I could get clear on this, do you mean by that that a political settlement which would be negotiated by the various Vietnamese parties, including the present government, would not be acceptable?

THE PRESIDENT. No. That is another matter. When you were suggesting that the present Vietnamese parties, as they are represented in the legislative body of South Vietnam which has been elected by the people---if those parties should negotiate a settlement with other political parties, that is certainly something that is a decision by the people of South Vietnam.

Q. I was referring, sir, to the Government of South Vietnam as it is represented in Paris and the other parties that are represented in Paris--settlement in that forum.

THE PRESIDENT. A settlement in that forum would seem to be highly improbable. And I think perhaps it serves no interest to speculate as to whether that would happen.

President Thieu has indicated that he in that forum would not agree to a coalition government.

TRADE LEGISLATION

[8.] Q. Mr. President, how do you view the trade bill that seems to be developing in the House Ways and Means Committee, and if it contains the provisions that apparently will be voted on, would you veto it, sir?

THE PRESIDENT. I would certainly veto it, if it contains the provisions which I did not recommend. Speaking in general terms, first, quota legislation, mandatory quota legislation, is not in the interest of the United States. We're an exporting nation rather than importing nation. It would mean in the end, while it would save some jobs, it would cost us more jobs in the exports that would be denied us, the export markets that would be denied us. And, second, even more important, it is highly inflationary, as anybody who has studied tariffs and quotas through the years is well aware.

Consequently, I have always opposed quota legislation as a general proposition.

In the case of textiles, for 16 months we have been attempting to negotiate a voluntary quota agreement with Japan without success, and also with other nations. In view of that lack of success, and in view of the enormous importance of the textile industry to this country, the fact that one out of eight workers in manufacturing is in textiles, we feel that for the Congress to pass a limited bill dealing with textiles only and providing that mandatory quotas will come into effect and will remain in effect only if voluntary quotas are not negotiated, we believe that that approach is acceptable.

But if the bill goes beyond that, if it provides, for example--includes other items, I would not be able to sign the bill because that would set off a trade war which would have all the repercussions that I have tried to describe earlier.

FURTHER QUESTIONS ON VIETNAM

[9.] Q. Mr. President, are we in the situation--getting back to the Vietnam situation--where the South Vietnamese Government has in effect vetoed certain advances that we would like to make, new initiatives in the Paris talks?

THE PRESIDENT. No, not at all. The South Vietnamese Government has been very cooperative. They have agreed to free elections. They have agreed to accept the mandate of free elections, something which the Government of North Vietnam, of course, has never agreed to in North Vietnam. They have agreed to discuss and negotiate cease-fires on a national basis. And as far as this talk about coalition government is concerned, I want to be quite categorical. I have always said that in South Vietnam we will negotiate without conditions except with regard to one condition: and that is the right of the people of South Vietnam to determine their future.

Imposing a coalition government upon them, one which they had not chosen themselves, would be in violation of that principle. That we will not accept. But this is not a case of South Vietnam vetoing our initiatives.

Q. Mr. President, in following that up, does Mr. Thieu's statement that Communist candidates would not be allowed in the election, does that fit in with your belief that there should be a free election in South Vietnam to determine its future?

THE PRESIDENT. I have read his statements in context of the general proposals that he and his government have made, along with the proposals we have made in the Paris talks. And those proposals have indicated that all political parties in South Vietnam could participate in the political process. And I do not understand that President Thieu has departed from that proposition.

THE MIDEAST

[10.] Q. Mr. President, could we move to the Mideast for a moment?

THE PRESIDENT. Sure. I don't want to go. [Laughter]

Q. Can you at all, sir, clarify for us how your various approaches to the problem, both to the area itself and Soviet interests in the area, are proceeding?

THE PRESIDENT. I would be glad to discuss it. I don't, however, count this as a clarification. I think my position is quite clear.

First, I have always said, as I said on July I, that our interest is peace in the area and the recognition of the sovereignty and independence of every state in the area.

Second, I pointed out that to maintain peace in the area we felt that it was important to maintain a military balance of power so that no state in the area would be encouraged to launch an offensive against another state or be driven to launching a preemptive strike because of fear of an offensive or of a buildup.

Third, I have indicated that the Soviet movement not just of weapons but of men to Vietnam [sic] to man the weapons causes us concern because if that continues that could upset the balance of power. It has not yet been upset, as the Secretary, of State has said, but we are watching it closely because if the balance of power is upset then that would have the effect of leading nations on both sides possibly to take action which would lead to another

war.

I further pointed out that as far as the Soviet Union was concerned and the United States is concerned that we both wanted to avoid a confrontation, we want to avoid a confrontation every place in the world. We want to avoid it in Europe, we want to avoid it in Southeast Asia, and we want to avoid it in the Mideast. And that an arms escalation, and particularly the insertion of troops, men, into the Mideast increases the risks of a confrontation, a confrontation that neither side wants. That is why we are putting such emphasis on our peace initiative. That is why we have not announced any sale of planes or delivery of planes to Israel at this time, because we want to give that peace initiative every chance to succeed.

Now, one other point that I think is worth, shall we say--I will accept the word "clarifying" in this respect--I know that there was some concern expressed about the use of the word "expelled" in one of the backgrounders that was given. I read the backgrounder and I support exactly what was said because what we meant to say there was simply this: that in any peace settlement, once a peace settlement is made then there will be no need for the forces of other nations to be in these countries. The use of the word "expelled" was not with the idea of using armed force for that purpose but to negotiate any peaceful settlement, the removal of these forces which if they remain there we believe might increase the chance of a confrontation.

I suppose that needs to be clarified again.

SCHOOL DESEGREGATION POLICY

[11.] Q. Mr. President, are you concerned about southern reaction to the administration's school desegregation policy, particularly Senator Thurmond's speech the other day?

THE PRESIDENT. Well, I am not surprised at the reaction, but I believe that as thoughtful people of the South consider not only what we have done in the past but what we do in the future they will recognize that we finally have in this country what the South has wanted and what the South deserves, a one-nation policy--not a southern strategy and not a northern strategy, but a one-nation strategy.

As far as the South is concerned, we are--the statement that Senator Thurmond made partially objected to an action we have not taken and have no intention of taking, and that is of sending vigilante squads, in effect, of the Justice Department lawyers in to coerce the southern school districts to integrate. We have not done that; we are not going to do that.

Our approach is one of recognizing this terribly difficult problem of cooperating with the educational leaders and other leaders in the South in bringing them into compliance with the law of the land as it has been interpreted by the Supreme Court. Our policy, in other words, is cooperation rather than coercion.

Now I would say finally that I know that some people in the South would prefer a policy that was perhaps not as even. handed as this, but I believe this is the right policy insofar as carrying out the constitutional mandates are concerned. I think it also is the fair policy. I think in the long run, too, it is in the interest of the South, because when we look at this difficult school problem there cannot be instant integration, but segregation: must be ended. That is the law of the land and it is necessary for us to go forward and to end it with a transition period which will be as least difficult as possible.

That is what we are trying to work out. That is one of the reasons why we are trying to, as you know, obtain $1 1/2 billion out of the budget for this year and year to cushion that transition period from segregated to nonsegregated education.

U.S. RELATIONS WITH MAINLAND CHINA

[12.] Q. Mr. President, is there movement in our relations with Mainland China?

THE PRESIDENT. No. As you there was slight movement before in the meetings we had in Warsaw. We are still hopeful that those meetings will be resumed.

But I have nothing to report on any movement toward resuming them at this point, although we think there is a chance they may be moving.

TROOP WITHDRAWALS

[13.] Q. Mr. President, you said that the Cambodian operation has smoothed the way or helped the course of the Vietnamization. Do you think you will be able to increase the increment of 50,000 troop withdrawal that you have announced between now and October 15?

THE PRESIDENT. I have nothing to say on that at this time. We are going to examine this situation as time goes on based on--I know you get tired of hearing this-the three criteria of progress in Paris, if any, and the level of enemy activity, and the progress in the training of South Vietnamese.

At the present time, however, our plans are to go forward with our 150,000 withdrawal to be completed during the spring of next year. In the event that there is progress on any of these three fronts which will justify our moving faster, you can be sure that we will move faster.

Incidentally, one factor that is encouraging in this general area was the fact that I was looking at this morning: In the 3 weeks since the Cambodian action was completed on July 1, American casualties were the lowest of any 3-week period in the last 4 years.

That still is too many. One is too many. But the fact that we have come that far is some accomplishment.

"ISOLATION" OF THE PRESIDENT

[14.] Q. Do you have any concern, Mr. President, that your staff might have you isolated, as has been charged in some news columns?

THE PRESIDENT. Well, I isolate them. No; as a matter of fact, I not only see my staff, but I see a great number of people who come in representing all points of view.

As a matter of fact, we have been checking on that since the suggestion was made that I was isolated. And some members of my staff believe that perhaps I have been having too heavy a schedule in that respect. However, I intend to continue as heavy a schedule as I can, talking to all people representing various points of view.

I am generally, incidentally, a very good listener, except in a press conference.

CAMPUS UNREST

[15.] Q. Mr. President, last Friday, I believe, you had a report from Dr. Heard on the problems of campus unrest and your Commission, headed by Governor Scranton, has been studying this problem. There have been some indications that they think that the administration itself ought to do something to still the problems on the campuses.

What is your feeling about what you may be able to do before the schools open in the fall to help alleviate this problem?

THE PRESIDENT. I would rather wait until Dr. Heard has an opportunity to make his conclusions public, which I asked him to do after we met--and I understand he will make those conclusions public sometime this week--and until after the Scranton Commission makes some recommendations.

I noted that the Scranton Commission hearings had been interpreted by some as indicating that the evidence was mounting to a conclusion that one way to bring peace on campus was to end the war in Vietnam.

Well, that of course would not be news. I am not sure if it would bring peace to the campus. But I would have to respond to that in this way: I want peace on the campus, but my major obligation is to adopt policies that I consider will bring peace to the world.

And for that reason I have to reject the easy and sometimes tempting road of a quick and easy solution of ending the war in Vietnam, because I want to end it in a way that we can have a better chance for a lasting peace and not in a way that will encourage the forces of aggression in Southeast Asia and other parts of the world.

LAOS

[16.] Q. Mr. President, there has been speculation recently that American forces or South Vietnamese forces are planning a Cambodian-type operation into Laos. I know that you can't talk about future operations in this sort of thing, but can you tell us if our policy precludes American troops launching a Cambodian-style operation into Laos?

THE PRESIDENT. I think I answered that question when I issued my rather long Laotian statement, you will recall, earlier this spring.

Our actions in Laos will be directed toward interdicting the flow of enemy supplies down the Ho Chi Minh Trail. That is the occupied part of southern Laos. We will use air power for that purpose.

We have no intention of using ground forces for the purpose of interdicting the Ho Chi Minh Trail.

FAMILY ASSISTANCE PLAN

[17.] Q. Mr. President, how do you now assess the prospects of your family assistance plan getting through the Senate?

THE PRESIDENT. I would probably know more about that after I see what happened at a meeting with some of the Senators today. I put the chances as fair. I expect to meet with our legislative leaders in the morning and may have more to report on that later.

THE PRESIDENT'S TRAVEL PLANS

[18.] Q. Mr. President, do you have any travel plans for this year? A year ago at this time you were greeting the Apollo astronauts in the mid-Pacific. I wondered if you had any plans to do any traveling between now and January i.

THE PRESIDENT. No, I haven't figured out anything that would top that.

EMPLOYMENT AND THE ECONOMY

[19.] Q. Mr. President, you earlier that you expect full be reached during fiscal '72.

THE PRESIDENT. Oh, I'm not saying it won't be reached before 1972.

Q. How high do you think unemployment may rise in the interim and in general how strong do you think the recovery of the economy may be this year?

THE PRESIDENT. I wouldn't and should not speculate on that point. We are at really the watershed of economic policy now. That is why I issued the rather strong statement to Congress with regard to appropriations and spending.

I am a political man. I know how popular it is to be for big spending programs in an election year. But I also know that big spenders are only popular as long as they are picking up the check--when somebody else picks up the check they become very unpopular--and when the American people learn that the big spenders in Congress are primarily responsible for higher prices, and eventually even higher taxes, I think that the American people will turn on the big spenders politically.

Let me put that into context with the question of employment. We are at a situation now where we finally see as we look at the wholesale price index and at the deflator figures that came out, which of course were the broader price index figures a few days ago, that the inflation has cooled.

I believe, and all of the economic experts tell me that I can predict this, that that leveling of the rise in wholesale prices will be reflected as the year goes on in a downturn of the rate of increase in the Consumer Price Index. However, at the same time as we do that, we find that the economy as it has cooled has inevitably had some upturn in unemployment and also this upturn has been greater than would usually be the case in moving from an inflation to an economy with price stability or relative price stability.

This situation has been aggravated by the fact that we have been moving from a wartime to a peacetime economy. As I have pointed out, 700,000 men out of the armed services and defense plants had added to the unemployment roles.

We think this is a cost worth paying, however. We want, however, to cushion that transition as much as we can.

Looking on through the summer, I think I could probably better, with more precision, speak of the last half of the year. The economic experts, with whom I have been meeting quite regularly here, indicate that the last half of the year will definitely see the economy turning up. And as all of you have noted, there have been some indications both in the indicators, not all of the indicators, but a majority of those that people watch, and also among the economic analysts, that the downturn has bottomed out and that the last half of the year will see an increase in productivity and an upturn in the economy.

EDUCATION APPROPRIATION BILL

[20.] Q. Mr. President, will you veto the education appropriation bill if it comes to you in its present form?

THE PRESIDENT. That is a terribly tough decision because the amount was so large, as you know. This one, however, while the amount is lower, the amount over the budget still is a matter of great concern. This bill, as it will come to me, will be over $400 million in excess of the budget recommendation that I made and I have not yet determined whether I can veto it or not, but I do know this: that that $400 million in excess of the budget request is an unacceptable amount and that we have to find that $400 million someplace else if I don't veto the bill, and I am trying to presently examine that possibility.

Reporter: Thank you, Mr. President.