The President's News Conference

INFLATION

THE PRESIDENT. Good morning, everybody. I have a brief opening statement, and then I'd be glad to answer questions.

More and more in the last few months, it's become obvious that inflationary pressures are building up. In the first 3 months of this year, the average Consumer Price Index increased to the annual rate in excess of 9 percent; the Wholesale Price Index increased during that period of time in excess of 10 percent, and we've seen a very encouraging increase in consumer confidence, retail sales, and other economic indicators.

I've tried to address, ever since I've been in office, the very difficult and pernicious problem of inflation. We've not been willing to control inflation by deliberately dampening the economy nor holding down employment. We've left intact, even after withdrawing the recommendation for a $50 tax rebate and the business tax credits, an economic stimulus package in excess of $20 billion designed almost entirely to provide jobs for the American people.

This morning I distributed to the press and to the public a list of things that we will do as an anti-inflation effort. It's comprehensive and it's as complete as we can possibly devise. We will be probing throughout the coming months and years for additional ways to control inflation. Our goal is to reduce the inflation rate by 2 percent by the end of 1979, which is a very difficult task to undertake.

I've become convinced that the Government by itself can't do it. We can take the lead. We can hold down unnecessary expenditures, work toward a balanced budget by the end of this administration. We can coordinate the many elements within Government that have detailed information. about specific inflationary pressures to try to nip them in the bud before they become apparent because of their severity. We can build up adequate agriculture reserves, deal with the widely fluctuating commodity prices, make sure that we have an international approach to worldwide inflation working with other industrialized countries, and make sure that Government policies, including unnecessary programs, the unnecessary regulations, enhance the competitive nature of the American economic system.

All these things will be done simultaneously. I think they directly address the roots of inflation and, at the same time, permit us to have expansion in our economy and a simultaneous reduction in unemployment. This is a commitment that I have, and I'm very grateful that the business and labor leaders have agreed to cooperate on a continuing and routine basis to try to address the basic causes of inflation.

I will now schedule monthly meetings with the Chairman of the Federal Reserve Bank, Mr. Arthur Burns, and my own economic advisers to make sure that there is some maximum degree of coordination in addressing inflationary pressures.

I'd be glad to answer any questions that anyone might have.

Ms. Thomas [Helen Thomas, United Press International].

QUESTIONS

THE SOVIET UNION

Q. Mr. President, in view of the Soviet reaction and your own reassessment so far, do you see any reason to change your SALT proposals? Also, do you see any validity in meeting with Secretary Brezhnev from time to time, starting this year?

THE PRESIDENT. I think that the Soviet response has been predictable. I've been somewhat concerned lately that they've decided to go public as much as they have. But I have to say that there is a very important distinction that ought to be drawn between private and determined and continuing negotiations which are being pursued on the one hand, and the education of the public, the presentation of issues to people in our own country, which has always been the case since I've been in office. And it's very encouraging to know that now Mr. Brezhnev and his other leaders, through Pravda, are explaining the Soviet position to the people of Russia.

So, I see nothing wrong with the Soviet leadership giving their arguments and their excuses for not agreeing immediately to our drastic cut proposals to the Soviet people, but I do feel encouraged about it.

As far as the--the other part of your question?

Q. I asked, did you see any reason to change your proposals and also, do you plan a summit meeting with Brezhnev, and will you be having them from time to time?

THE PRESIDENT. I see no reason to change our proposals. We had two, as you remember. 'One is to ratify the basic agreements of the Vladivostok discussions, and the other one is a much more drastic reduction in overall weapon capability. I see no reason to change those proposals.

I would welcome a chance to meet with General Secretary Brezhnev on a continuing basis, annually at least, and I hope that later on this year that he and I might meet in our own country. I think it's good, though, not to predicate each meeting with the belief that some dramatic conclusion might be reached or some dramatic agreement might be reached.

I hesitate and am reluctant to work under the pressure of having to come up with an agreement each time. I think it makes too much of an inclination for us to agree to things that might be counterproductive for our own Nation's benefit, just in order to have some publicity derived from the agreement itself.

ENERGY POLICY PROPOSALS

Q. Mr. President, can you offer any assurances that your energy program, coming in a few more days, won't, on balance, be inflationary?

THE PRESIDENT. No. The energy policy proposal which will be made next week will be inflationary in nature. There have been some news reports that it would contribute 2 or 3 percent to the rate of inflation. These reports are completely erroneous. We are going to try to come out with an energy policy package which will minimize the effect of inflation which we've already felt so severely.

As you know, there has been a 500 or 600 percent increase in the price of oil since 1972. And the price of energy, as it becomes scarcer and scarcer, is going to go up.

We hope to be able, within the energy policy that I present, to hold down the impact on inflation to less than 1/2 percent by emphasizing wherever possible voluntary conservation. A termination of unnecessary waste of energy is anti-inflationary in itself. The inevitable increases in the price of energy as it becomes scarce are inflationary. So, we're going to try to balance those two to minimize the impact on the inflation rate of any energy policy, or absence of energy policy. But I think it's accurate to say that there will be some adverse impact in the future because of energy prices.

ECONOMIC STIMULUS PACKAGE

Q. Mr. President, your withdrawal of the $50 tax rebate left a lot of Democrats in Congress who had supported the rebate even though they had reservations about it looking as, maybe, if they had a little political egg left on their faces. What do you offer them in the way of recompense; and, secondly, how would you feel if Congress should pass the Republican alternative, which is an across-the-board permanent tax cut now?

THE PRESIDENT. If the Congress should pass the Republican alternative, which is a permanent tax cut, I would veto it. I don't think the Congress is going to take that action, which would be irresponsible. It would mean that over a long period of time we would have an inability to have comprehensive tax reform, and it would be permanently inflationary in nature and is not necessary.

I think the recompense for the Democrats who have approved the economic stimulus package when it was evolved in Plains last year and who passed it with, I think, approximately a 2-to-1 majority in the House and passed it through the Senate Finance Committee, the Senate Budget Committee--I think they can derive satisfaction out of knowing that we still have intact a stimulus package in excess of $20 billion designed to do two things: One is in stimulate the economy through job opportunities--public works jobs, public service jobs, training programs, anticyclical allotments to local governments.

The other part of it is the first step toward comprehensive income tax reform which will greatly simplify the income tax laws and tax returns for next year by increasing the personal exemption. That package is still beneficial and, because of improving economic indicators and increasing inflationary pressures, is adequate.

Mr. Sperling [Godfrey Sperling, Jr., Christian Science Monitor].

ECONOMIC POLICY

Q. Mr. President, how would you distinguish your basic approach toward economic problems from that of the Ford administration? You are leaning, aren't you, in the conservative direction?

THE PRESIDENT. Well, I think there is a sharp distinction. I would like to answer the question without criticizing the previous administrations, Mr. Ford or Nixon. I think their basic approach to controlling inflation was to deliberately dampen the economy and to accept in the process, again deliberately in my opinion, a very high, permanent unemployment rate. We've tried to address this in a completely different fashion by deliberately stimulating the economy with the $20 billion or $23 billion package still intact and also addressing directly the unemployment rate which has dropped now from about 8 percent, I think, in December, to about 7.3 percent and, at the same time, attacking the direct causes of inflation. I refuse to connect the two. I think that if you deliberately accept unemployment as a means to control inflation, that's wrong. And that's the basic distinction.

ILLEGAL ALIENS

Q. Mr. President, for many weeks now you had officials of your administration studying the problem of illegal aliens coming to this country from Mexico. Can you tell us when you will have a policy in place to deal with that and what its main features will be?

THE PRESIDENT. My guess is that I will have a message to present on the illegal or undocumented aliens probably within the next 2 weeks. I would rather get a specific date from the Attorney General and the Secretary of Labor who have led this task force, but my understanding from them is that within the next couple of weeks they'll be ready for this recommendation. I can't tell you the features of it yet, not having approved the recommendations that they present to me.

FOOD PRICES

Q. Mr. President, I would like to ask you about food prices. In your message, you referred to farmer-held food reserves to help stabilize consumer prices. To the housewives who are the shoppers of America, what encouragement can you give them as to a target date, as best you can?

THE PRESIDENT. The food prices in 1976 actually decreased about 1 percent, as you remember. Food prices in the first 3 months of this year have increased at an annual rate of about 19 percent; 19.3 percent, I believe. This is a matter that must be addressed in a comprehensive farm bill.

My own recommendations on basic farm price supports are much lower than many farmers desire. They are predicated on a commitment to make American food products competitive on an international market scale with similar products from other countries.

We've also tried to give in a new farm bill a proposal, which I think is adequate, to maintain farmers' income at a break-even point on individual crops. I've never wanted to guarantee farmers a profit. We've tried to assess the cost of production, and that's a recommendation.

The building up of adequate reserves of basic food supplies--wheat, soybeans, and so forth--to 'be held primarily by farmers themselves, is the best approach, I think, to the question. Almost chronically we have a shortage of soybeans. The American soybean production comprises about 85 percent of all soybeans traded in international circles. And of course, we have a dominant portion of the wheat traded on a worldwide basis coming from our country.

So, with adequate production, adequate storage when you have excessive production, and orderly marketing primarily controlled by farmers, I believe that we can remove the wild fluctuations that have been characteristic of farm prices in the past.

As you know, we had sugar almost a dollar a pound just a few months ago. Now it's down less than the cost of production, about 12 cents a pound. And I will try to pursue an international marketing agreement on sugar.

So, in many different ways, varying from one crop to another, we are trying to hold down the wild fluctuations in food prices. Almost invariably the prices go up after the farmers sell their crop; the consumers pay. When the prices go down to the farmer, they do not go down quite often in the marketplace. So, stability is good for the farmers and consumers.

ENERGY PROGRAM

Q. Mr. President, there appear to be some different philosophies on two problems. In the field of energy, it's pretty clear your program is going to have mandatory incentives to force Americans to save fuel. Yet in this inflation program it is pretty clear that you leave it up to voluntarism on holding down wages and prices. Now, why do you think Americans need to be forced to save energy but will voluntarily shown restraint in the field of wage and price increases?

THE PRESIDENT. Because I'm still working on my energy policy and will spend the whole weekend in this pursuit and will make a major statement next week on energy policy, I don't want to get into details. But I believe that a predictable energy policy with tight constraints on waste of increasingly scarce energy sources is by far the least inflationary approach to the question.

With a lack of planning, a lack of comprehension of the problem, and a lack of effort to conserve scarce energy products, you are going to have a wildly escalating inflationary impact which we've experienced in the last 4 or 5 years.

So, I don't think the two questions are incompatible at all. When you have excessive regulation of an industry--say airlines--it's obviously inflationary. In almost every instance I believe the free competition in our enterprise system is superior. There comes a time when commodities like energy are extremely scarce, when there has to be perpetuated some Government controls. But in the energy package we will try to minimize those regulations and controls. But at the same time, I believe that our policy will be less inflationary than the absence of a policy, which we've experienced in the last number of years.

Mr. Donaldson [Sam Donaldson, ABC News].

Q. Perhaps I didn't make myself clear. I'm really asking whether you believe that Americans will voluntarily hold down their wages and prices, corporations and businesses. You seem to have nothing in your program that would make it mandatory for them to hold it down or even to jawbone them to hold it down. I was comparing that to what would appear to be a mandatory approach on energy.

THE PRESIDENT. My belief is that we will make a major stride forward in inducing business and labor voluntarily to work with us in Government in holding down the inflationary pressures. When there is an unpredictable Government policy or when there is a chronic inflation rate--6, 6 1/2 percent which we presently experience-when prices or wage increases are considered, there is always an inclination to go beyond the predictable inflationary pressure.

I believe the best approach to it is on a voluntary basis. But in the case of energy, in many instances mandatory Government regulations are necessary. I think there is a good and legitimate reason to distinguish between the two.

Ms. Berger [Marilyn Berger, NBC News].

SALT TALKS; MEETINGS WITH FOREIGN

LEADERS

Q. Mr. President, another question on strategic arms limitations. At least on the public record, which is growing daily, there seems to be a total impasse between the United States and the Soviet Union on the solution to the problem.

Now, do you believe that a meeting between you and Mr. Brezhnev could help overcome that impasse. And more generally, you've been meeting with a lot of leaders. Do you feel that in meeting with foreign leaders you can help change their perception of what is actually in their national interests?

THE PRESIDENT. I wouldn't ever expect to change a foreign leader's opinion if he thought it was contrary to his own national interests, no. I have found, though, in my meetings with a number of foreign leaders, already, to be very helpful to me in understanding their particular perspective in trying to find some common ground on which agreements can be reached.

The Middle East is one of the more notable examples of this. And by the end of May, I intend to have met with all the foreign leaders who will be involved in the Middle Eastern settlement, which we hope to see make progress this year.

I don't consider the SALT talks at this point to have reached an impasse. There are continual discussions going on through normal diplomatic channels. I think that when we reconvene the Secretary-of-State-level discussions in Geneva in just a few weeks, we will have made some basic progress. The 8 or 10 discussion groups that were agreed to jointly by Mr. Brezhnev and Mr. Vance will be put into effect within the next 2 or 3 weeks, and a wide range of discussion of strategic arms limitations, the comprehensive test ban, commitment not to destroy one another's satellite observation posts, demilitarization of the Indian Ocean, and so forth, are going to proceed, I hope, with a moderate degree of hope for success. No one can guarantee success, but I'll be doing the best I can, and I'm sure Mr. Brezhnev will also, to find that common ground that will leave our national interest and the Soviet's national interest intact.

MILK PRICE SUPPORTS

Q. Mr. President, you say your anti-inflation program will require hard choices by you. How do you reconcile that with your recent approval of higher milk subsidies that will raise the price of milk by an estimated 6 cents a gallon and also raise the price of other dairy products?

THE PRESIDENT. Milk is a special case. Within the last few months the market price of milk has dropped 9 percent. Feed for dairy cows has more than doubled. And the profit margin of dairy farmers was precariously imbalanced even before these changes took place. Other farm price supports, as you know, have been held down, by my administration's recommendations, lower than milk.

I might point out also that the approximately 9-percent increase in the price of milk was much lower than dairy interests requested and demanded. But there was an extraordinary circumstance surrounding milk which caused the Secretary of Agriculture to make that decision, which I think was proper.

THE ENERGY CRISIS

Q. Mr. President, the latest public opinion poll suggests that a majority of the people still don't think there is an energy crisis. What do you think it's going to take to jar their consciousness, and are you planning a massive public information program beyond the two speeches you'll be giving next week?

THE PRESIDENT. I'm going to do all I can in addition to the two speeches next week to convince the American people of the truth. The CIA has just completed this week a long and detailed analysis of international oil supplies, natural gas supplies. Their findings are quite disturbing. Reserve estimates that had been used as a basis for decisions in the past were found to be quite excessive. Reserves are not as great as we thought they were.

If I can simply convince the American people of the truth, using whatever means that I have at my command, that is the commitment that I have. And I believe that when they see the truth, they'll cooperate in trying to cut down the waste of energy.

UNEMPLOYMENT; TAX REBATE

Q. Mr. President, on the tax rebate, last week you sent a letter to the Senate in which you said the rebate itself would produce 250,000 jobs. Even with the remaining elements of your stimulus package and even with the upturn in the economy, won't your decision yesterday cost most of those jobs, and does it in any sense represent a trimming back of your ultimate goal on unemployment?

THE PRESIDENT. No, I don't believe so. At the time we decided on the $50 tax rebate, I and the congressional leaders, of course, jointly--we were experiencing about an 8-percent unemployment rate. That's now dropped down to 7.3 percent, which is much too high.

At the same time, we had a very sluggish or dormant economy growing at an annual rate of only 3.2 percent. That's now almost doubled its rate of growth.

My own economic advisers, who will be answering questions from the news media in about 15 minutes after I go off of this podium, have estimated that for the next 3 or 4 months these favorable economic indicators on growth will continue.

Another very important factor is that back in December we thought that we might get the economic stimulus apart from the $50 rebate in the mail to Americans in April. And we depended on the public works jobs programs and so forth to come along later this year to maintain the stimulus impetus. Obviously, now it's not possible to get those checks in the mail, even if everybody was unanimously in favor of it, until June or July.

So, because of those factors we changed our plans. But I believe that we will have now an adequate stimulus package for job improvements, and the increase in consumer confidence and consumer purchases that we hope to bring about with the $50 tax rebate has simply already occurred. And it is not necessary any more.

Q. Mr. President, yesterday when you dropped the $50 tax rebate, you suggested that one of the reasons was increased inflationary pressure over last November or December when it was first proposed. I'd like to ask now, if the Senate had acted quickly, and as quickly as the House did, and passed the $50 rebates, would we now be in the clutches of runaway inflation?

THE PRESIDENT. I don't think and have never thought that the $50 tax rebate would have any significant impact on inflation. I deliberately did not tie the $50 tax rebate withdrawal to the anti-inflation proposals that I made today. I don't think it would have. We still have about, I'd say, a 15- to 20-percent unused capacity in our industrial production. And, of course, the unemployment rate is still above 7 percent, which is very severe. But under those circumstances, I simply don't think that you can say that a reason for withdrawing the $50 tax rebate was to hold down inflation. The reason was that it is simply not needed.

HARKIN AMENDMENT

Q. Mr. President, the House, as you know, just recently passed the Harkin amendment to the International Lending Institutions Act of 1977---

THE PRESIDENT. Yes, I know.

Q.---which stipulates that the United States representative must vote no to countries who violate--loans to countries who violate human rights. Did the administration actively support---or why didn't the administration actively support this amendment?

THE PRESIDENT. I think the Harkin amendment is a mistake. The Reuss amendment 'and the Senator Humphrey amendment, which are the same, provide me with an adequate authority to deal with the question of human rights as it relates to international and regional lending institutions. To have a frozen mandatory prohibition against our Nation voting for any loan simply removes my ability to bargain with a foreign leader whom we think might be willing to ease off on the deprivation of human rights. But when the requirement is frozen into law, there is simply no reason for a foreign leader to try to comply.

I think we need to have the flexibility that we proposed. My heart is with the Harkin amendment because I want to do everything I can to assure a maximum amount of human rights commitment around the world. But I think that to give us the authority within the lending institutions to use our best judgment and to negotiate for an easing off of human rights restraints before a loan is made is the best approach to it.

Thank you very much.

BUSINESS INVESTMENT PLANS

Q. Mr. President, the Nation's businessmen remain reluctant to invest partly, they say, because of its uncertainty, and now you've added the uncertainty of what Government policy is by an abrupt change on the rebate and removed the business tax incentive. What can be done to get businessmen to go ahead and expand their production, which would create more jobs?

THE PRESIDENT. Well, another economic indicator that I did not mention earlier is the business investment plan, which is up 11 percent above last year. I think it's accurate to say that early this week, when I was deciding on the $50 tax rebate, that every economic indicator was favorable except the stock market prices, and I think that's improving this week.

So, this means that the business investment plans, in my opinion, will not be adversely affected by the withdrawal of the $50 tax rebate proposal.

TAX REBATE PROPOSAL

Q. Mr. President, what do you say to the family of four that had counted on, indeed may have already borrowed against, the $200 rebate that you had promised them?

THE PRESIDENT. Well, that's a hard question to answer, and it's obviously the most difficult part of the decision about withdrawing the $50 tax rebate. I think, though, that the resurgence of the economy, which had already been brought about by improved attitudes and increased spending, just had to be balanced against the direct benefit to a family of the $50 tax rebate.

We will leave intact the increased personal exemption, which will help people on their income tax returns. And had we been able to get immediate action on the $50 rebate and let it be in the mail, say, this month, in April, which we first thought, I would have gone ahead with it. It was a close call primarily because of that factor, but you just have to make a judgment, and I believe my judgment was proper.

WATER RESOURCE PROJECTS

Q. Mr. President, could you tell us why you feel determined to cut back several of the waterway projects which you say are undesirable. In particular, could you tell us why you would like to stop the Tennessee Tombigbee Waterway, which is the favorite of some of your friends in the deep South?

THE PRESIDENT. I finished my work on the waterway projects today, and my staff is now preparing an analysis to present to the public on my decisions, the reasons for my decisions. This weekend we'll be notifying the affected Governors and Members of Congress, other leaders, about the decisions, and I would guess quite early next week, perhaps Monday, we'll make a list of my decisions public.

We've tried to do this in a very careful and methodical way. Combined with it, we will publish and adhere to a very strict list of criteria in the future for approval of projects.

We had many factors involved, but I think you'll be well pleased when we make our list public after the weekend is over.

WHITE HOUSE STAFF

Q. Mr. President, in your fireside chat you said you would reduce the size of the White House staff by nearly one-third, but several days ago one of your aides said actually the size of the White House staff has grown and he said it would be impossible to reach this goal of a reduction of about 30 percent. What goal have you set now for reducing the staff, and what's your deadline for meeting it?

THE PRESIDENT. The reason for the apparent increase, or the actual increase in the size of the White House staff right now is primarily--it's temporary. We've been getting--last week I think I got 87,000 letters. The normal number of letters that Mr. Ford got was about 15,000 to 20,000 letters a week.

And it just takes more people to come in, I believe on a temporary basis, to manage this enormous influx of mail. We can't leave those letters unanswered.

At one time, after about a month when I was in office, I had 315,000 letters that hadn't been opened or answered. We are current now. We're only running 3 or 4 days behind.

It's taken extra people to do it. We've gotten an equivalent increase in the number of telephone calls. We get 20,000 or 30,000 telephone calls per day. It really puts a tremendous pressure on us to deal with this unpredictable interest in our administration by people around the country.

I don't want to discourage people from staying in touch with me, but it has taken a lot of struggle to do that. I think in our regular staffing, when we--in this surge which will be within the next 3 or 4 weeks--we will make public the staffing levels, and we will still have the same goals in mind.

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

THE PRESIDENT. Thank you very much.