Conversation 123-002

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All right.

Perfect.

Perfect second.

Let's see.

Why don't we get up there and get you.

You're gonna take a lot of action today.

I'm not about to bench you now.

Turn to your side, I'll let you see the picture, all right?

This is it.

So, from Undersecretary Day.

Yes, sir.

Well, we...

We did set up this meeting for the purpose of reporting to the members of the cabinet, and he's on the matter of the sub-cabinet, and this will not be the only time we go up against the sub-cabinet.

Could I get a line on some of the general issues that you may be talking about today?

The two that we have picked today are, I thought you were going to read about them, and I'll tell you what you're going to want to work on.

I'm sure everybody here is going to say, well, I've already read them.

If you say that, you'll be lying.

What did I say when I read that?

I know it's in it.

I think it's in person.

It highlights the journey that there was a day that we saw this.

and George will cover energy, and we'll go to the subject of economics, which nobody here knows any more about than me.

Mr. President, before we turn, I'm George Olsen.

I actually didn't hear his sign.

About a month ago, we talked about candidate and sub-candidate participation in the ad for John Siddons.

Where did John Siddons sit as Vice President of the Senate?

We talked about the need to get out around the country and talk about these bills that were subject to retail.

And there's been a very good response to that request.

Mrs. Armstrong and a number of people have done the own service.

But we've only seen two of those bills here so far out of 15 that we've targeted.

And it's very difficult.

I was saying some easing, some modifications, but we still are facing 13 major problems to the budget up there.

And there's a tendency for John Guthrie for folks to think that two swallows have made a spring and that there is indeed a key to full cart press and nothing could be further from the fact.

We know there's an approximate relationship between the efforts that the cabinet and the other administration speakers are making around the country and the votes that we've gotten so far.

And it's been a sort of a pour-over effect on the Economic Stabilization Act extension votes that we've gotten in government because the subjects are so closely aligned.

So this is just a plea to all of you to, at this time, redouble your efforts.

If anything, I think that Ann and certainly at least five of you gentlemen would find it difficult to redouble your efforts because you've all been going at full bore.

It's not like the other members of the Cabinet still have some slack or some skittles.

And where you do have that slack and you can take commencement days or other kinds of engagements in the springtime period, please do so.

And then use the other time your people are coming over to an advancement school, your PIOs will be over in the next week for further work and scheduling.

We just ask that you all

Keep at this now.

On to the spring period.

Mr. President, you'll understand that when I leave at 9.15, I have Tampa, Jacksonville, and Columbus there to attend to.

They're there hiding.

Thank you for the time that we have, Mr. President.

But we have, as I've said at other meetings here, no one really knows when he's out there talking.

I mean, think about where we were 60 days ago about the possible ability to sustain .

And the impossibility totally of ever sustaining an ascent is an indication that you fight hard to do it.

And we've got some pretty tough battles like that.

We've won two tough ones.

And we're trying to work out some of the other things.

We can just continue to talk about it, particularly in view of some of the inflation that we're going to hear today.

On the budget side, it's even more encouraging than ever that we hold the line here because it's just one of the major fronts that we've got to hold the line here.

economic stabilization.

Of course, I guess we'll have that monstrosity down here by the 30th.

But it will be, I don't know, I was talking to Pete the other day, coming back tomorrow, in the building trade, that there is the Congress that would like very much to put us in a very interesting box.

They'd like to say freeze everything.

We'll come to this later when this subject comes up.

Freeze everything, but not wages.

Well, and that will work.

I mean, if you freeze everything and not wages, there's a question.

But we wouldn't like to have wages go up and prices stay down.

But everybody knows if you do that, the economy just comes apart at the seams.

And the other thing, if you talk about freeze everything, period, like we did,

In 1971, we had a situation where that would be grossly unfair to labor because labor got several big contracts coming up.

Now they aren't going to go through the ceiling, we don't think, but they're going to go up and you freeze everything and that's going to kick their mind.

So it's just as easy as all that.

People say just put a freeze on like we did in 1971.

It is quite different.

Well, I digress.

The main thing is that the administrative people is also very, very aggressive with regard to this whole matter of the budget and so forth.

It's extremely helpful.

And just don't get discouraged, as I say.

Come back to your offices and see the national press and what matters.

Because the national press doesn't affect the people.

He's a smart congressman or senator and so forth.

He's more effective at what he hears from home than he is when he hears from the seat.

Okay, now what do you want to do to yield to Secretary Shultz, one of the architects of the energy message, and then we'll have some time for questions.

Sure.

Well, I'll say some background things about the nature of the energy problem.

I see a few questions in the message, and you mentioned some of the outstanding actions that were taken.

And so that's trying to go through the whole thing because everybody has seen it.

There are people around here who have been in this business for a long time.

I'm sitting right now with Bill here.

He knows a fair amount about the 2nd PM and is quite a big about this company.

I think the, uh, the special is that there's no other people.

The only people that could be members of the administration have got to be poor people or liars.

That puts me in a bad position.

I'm hungry, really.

The first point about the energy problem, and it is, I think, a very major problem.

It can become a crisis if we don't get action on policy and president's way forward.

It doesn't need to be a reality.

If I could interrupt for a moment here.

I said facetiously something about the fact that it is too long to read and so forth, but this is a subject which covers everybody, that it's good to work into your doctrine, and I don't implore people to that generally, unless you...

sort of point out that, look, you don't want your lights to go off, you want gasoline for your cars and the rest.

It's an area where we have taken a very positive line, and some people are thinking about it, so I urge everybody to try to immerse themselves in it and be able to talk to some sophistication about it.

Well, I think the first point I'd like to make is that God did not create this problem.

She provided plenty of energy for us.

It's just that man has managed to so arrange things that we have made a problem out of a situation where we have essentially plenty on our hands.

And the dimensions of the problem are created by what we do on Christ.

what we do about the environment and our considerations about security.

Those are sort of the analytical points that one has to get into.

And I think we can come at them, and the President comes at them,

in his message by considering those variables and also putting against them the potential for research and development to get at some of these problems and also to consider the unfolding of the problems over a period of time.

That is, what we face in the next five years is one thing.

What we try to bring about for a period of time after that is something else again, so there is the unfolding of time here.

I found in going around talking with the finance ministers of the world that in these meetings that we had about monetary problems that there are always sort of two agendas in all these meetings.

We'd sit around the table and talk about exchange rates and then whenever we had a luncheon or a dinner or a coffee break or something,

why one or another would take me by the arm and lead me off into the corner of St. George.

What this is really all about is the energy problem.

What are we going to do?

What is the President's message going to have to say about this and so on?

And of course, the reason why is so dramatic.

as far as finance ministers are concerned, is that while we have a dollar reserve of the oil-producing countries, now about $10 billion, which is not an unmanageable sum at all.

When we get to 1980, as present trends can be extrapolated, take varying assumptions about the price of oil, but you can very readily see

flow of revenues to the oil producing.

countries on the order of $60 billion of 1973 dollars.

And you can see net reserves, that is, after they have exported and received money, and then they've imported things that they want.

So you set out of, say, $20 billion per year accumulated in their hands in the form of reserves for investment or other purposes.

And it's startling to realize that half of that

is likely to flow into the hands of Saudi Arabia.

There's that much concentration of resources in that one country, which has a relatively small population and a limited, in a sense, need for this money, as they bring out to us.

They're all sorts of uncertainties built into these projections, and I think when you project numbers like that,

You say to yourself, well, that is a projection that we have to avoid.

We have to do something about it.

We have to have some policies that are going to make for that problem.

Turn it around.

And this is, I think, where this energy message hits and basically has in it a strategy.

It says, let us do things that will build up our ability to use the domestic resources we have through an integrated set of policies, involved in price or incentives.

involving how we go about the environmental problems and involving our unfolding research and development.

So we do that.

And then second, we meet our immediate needs, and the only way they can't be vaccinated through imports, there's no other way.

So that necessitates examining the conditions of importing so that we can bring the flow in that we want, but also,

to construct our import system in such a way that it encourages our ability to develop ourselves domestically.

So we work those two things together.

And this basically aims towards a much greater element of self-sufficiency in our picture, which, as it emerges,

And as we are able to make that possibility credible through our R&D or other efforts, that I think puts tremendous bargains leverage in our hands against the prices of oil, which have been going up very rapidly, but which are not going up on the basis of cost.

Cost is minimal for most of this oil.

There's a gigantic economic rent or profit or whatever you want to call it that has been captured by the oil companies in the past and is now being captured by these countries, but which represents something that can be gotten out of the system under the proper kinds of conditions.

Well, so the energy message treats with the problem of imports of oil.

It eliminates the quantitative restrictions on imports.

I think it's a fair statement that the alterations in this program and the annual realignments of the program led to a sort of a patchwork of quality and to a sense of uncertainty about what would happen.

and provides the underpinning for making rationale for making changes.

So what has been done is to eliminate quantitative restrictions, to move toward a license fee system, and we call it a license fee system rather than a tariff.

It could be described either way, but for legal reasons, a tariff is better to describe as a license fee system.

which has fees in two tiers, that is, a fee for crude and a fee for product.

And the reason for having these two is to encourage the development of refined capacity in the U.S. from the standpoint of our own balance of payments, from the standpoint of our own jobs, and from the standpoint of our own control over as much of the total energy flow as we can get.

Now we have transition problems that we have tried to take care of in developing this system.

We have the immediate price problem.

That is, we don't want to do anything that raises price unnecessarily.

So that has been handled.

I didn't work this out.

Bill Simon worked it out.

His associates, I think, did a clever job.

The way that's been handled is that the present tariff that affects all oil imports

has been removed.

And the license fees apply only to imports that take place without a quota ticket.

Now, we have lots of quota tickets out under the old system.

There are more tickets probably than there is need to import.

which means that this year, in the extra use of these tickets, we will have tariff-free oil, in effect.

But as time moves along and as we gradually phase the quota tickets out of the picture, the tariffs will take hold and we'll be producing the incentives that we seek for the development of oil here and for the development of refining capacity and so on.

time transition involved and how this all works.

And for those of you who are students of this, yes, there are special arrangements for the petrochemical problems and so on and so on and so on.

I think as a connected matter, suggesting sort of the integrated nature of the President's message here,

It's important to get these deep water ports that we don't have, which are necessary, if we're going to import oil in the cheapest possible way, and in the environmentally most considerate way.

Could I mention to you the, I don't know whether it's our concern, I feel like it's not important to me, but I'm sure it's all on the list, isn't it?

Yes, sir.

There's jobs.

on several other things.

I think they don't stay.

But usually do, don't they?

No, but what I was thinking is she would talk to you, and I'd talk about it, because, you know, that's one group they really, really have been strong for, is everybody pleading police and those kinds of things.

Well, I'll be talking to them in the next couple of days.

Good, good.

But this is a very significant move.

This is a big move, a big change in a system.

I think it is important to notice

But the oil companies were very strong for the mandatory oil import program.

Now they have swung many of them against the Exxon, for example, came out for the total abolition of it.

Our posture here is a change-up.

to suit the conditions of the future as we see it, but not unabandoned enough because we think that these concepts can still be useful in encouraging domestic production and exploration and encouraging the development of refining capacity here.

It may also be a useful ingredient as we move down the road in dealing with other countries because it gives us an element of control over the situation that we wouldn't have if we just advanced it.

Well, going on to the subject of developing our own resources, 40% of our estimated reserves are in the outer continental shelves, and we are developing there, but slowly.

And in the message, the President sets a goal of tripling the annual leases by 1979.

which involves expanding the leasing beyond the 200 meter depth in the Gulf and resuming leasing beyond the Channel Islands based on individual environmental assessments by studying in the Atlantic and the Alaska Gulf

Council on Environmental Quality.

It's a one year study that we hope will show us how to exploit resources in those areas.

Also, we have gigantic reserves in Alaska.

The proven reserves are already such that they would supply a third of our current imports if we had access to them.

And I have yet to run into any knowledgeable person in the oil industry who doesn't think that there's a lot more oil there than the so-called proven reserves that are being carried.

And particularly if one were to consider the naval petroleum reserve there, there's a gigantic amount of oil and gas in Alaska, so we must have that pipeline.

and it has been delayed and delayed and delayed.

The capacity of the courts and the environmentalists and so forth to delay changes is astounding.

And the greatest is this right-of-way problem, which the statute is addressed to and which the President is supporting.

Fitting in with this is the proposal to apply the investment tax credit concept

to exploration for oil and gas.

And we haven't applied a 7% rate, which is the rate of the investment tax credit.

In the case of a dry hole, unless you go out and engage in true exploratory effort and you don't get anywhere, well, you've lost.

But still, we want to encourage people to take that kind of a risk.

and at a 12% level in the case of a producing hole.

So we pay off more on success than failure, but pay off on the dry hole in the interest of encouraging people to take those risks and get out and explore.

I think we have been able adequately to describe what exploration is from production.

It might be noticed that

and we've taken some heat from the oil industry on this.

In the trade message, the president proposed a matter on the taxation of foreign source income that in effect deadens somewhat the incentives for our oil companies to explore abroad.

Now this provides incentives for our oil companies to explore at home.

So, again, I want to point out the way in which all these different messages have tried to sort of be conceived together, and what we're trying to get our oil companies to pay more attention here in the U.S., where we think there is, particularly with the opening of the out-and-out continental shelf and other places, there is a lot to be done, and we want to focus on it.

It's better for us to have the oil come here than there.

Now, take the case of natural gas.

Here is another fuel.

This is undoubtedly the best fuel there is from an environmental standpoint and many other standpoints.

We have had a situation of regulated wellhead price.

That has been extremely low.

And the result is that the fuel is used in uneconomic uses, that is, economically, like what you would do at that price, the best use of the fuel.

On the one hand, and on the other hand, we provide no encouragement to the development of the supply.

So we were working ourselves to a situation where we have a low price and no product available.

And basically what is optimal for in the message is to permit competitive pricing of new gas so that we encourage the production of this gas and we make people pay.

its true cost in the marketplace as a way of dealing with the demand problem.

Now, how much new gas there will be when the price goes up substantially, nobody knows there.

I've seen experts argue wildly about it.

Many think there's an awful lot of it.

And others are skeptical.

But there certainly is a great deal if you let the price rise so that you can afford to go after more costly natural gas.

If you have to drill deeper, it costs more to do that.

So you won't do it at a low price.

You might do it at a high price.

so the natural gas proposal is controversial but very important I might say from a consumer point of view since this applies to new gas the consumer is not going to see any big increase in price as a result of this move for two reasons first the new gas is rolled into the total price structure so it's

The weight in the total will only appear as it becomes quantitatively important.

By definition, new gas, we don't have a lot of new gas to fight it.

So it comes about slowly in that sense.

The wellhead price is less than 20% of the final price.

And as there is so much cost involved in the distribution and the transportation of the product, then it isn't going to make that big a difference.

But it's a very important step to take.

There are many other elements in the President's message.

Coal is our most abundant resource.

We have coal that lasts forever, practically.

And here, our environmental concerns are practically preventing us from using the thing that's most available.

On the one hand, the environmental problems of mining it.

On the other hand, the environmental problems of using it.

So we need legislation that will allow us to mine it and to encourage and demand that that be done in a way that's compatible with environmental concerns.

And we need a major research and development thrust on the problems of burning.

Or you take atomic energy.

Here's a field in which we have been preeminent.

We've developed that.

We're the ones that pioneered the atomic power plants.

And we have now worked ourselves into a situation where the same construction happens using the same plan for a plant.

It has to take twice as long to build it in the United States as to build it in, say, France or Germany.

But the records show, having talked to the building directors today and saying that Americans build the best in the world, this is not the fault of the builders.

This has nothing to do with the rest of the planet at all.

It has to do with our procedural problems, which we have managed to make into an extraordinary

I can get her up right there to say just one very fundamental point which involves everybody.

Everybody's been in this environment for quite a while.

And understandably, everybody, but it seems small in Los Angeles.

Yep.

They, like everything else in this country, there's a tendency for people who get on such kicks to go totally wild, particularly when it's a good media incident.

Now, for example, one of the greatest mistakes the United States has ever made in my life, and one that we will not regret while I'm here, but the guy who follows here, I don't know, whoever does follow, it'll be a regret.

I said, well, you know, anyway,

failure to go ahead with the ssd within eight years the major way that people are going to be crossing the atlantic kind of a subject on our south hop is going to be with the ssd no other way if you go there if for example you can go from here to los angeles for example in an hour and a half you're not going to make five hours

And why did we build it?

Well, because these environmentalists said that you might get skin cancer as a result of the plane flying up there so high and surging in depth.

It's all a bunch of nonsense.

They had to make too much noise, but it's going to be built.

So there it is.

You come to the situation there on the cold.

And frankly, you're really interested in the environment.

We've never done coal at all.

Why not?

I mean, it's such a beautiful country where you can't be spoiled at all.

And yet, if you look at the nature of the law, I've seen an awful lot of it in Africa, and I sure well live there.

I'd like to see it develop just a little bit.

And so the point is, are we going to have the gold that allows us to do all the other things we have?

Are we going to develop it, and develop it in a sensible way which protects the environment?

Or are we going to do without it?

We've got to make the choice.

You come to the whole question of nuclear power.

Here, you really have nuts.

You have a combination of nuts involved.

First, you've got the scientists who have a guilt feeling about ever letting the genie out of the bottle.

And they don't want to default to nuclear power.

I mean, the fear, all that.

And they create fears among many people that you've got a nuclear power plant nearby, that it might blow up one day, an atom bomb, so to speak.

And I live within one mile of one at San Clemente, and I get to see what it's like there.

out around there, about three, four miles offshore, and they're all around there because the one or four where the

If it's more efficient, all it's done is improve the efficiency as far as I can see, and it hasn't affected the environment yet.

You not only have that, but then you have the environmentalists going into it too.

They fought, as you know, they fought Conhead on building that one in New York.

I don't think they built it yet.

Well, I think it's about, I know, I've been in on that now for 10 years, yeah.

You're on the side of building it.

Oh yes, of course, yes.

The point that I make is this.

Here are areas where you have a conflict.

On one side, this administration has a very good record on the environment.

I mean, clean air, clean water, and so on.

On the other side, this administration is for the development of this country, for new jobs, for all the things that Americans want.

Now, sometimes you've got to make a choice.

It can't be clear.

You can't say, we've got the environment only for jobs, and then you have, on one side, you can spoil the country and so forth.

No.

You say environment only, you don't have any progress.

And so we must clearly understand that this energy message

takes a line right down the center, but one which takes it without both parts of the vehicle.

I would say, however, it is the kind of thing that will give, will provide a lot of imagination for the loudest and noisiest people, the environmentalists.

And that's why the last pipeline is about, the last pipeline, so don't build the last pipeline.

Why?

Because, well, the caribou or something can't live or something happens to the ice up there.

I don't know.

Well, anyway.

I don't see how they're going to spoil the landscape there, but whatever the case may be, they say, you know, don't do it.

That's going to be in Canada.

People are concerned about that.

Now, here you're getting a foreign policy.

So you're going to build that through Canada.

First, it costs a lot more.

Second, the Canadians may not want it.

Third, Canadians, even though they are supposed to be irrelevant around the government, they would have us right by the throat.

in terms of our future supplies coming through Canada.

And we can't allow any nation to be in that position.

It's bad enough to have to have the page that we're not punching about 3% of our present supply contract.

I guess to throw in these points here, as you already know, is to indicate how this clicks across the board.

the mix of policies and that when you get out, you hear about the environment, you hear about the benefits.

Take it all in front of you.

Come right down to it, the individual who says, look, I retain air and clean water and so forth and so on.

And he says, do you want a job?

Or this, rather, I want a job.

Or do you want your house seated?

I want my house seated.

Or do I want my television running?

I want my television running.

Oh, some extremists would say, oh, no, let's go back to nature and the raw.

And they really mean it, the raw, as far as that's concerned.

Frankly, I think that all of those who want to go, there are plenty of places on this good earth where they're not going to determine the policies of this country anymore.

I think right now we've got a good time to take the offensive every time we talk and put this alternative before the people and take it to the people.

What we have to understand is this.

It's very important.

We tend to be, in this country, crisis-oriented.

Joe Alsop came in to say, John, earlier than that, he says, oh, this message is fanatic.

He said, you should have called it a crisis.

You know we're going to be out of it.

Well, Joe's a great friend of ours, and so forth.

But he loves it.

See, the average commentator, columnist, et cetera, to him, the stories weren't written unless it's a major, full-blown crisis.

Now what is a crisis?

A crisis is when something terrible is happening and you've got to put everything else aside to do a lot of things right now on a crash basis to deal with it.

Now this is not a crisis.

It's a problem that we see developing in the future.

It can be a very serious problem unless we take some action.

Now some of these actions, incidentally, will affect something else.

Take the price of natural gas.

It may go up.

It will go up.

No question about it.

for a while.

The question is, do you want some gas or not?

That's really what you get down to.

And so it is in other areas.

The whole point is, this administration has looked at the whole problem.

We've analyzed it, and we said, now they're winning.

It will not be precious if we do several things.

And so, and George should point out that we have a massive program for research in this.

Like people say, what about solar energy?

And what about all the other things that may come in the future?

Well, probably none of them will come in our time.

But the research program and the science, most of this research is just down the drain.

You know, it just subsidizes professors for the purpose of growth.

against the government.

But the fight is, because now and then, the professors find something.

You know, these people .

If they do, maybe they'll find something .

But the main part of it is .

Without anything else, there's coal in the ground that can't be used, and it can't be used in the way that it does here in the environment.

We've got to get it out, and we will.

There's oil, oil in this country, in Alaska, and in the United States that can't be used.

We're going to have to, and gas as well, but we're going to have to pay more.

We're going to have to, we're going to have to fight environmentalists to a certain extent to get it.

And also...

In addition to that, there's nuclear energy.

We're in the lead in nuclear energy development.

We're the people that started it all.

And now, who's ahead in the development of nuclear power plants in terms of actually having them on screen?

The Soviet Union.

Even the British.

Why?

Why are they ahead of us?

Because we have so many in terms of getting one done and so forth and so on.

Because of all of the

all of the whole red tape that was required to get one through.

And again, our environmental panelists

So what we're saying to the American people, look, we are the most creative and many people in the world, but now, and as far as we're concerned, whether it's in coal, whether it's in oil, whether it's in nuclear, we're going to go out and get it, and we're going to develop it, and we're going to grasp this problem, and we're going to, and if it's going to cause a problem, let's debate it out, but let people take their choice as to which they want.

One final thing that should be said before we go to the other subject is the effect by foreign policy, so it's important to hear.

In the Middle East, the Middle Eastern oil, of course, is

is absolutely essential for Japan.

90% of their oil is absolutely essential for Europe.

80% of theirs comes from Asia.

The Europeans are very involved in the North Sea.

That's where they're pumping that gas out there.

For us, it's important, a relatively small amount, because we get ours from Venezuela, from the United States.

It's important.

but could be very essential because you can't really separate the United States from Europe and Japan as great industrial nations.

Now, the point is that here the need for a foreign policy that will be such that those countries upon whom we depend for imports will not be able to purchase

play one against the other is important.

To have relations so that we don't have that.

And also, the need to recognize that in dealing, for example, with the Soviet Union on that great pipeline that they're talking about.

that we have to make that decision based not only on our energy needs, but also on the effect that that may have on the total relationship with the Soviet Union at this time.

So it is no mean, no way to say, look, I'm going to eat them, I'm going to gas them.

Now that brings me to another point that has to do particularly with the present time in the international field.

The United States is a giant, practically infinite, dealing with a bunch of victims.

And the reason we are is that we, our age and international field, have a number of great, large oil and gas companies.

And when we go out and deal with the mediation, when we deal with the Soviet Union and so forth, all of our companies go out and compete with each other.

And so what happens?

Take the Soviet Union.

They play one off against the other.

What the result was that we have a pretty hard time.

The antitrust laws, they're kind of... You take, for example, let's suppose, let's take a deal with Iraq.

The Iraqis.

The Iraqis crossed out the British.

And what happened there?

The French walk in.

That shows you what's happened there.

Each of these European companies and Japan is in business for itself.

Each of the American companies is in business for itself.

And when they talk about Exxon, Exxon coming in and saying, we bought this whole thing through because the interests of the nation.

It must be served out of the interest of the soldiers concerned.

We believe that the oil inventory should be lifted.

Baloney.

Let me tell you why.

I mean, I like the Exxon people, great people of us, and I like the people from Philly.

All these guys sit down and they say, how much do we get, do we need imports abroad?

How much of an interest do we have abroad?

How much do we have at home?

Wasn't it for us?

And that is the basis of their decisions.

And it should be.

We wouldn't want them to go away.

But what we come down to is that the United States in this area will not in the future be able to deal effectively unless there is significant change in the antitrust laws.

You agree?

I've said that publicly and I couldn't stop the traditional antitrust people because otherwise they, we, Kissinger for example, called them down on something and said, well, we will have to call, we'll have to meet informally and sort of behind it.

but it was a top secret thing or something.

I mean, if we're trying to make a, at the present time, the present time you have a situation with the mid-eastern countries.

Take the crazy Libyans.

They got a lot of water.

The Libyans, the Libyans are playing well against the Libyans.

And it's just madness for the United States to have one of our companies go in, have its throat cut, and another go in and pick up the pieces.

Or, madness for the United States' foreign policy bill is for us to go in to Algeria after the accident, go to the French Isle, and then have El Paso and Africa Gas go in and pick up the chips for them.

That's wrong, too.

The attitude of all of the free nations are expropriated.

In fact, you need the free nations together in a combine to deal with it.

That's what we're really talking about here.

Well, I mentioned this to you.

It's easier to amend the National Labor Relations Act than to do the Antitrust Clause, and it's impossible to amend the National Labor Clause.

This issue will become very clear and very quiet when the Europeans bring out their energy pumps.

They're going to require the companies, even ask the companies to submit five-year plans.

To the whole European Union?

To the whole European Union.

So the European Union will speak as one voice?

Yes.

Now where does that leave Japan?

Well, they'll be outshined.

That's rough.

They've often had to deal with us, and I think it's fine with me.

I think it's fine with me.

Yeah.

Reducing states, but they're going to try to do matters in which the market is opposed to us, and the market matters to me, which will be impossible in the end.

I trust them.

Let me just say, the purpose of all this is not to indicate to you that we have terrible problems in something.

The purpose of this is to indicate this is a very exciting problem that is something, because there is oil out there, and there is gas out there, and there is coal that can be used, and there is nuclear energy that we ought to get going on in advance.

You know, we've got a greater reaction to this.

React, react, react.

We made that decision.

Probably heard it was made.

We made it.

About 10 years from now, we're going to be thanking God we did it.

Because they'll probably not only have a greater actor, but they'll probably have Lee brought back to the other, whatever it's called.

But one of the deterrents to nuclear plants is the antitrust overview, which is required by law.

You know, they're hanging up some of the Alaskans pipeline as the second group, one who get antitrust clearance in advance.

And that creates stumbling blocks and problems that have to... Oh, let me suggest this.

I've got a condition, Steve, back here, too.

I really would like to...

I know the Justice Department's been through this thing before, but let us really get at this in terms of the energy thing.

Talk to jurors, people, or the voter.

We've got Mr. Voter.

Sorry.

Speak.

Let's anticipate these problems because we've got to do it because if it really comes down to it, we're going to have to just look the other way from the head of Gus Laws because the country's interests have got to come first on this sort of thing.

Will you excuse me, Mr. President?

Mr. President, Mr. President, Mr. President, Mr. President, Mr. President, Mr. President, Mr. President, Mr. President, Mr. President,

as much over the concept.

As we find things that are worth spending money on, that can be spent usefully without just wasting it, we are prepared to find the money to spend it.

That's different from saying, no matter what, we must spend at least $2 billion a year on something, and that leads you into a wasteful type of pattern.

But the thrust energy is very strong.

I mention this because the message is taking a breath, because it doesn't call for huge expenditures to enlist them.

What is put forward is a concept of how to do this in a non-wasteful way.

It's a very powerful R&D thrust, and it's a thrust that takes cognizant of the fact that private enterprise spends a lot of money on this, about a billion dollars a year.

put a federal program in place that winds up driving the private money out if we want to work in a collaborative pattern with the private sector on it.

And it has seemed to me also in this area, and I had a discussion with some of the, a couple of people from the producing countries the other day, and they were there.

It's been narrowed very strongly these days.

And it does set them back a little bit this day.

Look, just what the president said.

We have the potential for producing all the energy we want here.

And all we have to do is crack some of these development problems, the science of which is already known.

And if you think they determine the US,

which from a standing start in four years produced atomic energy.

From a standing start in nine years put a man on the moon.

He's not going to be able to solve these research problems and produce this energy.

You're wrong.

Or so they said.

Our oil in the ground is the best investment you've got.

And I said, well, you better not count on that too much because we may have some real breakthroughs there.

So I think we have a little bargain bleeper here based on the R&D message.

There's a lot of other stuff in here that words to use are geothermal.

There's a great fact sheet on this subject.

There's a tougher not to crack thing than there is doing it, as you've been talking here about, when it was part of policy.

And that is, at least since I've been opening this area, I think there's a terrible suspicion that the best R&D by far in energy is done by the government, it's done by the companies.

We can, for example, put together a package like this.

American Gas Association, all they care about is gas going through their pipelines.

They don't care if it comes from natural gas or from research and coal, et cetera.

So they'll make a deal with the government, and they have such a deal, $30 million.

They put up $10 million, they put up $1 million.

Try to make that same deal, though, in getting liquefaction out of coal, in other words, kerosene or oil out of coal.

No sale.

The reason there's no sale is that the interests of the companies are different.

Continental Oil, for example, they're halfway in the coal business, so they'd win either way.

Exxon, no sale.

They want to do it, you know, their interests are in oil.

You talk to Exxon and you say, let's try to make a deal, and they'll say, they're really saying, we've probably got more going to put together in terms of research on getting oil out of coal.

I don't know how to break this thing unless we get back to the same question domestically, R&D, with the antitrust business.

And I don't know the answer, but I think we sure ought to be working harder than we are.

They're, of course, secret.

They're self-protected.

I don't see what's wrong with that guy.

They have a state in getting... Well, they hold a lot of...

What I'm after is to try to get more money spent by the entire private industry across the board in association with government.

Let me say this.

Follow up on that is done.

We're working on it.

The Attorney General will not muster it.

I'm not mustering it.

The other thing that you did there.

It's the same, you know.

I sent my dispatcher to the top of the train to listen to the free network of their attitude toward cable television.

Two of them are violently against it.

And of course, they all put it on the basis that they're thinking of the higher interest and so forth and so on and so forth and so forth.

I checked a little on it and I said, now, why would two of these, one of these and the other be sort of half foreign and half American?

Plus the third, which we have much more concern about.

The third has got to be interested in it.

They own some cable television.

So I think my point is, don't underestimate the staff who's interested in all this.

And I don't.

All right, John.

Later on this month, Herb Stein is speaking to the Security Center of the Financial Union.

And the title of his talk is, I never promised you a rose garden.

And this morning, he is not going to admit to it, but he is going to be talking about the economy and the potential of his drawing pistols for London Front.

So, Mr. President, I fear that I wouldn't intrude into Secretary Blunt's department.

I might have followed up that lead, but we'll talk briefly because we have no crisis then.

Thank you.

Three main facts stand out in the American economy today.

First, we are enjoying very high levels of employment production and real incomes.

And this is what it's all about.

This is what an economy is supposed to do for us.

Employment is up about 2.7 million over a year ago, while the unemployment rate still hangs there around 5%.

The proportion of the population that is in the labor force and the proportion of the population that's working is exceptionally high.

The figures that were released yesterday about the gross national product show that the economy has continued to rise at a very strong rate.

Realignment is up about 8% a year ago and growth at a rate of about 8% in the first quarter of the year.

to try to translate that into what you're seeing in people.

The real per capita disposable income and what people have after taxes and after allowing for the increase in prices, even the increase in prices they have in the first quarter, that real per capita disposable income is up at the annual rate of 5% in the first quarter, which is about twice the long-term rate of expansion in that particular quantity.

And real per capita consumption is a real value of what people bought for food and automobiles and clothing and so on in the first quarter.

Per capita increase in the rate of 9%, which is the highest rate since people got arrested at the beginning of the Korean War.

So it's quite evident that the American people are not suffering from lack of real incomes or from the inactive supply of consumer goods.

They're not even starving.

And as far as you can tell, this prosperity is very widely spread.

I tried to say that in a statement which I put out yesterday about the GST and all I got was a stunt.

Of course, I got depressed when Stein was worried.

He said the second main fact about the economy is worth some of that worrying problem.

The economy is rising at a rate which obviously cannot go on.

The economy cannot go on rising at a real rate of 8% a year.

The productive capacity of the country does not rise at that level and at some point, at that rate, at some point to reach a...

ceiling which which rises only more gradually something like four to four and a half percent and the problem is how to get onto that sustainable path without falling below it it's a common analogy it's hard to slow down the bicycle without falling off the bicycle and this is a classical problem that danger takes several possible forms one is that under the

images of a big expansion.

Businesses try to build up inventories, which at first they can't do because sales are running so rapidly and that's what's been happening all the time.

But at some point sales settle down, they go on and do accumulate the inventory, but finally they have too much and it's caused a downturn.

or under the stimulus of the big rate of expansion, we get too much investment going and the business finally decides at some point it's too much.

Now these are dangerous.

They're not inevitable in this situation.

We have had...

cases in which we rose.

When we did get onto a more sustainable path from a very high one, from 1961 to 62, we were running very fast and gradually tapered off onto a more sustainable path until we got kicked off it by the Vietnam War and associated policies.

So it's by no means inevitable.

We have a combination of policies which we think will bring about a moderation of this boom in a timely way.

Those policies involved sticking to the budget path which has been laid out.

One aspect of the budget policy which has been laid out is that it provides certain built-in restraints of the economy boom too rapidly because

As the economy rises very rapidly, it generates more revenue, more revenue than it has been planned for.

And yet, if the government can keep itself from spending that additional revenue, that serves as a brake on the expansion, keeps it from, like, blowing off.

Similarly, if we can keep on the steady course of monetary policy, this also exerts a gentle braking.

if the screws are not turned too tight.

So this, well, as you said earlier, nobody really knows very much about this.

There was some chance of getting out of this situation without any undesirable consequences, but it does seem to be desirable to express some, to express this concern, partly because I think it's desirable to introduce some

moderation of behavior in the private sector and in the business sector.

And I think up to this point, business has been reasonably cautious of not the boom fever, and I think that is a desirable condition to preserve.

Well, the third main aspect of the situation is inflation.

We've had an enormous surge of inflation in February and March and probably not all over yet.

The surge was associated in time with the transition from phase two to phase three, although I think it actually had very little to do with that transition.

And we have the confidence that the surge was temporary, as the word suggested.

However complex we were, with temporary character, the surge created certain dangers.

One was that it would undo what we had thought we had achieved in the course of the preceding year and a half in reducing inflationary expectations.

which was a major element in conquering the problem, would again crystallize the idea that prices were going to rise at a very rapid rate, that this would spill over into wage behavior, and we would be on a kind of spiral, which we thought we had to be getting away from.

The other danger was that there would be a panicky reaction in the government, especially in the Congress, to go back to the, to meet this problem by going back to the simple happy days of agrees, which would be entirely inappropriate to this situation.

Well, I think that, I mean, I think these are both leaders, still both dangers, but

The prospect for avoiding them seems a little better now than it did a week or two ago.

Today, at 10 o'clock, the Department of Labor will release the Consular Price Index for March.

which will again show an increase of eight-tenths of one percent, the same as in February.

However, this is a much more comforting eight-tenths of one percent than the last one.

I thought it was ten.

Well, if you multiply by 12, the compound will come out.

But this time, whereas last time food accounted for 63% of the increase, this time it would count for almost 80% of the increase.

Let me ask you this.

The leader of the other side of the non-food sector there.

Not too bad.

I'm coming to that.

I didn't know that yesterday when I asked you.

Well, why do you keep these tickets from these guys?

Oh, that's not a commerce.

No, no, no.

Your tickets.

They got you.

Well, you get a hold of that place.

Oh, we haven't.

Well, the plan I wanted to make was that last month, we were last month, you see, that non-food items went up at half, increased at half of 1%.

And we were afraid that once we were confident that the food thing would someday level out, we might begin to get acceleration in the non-food part.

Well, this time the non-food part was only two-tenths of one percent.

And that is, I think, very encouraging because we are, despite the bad weather and all that, confident that the food thing will level out.

We have food prices, prices received by farmers .

Prices received by farmers declined from March to April.

Remember the farmer called me yesterday to tell me that, and I said, hooray.

It was a little shock, but anyway.

Those figures will not come out until April 30, but the best guess right now is they'll be down at 1.5 on April 15th.

Also, we have some preliminary evidence that retail food prices rose substantially less in April than in March.

Can I ask this?

What is the component of food which is covered by our ceiling on meat?

How much is that?

A third of the grocery bill?

It's approximately a third of the food bill.

A third of the food bill.

Well, that isn't going to go up for somebody who's breaking the law.

No, as a matter of fact, it's down there.

Some of those at the retail price link will be down when the figures come out for April from farms.

Our index of price is received by the farmers.

We're talking about what the folks had.

Okay, you're quite right.

The housewife boycott had some impact on that.

I think it's an upstart sense of what I meant.

We always start with the ceiling.

That's right.

We're talking, we always start with the ceiling.

Now, if a third doesn't move at all, that's bound to have some effect on it.

A third of it will have come down when the end was taken from it.

But there is a tendency among retailers to advertise that we are 5 cents below the ceiling, and they ought to be 10 cents below.

Well, of course, to some extent, they make that up by raising the price a lot of things.

But also, we have this, as far as the annual figures, there's no figures on time.

Yeah, on time, this is why there's no video.

between March and April.

When the April figure comes out, that will be comparing about the first week in April and the first week in March.

And the ceiling only went into effect on March 28.

So there will have been some increase up to that point, which will show in the April figures.

But anyway, we don't expect it to be what we had a little month.

However,

There's obviously lots of problems ahead on the inflation side.

Assuming that we get reasonable legislation, we are in the process now of re-examining the phase three program to see how it can be made more effective within the limits of its own character without

without going back to something radically different and without going back to something which would be inconsistent with what I take to be our ultimate objective, which is to get out of this business.

And a lot of things have been done already by the cost of living council under phase three, which are not well understood.

We think that there probably are other things further that can be done that we will have both a great need and an opportunity to take some of these steps up.

and to explain the whole philosophy of this action within the administration's thinking, if we can get over this present crisis about the legislation.

I think that there isn't anybody who thinks that we're going to go on having the kind of rate of inflation that we've been having in February or March.

No doubt that it will subside.

There's a natural uncertainty about the degree of timing, but certainly we'll see more satisfactory price figures as we go through this year.

And if we can avoid doing foolish things as a result of

I'm going to take time for one or two questions.

Sure.

Well, let me just say one.

There's a lot of questions that people have.

Let me put it here, rather than having her answer, let me put it in the layman's language after having heard her part of the verse that George Charles explained, and translating it into English.

What really comes down to is this.

In August of 1971, we had the worst of both worlds.

We had a recession, not a big deal.

And that's tough.

The economy was not acting, it was not in full tilt.

And the inflation was roaring on.

So we can post a freeze for 90 days.

It worked.

Probably it worked even if we hadn't posted, as a matter of fact.

But nevertheless, it worked.

We just happened to hit it at the right time, phase two following.

As a result, the inflation was tempered.

And the economy, which was already recovering, kept recovering.

So that by 1972, election time,

We had the best of the eight worlds.

We had basically a boom, an incipient boom, and it's pretty good with that, compared with on a flight, you know, on the flight.

And this time we had a 5.1 figure, if I may say so.

When you look at the male workers and so forth and the female workers as well,

and taking out the 15, 16, 17-year-olds who are living for jobs, it's a very different picture.

You've got 20% unemployment in that group, and you're always going to have 20% unemployment in that group.

But nevertheless, you come to this.

72 then we had the best pull through and the plane was down to 3 points, 3.5 or as Kirk was going to say, in the neighborhood of 3.5 and with the plane moving non-substantial.

Now what we have is we have a full-fledged loop.

Everybody agrees with that.

It's hard to think why anybody would say, how can a boom be bigger than you want?

Well, the history of these cycles is if a boom goes too high, then it has to drop down and back.

Correct.

Unless you have an actually controlled economy, you cannot have an economy growing always at the rate of 4%.

or three percent, or six percent, or no percent, whatever the case that is, and it's no percent that the Soviet Union is not growing, and theirs is totally controlled, so that shows you the other box you can get into.

Now, we have a situation now, then, where we have a full-sized boom in inflation.

The problem you've got is that all of the devices, the radical devices that are suggested, and believe me, I've considered them all, and we've considered them all,

And the one that you hear the most often is impose, which the Congress hopefully has rejected for at least the moment, is impose a freeze for six months and roll back prices.

Now that's just great.

That's a marvelous little television speech that I'd love to make at 9 o'clock, 90, 80 million people, and everyone would feel great.

We're going to roll back prices, and we're going to have a freeze for six months.

But you know what would happen?

It would have effect neither on the prices adequately, looking ahead eight months from now.

And it would crack food.

And we would be back in a situation eight, nine, ten months from now, toward the end of this year, where we would have had to be in the worst of both worlds.

We would still have our inflation.

We wouldn't have that we'd have a recession.

Now, the trick here, therefore, is to do those things now, which we're doing in the food area, which we're doing in the lumber area, which we're doing in several other areas,

as well as phase three, which is pretty tough.

We may ever have to strengthen it in a couple of areas, we think.

Do those things which will deal with the problem in those areas where they need to be dealt with.

Do those things which will curb the inflation or check rent, but do it in a way that we don't destroy the boat.

Now,

This is what I mean to be right here.

All of us are going to take some heat on this.

It's going to be rough.

Because you'll get out in the country.

I found that when I went over to the Director of Trade and I view that because they say, look here,

We're doing pretty good.

We've got lots of jobs and so forth.

Housing is up high and so forth.

But what about the prices of food?

Our mutual friend, I consider, has a lot in common.

But one of the things we've got in common is that we both had arguments with George and me.

But whatever the case might be, we both are going to come out with all right.

But I understand what George is talking about.

He is obsessed with the prices of food.

Because Mrs. Meany is, you know, is an enormous influence on me.

She comes home and every time she charges, she says, you know how much they charged for eggplant last week or this or that?

He's right, he knows.

I don't, I do say, not as an example of ridicule, but as an example of what millions of people think.

They say, do something about the food thing.

In other words, if it's an extra pair of shoes,

or if it's even a new column, or if it's something else, people can put that off, but they gotta eat.

That's why the food thing is the toughest problem we've got, because they gotta go to that store every day and buy that food at those exorbitant prices, most of which doesn't go to the farmers, but it's always myself.

We've come down to the point that we're gonna have to take heat for two to three months, in my opinion.

But I can assure you that we've considered all the alternatives.

A big play would be great today, but there is no big play that we can take that would not have very serious risks of destroying the moon and then risks after the big play is made of having the inflation roar up again, and that we're not going to do.

So what I'm simply suggesting here is that I don't want the people from this room to go out and say the administration just wants to sit tight.

That's not true.

The attitude should be

We believe, first, we are tremendously concerned about this problem, always expressed concern.

Second, we showed our concern for putting a ceiling on meat prices, and that ceiling is going to be richly enforced as long as it's necessary.

Third, we are strengthening, we're going to strengthen the anti-inflation forces

with the weapons we've got, wherever we believe it will work, that should be your mind.

Is there gonna be a breeze?

Well, that's something that, and I just raise the points that I raised earlier, it's very serious problems.

Don't say it's gonna necessarily rule out for something it has, but I have simply indicated that it has very difficult problems, because we're in a different situation than we were in August, but there are many more effective ways to deal with it.

What I'm simply saying is that all of you, as you go out and as you take the heat and so forth, that we all have to have within you a kind of belief that the program that we are, that we have is right.

that we believe it's going to work.

Third, that we have looked at all the alternative, all the options and have found that there is nothing else that we could do that would not run these very serious risks that I am thinking.

There is a fourth line, I think, on our building.

We are taking steps to increase food production this year, unparalleled in the history of the country.

We're doing that.

And you can express concern.

And I would say that, for example, in Europe, I want you to get this to our consumer lady and all those who talk.

The main thing is there isn't anything that's more about food prices.

And we're working on the supply side.

We've got a ceiling on it at the present time.

And we're going to get them down.

And that's the way it is.

But also, let's remember this.

I never forget.

I had a meeting here with a group of labor leaders.

This was not the construction, it was the international group, you know, where they call that building.

Executive committee, executive committee, and I said, this was several months ago, and I talked about the problem with taxes and the problem with prices.

And anyway, look, taxes and prices are important.

They don't want to pay any higher taxes.

They're working on it.

They don't want prices.

Now, the third thing they said, which is most important, which you haven't mentioned at the present, is jobs.

Jobs is what we want.

Jobs.

Now, I have basically, we basically have made the decision that we must do nothing which will imperil the increasing employment in this country, which means jobs, and good jobs, the best jobs in the world for Americans.

and the inflating thing we're going to fight in a way that will not destroy prosperity.

That's basically what our policy is.

It's going to be a hard sell, but three or four months from now, I think it's going to look better.

I can't predict what the numbers are going to be.

I leave that to the council, but he's going to make advice for you today.

It's a luxury of making predictions, but I have to admit it.

All I can say is that

It's my own belief from what I see of what we're doing.

I don't see it going to nine.

There's no way with the ceiling unless that ceiling is made.

You can't have a ceiling on basically 40% of what the individual has in his food package, and the food being about 260% or 80% of the increase without having that go down.

Because even in that state, it's better without having to go down.

That's just one more line.

I don't know why I'm going to simply say, by itself, we're going to get food prices down.

That bribes farmers.

in an unprecedented way.

They had a 71% force in the last election.

I'm saying that we're going to keep our income up and still have...

I know.

Okay.

There's more of them.

But here's the line.

I think we should all take this line.

We are going to maintain our income and still have cheaper food prices.

However,

We've been producing at about 80% of capacity.

Now this year, to optimum capacity.

And when you put that additional 20% and you do it at a low marginal cost, because the equipment's there, the help is there, and this lowers your unit costs across the board.

Therefore, we're going to have lower food prices for consumers, higher income for farmers.

This is not an inconsistent position.

Well, sure, because they're going to sell 20%.

Well, quite sure.

The great strength that we have in our whole food situation is that the American farmers are the most productive in the world.

Only 5% of our working population on the farm are producing enough to feed the United States and clothe the United States.

give away billions abroad.

And sometimes even the department of the thing that Casey's in favor of.

And sometimes you'll get the question out there, why don't we stop the exports so we can have that food at home?

Good answer.

export market to produce that capacity and therefore lower our unit costs of this year.

It's so wrong.

It's your advantage to export this as well as Pete's advantage because every million tons you're going to export makes 5,000 damn good jobs.

Well, true, but also when you shut the frog, what are you going to do, store it at home?

That's the other thing.

That's not going to help them subsidize it.

Yeah, but the part I want to make is we can have both people who didn't hire subs for farmers.

These are not inconsistent.

Don't set one against the other.

Don't set the farmer against the other.

And of course, but the main thing is, remember, the biggest group is the consumer.

And the president is none.

We're going to do more than cut this down now.

So that means, now we've got it at eight tenths percent, but we've got the biggest boom in history.

Let's talk about that.

This is great, and it's the best in the world, and the best jobs in the world.

Now, how do we keep this?

Well, one, we are, in order for this boom not to end with a bust, we have got to do everything we can

to see that the inflation cools off.

What do we see?

How do we fight it?

We've got to fight it on several fronts.

One front which is sophisticated is the monetary front.

And, of course, the Federal Reserve is going to be more of a strength.

But they don't want to be too restrained that they throw heads beneath them.

You can't say too much about that.

Our monetary policy is going to be, of course, restrained to deal with this problem.

Second, budget policy.

Budget policy isn't going to affect the federal budget.

I mean, federal budget policy isn't going to affect the family budget next month, but it will six months from now.

So therefore, we've got to hold the lid on the budget where this thing is going to go up.

And third, there are the policies that we can drill through the cost of living council, which had to do with particularly certain areas of prices.

And fourth, there is the whole policy, and the primary particularly, of supply, paying the supplier.

And we hope that under these circumstances, while we're going through a tough period now, we see the situation improving as the year goes on.

And our whole feeling about the economy is that the prospects, first, it is healthy.

And second, the prospects are good.

It's just a little overweight right now, and that's why we got to diet just a little bit.

I don't mean in terms of telling people not to eat meat, but I frankly prefer fish.

It's not because I don't want to eat meat, but also it has less cholesterol.

You know that?

I'll take the risk.

a great dear friend of mine who's now dead apparently.

He was a major stockholder in the Reynolds tobacco company now that missed the sale of them.

And he was, he said, that I had to appear to be handsome or have a living or something like that.

And he's smoking four or five packs a day.

I said, God, why are you doing all that smoking?

He said, well, he said,

The doctors don't have any other choice.

He said they need to die of senility or cancer.

He says, I chose the, I didn't want to die of senility.

Yes, you want to say something?

Mr. President, I would like to make two quick comments.

Yes, sir.

This has to do with, I'm sorry to come back to it on the oil situation, George.

I think you and John and your staff have done a very commendable job, and I want to comment it.

all of the information flowing back on the quick reaction is favorable.

I hear good things from the outland and I think it's been very favorable to receive.

Having said that, I'd like to very quickly make two quick points.

First of all, that all of the data and statistical information would indicate that

that by 1985 we will, in fact, double our requirements of the energy as we know it today by 1985.

I think that your group would support that requirement.

That's what we need.

That's what we're going to be using.

That's right.

It'll double by 1985.

This is a quick, very easy rule of thumb.

From today to 1985, which is considered near term in this problem, our requirements will double.

Of that double figure, it's generally agreed that half will come from outside the United States.

Now, that's a very significant number, supports George's figures about this dollar net outlay, George.

Then you extrapolate that, Mr. President, and we'll get back to the CEDAW now, if you find it has to do with security.

Of that half that will be coming into the country from outside by 1985, a quarter will probably be coming, or 25% of our requirements will be coming from the very area that you referred to, the Persian-Iraq Gulf area.

Now, this has tremendous security implications.

And the President touched on this a moment ago.

I would like to advise everybody, and you're aware of this, and Henry's approved it, but we are right now taking some very constructive steps to assure ourselves of the continued supply and the security precautions in this area.

It's a continuation of the program that you put into effect.

Well, that is to show you how all this one ties into that, you know, where sometimes people wonder, why do you spend all that time with Mrs. Meijer, King Hussein, and so on.

It's all a contagion to me.

And it's got a magnificent face, most likely because it's the second of apparel.

But anyway...

in the Middle East as we've all been sitting in a powder cave for a long time.

Now, just talking right here, it's really, you have to realize that one of our major problems is that our plan in the Middle East is different.

There are emotional reasons for that.

There are inherently political reasons for that.

But in terms of American foreign policy and energy requirements, it's a loose end.

It's a loser, in turn, because basically, when the United States takes a position that is 100% pro-Israel, then some of us will go further than that through the export visa, the tax, and so on and so forth.

So, to make our whole foreign policy on that, and I'm not going to say where it's at, but pro-Israel and pro-Israel.

What happens is that Israel's neighbors

who produce all this oil.

For emotional reasons, and Arabs are emotional, and do irrational things.

The Israelis, the reason that they feel like they're neighbors for 10 years is that they are not irrational.

They do not do irrational things.

They are smart, and they're tough, and they fight, and they fire them, and they're courageous, and I believe to God they can survive.

But the present situation is this.

The long U.S. foreign policy is totally in control.

by our ties with Israel.

The situation with regard to the oil committees becomes more and more tenuous.

This needs to be said.

It needs to be understood.

That is why at the present time we're working on the Israeli-Arab problem.

As hard as we can.

We cannot temporize it.

Every time it's come up in the last year that I couldn't do something for the 70 elections because the Congress was allowed to do it.

And I couldn't do it for the 72 elections because now I said, well, why don't we do something this year?

And they said, well, the Israelis have a election this year.

Well, elections be there.

The point is, in this critical area, and I'm not suggesting here that we want to have a dramatic shift in our policy toward Israel and find that we can discontinue our support.

We're not.

The independence of Israel and its right to survive is the cardinal basis of American foreign policy.

We said that to Jewish leaders yesterday, and I did.

On the other hand, the United States now has got to take a hard look at our own policy.

And the whole car requires that we have, that we have some basis for developing a better relationship with Syria, the crazy people in Iraq, the Saudi Arabia.

Let me say we have good relations with the Saudis, but the Saudis, particularly the ISIL, when you go to talk to them about oil, it spends all of its time talking about Israel.

and the early parts of the government church around him, that one day they cross him out.

And when they do, they decide, I don't mind, it's all like that, until we hear something about the future of Christ.

So let's not have any nonsense about what this is.

Now we come to the, let me say a word about that export tax.

I know that some of you, particularly the politically oriented, say, what is the matter with the president?

He's got a hole in his head that he doesn't support after 88 senators say that the United States shall not provide most favored nation treatment for the Soviet Union.

unless the Soviet Union publicly, by treaty signed in hand blood, if necessary, say that they repeal the exit tax for Israelis, for Jews.

They don't mention any of the other minorities, Jews, and let them out.

Now, I'll tell you why I haven't done it.

First, because working quietly through diplomacy from the Soviet government, we have now an official communication indicating that the exit tax will not be applied to Jews who want to leave.

The senators and some of the professional Jews, when I say professional Jews, let me say I'm referring to people who are different, to people who are different from, like Max Fischer.

Max Fischer is thinking in terms of the U.S. first and

background second, which most of us do, and that's the case of most of our communities.

There always are professional Catholics that put Catholics above everything, and there are professional Quavers that put Quavers before everything.

I have to be one that isn't professional.

And they're professional, we all know that.

But there is a professional Jewish community who say, in fact, this isn't enough to have this communication, because we believe that the Russians

The Russians, in applying this rule, will find other means not to let the Jews who are in Russia out.

Now here's what we come to.

With an amendment, it says to the MFN Bill, saying that there could be no MFN granted in any nation, and that means the Soviet Union.

which has, does not allow free immigration and so forth and so on under the UN.

If that happens, there is a very, very significant risk that the promising identities of the Soviet will all come to.

The reason for that is that, I mean, that last year,

One of the few things they got on the deal was that.

We said, look, actually, most favored nations, it doesn't mean that they're getting something, somebody else's, as Bill Casey would say, it just means they're going to be treated like other people in the world.

Isn't that right?

I mean, virtually every nation has most favored nations.

It means that the discrimination against the communists and so forth, which I've always approved of in the past, will stop, and that we can sell and have more trade, etc., etc.

But having said that, we would work for that at the Congress.

Then if the Congress says, no, the President cannot grant those favored Navy treatments to the Soviet Union, even though it is indeterminate internationally if he's not going to trade, then the Soviet has a tough problem.

They can, in fact, be told that they've had a conversation.

They must change their internal policy.

Do you think it's true with the subject that I have disputes about?

Everybody in this room should have disputes about this because of the terrible things that have been done to Jewish minorities through the years.

Not only in Germany, but in Spain.

Virtually every country in Europe has got that terrible background.

The point of this is, if that amendment then is passed, here's the situation.

Which is not the position of Russian leaders.

Can they come here and say,

as we go forward.

And look, we nevertheless will back down publicly.

They never can.

They can't do that because today it's Jewish monarchy.

Tomorrow it's the Ukrainians.

I intend to lend a light to that.

It's a huge German monarchy.

And so what you're really saying to them, you gotta change your system.

Now they ought to change their system.

But the point is, right now, for the past 20 years,

Before we started our initiatives with the Soviet Union, I was amazed.

What effect did previous presidents have on Soviet policy?

And very, very little.

For example, very this past year, there have been several thousand Jewish immigrants that didn't get out, that didn't work as out.

How'd they do that?

Because we were able to talk to the Russians, and we did it privately.

What I'm simply saying is that for this and any contingent to be sexual,

yet the President of the United States and his associates are to have a voice from within rather than from without.

So the critical question is this, do we want confrontation with the Russians on this and other issues, or do we want negotiation and communication?

I don't mean by that that we're going to succeed every time, but I do mean

that when we do have problems that people raise, not just about Jewish minorities, but by others, we, in a quiet way, that will not affect their faiths, can say, look here, it's to your interest and ours to do something about it.

That's one side, but there's a much bigger side.

And George will tell you, think of a great story, right, George?

Now,

I think there is a serious risk that if they conclude that the Congress is trying to insist on this condition, that they would find it difficult to go forward with these issues.

Now let's kind of just look what's on the plate with the Russians at the present time, if you get an idea.

One, we're in negotiations for a new soldiery, which next temporary,

and the temporary provisions, limitations, permanent.

Second, we are having discussions with regard to MDR law, that's Medical Mammals Force Reduction in Europe.

We have an opportunity for the first time mutually to reduce the forces in Europe that the United States and other nations have.

Third, we're having

What is involved is what has influenced the United States has had with regard to having the Soviet has no more, shall we say, restraining policy in Southeast Asia, which is critical to how that all works out.

And the reason I bring up this last one, even more important, and this is my understanding, she knows this, even more important,

is that the influence the United States may have with the Russian, with regard to their having a restrained policy of innovation?

All of that is on the plate.

Now, do I say that if we don't get them, if they aren't able to get them, that they aren't going to continue to talk in this field?

No.

Simply saying, it's going to set back these talks and could torpedo the chances for arms limitation, for the reduction of forces of guard, for wrecking restraint committees, and for wrecking restraint, of course, in Southeast Asia.

Now, let's look at the problem also.

And here's what I talked about to our friends, and they're great people, and I said, look, the real question is, if the Congress passes this, the Russians can irritate me.

What's going to happen then?

Do you think that as a result of that, then, that more of the Jews are going to get out?

I said, on the contrary, less are going to get out.

They're just going to slam down that curtain, and we aren't going to have any voice within.

That's the critical problem.

And I said, the other thing is, if we do provide for most favored nations, and then with the president having this commitment to do everything he can,

to get the Soviet to have a more temperate policy in this and many other areas, then there is a chance that we will be able to use that influence to get them out.

And then, of course, since many people, the Jewish community as well as many others, including myself, are very, very concerned about the survival of Israel,

It is imperative, mind you, that the United States continue to have the very best possible communication and relationship with the Russian leaders because, when you look at Israel, its future depends on one thing.

It's not on the strength of its neighbors, but on whether the Russians get in.

Let me explain that in a minute.

You see, one of the problems here is that Israel, and anybody that's visited there will know this, Israel has brains, it has strength, it has the capability to lift the whole Arab world for the next ten years, in my opinion.

And we continue to provide support, which we've pledged, and we're going to do it.

I mean, my car, and so on, and so forth.

There is one very big if in that.

If the Russians, they don't have to intervene, but if the Russians man the missile sites in Egypt, if the Russians man the planes, Israel's headed.

Just down the road.

We had a prime example of that at the Jordan crisis, what most of you probably forgot.

Do you remember when the crazy Syrians came down at 11, down to there in Jordan?

And so it looked like they were going to collapse before Hussein and so forth.

People wondered what could be done.

Well, what we did at that point,

Obviously, we sent a strong message to the Russians.

But we just didn't.

We sent words.

We sent the sixth fleet into there.

And that was a very bold move.

It happened to work.

But the point is, had the Russians felt that they were unrestrained in encouraging the Syrians, they would have knocked off Hussein, and you'd have a Mideast war.

All the consequences involved.

And with the Russians, that involves a matter of faith.

What I'm simply saying is that we're dealing with a very tenuous situation where we have great progress, the movement, the China initiative, the Russia initiative, and all the rest.

There could be great progress in the future.

We can have an arms limitation agreement.

We can have an MDF army.

We can have more restraint committees with the possibility at least of an interim settlement.

perhaps have enormous possibilities in the area of trade and the rest, and the world will be safer.

But we cannot have all of that jeopardized because of a very emotional issue in which moving the way that the senators would have us move, first, would knock the initiatives out, and second, would be counterproductive totally in helping the very people we're supposed to help.

And that's the reason, you see, you've got to take that position.

I'd love to go before a group in New York or Miami and say, I support the Jackson Amendment and all the rest, and they would cheer and yell and all the rest.

And most Americans would agree with that and say, our Americans are wrong for doing this.

But I think you've got to know the truth.

You've got to do what's right.

We're going to do what's right.

We're going to have to oppose that amendment.

And we're going to have to tell them off.

There is no other course.

I just say, finally, that there's just another context.

A senator called me before I went to China.

He said, there's an issue with China.

He said, the condition on that release is downy.

I said, downy?

He said, it won't be in that prison.

I didn't put it on that basis.

We went to check.

We discussed it.

It was way in the background.

It was brought up, but not in condition.

We went over it in other areas.

Within several months after that, almost a year, Downey was released.

Now, we had openly asked that senator whether he had a son.

Openly and directly.

challenged the Chinese that our relationships with them would depend upon their relief whether they released Downey.

Downey would still be in that jail.

He'd die there.

So what I'm simply saying is that nobody in this room, nobody that's been in this room, nobody that sat in this chair is more skeptical of communist intentions than I am.

But I do know this, that at the present time, if we allow, if we were to allow, the Chinese, where a fourth of the people in the world live, to continue to live in isolation from us, to develop an enormous nuclear capability, which they would within 20 years.

your children, grandchildren, would have a very, very dangerous future.

And as far as the Russians are concerned, if we had not made those moves, we would have continued to have enormous arms budgets, much bigger than the one we have at the present time.

But more than that, we would continue to have confrontations in the Middle East.

We would continue to have problems in Southeast Asia, and they're big enough even as they are.

We would continue to have problems with Cuba, and Huevos, and so forth, and they're difficult enough.

The whole point is, is the President of the United States, whoever is President now, is he doing his job?

Yes, he does not make a move like this, but looking forward 20 years, so that China, even though they may not be our friends, they are not necessarily our enemies 20 years from now.

Does he not move forward with the Russians who are equal to us in nuclear power?

Does he feel that these two great powers someplace in the world cannot rub together and a spark destroys them?

They talk, you know, loosely about blah.

I mean, after all, we've got a great power.

And do you realize, Mr. President, if you push a button, 70 million Russians are going to be dead in 30 minutes?

I know that.

And also 70 million Americans will be dead in 30 minutes.

That's the power they got, that's the power we got.

And that's why we cannot make this Soviet initiative hostage to, as emotional as it is, the Jewish immigration problem.

We'll get them out, as well as we can.

But we have got to go forth.

I can assure you that that kind of talk is not what the Senators want to hear.

It is what some others want to hear.

But it's what they're going to hear.

I also want to cover briefly what is, I know, a very disturbing subject for all of you, and the problems why.

I know you probably wonder why we haven't discussed the previous subject.

We have, over the past year,

that everything we can, we thought we were doing everything we can, to apply these to this department here in the White House to try to get to the bottom of this thing.

Right there.

We have had breaks in the past three weeks, I would say, over the past three weeks, which are now being considered for the grand jury.

That's the place where it should be considered.

I can assure you, if you look at this thing, it's extremely painful to me personally, but very painful to Dick.

Very painful.

I'm not going to indicate what I think is going to happen, because until everybody appears, until evidence is corroborated, nobody knows what's going to happen.

I can only say this, though.

Don't any of you make up your minds about anything based on stories you see in the press, a leak from the grand jury, or the rest.

You must remember that the important thing here is to get the truth.

and once the truth is out anybody who is guilty will be tried and convicted but the important thing also is to get the truth and anybody who is this will be good now that's where we stand for and that's the action and i just want you to know that you can be sure that i have the ability to get it and i want to be sure that you know too with regard to dick when we met somebody

Dave volunteers, and of course I should also help, this is the right, the teacher, grandfather, the kids, mainly because John Mitchell's name isn't mentioned.

He was right to drop out of the case.

Of course, year two, we didn't put him in charge.

Somebody's got to run that damn department.

So I brought in Peterson, who was the assistant attorney general in charge of the criminal division.

He is the man who is now him.

He's not doing the prosecution.

That's done by the district court, district attorney.

But Peterson is the man who is in direct contact with me as the deputy attorney general.

He's a career man.

He's served in the Democratic administration, general public administration for 25 years.

A good man.

An honest man.

And he's calling the shots again.

He's getting total cooperation from everybody here.

If there's anybody in your departments that is called to cooperate, you can tell them only one thing.

Don't tell them what to say.

Just say, tell the truth.

That's all.

And that's what everybody who's been questioning the White House staff, tell the truth.

And I believe and hope that that's what's been done with as far as those who were with the campaign committee.

But I simply want you to say to them,

You're going to go through a rough time over the next few weeks on this thing.

And the main thing is to remember that it is not doing something that is wrong.

It's an almost unbelievable jackassery that happened.

But it's not trying to get the truth.

And one of the things that hurt Truman, for example, was that the famous Hiss case.

Not that Hiss was a communist and an espionage, but that for months, months for a long time, the Truman administration said they tried to turn around and call it a red herring.

We are not trying to cover up.

We have tried our best to get us out, to get at the facts, and now, by reason of individuals discussing the matter, as I said, there are events and developments.

They are being presented to the grand jury.

The grand jury will then, I assume,

either indict or clear.

If they don't clear, when they don't indict, that means that they have not found guilt.

Mr. President, let me say something that Tom couldn't say.

From the day that this unfortunate thing occurred, the only direction the President has ever given me, Mr. Gray of the FBI, is that this matter be fully investigated.

The complete

extension of the criminal justice process be employed.

He said it time and time again, and that's what we've done.

That's been his only direction to us.

But I'd like to give you some statistics just to show you what has been done on this thing for the last year.

There have been 2,347 people interviewed, and I think we've got it two feet down.

There have been 2,698 leads checked out by the FBI.

51 of the 59 field officers of the FBI were involved.

There were 343 agents who have been working on the case.

343 FBI agents.

To date, there have been 22,000 man hours spent by the FBI.

There have been 5,500 pages of investigative reports.

lead it up to it.

And as I think you all know, when the criminal justice system is set in motion, if you don't stop it, and this has been an ongoing investigation, then it's going to continue.

Well, we want it to continue, to finish.

But the important thing is this.

The toughest thing, and I've often said this, looking back over the history, the toughest thing that any administration can do is to investigate itself or investigate its former people.

And the record shows, will show, first, that's what those are about, and that's what I was saying the other day.

As I said, it's terribly painful for me to have people like John Mitchell under investigation.

But it has to be done, and it will be done.

And that's what I do with Dick, and I also tell Peterson virtually every day.

So there is, and oh, and I think the most important thing that you should say is that we're getting the facts.

This administration is determined to say that we require it.

It may be embarrassing to the administration to investigate and get the facts because it's most important that our system of criminal justice fall evenly on whoever is involved.

And, but finally, I would also caution everybody to say don't judge anyone.

don't say anything on that.

Everybody is entitled to be heard and wait until the criminal justice system indicts or doesn't indict, then make up your mind.

Because it isn't fair to innocent people to say, gee, I saw this in the Washington Post or I heard where this law said that about others.

See, when a case like this starts to break, too, you will find that individuals who are involved sometimes will tend to have an incentive to talk

about other people, which in ways that are not true.

I'm not suggesting that that is always the case, but as Dick knows, as Toby, that there's always an incentive.

That's why the grand jury process should be used instead of some public hearing.

You can determine the credibility of that evidence, and what's provable, and then present it in an orderly fashion in court.

And that's very difficult with the atmosphere in which we find ourselves in the weeks of the present time.

to find an actual transcript of a grand jurist proceeding in a column.

And I understand that was an actual .

Now, one thing you've got to understand about that, too, let's get away from this nonsense.

It must have been the court of the court.

These court of the court, it's good God, there's just a group of people in this court of the court.

It had to be somebody, one of the prosecutors.

No, it is one of the members of the grand jury.

How can they remember it?

Well, I don't know the transcript problem, but I think that one of the jurors has been...

The juror could talk to him, but this point is, when you have the rebated transcript, that had to come from somebody, and there's prosecution out there.

And that's my view, at least.

I don't know about that.

You mean a juror's going to remember word for word what happened?

Well, jurors can take notes and graduate.

But I don't think we've got any volunteers today.

By the way, we want you all to have a good Easter night.

I'm going to go to Florida and to others I've urged the members of the staff to stay here with their families this time and not to go down there so they can have a chance to recoup themselves.

As I say, you're going to have this, if you think of economists as economically in this talk, isn't this a rough thing?

Isn't this battle of buggy rock?

Isn't this walking in the masses?

Of course not.

And here's how we look at it.

What was the argument about that?

For those who were new members of the cabinet, I'll never forget how three-fourths of the White House staff practically wouldn't have thought of mine at the time they had the Cambodian thing.

They were coming to the door, I had to do this, I had to do that for people to understand.

It worked.

If I hadn't done the Cambodian, these men would still be in Vietnam, I can assure you.

Maybe it was even worse because it didn't last as long because the summit came off.

As my people said, this is mine, my farm, and so forth and so on.

But it was necessary, it worked.

And perhaps the worst situation was, I must say, did feel almost totally alone with the exception of two people.

But when I ordered the bombing in May and January, December 18th, everybody says, why don't you explain it to the public?

So I explained it to the public.

They couldn't have backed out.

And everybody says that everybody from our newspapers and my preacher friends and I have some and others and so forth and so on, they're all saying this is terrible and so forth.

Everybody had peace in their minds.

It's the wrong thing to do and so forth.

Every POW has come back and said, what did it?

Well, what did it was the toughest decision that I had to make.

It was before Christmas.

If we hadn't bombed them on December 18th, those prisoners would be rotting in those horrible cells.

So if you think it's tough now, just remember we've been through some tough ones before.

And by God, we're in my boat.

That's why we're here.

Thank you.