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Third Debate: Briefing Book, II
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White House Special Files Unit Files
Ford - Carter Debates Files
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African Americans
Crime
Debates and debating
Fiscal policy
Housing
National security
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Presidential campaign, 1976
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The original documents are located in Box 3, folder "Third Debate: Briefing Book II" of
the White House Special Files Unit Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Digitized from Box 3 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
THE PRESIDENT
F
BRIEFING BOOK II
LAST DEBATE
GENERAL
THE The EAS SEE:
DEBATE TOPICS - VISION OF THE NATION'S FUTURE
My vision of America's future is of a land strong and good,
in which men and women strive for their own betterment, and
share their blessings with their neighbors.
Beyond that, a land in which basic human rights are
respected and maintained:
-- The right to speak our minds.
-- The right to choose the men and women who enact
and enforce our laws.
-- The right to stand equal before the law, regardless
of sex, race, or religion.
-- The right to bargain freely in the economic
marketplace.
-- The right to worship as we choose.
These are goals that are shared by most Americans. I am sure
that Governor Carter subscribes to all of them, at least in
a general way.
The question is, how do we go about achieving that kind of
future -- for ourselves and our posterity?
First, we need a strong defense -- so that America never need
fear attack by a hostile aggressor.
Second, we need experienced foreign policy leadership -- to work
for a higher degree of cooperation among nations in this
increasingly interdependent world, and to head off differences
before they approach a warlike stage.
Third, economic opportunity -- so that Americans can make full
use of their talents and abilities, to build secure futures
for themselves and their families.
Fourth, a strong system of justice, to protect the law-abiding,
the assure the maintenance of equal rights for all.
Fifth, an effective system of education, so that coming
generations of Americans will possess the vocational skills
and the training in citizenship on which the future of our
country depends.
-2-
And sixth, provision for what I call the "quality of life"
goals -- such as good medical care at affordable costs,
comfortable homes in decent neighborhoods, clean water and
clean air, and improved recreation opportunities.
Government has a role in achieving all of this -- but in my
view a limited role only.
I would never let government grow so big or so strong that it
can take away all our freedoms. And I would not allow our
people to grow so dependent on government that they would
lose the incentive to develop individual creativity,
generosity, and initiative.
I would turn to government only when solutions through the
private sector would not work at least as well.
And when a government solution is needed, I would place
administration at the level that is closest to the problem.
That is probably the most fundamental difference between my
approach and the approach that is favored by my opponent.
He would assume that a government solution was the best way
to respond to most economic and social problems unless there
were strong evidence to the contrary.
I would go at it just the other way. I would turn to government
only when no other means could be found to deal with a problem --
and then I would give the largest say in how the solution is
to be applied to representatives of those who are directly
affected.
ANECDOTES ON COMPASSION
Why the President is Compassionate
You might relate the process for making budget decisions to
the same steps a family goes through in allocating their
limited funds.
You appreciate the desires and the needs of people for any
number of programs. But just as your family has had to
carefully live within your paycheck, so must the Nation live
within it's means.
You prepare the Federal Budget much the same way as a family
prepares their budget. You sit down with your Budget Director
and Cabinet Officers and discuss the many programs which
are being advocated and then set priorities based on the
funds available.
Just like a family is unable to take all the vacations it wants
or buy all the clothes it wants, so the President has to say no
to some of the programs he wants.
Jimmy Carter on the other hand, is promising all the programs
without worrying about where the money is going to come from.
You know where it comes from -- it comes from people like you and
your family who have had to work for every penny they have to
spend and who already pay too much in taxes.
Why Carter is not Compassionate
Some people say I am insensitive to the plight of the
unemployed and the less privileged. Certainly that's not
the way I feel. Some say I am not as adept as my opponent at
the rhetoric of compassion. Perhaps that is because I believe
that talk is no substitute for effective action. Compassionate
words are soothing, but they don't get a job back for somebody
who has been laid off. Words are nice - - but they do not help
pay the doctor when the family is confronted with a tragic
illness.
I believe the American people are fed up with overblown promises
and hollow rhetoric. They want policies which work, not a
politician's rhetoric.
My opponent seems to exude compassion for the world at large
but not towards individual people. He is quick to call for
this person or that person to be fired - - often without knowing
the facts. He forgets that these are people: You don't
irresponsibly rush to destory careers and reputations. People
have feelings and families. They deserve justice and true
compassion, not meanness.
HOUSING
My policy aimes to bring homeownership within the reach of
every American family that wants to own a home and is willing
to work for and save for it.
Homeownership will be increased through continuation of my
anti-inflationary economic policies. If we hold down
government borrowing, more savings will be available for home
mortgages. Holding down inflation will also cut mortgage
interest rates, and slow the rise in construction costs.
Reducing the income tax as I recommended, but rejected by
Congress this year -- would put an additional $200 annually
in the pocket of the average American taxpayer - - which would
help with those monthly mortgage interest payments.
While sound economic policies are the basic answer to a growth
in home ownership, I have taken further steps to aid families
setting out to own their own homes. In 1974, my Administration
extended Government National Mortgage Insurance to cover
conventional mortgages.
Last month, I ordered implementation of a new Federal
guarantee program to lower monthly interest payments in the early
years of homeownership and gradually increase them as family
income rises. I also called for changes in the FHA loan program
to reduce down payments on lower-priced and middle-priced homes
by as much as 50 percent.
Page 2
For low income families, my Administration has sponsored a
rent subsidy program, which I signed into law in 1974. This
program gives low income families freedom of choice in
selecting their own housing, instead of arbitrarily assigning
them to vast public housing developments. This year, 400,000
families are authorized to receive rent subsidies. In fiscal
year 1977, this figure will rise to 800,000 families.
Under no circumstances would I ever approve elimination or
reduction of the income tax credit for mortgage interest
payments, as was proposed by Jimmy Carter before a national
television audience on February 23, 1976 during a primary
debate in Boston.
CRIME
Q. Mr. President, in a recent speech in Detroit on crime,
Mr. Carter accused your Administration of failure to
take effective action against the rising crime rate and
outlined his own plans in this regard. What has your
Administration done about crime? And what could we look
forward to under the new Ford Administration.
A. Well, first of all, let me talk just a little about
Mr. Carter's speech. Mr. Carter has said, in fact, that if he
is elected President he will solve the crime problem.
Anyone who knows anything about America's Constitution or
her history and tradition would know better than to talk
like this.
Under our Constitution, and for the 200 years of our existence,
the fundamental responsibility for law enforcement rests
with State and local governments. We have no national police
force in this country -- and I don't think the American people
want one.
The proper role for the Federal government in the area of
crime prevention is one of leadership and support, and this is
what I have tried to provide during my tenure in office. Let
me be more specific.
In my crime message to the Congress, I called for the
enactment of a comprehensive criminal code to serve as
a model for State and local governments to follow.
Page 2
I called for mandatory minimum sentences for violent
offenders, particularly those using guns, and for drug pushers.
I called for legislation increasing the number of Federal
judges, and I increased the number of Federal prosecutors.
And I called for legislation to provide compensation for the
victims of Federal crimes.
It troubles me to have to tell you that the Congress has done
nothing on these recommendations. In fact, Congress has done
virtually nothing at all to address the serious crime problem
facing this country. Fortunately, we have been able to do some
things without the help of the Congress
For example, two years ago -- shortly after I became President - -
I directed the Law Enforcement Assistance Administration to develop
a new Career Criminal Program designed to focus the attention of
the criminal justice system on the professional criminal - - the
repeat offender who makes his living through crime. This program
is now operating in almost 20 States across the nation and it
has had dramatic results. Over 95 per cent of those identified
as career criminals have been convicted and sentenced to more than
20 years in jail.
Page 3
Another area where we are making considerable progress
is in combating drug abuse. I have personally met with the
leaders of Mexico and other countries to let them know of my
concern about the shipment of drugs, particularly heroin, from
their countries to ours. I think these meetings have stimulated
greater cooperation and we are now beginning to see reductions in
the amount of "brown heroin" coming into this country from Mexico.
These are just two of the areas where we are making progress.
There are more. And I think these efforts are beginning to have
an impact throughout the country.
In the year in which I became President, crime increased 18 per cent
over the previous year. After my first full year in office, the
rate of increase had been cut to 9 per cent. For the first six
months of this year, the rate of increase was only 3 per cent,
and serious crimes -- rapes, murders, robberies and the like - -
had acutally declined for the first time in years. So we are
beginning to see positive results. But I fully realize that we
have a long way to go.
If the American people are going to beat this problem, and
I believe we are, punishment for those who break our laws must
be swift and certain. This is what I have been advocating.
Page 4
But I can't do the job alone, without the help of Congress.
That is why I have stated that one of my top priorities next
January, immediately when Congress returns, will be the rallying
of America behind Federal anticrime legislation. I realize that
this legislation will not completely answer the crime problem,
but it will be a good beginning.
BLACK AMERICANS
My policies offer black Americans what they offer all other
Americans: More jobs, equal opportunity, stable prices, better
education, better health care, protection against crime, equal
enforcement of the law.
I recognize that blacks in the United States are still to some
extent the victims of discrimination. I am determined, first
of all, to stamp out vestiges of discrimination wherever they
exist; and, second, to provide blacks with the means to get the
fullest possible use out of their abilities and talents.
In carrying on the continuing struggle against discrimination, I
sponsored and signed extension of the Voting Rights Act in 1975.
The extended act was broadened to include protection for Spanish-
Americans, Indians, and Asian-Americans - - who will now benefit from
the same safeguards that were first successfully demanded by blacks.
The Federal Budget for civil rights activities next year will be
$3.9 billion -- up from $2.9 billion when I first came into
office. Funding for the activities of the Equal Employment
Opportunity Commission has risen by more than 20 per cent under
my Administration.
Page 2
Blacks, such as Secretary of Transportation William Coleman, hold
many top posts in the Ford Administration -- not because they
are blacks but because they are the individuals best qualified
for their jobs.
We are not going to achieve full equality in this country until
we have defeated the problem of unemployment. There is simply
no way for government, by reaching into economic transactions all
over the country, to eliminate completely the effects of past
discrimination and current prejudice. Blacks will gain full
equality when the economy needs full utilization of their energies
and talents in order to function at top efficiency. Achievement
of full employment depends on bringing inflation under control.
Inflation causes unemployment. Unemployment feeds discrimination.
To conquer discrimination, we must wipe out inflation.
This does not mean that government must stand still in dealing
with social problems until the war against inflation is won.
I have recommended programs for catastrophic health insurance,
job incentives in areas of chronic unemployment, and low cost housing,
whcih, when enacted, will give special help to those whose incomes
have not kept pace with overall economic growth.
Page 3
In addition, my Administration in two years has more than
doubled loan and loan guarantee funding available through
the Small Business Administration for minority enterprises.
With the return of health to the economy, I have promised in the
next four years to assign top priority to six "quality of life"
issues: Jobs, housing, education, health care, law enforcement,
and improved recreation opportunities - - all among the major
interests of black Americans.
Mr. Carter has attempted to achieve rapport with black Americans
by telling black audiences again and again that he "understands" - -
while offering very little in the way of concrete programs to
improve the conditions under which black Americans live. The
time is past when the vote of blacks can be won by vague professions
of "understanding," and emotional tokenism.
Black Americans -- like all Americans now demand firm commitments
to definite social and economic policies. Some may prefer policies
different from those of my Administration. But they know that I
have not tried to deceive them. I have offered a program which will
bring economic and social progress for all. I am confident that
many black Americans will agree with my conclusions, and will give
me their support on election day.
Programs for the Elderly
One of the main items of concern to the President is
the need to be certain that Federal programs assist the
elderly in a way that allows them to maintain dignity
and self-respect and to remain as nondependent and pro-
ductive citizens. On the other hand, if an elderly
individual needs assistance, either in the form of
income support, health services, or institutional
care, such assistance should be provided in a high
quality and effective manner.
The President has:
A. Social Security
The President has been a leader in seeking to main-
tain the integrity of the Social Security trust
funds and has advanced proposals during the past
year to guarantee that the trust funds remain sound
and that benefits are available when they are needed.
The President's budget also included a full cost
of living increase in Social Security benefits.
B. Catastrophic Health Care Protection
The President believes the elderly should not have
to worry about serious financial hardship when seek-
ing out health care. During the past year the
President advanced a proposal to extend the benefits
of Medicare to cover financing of catastrophic
illnesses so that all elderly citizens will be able
to receive health care when they need it without
Housing
fear of serious financial hardship.
C. Nursing Homes
The President believes it is an important Federal
responsibility to assure that nursing home care,
especially that financed through Federal programs
such as Medicaid, is of high quality and provides
for the health and social services needs of the
recipient. Similarly, the elderly must not be
institutionalized if a more independent lifestyle
is possible and preferred by the individual.
The elderly should be offered a range of options
from periodic homemaker assistance in their own
home to full institutional care if needed.
D. Fear of Crime
The President believes the elderly must not live in
constant fear of crime. He has proposed a major
program against career criminals and drug abuse.
The Ford Administration's Economic Accompli shments
and the Outlook for the Economy
Ford Economic Accomplishments
When I became President I inherited an economy with double digit
inflation, eroding consumer and business confidence, and an econ-
omy in the early stages of the most severe recession since the
1930s. All the economic indicators were moving in the wrong
direction.
During the past year and a half, the trends on all the major eco-
nomic indicators have been moving in the right direction. Employ-
ment has increased; unemployment has declined; the inflation rate
has been significantly reduced; and real gross national product
(adjusted for inflation) has increased at an annual rate of 7 percent.
The Economic Outlook
Our forecast for the economy is for a good fourth quarter of 1976
and a sustained expansion during 1977. We expect the inflation
rate to continue to decline, employment to grow, and the real gross
national product to increase at an annual rate of at least 5-1/2 per-
cent.
Our confidence in the outlook for the economy is also shared by
American consumers and businessmen.
I was delighted by the results of a recent survey released by the
University of Michigan Survey Research Center indicating that
consumers' opinions about government economic policy have
improved substantially and that consumers expect the ongoing
recovery to continue during the next 12 months. The report
revealed that the index of consumer sentiment has now regained
a level last reached in 1972.
The Business Council, which just completed its annual meetings,
also expressed confidence in the outlook for our economy, conclud-
ing that they are now certain economic recovery will continue at
least through 1978.
I am convinced that the reason both consumers and businessmen
are confident about the future of our economy is that we have
2
adopted and followed policies designed to provide long-term,
sustained economic growth without inflation. We have gotten off
the roller coaster of stop-go economic policy. We have shown
that with sufficient determination and a willingness to make diffi-
cult decisions we can significantly reduce the rate of inflation.
Differences Between the President and
Governor Carter on Economic Policy
There are several key differences between myself and Governor Carter
on economic policy.
First, there is the matter of certainty. People know what I have
done, they know where I stand, they know where I want to go.
I have pursued consistent policies -- ones which I have announced
and have adhered to. This is terribly important in considering the
element of confidence in the economy. Individuals and businesses
must plan for the future but they can only plan efficiently if they are
able to make decisions with reasonable confidence regarding the
overall policies the government will pursue.
Governor Carter's policies, I think any objective observer would
agree, have been both vague and inconsistent. Theseare certainly
the hallmarks of his statements on tax policy.
Second, there is the issue of reducing taxes or increasing govern-
ment spending. I have proposed and continue to advocate an addi-
tional permanent tax cut. I want to increase the personal income
tax exemption from $750 to $1000.
Governor Carter has expressed his support for the Democratic
party platform. Much in the platform is imprecise and it is diffi-
cult to cost out the estimates vary anywhere from $100 billion
to $200 billion in additional spending that would be required every
year by the Federal government. You simply can't have it both
ways. You can't dramatically increase government spending and
at the same time cut taxes.
In part, this election is a referendum on the question of whether
people want to spend more of their money themselves or whether
they want to see the Federal government spend more of it for them.
Third, there are also striking differences regarding the degree of
interference that Governor Carter and I feel is appropriate for the
Federal government to have in the economy. I have proposed to
reduce the level of controls and government interference. Governor
Carter has supported legislation which would provide for national
economic planning. Wage and price controls are another example of
where Governor Carter and I differ on the issue of government
interference in the economy.
2
Fourth, I have emphasized the need to combat inflation because
there can be no lasting job security in a period of soaring inflation.
I believe the root cause of unemployment is inflation and that in
order to keep our economy growing and provide jobs for our workers
we must keep the forces of inflation permanently in check.
Governor Carter has said that he would focus his economic policy
on cutting unemployment and "take my chances with inflation. 11
I believe that saying reducing unemployment is more important than
fighting inflation is like saying that long life is more important than
good health. The one without the other is probably impossible --
and certainly unpleasant.
CARTER'S ATTEMPT TO REPEAL THE LAWS OF ARITHMETIC
Carter wants to straddle the issue of support of the programs
in the Democratic platform and his goal of a balanced budget
without tax increases by 1980.
On September 3, Carter said "there will be no new spending
programs implemented under my Administration unless we can
be sure the cost of those programs is compatible with my goal of
having a balanced budget by the end of my term. "
On October 19 in Miami Beach he again support "comprehensive
national health insurance" with a start on the program if he took
office on January 20. But he again waffled on his commitment by
inserting the loophole "as revenues permit".
Carter cannot have it both ways. No responsible estimate of
the cost of comprehensive national health insurance is remotely
consistent with a balanced budget by 1980 with no tax increase.
Carter either supports or doesn't support the Democratic platform
on major spending proposals. Carter either supports or doesn't
support the achievement of a balanced budget by 1980 without a
tax increase. Which is it?
The American people understand that when a politican promises
everything to everybody, he is really promising nothing at all. The
American people know that it is nonsense to promise not to raise
taxes one day, a balanced budget the next and free health care the
day after.
ON BALANCING THE BUDGET
My opponent says that the simplest way to balance the budget
is to restore full employment, thereby increasing tax revenues and
reducing unemployment insurance payments. Unfortunately, his view
of how to increase employment and reduce deficits is through more
government spending. You can't cure deficits by creating more
deficits. You can't balance the budget through more deficit
spending. It's like giving liquor to a drunk to make him sober.
The only way to restore full employment and higher tax revenues
is to stimulate the private sector by improving the confidence and
incentive of Americans, both consumers and business, to invest
in their future.
Perhaps we should heed the advice of Prime Minister Callaghan who
at a Labour Party Conference (September 28, 1976) said:
"We used to think that you could just spend your
way out of a recession and increase employment
by cutting taxes and boosting government spending.
I tell you in all candor that that option no longer
exists, and that insofar as it ever did exist, it
worked by injecting inflation into the economy.
And each time that happened the average level of
unemployment has risen. Higher inflation, followed
by higher unemployment. That is the history of the
last twenty years.
Page 2
"And each time we did this the twin evils of
un-employment and inflation have hit hardest
those least able to stand them -- our own
people, the poor, the old and the sick."
GER
Employment and Unemployment
The Record
My Administration has a good and solid record in creating jobs.
Since the recession low of March 1975, total employment has
increased by 3.7 million to a record high of 88 million. More
jobs have been created in the last year and a half than in any other
18-month period in our peacetime history.
The failure of the unemployment rate to decline more sharply this
year is the result of an unprecedented increase in the size of the
labor force. The great increase in the size of the labor force is a
sign of the renewed confidence in the health of the economy. We
now have the highest labor force participation rate in our history.
Today we have the same percentage of our population over the age
of 16 who are employed as we have averaged during the post-World
War II period.
The long-term unemployment rate -- those who have been unem-
ployed for 15 weeks or longer -- is currently 2.4 percent.
I have pursued policies and will continue to pursue policies that will
create jobs and reduce unemployment without reigniting inflation and
threatening the jobs of the 88 million who are now employed.
UNEMPLOYMENT ANECDOTE
When the economic history of this period is written one of
the highpoints will be a fact that has been little noted. In
November and December of 1974, at my initiative, the Administration
and the Congress worked together in anticipation of the recession.
Together we fashioned a broadened program of unemployment
insurance that provided a safety-net for 12 million Americans
that previously had no coverage -- this action was taken before
unemployment rates shot up. And as a result we avoided what
otherwise would have been a disasterous social problem. In
my judgment, this was government action at its best -- anticipating
a problem, and dealing with it. As I say, when the economic
history of this period is written, this will be noted as one of
our finest hours.
#######
GERALD
TAX THE RICH
Aside from my proposal of a significant minimum tax for
all income brackets, I do not support any punitive or unfair
tax proposal on any group of Americans.
1. I firmly believe that whatever the level a man has reached
on the economic ladder he must have an incentive to move up.
I was particularly touched by Senator Pastore's farewell
remarks to the Senate last month. He said, "Keep the torch
of opportunity lighted wherever you go."
We must never strip away the incentive for families to move
up the economic ladder.
2. A 100% tax on all incomes over $50,000 will produce less
than $9 billion in additional revenues. It would only pay for
4% of Mr. Carter's platform. Each taxpayer should ask
himself - - where will the other 96% come from? If the
Governor in seeking additional income to tax decides to reach
down into, say, the $25,000 family incomes as some of his
nearly
4
of
5)
advisors have implied, remember that more than 75 per cent
A
of the families reporting income over $25,000 have two or
more wage earners in the family. We are talking about
policemen whose wives teach school, truck drivers whose wives
work as secretaries, and so on. We are talking about the
Page 2
hardest working families in America. People who should
be rewarded, not penalized for their labor.
3. If we want jobs, a productive and viable economy, and
the type of capital investment we need in the long run,
such an unfair tax philosophy is extremely short-sighted
and counter-productive. In the end, it will be the poor
who will suffer most.
Q. Mr. President, what specifically are the objectives of your
energy program?
A.
The program I proposed is designed to insure that this Nation
is importing no more than 4 to 6 million barrels a day from
foreign nations by 1985. All of the legislation I have
submitted is designed to achieve the following:
1) Reduce energy consumption rate of growth from 3-1/2
to 2-1/2 percent per year -- that means conservation.
2) Double American coal production.
3) Increase American oil and natural gas production to
higher levels we think are achieveable.
4) Increase nuclear power from 9 percent of electric
generation to 26 percent of electric generation.
If we do all of these things and complete the stockpile program
which I proposed and the Congress has passed, we will be in an
embargo-proof economy by 1985. The effect will be sufficient
supplies of energy at lower prices for the American people.
The Congress has so far passed one half of the legislation
which I sent them to achieve these results, and if they finish
the job when they come back next January, we will reach our
energy objectives.
Make no mistake about this -- the United States has the technical
capabilities, natural resources and financial capabilities, to
reduce our imports to provide lower energy prices to the American
people.
INTERNATIONAL ENERGY AGENCY
In November 1974 the United States took the lead to establish
the International Energy Agency (composed of Canada, Japan, the EC
except France, plus a number of smaller European countries). As a
result of this leadership, we today have a strong framework for
cooperation among oil-importing countries to reduce vulnerability to
disruptions of oil imports and to reduce our collective dependence.
Progress has been made in several important areas:
-- Meet oil supply emergencies by increasing oil stocks
and sharing oil on an equitable basis.
-- Develop oil conservation programs.
-- Develop new energy sources.
-- Improve collective understanding of the operation of the
international oil market and the activities of the international oil
companies.
In addition, the IEA has been the main forum for consumer
cooperation in the CIEC. Without an international body through
which to focus cooperation among the industrialized democracies
there was a very strong likelihood that individual countries would have
succumbed to producer pressure and any hope at moderating cartel
actions would have been lost in a series of bilateral arrangements.
The IEA has foreclosed that threat and put us on a footing of solid
consumer cooperation.
CONFERENCE ON INTERNATIONAL ECONOMIC COOPERA TION (CIEC)
Convened in December 1975, and expected to continue its work
at least through December of this year, the CIEC brings together
representatives of the US, EC, six other industrialized countries,
and 19 members of the developing world, including seven OPEC
countries. The main purpose of the Conference is to improve under-
standing and cooperation between oil consumers and producers.
The work of the Conference is carried on by four commissions:
energy, raw materials, development, and financial affairs. The
purpose of each commission is to facilitate mutually beneficial
arrangements between developed and developing countries.
The US played a key role in establishing CIEC. Secretary
Kissinger's speech at the UN Seventh Special Session last year, and
other similar initiatives, have demonstrated concern for the problems
of the developing countries and provided constructive proposals for
meeting many of their problems in the context of a common developed-
developing country effort to achieve a prosperous and orderly world
economy, in the interest of both groups.
OF THE
THE
PRESIDENT
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE
OFFICE OF MANAGEMENT AND BUDGET
GEOUTIVE
STATE
WASHINGTON, D.C. 20503
OCT 21 1976
MEMORANDUM FOR:
Jack Marsh
FROM:
Paul H. O'Neill
Ohein
SUBJECT:
Response to President's Question Regarding
Inflation Rates in Various Countries
The President asked for inflation rates for various countries
during 1974 and 1976. The following table shows the rate of
inflation from December 1973 through December 1974 in the
first column and from December 1975 through either August
or September depending on the last data available.
Inflation Rates
Country
1974
1/
1976
2/
U.S.
12.2
4.9
(September)
Canada
12.4
5.9
(September)
Japan
21.0
10.4
(August)
France
15.2
9.6
(August)
West Germany
5.9
4.0
(September)
Italy
25.3
19.0
(August)
U. K.
19.5
15.2
(August)
December 1973 through December 1974.
2/
December 1975 through either August or September
as indicated.
FOREIGN/DEFENSE
10/17/76
FOREIGN AND DEFENSE POLICY
I think it is important for the American people to understand
clearly what my foreign and defense policies are, what I propose for
America over the next four years and the major differences between
me andmy opponent in this field. There is one basic overriding issue:
Can we keep America at peace and make the world a safer and a better
place?
My answer to that critical question is a ringing "yes. 11 Now let me
tell you in straight terms just what I mean and what I intend to do. The
world of the next four years will be characterized by such developments
as:
-- the continued dependence of mankind on effective nuclear
deterrence to keep the peace and prevent the catastrophe of nuclear
war between the east and west.
intensified competition among all nations for scarce resources --
particularly energy resources -- and the consequent increased necessity
of dealing constructively with the countries controlling those resources.
-- massive increases in population -- particularly in the
developing world -- unmatched by sufficient economic growth to
provide for the increases.
-- expanded possibilities for the proliferation of nuclear weapons.
This is not a comforting prospect; many things could happen:
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-- a miscalculation as to our strength and resolve by the Soviet
Union could result in nuclear holocaust.
-- questioning of our strength and resolve by our allies could frag-
ment the unity of the industrialized democracies which is critical to any
hope of assuring deterrence and dealing constructively with the energy,
economic and development problems before us.
-- failure among the industrialized countries to find workable
solutions to the urgent problems of development in the third world could
lead to massive upheaval, enormous suffering and even war.
In the past two years we have shown that we can deal with these
challenges if we act responsibly and adhere to proven principles:
-- maintaining unquestioned military strength.
-- maintain and strengthen our alliance relationships.
-- from this position of national and allied strength, negotiate
with adversaries to reduce tensions in the world and the threat of
nuclear war.
-- continue to act as a peacemaker and to deal with the new
agenda of world issues -- such as nuclear proliferation, economic inter-
dependence, food, energy, pollution, population.
Mr. Carter and I have clear differences with respect to these
principles -- he proposes that we launch out in new and historically
harmful directions. I think this is dangerous: we have right now a very
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-- He states that he will cut waste. That is what we were told
just before the Korean War and you know what shape we were in when
that war started. The fact is that with cuts of the size being proposed,
it simply is impossible not to cut into the muscle, and I think that is
dangerous.
So the differences are clear:
-- He wants to go in one direction, and I want to go in the other
direction. That is all there is to it.
AMERICAN FRIENDS AND ALLIES
The second principle of peace is the strength of our parter-
ships with our major allies, the industrial democracies of Europe and
Asia, because if America became lost in self-doubt then the peace of
the world would be in jeopardy.
I am proud of my record in this period of testing.
-- Our friends and allies know that we can be trusted, that we are
reliable;
-- We led the world out of the most dangerous recession since the
1930's and at two summit meetings -- in France and Puerto Rico --
achieved a degree of policy coordination to promote steady, sustained
recovery unprecedented in modern history.
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successful foreign policy. We are strong and respected. We play a
key role in the world and we are a force for justice. The choice is
between experience and very positive results and experiments threatening
dangerous consequences.
NATIONAL DEFENSE
The foundation of our security and our ability to play a constructive
role in the world is American military strength. Throughout my career
I have been a champion of a strong defense. It deters war, builds
confidence among our allies and underwrites our diplomacy. It is essential
to international stability. Without it we can achieve nothing. Largely
because of our strength, today we are at peace. No American soldier
is fighting on any battlefield anywhere in the world.
I reversed the slide in defense expenditures; I am proud of this
record. I want an Army, a Navy, and Air Force and a Marine Corps
that are second to none. It is costly. It will require sacrifice. But we
can do it. We must do it.
In sharp contrast to my record and my position, Mr. Carter proposes
heavy cuts in our defense programs. His party states in its platform that
they will cut our defense by $5-7 billion. Those are simple facts.
-- That would return us to the lowest defense budget as a share of
the national budget since before the Korean War.
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-- That's leadership and we are respected for it.
In the Middle East, we have stood by Israel:
-- I would simply cite Prime Minister Rabin's statement that our
relations are at a peak;
-- And we have done so while gaining the confidence of the Arab
states;
-- That is an historic success in our foreign policy that cannot be
denied.
We cannot afford to tinker with our alliances and our friends. In our
efforts to control the diffusion of nuclear technology for nuclear weapons,
we cannot issue ultimatums to our friends. We cannot afford to announce
new military doctrines that may undermine our reliability. We cannot
afford to undermine mutual security suggesting unilateral withdrawal
of American forces. We are not going to strengthen freedom by opening
the door to the Communist parties to participate in the Governments of
our European allies.
The two fundamentals of American policy must be: a strong
national defense and strong alliances. Only from this firm foundation
can we expect to solve the major issues confronting us in the next four
years.
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RELAXING TENSIONS
America is at peace. That sums up the whole foreign policy
debate. But it is not good enough to rest where we are. We are going
to have to work to keep the peace.
1. The Soviet Union
First, we have to face the fact that the shadow of nuclear war
hangs over us.
-- The Soviet Union and the United States have to build a
relationship that allows us to live together, and to reduce the danger of
confrontation and nuclear war;
This is an overriding concern, and the first step is to put a
cap on the nuclear arms pact. That is what we are working on right now.
In our relations with the Soviet Union, we must always be
aware that there are basic differences between us; differences that we
cannot expect to go away.
-- That means our relations will have ups and downs;
-- We will stand up for our beliefs. From a position of
strength, we will compete peacefully.
-- We will stand firm when challenged;
-- We can negotiate from strength to reduce tensions; to increase
trade and other exchanges between east and west; and to relieve the severity
of oppression through careful diplomacy rather than by bombast.
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-- Mr. Carter says he would be tougher with the Soviet Union.
Yet he would reduce our strength and take actions which would shake the
confidence of our allies. Those are incompatible policies -- Mr. Carter
just can't have it both ways.
2. China
We have made a major breakthrough in ending our isolation from
China. We will continue that process, working for a moral normal, peace-
ful relationship.
-- This is essential if we want an international system that
works for peace and stability.
3. Regional Conflicts
Even if America remains at peace, the world will remain
troubled and dangerous unless we attack the roots of conflict in the key
regions:
In the Middle East we have achieved a position of trust with all
the parties and now have the opportunity which has eluded us for decades;
I will not let that opportunity pass.
-- Mr. Carter's position of hostility toward the Arabs would
return us to our helplessness of 1968, destroying our ability to work
with both sides for a permanent just settlement.
In Southern Africa, another great conflict threatens.
-- Americans can be proud that this country was the key to
breaking the stalemate and opening up a new prospect for peace.
- 8 -
-- Elsewhere we can preempt the threat of massive hunger and
starvation and bring the producers of primary products into a rewarding
participation in the world's marketplace.
-- We can build effective safeguards with our allies against the
spread of nuclear weapons.
This is no time for experiments. We have tried and proven foreign
policy. It has brought us peace and the respect of allies and adversaries;
it has enabled us to be a peacemaker and to lead the world toward solutions
to the pressing problems of our time. These relationships have been
restored to a basis of strong mutual trust after a difficult period. It
is dangerous now to raise new questions as to our reliability by threats
of withdrawal, suggestions of rethinking allied strategy, peremptory
statements on nuclear policy, or alarming threats of counter-embargo
toward countries holding the very lifeline of Europe and Japan.
It is a time for steadiness, good faith, constancy and quiet diplomacy.
We have an enormous challenge before us. The free world is looking to
us for the leadership so essential to a future of hope and an end to
despair. We are ready; let's get on with it.
Redraft 10/19/76
Carter Debate Strategy: Foreign/Defense Policy
Carter will probably stick with the basic foreign and defense policy
theme he used in the second debate, on the assumption that he "won" that
debate. His general strategy therefore will be to remain vague on specifics
and to issue mainly theoretical or philosophical broadsides against the
Administration's foreign policy.
General
His main points are likely to be: (1) there is a lack of leadership in
foreign policy; (2) our policies do not reflect the "character" of our country;
and (3) we have no vision of the future.
-- He has a new twist on our national strength. In New York on
October 14 he said: "Ours is a strong nation and must remain strong, " but
national security is more than weapons.
The most appropriate response would be to note that:
-- His attacks on style and abstract principle reflect the impregnability
of the substance of President Ford's policies. Carter avoids discussion of
the substance.
-- Resort to attacks on strength, morality and respect are a subterfuge
to conceal that Carter has no substantive objections to our foreign policy and
no alternatives of his own to offer.
-2-
-- His comments about strength are belied by every indicator by which
one can measure -- both material strength and moral strength.
-- To buttress his claims of lack of leadership and morality, he may
again raise Chile and our support for a dictatorship or the Arab boycott
(we have permitted a foreign nation "to subvert the basic tenets of our
Constitution and Bill of Rights. 11
-- He may also again raise the charge that the Administration has
no energy policy as witnessed by the increase in oil imports since 1973.
This can be answered by reference to the irresponsible inaction of the Congress
in allowing most of the essential legislation to die on the Hill.
-- He may hit the Administration's failure to address the problem of
non-proliferation. Your new nuclear policy statement should adequately
refute any charges here.
-- He is likely again to attack our arms sale policy, saying that
we are becoming the merchants of death and should negotiate a multilateral
freeze on arms sales. You here could ask how we can defend the free world
if we are not to be the world's policeman -- as we should not be -- and
cannot sell arms to let our friends defend themselves.
-- He may repeat that we will sell $7 billion in arms to Saudi Arabia,
that 60 percent of arms sales in the Middle East went to Israel under Kennedy/
Johnson and that has been reversed (60 percent now goes to Arab countries
and 40 percent to Israel).
The correct statistics are as follows:
64 - 68
74 - 76
Israel
58
61
All Arab
42
39
-2a-
-- Finally he may cite General Brown's remarks as evidence of the
Administration's disarray, conflicting viewpoints and insensitive judgment --
or to prove his points about arms sales (Iran) and US inner strength. This
is best answered by reference to the flagrant distortion of the General's
actual comments and a strong reaffirmation of your support for Israel.
Eastern Europe
This subject is likely to come up -- Carter himself might try to
raise it.
-- Carter has in general not spelled out what policies he would
pursue other than to say he would not intervene if there were Polish
resistance to Soviet domination. In that case, he came very close to
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saying that was an "internal affair' of the Soviet bloc, which, of course,
is conceding Eastern Europe to Soviet hegemony. Also, he said he
would not send US troops to Yugoslavia, even if there were a Soviet
invasion -- reminiscent of the statement about Korea early in 1950.
-- His most likely line will be simply to reiterate what he has
been claiming--that it took you six days to clarify your original
statement and he therefore thinks you actually believe what you said,
that the Soviets do not dominate Eastern Europe.
Defense
His basic technique is to obfuscate his position by claiming that you
misrepresented him; if pressed he will do what Mondale did: in effect,
to claim there is a substantial amount of waste.
-- He may say that Schlesinger claims you distorted his recommen-
dations because he was addressing a $10 billion cut that you in fact wanted
to make. He might go on to say that he (Carter) only proposed cuts of
about the same size the Congress usually makes, and that there is about this
amount of "cut insurance" in the defense budget anyway.
-- He may say that we have to remain strong, that we have rough
equivalence in strategic nuclear weapons, and we ought to freeze missiles,
warheads and throw weight. It is doubtful he will allow himself to be
drawn into any greater detail on SALT. He may repeat that little was
accomplished at Vladivostok and nothing has been done since, then come
out with his recent recommendation to freeze weapons while we negotiate
a reduction.
- 4 -
VULNERABILITIES
Some of Carter's major weaknesses are the following:
1. Defense -- the fact that the Democratic Party is on the record
in favor of a $5-7 billion cut in the current FY 77 budget (and he did
mention $15 billion himself).
2. Communism in Europe -- the fact that Carter in a Playboy
interview did say he would not close the door to consultation, communi-
cation and friendship with the communist leaders in Italy, France and
Portugal.
3. National Strength -- Carter has been very vague about what he
means. He says we are not strong, but says we are second to none.
In New York he said "ours is a strong country."
4. Respect -- His comment we are not respected is an unsupported
assertion. He has not tried to deal with the fact of contrary comments from
major world statesmen. Of considerable interest in this regard is the fact
that some national commentators have been distinctly put off by his claim
that we are not respected.
5. Middle East-South Africa: In addition to his erroneous charges
on arms sales, Carter is vulnerable to rebuttal on his ill-conceived
counter-embargo scheme.
6. Korea -- Carter has repeated twice that we should withdraw our
troops over a 4-5 year period and withdraw all our tactical nuclear weapons,
thus practically inviting aggression.
*
*
*
Nobel
- 5 -
major vulnerability that is emerging in both Carter and Mondale's
position is that they are painting a picture of this country domestically
and in our foreign policy that simply does not ring true to the general
public. A number of columnists and commentators are beginning to
rebel at Carter's excessively gloomy rhetoric. Hugh Sidey, for example,
made a very telling point that Mondale's description of the US created
a totally false impression. Eric Sevareid has several times taken
Carter to task for claiming we are not respected abroad. So Carter
may be vulnerable to the charge that he is deliberately exaggerating the
problems of this country and misleading the people to convince them that
we are in some kind of horrible crisis.
Finally, it may be a clue to his approach that he said in an interview
with the Los Angeles Times, when asked what he wanted to see come out
of the final debate, that he hoped it would focus almost entirely on certain
domestic issues such as "housing, crime, employment, government
management, inflation, government secrecy, environment and national
health. "