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Second Debate: Issue Papers on Miscellaneous Topics
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Second Debate: Issue Papers on Miscellaneous Topics
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White House Special Files Unit Files
Ford - Carter Debates Files
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Campaign debates
Economics
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Nuclear energy
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Presidential campaign, 1976
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The original documents are located in Box 2, folder "Second Debate: Issue Papers on
Miscellaneous Topics" 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States of America his copyrights in all of his unpublished writings in National Archives collections.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 2 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
COUNCIL OF ECONOMIC ADVISERS
WASHINGTON
ALAN GREENSPAN, CHAIRMAN
PAUL W. MACAVOY
October 1, 1976
BURTON G. MALKIEL
MR7
MEMORANDUM FOR THE PRESIDENT
Subject: Monthly Report on Economic Conditions
Summary
The projections of the Commerce Department indicate that
real GNP will grow at a 4 percent annual rate in the third
quarter. This compares with a 4-1/2 percent growth rate in the
second quarter and a 7 percent average growth rate during the
past five quarters. Despite a 1-1/2 percent decline in the
index of leading indicators reported in September, signs of
an acceleration of real growth appear to be at hand. Recent
data suggest substantial increases in retail sales, investment
spending intentions and housing activity. Unless the Ford
Company strike is prolonged, the fourth quarter should show
a substantial increase in the real rate of GNP growth.
Burton Malkid
Burton G. Malkiel
HMERICAN REVOLUTION
1776-1976
@
Detailed Analysis
The slower growth phase in economic activity appears to
have continued at least through the early summer. Retail sales
did not grow in July. Business fixed investment has yet to show
substantial strength and housing starts were very low in July.
Moreover, businessmen appear to have been extremely cautious
in their inventory behavior during the third quarter. At the
present time the Commerce Department estimates that inventory
accumulation actually fell from second quarter levels.
In recent weeks, however, despite the decline in the index
of leading indicators, signs of renewed acceleration in economic
activity have appeared.
July retail sales estimates were revised upward by $0.6
billion to $53.8 billion. This compares with $54.0 in sales for
June. Retail sales then rose sharply to $55.0 billion in August.
Current evidence suggests that retail sales for September will
exceed August by perhaps $0.5 billion.
Housing starts increased to 1.54 million units in August
from 1.39 million units in July. Most of this increase is
in multi-unit dwellings. Single unit starts continued at a
very strong 1.20 million unit level. Total starts in August
were the highest since February and the near-term outlook is
for further strength in this area. Building permits have
exceeded starts in permit-issuing areas by 206 thousand units
at an annual rate for the last two months. This suggests good
gains in housing starts in coming months.
Indicators of business fixed investment have been rising
strongly in recent reports. Conference Board data on new
capital appropriations by manufacturers rose 13.2 percent in
the second quarter. The value of plant and equipment projections
started by manufacturers last quarter rose 9.6 percent. New
orders for nondefense capital goods have been quite volatile
in July and August rising sharply in July but falling by the
same amount in August,helping to push the leading indicators
down. Nevertheless, the average of nondefense capital goods orders
for July and August is 11-1/2 percent above the average during
the year.
In August, the unemployment rate increased for the third
consecutive month to 7.9 percent. As we have noted before, the
rise in unemployment has been caused by an extraordinary increase
in the labor force and not a shortfall in job creation. During
the past two months alone the economy has produced 500,000
new jobs but the labor force increased by 850,000, including
350,000 adult women. We continue to believe that the growth
- 2 -
in the labor force will slow in coming months and with
continued increases in employment, the unemployment rate
should drop sharply. The September unemployment rate from
the household survey will be released on October 8.
The rate of inflation appears to have stabilized at a
rate around 6 percent. The consumer price index (CPI) has
risen 0.5 percent in each of the last three months despite
continued moderation in food prices. This is because commodities,
excluding food, have been rising at an annual rate in excess
of 7 percent during the three months ending in August. This
high rate of inflation has been sustained by large increases in
energy prices.
The wholesale price index (WPI), which has been growing
at very low rates since May, has been influenced by declines
in food prices during the last two months. Food prices are
expected to remain weak through the Fall and into the early
part of 1977. The WPI for fuels increased at a 24 percent
annual rate in August. We expect the rate of increase in
energy prices to decline, however, in coming months.
The decline in long-term interest rates which began
in June continued during September, but at a slower pace.
The rate on corporate Aaa bonds averaged 8.37 percent
during the first 4 days of this week compared with an average
of 8.62 percent in June. A heavy supply of new corporate bonds
may exert some upward pressure on long-term rates during October,
but this will be partially offset by reduced Treasury borrowing
needs brought on by lower than anticipated Federal expenditures.
Short-term interest rates stabilized during September
with the Federal funds rate holding at about 5-1/4 percent,
the midpoint of the 5 to 5-1/2 percent range set at the
August 17 meeting of the Federal Open Market Committee. By
mid-September three successive declines in weekly M1 figures
had led some market participants to expect a decline in the
Federal funds rate. However, the large $4.5 billion increase
in M₁ for the week ending September 15 and the subsequent $2.8
billion decline in the following week reminded participants
of the volatility of the weekly figures and temporarily ended
these expectations. Looking at longer run averages, neither
M₁ nor M₂ appear to be growing at rates sufficiently different
from the Federal Reserve tolerance ranges to require a significant
change in the Federal funds rate. Commercial and industrial
loans at commercial banks were unchanged from July to August
and still show no significant sign of recovery. In the
latter part of September several large banks announced a
reduction in their prime rate from 7 to 6-3/4 percent, but
this reduction has not yet spread to a majority of commercial
banks.
10/1/76
AND
Overview Response on Nuclear Issues
Nuclear power is one of the most complex issues we face.
It is also one of the most difficult to discuss in a campaign because
it lends itself so easily to demagoguery. Fortunately, nuclear
power has traditionally been approached in a bipartisan manner.
There has never been a Republican or Democratic position on questions
of nuclear safety or preventing nuclear proliferation. I hope there
never will be.
As President I have dealt with nuclear issues from three different
perspectives:
First, in assuring that our domestic nuclear power plants are
safe and environmentally acceptable;
Second, preventing the proliferation of nuclear materials which
can be used to make weapons;
Third, in developing a balanced program of nuclear and non-nuclear
research and development which will contribute to reduction of
dependence on foreign oil and our vulnerability to embargoes.
My Administration has taken strong action in each of these
areas. For example:
1. Shortly after I took office, I signed into law the bill creating
an independent Nuclear Regulatory Commission. Its primary
mission is to oversee the development of the nuclear industry from
- 2 -
the standpoint of protecting public health and safety. This
legislation eliminated the potential conflict of interest that
existed in the old Atomic Energy Commission where the
regulatory and promotional responsibilities were combined.
2. In the last two years, I have increased the budget for nuclear
safety regulation by more than 60% from $148 million when I took
office to nearly $250 million this year.
3. In the fall of 1974, I became concerned that some other
nations, eager to become nuclear suppliers, were being tempted
to offer laxity in the treatment of nuclear materials as a
competitive device. I directed the Secretary of State to find
ways of eliminating this dangerous form of competition. As a
result of this effort, the first Conference of Nuclear Supplier
Nations was convened in London in April 1975. That Conference
has met 6 times and the seven nations have agreed to a much tighter
set of guidelines on nuclear exports. I have directed that the
states
United adopt these guidelines as our policy.
4. In the area of energy research and development, I have
increased our commitments in both the nuclear and non-nuclear
areas. By far the greatest increase, however, has occurred in
the non-nuclear area. Coal research has tripled in the last two
years. Solar energy research has increased about 8 times--conservation
research more than 4 times. We now have a balanced program,
and we expect results in both the nuclear and non-nuclear areas
that will contribute substantially to reducing our dependence
on foreign oil.
But the effort to insure that the benefits of nuclear energy outweigh
its risks have not stopped. Several months ago, I initiated a complex
review of the entire nuclear fuel cycle in both its domestic and inter-
national aspects. That review has now been completed. In the
context of this debate, there is obviously not enough time for me to
explain fully the decisions that I have made on this entire range of
issues, but I shall announce them in a very short time.
There is one final point that I would like to make on this whole
question of dealing with nuclear energy, particularly on the question of
proliferation. As in so many other areas of foreign policy, the real issue
which confronts the President is to make very sure that what he proposes
is effective. He cannot be satisifed with mere words. In nuclear proliferation
this means making sure that other countries which have the ability to export
nuclear materials and technology abide by the same set of rules as the United
States. If they do not, then all of our words and all of our efforts are in
vain and the world becomes an even more dangerous place than it is.
Achieving cooperation in these areas requires leadership on our part and a
willingness to negotiate positively but firmly to apply strong pressures, as
we have in some cases, to discourage undesirable developments, and to offer
incentives, as we have in other areas, to encourage cooperation. Unilateral
declarations, not matter how good they may sound, will not prevent nuclear
- 4
proliferation, and it is with such proliferation that the President
of the United States must concern himself.
THE PRESIDENT HAS SEEN
October 3, 1976
The Foreign Policy Debate
The Setting
There is reason to expect that Carter will take a
substantially more confrontational line in the second
debate than he did in the first.
It is, therefore, important that you set the tone of
the debate at the outset, and that Carter be shown to be a
man without a program -- a man who is reduced to picking
at the edges of a successful policy without having anything
comprehensive to offer in its place.
I would recommend that you seek an early opportunity --
hopefully in response to your first question -- to lay out a
few basic themes. These themes would then provide the under-
pinning for your answers to further questions, and you would
be able to refer back to the conceptual framework already
established.
The themes, as I see them, are:
-- Peace: In a world of thermonuclear weapons, with
their potential to destroy mankind, the search for
peace must be the overwhelming responsibility of
the President and the United States. America is
at peace for the first time in almost a generation.
No President since Eisenhower has been able to say
what can now be said: no American is fighting any-
where in the world. It is our task in the years
ahead to see that America remains at peace, that
tensions between the super powers are reduced, and
that local conflicts do not escalate to involve the
super powers.
-- Strength: Peace can only be lasting so long as
America and the Western democracies remain strong
and united. America is the most powerful nation
in the world and it must remain SO. America is,
after more than a decade of war and constitutional
crisis, a united country once again. Our relations
with our NATO allies and Japan have never been
better; our consultations are intimate and constant;
- 2 -
NATO's combined military strength in Europe has
never been more impressive; our cooperation with
Western Europe and Japan on military, economic
and political issues never more intimate.
-- Relations with Adversaries: Based on our
strength and that of our allies, America has
sought to lower the level of tension with our
adversaries. Ideological and political competi-
tion with the Soviet Union will continue for
decades. But the issue must be whether we can
contain that competition, and reduce the chances
of war between the super powers. A lessening
of tensions can only be achieved if both sides
are prepared to compromise; America has not,
and will not, accept "one-sided" agreements
that do not give a balance of benefits to
both sides.
-- A Compassionate America: America has, since its
birth 200 years ago, been the hope of the world.
We remain so today. We are the world's greatest
democracy; the wealthiest, most prosperous and
most generous nation in history. We have never
failed to help those in need, not only because
it is morally right, but also because it is wise
policy. We will continue to do all we can to
assist the world's poor and starving, because
there can be no peace, no security, in a world
of poverty, disease and hopelessness. But let us
also be clear that we will not respond to threats
or blackmail, and that we will be most ready to
help those who help themselves.
The specific answers to the probable Carter line of attack
can, with this framework established, be put within its context.
It is important not to be defensive, but to show how what we
have done is part of a coherent strategy and for a positive
purpose.
The Issues
The probable points of Carter attack and the suggested
responses are described below:
- 3 -
1. Detente
-- Carter: The U.S. has given up too much
and gotten too little. Helsinki confirmed
the Soviet takeover of Eastern Europe; the
Sonnenfeldt doctrine condemns Eastern Europe
to perpetual domination; the first SALT
agreement permitted the USSR to reach
strategic parity with the U.S., and the
Soviets have cheated on the agreement since
(e.g., submarine launched missiles; ABM-
related radar; enlarging of missile silos) ;
the Vladivostok accords, if carried through
would grant the Soviets the Backfire and
limit our cruise missiles; despite "detente"
the Soviets have fostered war in the Middle
East, attacked us in Africa, and sought to
upset the balance wherever they could.
In a reversal of roles, Carter may also
condemn the grain export embargo as frivolous
and harmful to the American farmer.
-- Response: Peace can only be maintained if we
manage the relationship with the Soviet Union.
The two super powers have the means to destroy
civilization if the competition between us gets
out of hand. This Administration has managed
the relationship to the benefit of the United
States: the danger of war in the heart of
Europe has substantially lessened; Berlin is
no longer a source of constant tension and
potential conflict; the Soviets and we agreed,
in SALT I, to limit the size of our nuclear
arsenals; that agreement ended the Soviet buildup,
while affecting no American program; as should be
expected in any agreement of such complexity,
some technical problems have arisen; we have a
joint Soviet-U.S. Commission to deal with such
cases, and it has done so effectively.
If further nuclear arms agreements can be
achieved that are fair to both sides we will
proceed with them; the American people will
support any reasonable effort to reduce the
dangers of war for themselves and their children.
- 4 -
The peoples of Eastern Europe have a
right to freedom and national independence,
and the United States has not, and will not
abandon them. The Helsinki agreement, which
was signed by such countries as Britain,
France, and Germany -- and by the Pope's
representative -- is aimed at requiring
the USSR to permit a freer flow of people
and ideas between West and East, thereby
forcing a relaxation of Soviet control over
Eastern Europe and, indeed, its own people.
As to the embargo of grain exports
I
have already pledged that we will not use
this weapon because of the hardship and
uncertainty it would impose on America's
farmers. Will Mr. Carter make a similar
pledge?
2. Relations with Allies
-- Carter: This Administration has ignored our
Japanese and Western European allies. As a
result, relations have never been worse;
Japan was "surprised" by the move toward
Peking, and has lost confidence in the U.S.;
Western Europe has been shaken by U.S. detente
with the Soviets, taken without consultation or
warning; "hardline" U.S. opposition to Western
European communist parties (particularly Italy)
1) threatens our ability to work with them if
they take power, thereby weakening their chances
of maintaining a course independent of Moscow;
2) places the U.S. squarely behind corrupt
parties that have failed to govern for too
long, and whom we failed to push toward reform
when we could have.
-- Response: Any charge that our relations with
Western Europe and Japan are not good is
irresponsible. I have personally met with
GERALD
the leaders of our NATO allies and Japan 56
times. NATO's defenses are stronger than they
have ever been, and we have opened up a whole
new range of consultations and cooperative
efforts in fields other than defense, such as
- 5 -
the environment, international financial
and economic issues, energy, The Law of
the Sea, etc. With Japan, too, we have
developed a closer relationship than ever
before in history, and again, we consult
with them across a wide and growing range
of issues.
It is correct that this Administration is
opposed to permitting Communist parties to enter
governments in Western Europe. The question, of
course, is for the peoples directly involved to
decide. But when we are asked we will give our
opinion, as we have. Communist participation in
NATO governments would be destructive of the
very democracy we seek to protect in Western
Europe, and would certainly mean a major change
in the structure and purpose of the NATO Alliance.
The peoples of Western Europe have a right to
know what our attitude is, and statements by
American leaders that indicate we would accept
Communists in European governments only weakens
those in Europe who fight against Communist
participation.
3. Arms Sales
-- Carter: This Administration has made America
the greatest purveyor of arms in history. We
have fueled arms races around the world, selling
billions of dollars worth of arms to virtaully
anyone who wants them; Saudi Arabia uses revenues
squeezed from Americans through high oil prices
to buy arms which may be used against Israel;
Iran does likewise, while both use the threat of
another oil embargo or price rise to blackmail
the U.S. to continue to sell; developing nations
in Latin America and elsewhere who would better
spend money on development are instead encouraged
to buy useless arms that only strengthen the
military establishment.
-- Response: The apparent compulsion of some in
America to punish those who stand with us and
are our friends is beyond understanding. If
it continues it can only weaken the resolve of
nations around the world to remain our friends
and allies.
- 6 -
Both Saudi Arabia and Iran, for example,
are strongly anti-Soviet; both have stood
firm against Communist adventurism in the
Middle East. Both nations pay cash for the
arms they buy; both have only bought items
they believe necessary for their defense.
The question of arms sales is, indeed, a
serious one. But it is not soluble by simple
answers or demagoguery. If the U.S. refuses
to sell arms that will not keep potential
purchasers from buying the arms they think
they need. It will simply mean that they
will buy from others, including the USSR, and
we will have lost our ability to influence
them along a moderate course.
The arms sales issue can only be resolved
by common agreement among all major suppliers
that limits will be placed on the amount every
nation will sell. Others are not yet ready to
make such an international commitment, but this
Administration will continue to examine how such
a solution might be negotiated and implemented.
4. Nuclear Proliferation
-- Carter: The U.S. has unwisely exported nuclear
technology and fuels under loose and ineffective
controls. We have also acted only hesitantly to
prevent others (e.g., France, the FRG) from
similar exports under even weaker controls. The
inevitable consequence will be other cases like
India, with ever more nations developing their
own nuclear weapons.
-- Response: It is ridiculous to charge that the
controls we maintain over the sale of nuclear
materials abroad are ineffective. On the
contrary, America's safeguards are the most
stringent in the world. And we are the strongest
advocate of strengthened international controls,
as well. But some other nuclear nations, seeing
export sales as a major source of revenue, have
not been so careful. The U.S. has opposed the
sale of nuclear technology and materials by
- 7 -
others when we considered the safeguards
inadequate; in some cases we have been
successful in preventing such sales.
Several months ago, I ordered a compre-
hensive study on the issue of nuclear prolifer-
ation and how we might bring the question of
technology and materials export under better
control. That study is now virtually complete
and I will announce its findings and recommenda-
tion soon. When we make that announcement we
will also propose a broad and far-reaching
program aimed at strengthening international
cooperation and control over nuclear exports.
We intend to pursue the negotiation of an
international agreement on this question
vigorously.
5. Human Rights
-- Carter: Under Nixon and Ford America has
strengthened its relationships with dictators
in Korea, Chile, Brazil, and elsewhere. Instead
of acting to force an end to political repres-
sion and torture, we provide arms, economic
assistance and moral support, making a mockery
of all America should stand for in the world.
-- Response: It is easy to posture and make public
statements about a dedication to human rights,
but it is another thing to do something concrete
about them. Our support for the Helsinki agree-
ment was because of its provisions regarding
greater freedom for Eastern Europeans, yet
Mr. Carter opposes that agreement. It is this
Administration that, through quiet pressure on
the Soviets, succeeded in raising Jewish emigra-
tion from the Soviet Union from a few hundred a
year to over 35,000 a year. And it was a
Democratic Congress that then enacted legislation
that led the Soviets to reduce that number sub-
stantially. It is this Administration that quietly
secured the release of at least 400 political
prisoners in Chile; it is this Administration that
has put quiet but effective pressure on the Govern-
ment of Korea to protect the rights of political
dissidents. Others have postured, but accomplished
nothing. In fact, those who constantly make a public
show of their concern for human rights often do the
cause they profess to serve great harm because their
public challenges make it more difficult for the govern-
- 8 -
ments we seek to influence to do what we
ask.
I will not accept the charge that we care
little about human rights around the world.
Rather, let us ask ourselves who has accom-
plished real results -- not who has made the
most noise.
6. The Third World
-- Carter: America's relations with the developing
nations have never been worse. Our aid is
grudging and inadequate; millions starve while
we channel most of our aid to dictators; the
U.S. is the object of frequent and violent
attack in the U.N., a measure of the state to
which our relations with the Third World have
sunk.
-- Response: American aid to the developing
nations is substantial and it is growing.
America is a generous nation -- in fact the
most generous in history. And we will continue
to aid the poor, the starving and the homeless.
But we cannot, by ourselves, correct all the
world's ills. We can do most by working with
nations that are themselves trying to change
the conditions under which their people live.
And we will not be pressured or blackmailed
into aiding those who constantly attack us or
demand that we do more. Our aid will be given
because it is the right thing to do, not because
it is being extorted from us.
7. Intelligence
-- Carter: Under Republican Presidents the CIA
and FBI have conducted illegal activities both
at home and abroad. The rights of Americans have
been violated; we have covertly overthrown
governments and sought to overthrow others; we
have sought, by covert means, to involve the U.S.
militarily in Angola; the Administration has
fought Congressional efforts to investigate and
- 9 -
reform the intelligence community, and
taken only those steps toward reform that
were forced upon it; we have used American
business to bribe foreign leaders, and in the
process American business has also been
corrupted.
-- Response: The violent attacks on the
Intelligence community over the past several
years are a great tragedy. Dedicated men
and women who have been part of the best
intelligence system in the world have been
unfairly attacked; the Congress has forced
public testimony about our intelligence
system that has probably given the Soviets
more information than they could ever have
gotten through other means; controls have
been imposed which greatly limit the ability
of our intelligence agencies to do their work;
sources of intelligence have dried up because
of the public circus we have conducted.
I have fought hard to maintain and protect
the intelligence community from unfair and
destructive attack. True, some unwise and
illegal activities did take place. They have
been corrected and will not happen while I am
President. But the American people know that
in today's world a competent intelligence service
is essential, and they know that the politically
motivated witch-hunt we witnessed over the past
year is both unfair and destructive.
All that is behind us now; our task is to
rebuild the CIA and the other intelligence
services while maintaining political control
over what they do. We have that control through
the reforms I announced earlier this year; we
also have a strong and capable intelligence
apparatus which I intend to see remains the
world's best.
8. The Middle East
-- Carter: This Administration has been insufficiently
concerned about Israel, as the recent arms sale to
GERALD
- 10 -
Saudi Arabia demonstrates. Our commitment
to Israel has been weakened, while we have
begun large aid programs to Egypt and Syria;
we maintain an intimate and costly relation-
ship with Saudi Arabia, despite the fact that
it and other Arab nations black list any U.S.
firm that violates their boycott of Israel;
our peace efforts in the Middle East have been
hesitant, have failed to bring peace (as
Lebanon shows), and have benefitted the Arab
states at the expense of Israel.
-- Response: What this Administration has
accomplished in the Middle East is a source
of pride to all Americans. For the first
time in almost 30 years the peace process is
at work there. Israel remains strong and free;
the U.S. has resumed diplomatic relations with
Egypt and Syria; two disengagement agreements
have been signed between Israel and Egypt; one
has been signed between Israel and Syria.
Much still remains to be done, but the
chances for a peaceful resolution of the tragic
Middle East conflict are better than ever before
in history. During 8 years of Democratic rule
America's influence in the Middle East fell to
an all-time low, while the Russians gained
greatly; during this Administration American
influence has reached an all-time high and the
chances for a lasting peace are better than ever
in history. Russian influence has been greatly
diminished; they have been kicked out of Egypt
and their bases there closed; they have lost
much of their influence over Syria; and their
efforts to prevent the peace process from
succeeding have totally failed. That is hardly
a record of American failure.
This Administration firmly opposes the Arab
boycott, but we know that public confrontation
will only make the Arab states intransigent. We
have worked quietly and effectively against the
boycott, as the growing number of American firms
that do business with Israel and the Arab states
demonstrates.
- 11 -
9. Africa
-- Carter: Recent efforts in Southern Africa
are praiseworthy, but woefully late. Frantic
efforts now to put the U.S. behind majority
rule would not have been necessary if
Kissinger had recognized years ago that a
war of independence was inevitable, and had
put American support behind the blacks then.
Now, it seems, we will have to spend millions
to buy the white Rhodesians out.
-- Response: Secretary Kissinger's recent efforts
in Southern Africa have, for the first time,
given hope that a peaceful solution to the
problem of Rhodesia is possible. He has
achieved a major breakthrough; it is now up
to the parties directly concerned, including
the UK, to reach a settlement on the basis of
the agreements already worked out. With good
will on all sides that is possible.
I will not debate whether something could
have been done sooner; that is an irrelevant
argument not subject to any proof. I believe
we acted at precisely the right time, when the
conditions were appropriate for our interven-
tion. But the basic point is that, as in the
Middle East, it is America that has broken the
stalemate and advanced the chances for a peaceful
solution; no amount of criticism, no degree of
damning with faint praise can change that fact.
A part of the peace settlement in Rhodesia
may well include an American contribution to an
aid fund for the new Rhodesian government. But
many other governments will join with us; we
will not be acting alone, nor will we give as
much as the others combined. We may well have
to bear some monetary burden, but the price will
not be great; and whatever the cost, it will be
worth it to prevent a race war in Africa that
would have inevitable and incalcuable consequences
for America.
THE PRESIDENT'S POSITION ON PROLIFERATION
When the President took office, the United States had
three ways of dealing with nuclear proliferation and pre-
venting the spread of plutonium:
-- no U.S. export of reprocessing facilities
-- support for Non-Proliferation Treaty
-- support of International Atomic Energy Agency Safe-
guards Program
Since taking office, he has expanded enormously U.S. efforts:
-- bilateral pressure on those who would acquire plutonium
facilities elsewhere
South Korea
Taiwan
-- much greater financial commitment to research in
U.S. and International Atomic Energy Agency to develop
ways of detecting diversion of plutonium.
-- multilateral cooperation to develop common guidelines
for all nuclear suppliers.
-- London Suppliers Conference, beginning April, 1975,
produced new, tougher guidelines on all nuclear exports.
U.S. has adopted as interim policy.
-- comprehensive review (Fri report) begun summer '76
to review entire U.S. stance toward plutonium:
question assumption whether use of plutonium
is either necessary or desirable.
2
As a result of Fri report, President has made decisions
dramatically changing U.S. stance toward use of plutonium:
-- it is not certain that plutonium use is either
necessary or desirable;
-- before we or others commit to it, it is necessary
to establish that the material can be handled in
such a way as to ensure both safety and non-proliferations.
-- calls for a three-year worldwide moratorium on export
of all reprocessing facilities;
-- for those countries which do produce plutonium, to
put it in the custody of the International Atomic
Energy Agency.
-- U.S. initiative to undertake agreements restricting
reprocessing and plutonium use;
-- development of financial and technical alternatives
to use of plutonium until and unless its safety is
assured.
10/4/76
REBUTTAL - NUCLEAR PROLIFERATION
Mr. Carter's remarks on nuclear proliferation suggest that
he has not followed what has been happening in U. S. foreign
policy and he does not know how an effective foreign policy is
made.
His claim that the proliferation issue has been ignored is
flatly wrong. Shortly after I took office I became concerned that
some other nations, eager to improve their nuclear buiness, were
enhancing their competitive position by offering customers easy access
to plutonium. As a nation, we had three choices:
-- compete along with them. But if we did, the world
would become an even more dangerous place than it is
today;
--issue a unilateral declaration like Mr. Carter has proposed
announcing that we did not like what was happening and
threatening other countries with seantions they could easily
avoid or ignore;
--Finally, we could take the initiative to eliminate this
dangerous form of competition once and for all on a world-wide
base.
I choose this third course. As a direct result of our efforts, the first
Nuclear Suppliers Conference convened in London in April 1975.
- 2 -
That conference has met six times and the seven nations have agreed
to a much tigher set of guidelines on nuclear exports. I directed
that as an interim step, the U. S. adopt these guidelines as
our policy.
But I was not satisfied that we had done all in our power to effectively
prevent nuclear proliferation. Last summer, therefore, I called
for a complete review of our policy toward plutonium both here and
abroad. That review was completed a month ago. I have made my
decisions. We are now in the process of ensuring that we get the
kind of international cooperation necessary to make an effective
worldwide policy.
Unlike Mr. Carter, I cannot be content with settling for a speech
which sounds good at home but makes no difference abroad. In the
area of nuclear proliferation this issparticularly true. The blunt
fact is that there are other nations who have the technology, the
resources and the will to supply nuclear materials no matter what we
do or say. In order to stop proliferation we must get the cooperation
of all of those nations. We won't get that cooperation by issuing
unilateral declarations. We have gotten it, and we will continue to get
it, by developing wise policies, and by pursuing those policies through
a course of quite, firm and patient negotiation.
COPY OF TELEGRAM SENT TODAY
TELEGRAM
October 6, 1976
The Honorable Thomas E. Morgan
Chairman
House Committee on International Relations
Washington, D.C.
Dear Mr. Chairman:
As Ranking Republican on the Subcommittee on International
Political and Military Affairs, I strongly object to
release without my knowledge of the Mayaguez report by
Committee staff one day before October 6 debate
between President Ford and Governor Carter.
Headlines from Committee Report stating "GAO criticizes
Administration handling of Mayaguez Crisis" reeks of
political partiality. According to the staff at the
printing office of the House International Relations
Committee, the material was sent to GPO on September 22,
1976, page proofs were returned on Friday, October 1, 1976,
the day Congress adjourned.
Page proofs were ostensibly made available to Members
of the Subcommittee on Monday, October 4, when Congress
had left Washington. At about the same time Monday,
the Subcommittee purportedly gave approval to the GPO
to print the report. Even HIRC printing office staff
had no opportunity to read the page proofs for errors.
On Tuesday, October 5, 1976, 100 copies of the hastily
printed report were released to the press. It is clear
that a decision was made to release the report on
October 5 without regard for normal courtesies to
colleagues and coworkers.
Ask that you investigate recent telephone calls by
Subcommittee Chairman and/or staff to and from Plains,
Georgia, and Carter for President National Headquarters.
I regret that a serious incident such as Mayaguez has
been deceitfully used to influence the Presidential
campaign. I am hoping you will respond to my request in
the very near future, and in fairness to all concerned I
am sending a copy of this telegram to the President.
Most sincerely,
Larry Winn, Jr., M. C.
Ranking Republican, Subcommittee on
International Political and Military Affairs
CRUDE OIL IMPORTS, BY SOURCE
FROM
PERCENT OF TOTAL IMPORTS
TOTAL OPEC
84%
TOTAL OAPEC
42%
SAUDI ARABIA
21%
IRAN
7%
NOTE: Iran has historically pushed for higher oil prices.
THE PRESIDENT HAS SEEN
CONGRESSIONAL SCORECARD
PRESIDENT'S BILLS PASSED
&
CONGRESSIONAL ADDITIONS
BILLS REMAINING
EPCA: x STRATEGIC RESERVES
NATURAL GAS DEREGULATION
STANDBY AUTHORITIES
NATURAL GAS EMERGENCY
COAL CONVERSION
AUTHORITY
APPLIANCE LABELING
SYNTHETIC FUELS COM-
AUTO EFFICIENCY STANDARDS
MERCIALIZATION
X
PRICE CONTROL PHASEOUT
INSULATION TAX CREDIT
COAL LOAN GUARANTEES
ALASKAN GAS TRANSPORTATION
STATE CONSERVATION PROGRAMS
NUCLEAR LICENSING
NUCLEAR FUEL ASSURANCE
ECPA:
BUILDING STANDARDS
CLEAN AIR ACT
WEATHERIZATION
ENERGY INDEPENDENCE
CONSERVATION LOAN GUARANTEES
AUTHORITY
UTILITY RATE STRUCTURE DEMO.
ENERGY FACILITIES SITING
INSULATION DEMO. PROGRAM
UTILITY TAX INCENTIVES
UTILITY REGULATORY REFORM
OTHER: & NAVAL PETROLEUM RESERVES
OIL SPILL LIABILITY
COASTAL IMPACT ASSISTANCE
URANIUM ENRICHMENT
ERDA ORGANIZATION
IMPACT ASSISTANCE
PRESIDENT'S BILLS PASSED
&
CONGRESSIONAL ADDITIONS
EPCA:
STRATEGIC RESERVES -- establishes storage of at least 150 million
barrels of petroleum within 3 years and up to 1 billion barrels
in seven years.
STANDBY AUTHORITIES -- provides the authorities necessary to deal
with severe energy emergencies, including foreign supply interruptions,
that may arise in the future.
COAL CONVERSION -- permits the conversion of oil and gas fired utility
and industrial boilers to coal.
APPLIANCE LABELING -- requires appliance manufacturers to provide
energy efficiency information to consumers.
AUTO EFFICIENCY STANDARDS -- mandatory standards for average fuel
economy is set at 18 m.p.g. for model year 1978, gradually increasing
to 27.5 m.p.g. in 1985.
PRICE CONTROL PHASEOUT -- the average price for all domestic crude
oil was subject to a composite price limit of $7.66, which is being
adjusted upward during the 40 month period specified in the law. The
mandatory control program converts automatically to a discretionary
program at the end of 40 months. Additionally, price and allocation
controls relating to wholesalers and retailers are being eliminated
as quickly as possible in accordance with the law.
COAL LOAN GUARANTEES -- provides financial assistance to companies
opening new coal mines that cannot obtain credit from private markets.
STATE CONSERVATION PROGRAMS -- to assist in the development and implementation
of energy conservation programs.
ECPA:
BUILDING STANDARDS -- requires HUD to develop and promulgate thermal
efficiency standards for all new residential and commercial buildings.
STRIPPER WELLS -- exempts stripper wells from price controls.
WEATHERIZATION -- authorizes a three year, $200 million weatherization
grant program for the insulation of homes of low-income, elderly, and
handicapped persons, and Indian tribes.
CONSERVATION OBLIGATION GUARANTEES -- authorizes up to $2 billion
in obligation guarantees for conservation investments by industry,
small business, and non-profit institutions, provided conservation
investments would pay off and applicants satisfy a credit elsewhere
test.
UTILITY RATE STRUCTURE INITIATIVES -- requires the FEA to develop
proposals for the improvement of electric utility rate design.
ENERGY CONSERVATION AND RENEWABLE RESOURCE DEMONSTRATION -- establishes
a demonstration program to test various mechanisms (grants, low
interest loans, interest subsidies, etc.) for encouraging energy
conservation improvements or use of renewable resources, such as
solar heating or cooling, in existing residential buildings.
OTHER:
NAVAL PETROLEUM RESERVES -- authorizes the full development of NPR's
1, 2, and 3 in the lower-48 States, and exploration of NPR-4 in Alaska,
leading to its eventual development.
COASTAL IMPACT ASSISTANCE --authorizes a coastal energy impact
program with funds of $1.2 billion over the next 10 years to help
coastal States and communities that are affected by the exploration
and production of oil and gas from the OCS.
ERDA ORGANIZATION -- consolidated Federal activities relating to
research and development on the various sources of energy and on
the efficiency and reliability in the use of energy.
New FEA Import Outlook: 1985
million barrels/day
15
Had No
Action Been
Taken
10
Existing
Programs
5
President's-
Entire
Program
0
Oct. 1, 1976
RESPONSE TO A GENERALIZED QUESTION
ON INTERNATIONAL ECONOMIC POLICY
I have developed a close personal rapport with the
heads of governments of our major industrial trading
partners. We have had continuous discussions on economic
issues before, between and subsequent to, our economic
summits at Rambouillet and Puerto Rico. We all recognize
that our prosperities are mutual and reinforcing, and
hence, our self interest requires the cooperation that
we have so successfully created.
In late June, for example, I invited to Puerto Rico
the heads of governments of Canada, France, Germany, Italy,
Japan and the United Kingdom to improve our mutual under-
standing of our respective economic policies and to intensify
our cooperation in a number of areas. We recognized (from
the summit declaration) " The interdependence of our
destinies makes it necessary to approach common economic
problems with a sense of common purpose and to work
toward mutually consistent economic strategies through
better cooperation." We further agreed that, "
Our
determination in recent months to avoid excessive
stimulation of our economies and new impediments to trade
and capital movements has contributed to the soundness
and breadth of this recovery
Sustained economic expansion
and the resultant increase in individual well-being cannot
be achieved in the context of high rates of inflation. "
MAJORITY RULE IN RHODESIA
c.
The Wall Street Journal asks that you explain what
you would be prepared to do with your scheme for majority
rule in Rhodesia to protect whites if Rhodesia should
turn into a black dictatorship?
A.
I would simply ask the Wall Street Journal what
they would have the United States do when, assuming
we had not taken our initiatives for a peaceful settlement,
the whites faced expulsion or annihilation in a brutal
guerrilla war.
Our plan provides an incentive for the
whites to stay and a credible guarantee of their substantial
investment.
SUBSIDIZING NUCLEAR REPROCESSING
a.
The Wall Street Journal today accuses you of participating
in a $1 Billion bailout of Allied Chemical under the
guise of non-proliferation. Would you comment?
A.
The Wall Street Journal is misinformed. The
Allied Chemical plant referred to is a separation plant.
U.S. funding for that plant is not contemplated. In
addition to that plant, however, nuclear fuel reprocessing
also requires additional plants for processing the separated
plutonium, for refabricating it into fuel rods, and for
nuclear waste disposal. It is for those plants, not the
Allied plant, that U.S. Government funds are required.
SOVIET NUCLEAR TESTS
3.
The Wall Street Journal accuses you of ignoring the
recent Soviet nuclear tests in violation of recently
signed test limitation treaties. Would you comment?
A.
While those treaties are not yet in effect,
we have vigorously made knownto the Soviets our strong
feeling that testing which might have exceeded the
prospective treaty test limits was a breach of faith.
But the key point in this issue is that the
Congress should act to ratify the two treaties. They
were submitted to the Senate, one in May and one in
July and yet the Congress adjourned without acting
on them.
ARAB BOYCOTT
::
Governor Carter has charged that your Administration has shown
a lack of moral leadership in not supporting legislative efforts
to combat the Arab boycott. There are many who believe that your
Administration worked with certain members of Congress to kill the
Export Administration Act extension and its anti-boycott provi-
sions. Wasn't this a cynical move designed to win votes? Do we
have a moral view of the matter?
A:
I am tired of the misleading statements on this issue. Let's
take a look at the facts relating to the boycott and our responses
to it.
The facts are that the international boycott has been in effect
since 1952. No one had taken any comprehensive action against
it before I, in November 1975, issued a series of orders to
government agencies to counteract any foreign boycott activity
which would have the effect of discriminating against American
citizens as a result of their race, color, national origin, reli-
gion, sex or age.
In addition, the Justice Department earlier this year filed
a historic antitrust suit against an American company charging it
with illegally refusing to deal with other American companies
in furtherance of a boycott agreement.
Earlier this week I signed the Tax Reform Act which includes
tax penalties against American companies which comply with the
boycott.
Finally, I proposed a solution to the Congress two weeks
ago, when it was deadlocked over new anti-boycott legislation.
In light of Congress' inability to act, I will direct the
Commerce Department to strengthen its regulations to make public
-2-
boycott information forms filed with it by American companies.
Disclosure of these reports will enable the American public
to assess the impact of the boycott and to monitor the conduct
of American firms.
I think the record clearly shows the thorough and compre-
hensive nature of my efforts. But we must remember that
ultimately it is peace in the Middle East that will solve the
problem.
SALT VIOLATIONS
Q:
The WSJ claims that SALT negotiations are sidetracked by problems
of compliance with SALT I. Is that true?
A:
There is absolutely no connection between our discussions
with the Soviet Union over compliance with SAL Interim Agreement
and the pace of our negotiations on a new SAL Agreement. The
two sides understood that in anything so complex and technical
as SAL there would be questions of compliance ,and a special
commission was set up to deal with these questions. That system
has been operating satisfactorily.
GERALD
CHINESE NUCLEAR TEST FALLOUT
Q:
We have been receiving reports of fallout in several states from
the recent Chinese nuclear test. What can the U.S. do about
this problem? Wouldn't Mr. Carter's moratorium proposal take
care of the problem?
A:
The U.S. has been for years the leader in seeking solutions to
the problem of nuclear tests and nuclear fallout. A treaty with
the Soviet Union to ban atmospheric nuclear tests was signed in 1963.
Last summer I sent to the Senate two additional treaties
which limit the size of underground tests and provide verification
safeguards. When we see the results of these treaties in practice,
we will be prepared for further steps.
The Peoples Republic of China, however, has thus far
adamantly refused to participate in any of these treaties. We
will continue to press the Chinese on these issues. But since
they thus far have adamantly refused even to move their testing
underground, they can hardly be expected to agree to a moratorium.
Even a moratorium however must include reliable means of verifica-
tion a point Mr. Carter apparently does not understand. We
intend to continue our efforts toward further test limitations.
F
I have ordered a study of any possible hazards resulting from the
fallout from the Chinese explosion.
FOREIGN BOYCOTTS AND DISCRIMINATION
February 22, 1975: The President said at a Hollywood, California
press conference on reports of discrimination on religious or ethnic
grounds in the international banking community: "There should be no
doubt about the position of this Administration and the United States.
Such discrimination is totally contrary to the American tradition and
repugnant to American principles. " This statement of policy was
followed up by action.
February 24, 1975: Comptroller of the Currency James Smith
issued a bulletin to all national banks stating that "discrimination based
on religious affiliation or racial heritage is incompatible with the public
service function of a banking institution in this country.' "
March 4, 1975: The President instructed each of the appropriate
Cabinet members to do his or her utmost to insure that, in relation
to foreign boycotts, all allegations of attempted discrimination against
institutions or individuals on religious or ethnic grounds be fully
investigated and that appropriate action be taken in the event that the
investigations uncover discriminatory acts. The Office of White House
Counsel was directed to receive Agency replies to the March 4 instruction,
utilizing these as the basis for a major study leading to recommendations
for additional action to deal effectively with various aspects of foreign
boycotts and related discrimination on the basis of religion or national
origin.
March 10, 1975: The Secretary of Labor issued a Memorandum
to the heads of all USG agencies that contractors and subcontractors
of the Federal Government who contract for work outside of the United
States may not refuse to employ anyone because of religion or national
origin regardless of the country in which the work is to be performed
or the person for whom it is to be performed.
September 25, 1975: The Commerce Department made it mandatory
rather than optional for United States firms to inform Commerce whether
or not they had complied with requests from foreign governments for
information on boycott-related matters.
GERALD FORD
-2-
congress individual Destroyal
November 20, 1975: The President announced a package of
proposals, including eight specific decisions, to insure that American
citizens and firms will be fully protected from any discrimination on
the basis of race, color, religion, national origin or sex that might
arise from foreign boycott practices. This was the result of the study
earlier directed to review existing Federal legislation and regulations
covering possible discrimination against American citizens or firms
as a result of economic policies or practices of certain foreign
governments. The Departments of State, Treasury, Defense, Justice,
Labor, Commerce and Agriculture participated in the review as well
as AID, the Civil Service Commission, Export-Import Bank and the
Council for International Economic Policy, NSC and OMB.
The decisions were:
1. -- The President signed a Directive to the Heads of all
Departments and Agencies which states that the application of
Executive Order 11478 and relevant statutes forbids any Federal
Agency in making selections for overseas assignments, to take
into account in making that assignment any exclusionary policies
of a host country based upon race, color, religion, national origin,
sec or age.
2. -- The President instructed the Secretary of Labor to issue
an amendment to hi S Department's March 10, 1975 Secretary's
Memorandum which will require Federal contractors and sub-
contractors that have job applicants or present employees applying
for overseas assignments to inform the Department of State of any
visa rejections based on the exclusionary policies of a host country
and the Department of State will attempt, through diplomatic channels
to gain entry for those individuals. (Directive issued 11/21).
3. -- The Administration will propose legislation to prohibit
a business enterprise from using economic means to coerce any
person or entity to discriminate against any U.S. person or entity
on the basis of race, color, religion, national origin or sex.
(Economic Coercion Act of 1975 subsequently sent to the Congress).
-3- -
4. -- The President exercised his discretionary authority under
the Export Administration Act to direct the Secretary of Commerce
to amend the Acts regulations to:
(a) Prohibit U.S. exporters and related service organi-
zations from answering or complying in any way with
boycott requests that would cause discrimation against
U.S. citizens or firms on the basis of race, color, religion,
sex or national origin; and
(b) Require related service organizations that become
involved in any boycott request to report such involvement
directly to the Department of Commerce. Related service
organizations are defined to include banks, insurers,
freight forwarders and shipping companies that become
involved in any way in a boycott request to an export
transaction from the U.S. (Regulations amended effective
December 1).
5. -- The President has stated that hi S Administration will
not tolerate discriminatory commercial banking practices or
policies based upon the race or religious belief of any customer
stockholder, employee, officer or director of a bank and that
such practices or policies are incompatible with the public service
function of a banking institution in the country.
6. -- The Administration will support legislation to amend the
Equal Credit Opportunity Act, which presently covers sex and
marital status, to include prohibition against any creditor
discriminating on the basis of race, color, religion or national
origin against any credit applicant in any aspect of a credit
transaction. (This legislation was passed and signed by the
President this year. )
7. -- In regard to the investment banking industry, the President:
(a) Commended the U.S. investment banking community
for resisting the pressure of certain foreign investment
bankers to force the exclusion from financing syndicates
of some investment banking firms on a discriminatory basis;
-4-
(b) Urged the SEC and NASD to take whatever action
they deem necessary to insure that discriminatory
exclusion is not tolerated and that non-discriminatory
participation is maintained. (SEC issued an SEC release
on that day.)
8. -- The President endorsed the position of the Department of
Justice that the refusal of an American firm to deal with another
American firm in order to comply with a restrictive trade practice
by a foreign country raises serious questions under the U.S. anti-
trust laws and possible violations shall be investigated.
November 26, 1975: The Secretary of Commerce ordered that
documents on trade opportunities known to contain boycott conditions
imposing restrictive trade practices against friendly countries friendly
with the U.S. would no longer be disseminated or made available for
inspection. The Department of State instructed all Foreign Service
posts not to forward information on trade opportunities containing
boycott provisions.
December 12, 1975: The Board of Governors of the Feder al
Reserve sent a letter to 5, 800 banks in the system warning against
possible involvement in foreign boycott practices.
January 16, 1976: The Department of Justice filed a civil
anti-trust suit against Bechtel Corporation and four of its subsidiaries
or affiliates for their refusal to deal with U.S. subcontractors black-
listed by Arab League countries. The suit charged Bechtel with
violation of Section 1 of the Sherman Anti-trust Act.
April 29, 1976: The Secretary of Commerce directed that
all charging letters alleging violations of the Export Administration
regulations relating to the boycott be made public.