23 Sep 1976

Good evening. I'm Edwin Newman, moderator of this first debate of the 1976 campaign between Gerald R. Ford of Michigan, Republican candidate for president, and Jimmy Carter of Georgia, Democratic candidate for president. We thank you, President Ford and we thank you, Governor Carter, for being with us tonight. There are to be three debates between the presidential candidates and one between the vice-presidential candidates. All are being arranged by the League of Women Voters Education Fund. Tonight's debate, the first between presidential candidates in sixteen years and the first ever in which an incumbent president has participated, is taking place before an audience in the Walnut Street Theater in Philadelphia, just three blocks from Independence Hall. The television audience may reach a hundred million in the United States and many millions overseas. Tonight's debate focuses on domestic issues and economic policy. Questions will be put by Frank Reynolds of ABC News, James Gannon of the Wall Street Journal, and Elizabeth Drew of the New Yorker magazine. Under the agreed rules the first question will go to Governor Carter. That was decided by the toss of a coin. He will have up to three minutes to answer. One follow-up question will be permitted with up to two minutes to reply. President Ford will then have two minutes to respond. The next question will go to President Ford with the same time arrangements, and questions will continue to be alternated between the candidates. Each man will make a three-minute statement at the end, Governor Carter to go first. President Ford and Governor Carter do not have any notes or prepared remarks with them this evening. Mr. Reynolds, your question for Governor Carter.

Yes. First of all is to recognize a tremendous economic strength in this country and to set the putting to - back to work of our people as a top priority. This is uh - an effort that ought to be done primarily by strong leadership in the White House, the inspiration of our people, the tapping of uh - business, agriculture, industry, labor and government at all levels to work on this uh project. We'll never have uh - an end to the inflationary spiral, and we'll never have a balanced budget until we get our people back to work. There are several things that can be done specifically that are not now being done. First of all, to channel research and development funds into areas that will provide uh large numbers of jobs. Secondly, we need to have a commitment in the uh private sector uh - to cooperate with government in matters like housing. Here a very small investment of taxpayer's money - in the housing field can bring large numbers of extra jobs, and the guarantee of mortgage loans, and the uh - putting forward of uh - two-0-two programs for housing for older people and so forth to cut down the roughly 20 percent unemployment that now exists in the - in the construction industry. Another thing is to deal with our - uh needs in the central cities, where the unemployment rate is extremely high: sometimes among minority groups, or those who don't speak English, or who're black, or young people, or - 40 percent of the employment. Here a CCC type program would be appropriate to channel money into the ah - cha- in - in into the sharing with the private sector and also local and state governments to employ young people who are now out of work. Another very important - uh aspect of our - uh economy would be to increase production in every way possible, uh to hold down - uh taxes on individuals, and to uh shift the tax burdens onto those who have avoided paying taxes in the past. These uh - kinds of specific things, uh none of which are being done now, would be a great help in - in reducing uh unemployment. There is uh - uh an additional factor that needs to be done and covered very - very succinctly, and that is, to make sure that we have a good relationship between management - business on the one hand, and labor, on the other. In a > Transfer interrupted! ery high, we might channel specific uh targeted job - job - uh opportunities by paying part of the salary of unemployed people - uh and also sharing with uh - local governments the uh - payment of salaries which would uh - let us cut down the unemployment rate much lower, before we hit the inflationary level. But I believe that by the end of the first four years of uh - of the next term we could have the unemployment down to 3 percent adult unemployment, which is about uh - 4 to 4 and a half percent overall uh controlled inflation rate and have a uh balance of growth of about - uh 4 to 6 percent, around 5 percent which would give us a balanced budget.

Yes, in unemployment that is likely to create additional pressure on prices, how willing are you to consider an incomes policy, in other words, wage and price controls?

Well - we now have such uh - a low utilization of uh - our productive capacity - uh about 73 percent; I think it's about the lowest since the Great Depression years - and such a high unemployment rate now - uh 7.9 percent - that - uh we have a long way to go in getting people to work before we have the inflationary pressures. And I think this would uh - this would be uh easy to accomplish, to get jobs down, without having strong in- inflationary pressures that - that would be necessary. I would not favor the uh - payment of uh - of a given fixed income to people unless they are not able to work. But with tax incentives for the low-income groups we could build up their uh - income levels uh - above the poverty level and not uh make welfare more uh - profitable than - than work.

I don't believe that uh that Mr. Carter's been any more specific in this case than he has been on many other instances. I notice particularly that he didn't endorse the Humphrey-Hawkins bill which he has on occasions and which is included as a part of the Democratic platform. That legislation uh allegedly would help our unemployment, but uh - we all know that it would've controlled our economy, it would've added uh - ten to thirty billion dollars each year in additional expenditures by the Federal Government. It would've called for export controls on agricultural products In my judgment the best way to get jobs is to uh - expand the private sector, where five out of six jobs today exist in our economy. We can do that by reducing Federal taxes as I proposed uh - about a year ago when I called for a tax reduction of $28 billion - three-quarters of it to go to private uh taxpayers and uh one-quarter to the business sector. We could add to jobs in the major metropolitan areas by a proposal that I recommended that would give tax incentives to business to move into the inner city and to expand or to build new plants so that they would take a plant, or expand a plant where people are, and people are currently unemployed. We could uh - also uh - help our youths with some of the proposals that uh - would give to young people an opportunity to work and learn at the same time just like we give money to young people who are going to college. Those are the kind of specifics that I think we have to discuss on these uh - debates, and these are the kind of programs that I'll talk about on my time.

Mr. President, I would like to continue for a moment on this uh question of taxes which you have just raised. You have said that you favor more tax cuts for middle-income Americans - even those earning up to $30 thousand a year. That presumably would cost the Treasury quite a bit of money in lost revenue. In view of the very large budget deficits that you have accumulated and that are still in prospect, how is it possible to promise further tax cuts and to reach your goal of balancing the budget?

Mr. President, to follow up a moment, uh - the Congress has passed a tax bill which is before you now, which did not meet exactly the uh - sort of outline that you requested. What is your intention on that bill, uh - since it doesn't meet your - your requirements? Do you plan to sign that bill?

Governor Carter, your response.

Mrs. Drew, your question to Governor Carter.

Well, as a matter of fact there is. If we assume the ah - uh - a rate of growth of our economy, equivalent to what it was during President Johnson, President Kennedy, even before the - the - the - uh wa uh - Vietnese- namese War, and if we assume that at the end of the four-year period we can cut our unemployment rate down to 4 to 4 and a half percent - under those circumstances, even assuming no elimination of unnecessary programs and assuming an increase in the ad- in the allotment of money to finance programs, increasing as the inflation rate does - my economic projections, I think confirmed by the House uh - and the Senate committees, have been with the $60 billion extra amount of money that can be spent in fiscal year '81 which will be the last year of this next term. Within that sixty-billion dollars increase there would be fit the programs that I promised the American people. I might say too, that - that if we see that these goals cannot be reached - and I believe they're reasonable goals - then I would cut back on the rate of implement- implementation of new programs in order to accommodate a balanced budget by fiscal year '81 which is the last year of the next term. I believe that we ought to have a balanced budget during normal economic circumstances. And uh - these projections have been very carefully made. I stand behind them. And if they should be in error slightly on the down side, then I'll phase in the programs that we've uh - advocated, more slowly.

Well, the uh - the assumption that - that you uh - have described as different is in the rate of growth of our economy.

I believe that it's accurate to say that - that the - that the committees to whom you refer with the - the employment that you uh - state, and with the 5 to 5 and a half percent growth rate in our economy, that the uh - projections would be a uh - a $60 billion increase in the amount of money that we'd have to spend in l981 compared to now. And uh - with that uh - in that framework would befit the - any improvements in the programs. Now this does not include uh - any uh - uh extra control over uh unnecessary spending, the weeding out of obsolete or obsolescent programs. Uh - we'll have uh - a safety version built in with complete reorganization of the executive branch of government which I am pledged to do. The present bureaucratic structure of the - of the Federal Government is a mess. And if I'm elected president that's gonna be a top priority of mine to completely revise the structure of the federal government, to make it economical, efficient, purposeful and manageable for a change. And also, I'm going to institute zero-based budgeting which I used four years in Georgia, which uh - assesses every program every year, and eliminates those programs that are obsolete or obsolescent. But with these projections, we will have a balanced budget by fiscal year 1981, if I'm elected president. Keep my promises to the American people. And it's just predicated on very modest, but I think accurate, projections of employment increases and uh - a growth in our national economy equal to what was experienced under Kennedy, Johnson, before the Vietnam War.

If it is uh true that there will be a $60 billion surplus by fiscal year 1981, rather than spend that money for all the new programs that Governor Carter recommends and endorses, and which are included in the Democratic platform, I think the American taxpayer ought to get an additional tax break - a tax reduction of that magnitude. I feel that the taxpayers are the ones that need the relief: I don't think we should add additional programs of the magnitude that Governor Carter talks about. It seems to me that our tax structure today has rates that are too high. But I am uh - very glad to point out that since 1969, during a Republican administrations, we have had ten million people taken off of the tax rolls at the lower end of the taxpayer area. And at the same time, assuming that I sign the tax bill that was mentioned by Mr. Gannon, we will in the last two tax bills have increased the minimum tax on all wealthy taxpayers. And I believe that by eliminating ten million taxpayers in the last uh eight years, and by putting a heavier tax burden on those in the higher tax brackets, plus the other actions that've been taken uh - we can give taxpayers adequate tax relief. Now it seems to me that uh - as we look at the recommendations of the budget committees and our own projections, there isn't going to be any $60 billion dividend. I've heard of those dividends in the past; it always happens. We expected one at the time of the Vietnam War, but it was used up before we ever ended the war and taxpayers never got the adequate relief they deserved.

Mr. President, when you came into office you spoke very eloquently of the need for a time for healing, and very early in your administration you went out to Chicago and you announced, you proposed a program of uh case-by-case pardons for draft resisters to restore them to full citizenship. Some fourteen thousand young men took advantage of your offer, but another ninety thousand did not. In granting the pardon to former President Nixon, sir, part of your rationale was to put Watergate behind us to - if I may quote you again - truly end our long national nightmare. Why does not the same rationale apply now, today, in our Bicentennial year, to the young men who resisted in Vietnam, and many of them still in exile abroad?

I take it then, sir, that you do not believe that uh - it is - that you are going to reconsider and uh - think about those ninety thousand who are still abroad. Uh - have they not been penalized enough - many of 'em been there for years?

Governor Carter.

Mr. Gannon.

Well, I've been through this before, Mr. Gannon, as the governor of Georgia. When I took aver we had uh a bureaucratic mess, like we have in Washington now, and we had three hundred agencies, departments, bureaus, commissions - uh some uh - fully budgeted, some not, but all having responsibility to carry out that was in conflict. And we cut those three hundred - uh agencies and so forth down substantially. We eliminated two hundred and seventy-eight of them. We set up a simple structure of government that could be administrated fairly and it was a - a tremendous success. It hasn't been undone since I was there. It resulted also in an ability to reshape our court system, our prison system, our education system, our mental health programs and - and a clear assignment of responsibility and - and authority and also to have uh our people once again understanding control our government. I intend to do the same thing if I'm elected president. When I get to Washington, coming in as an outsider, one of the major responsibilities that - that I will have on my shoulder is a complete reorganization of the - of the executive branch of government. We now have uh - a greatly expanded White House staff. When Mr. Nixon went in office, for instance, we had three and a half million dollars spent on - on the White House and its staff. That has escalated now to sixteen and a half million dollars, in the last uh Republican administration. This needs to be changed. We need to put the responsibilities back on the cabinet members. We also need to have a great reduction in agencies and programs. For instance, we now have uh - in the health area three hundred and two different programs administered by eleven major departments and agencies, sixty other advisory commissions responsible for this. Medicaid's in one agency; Medicare is in a different one. The - the check on the quality of health care is in a different one. None of them uh are responsible for health care itself. This makes it almost impossible for us to have a good health program. We have uh - just advocated uh - this past week a consolidation of the responsibilities for energy. Our country now has no comprehensive energy program or policy. We have twenty different agencies in the federal government responsible for the production, the regulation, the uh - information about energy, the conservation of energy, spread all over government. This is a - a gross waste of money, so tough, competent management of government, giving us a simple efficient purposeful and manageable government would be a great step forward and if I'm elected - and I intend to be - then it's gonna be done.

I can't say for sure that we would have fewer federal employees when I go out of office than when I come in. It took me about three years to completely reorganize the Georgia government. The last year I was in office uh - our budget was - was actually less than it was a year before, uh which showed a great uh improvement. Also, we had a - a 2 percent increase in the number of employees the last year. But it was a tremendous shift from administrative jobs into the delivery of services. For instance, we uh - completely revised our prison system. We established eighty-four new mental health treatment centers. And we shifted people out of administrative jobs into the field to deliver better services. The same thing will be done uh - at the federal government level. I - I accomplished this with s - substantial reductions in employees in some departments. For instance, in the Transportation Department uh we had uh - we cut back about 25 percent of the total number of employees. In giving our people better mental health care, we increased the number of employees. But the efficiency of it, the simplicity of it, the uh ability of people to understand their own government and control it was a - was a uh - substantial benefit derived from complete reorganization. We uh - have got to do that at the federal government level. If we don't, the bureaucratic mess is going to continue. There's no way for our people now to understand what their government is. There's no way to get the answer to a question. When you come to Washington to try to - as a governor - to try to begin a new program for your people, like uh the treatment of drug addicts, I found there were thirteen different federal agencies that I had to go to, to manage the uh drug treatment program. In the Georgia government we only had one agency responsible for drug treatment. This is the kind of change that would be made. And uh - it would be of - of tremendous benefit in long-range planning, in tight budgeting, uh saving the taxpayers' money, making the government more efficient, cutting down on bureaucratic waste, having a clear delineation of authority and responsibility of employees, and giving our people a better chance to understand and control their government.

I think the record should show, Mr. Newman, that uh - the Bureau of Census - we checked it just yesterday - indicates that uh - in the four years that uh - Governor Carter was governor of the state of Georgia, uh - expenditures by the government went up over 50 percent Uh - employees of the government in Georgia during his term of office went up over 25 percent; and the figures also show that the uh, uh - bonded indebtedness of the state of Georgia during his governorship went up over 20 percent. And there was some very interesting testimony given by Governor Carter's successor, Governor Busby, before a Senate committee a few uh - months ago on how he found the Medicaid program when he came into office following Governor Carter. He testified, and these are his words - the present governor of Georgia - he says he found the Medicaid program in Georgia in shambles. Now let me talk about what we've done in the White House as far as federal employees are concerned The first order that I issued after I became president was to cut or eliminate the prospective forty-thousand increase in federal employees that had been scheduled by my predecessor. And in the term that I've been president - some two years - we have reduced federal employment by eleven thousand. In the White House staff itself, when I became president, we had roughly five hundred and forty employees. We now have about four hundred and eighty-five employees, so we've made a rather significant reduction in the number of employees on the White House staff working for the president. So I think our record of cutting back employees, plus the failure on the part of the Governor's programs to actually save employment in Georgia, shows which is the better plan.

Mr. President, at Vail, after the Republican convention, you announced that you would now emphasize five new areas; among those were jobs and housing and health and improved recreational facilities for Americans. And you also added crime. You also mentioned education. For two years you've been telling us that we couldn't do very much in these areas because we couldn't afford it; and in fact we do have a $50 billion deficit now. In rebuttal to Governor Carter a little bit earlier, you said that if there were to be any surplus in the next few years you thought it should be turned back to the people in the form of tax relief. So how are you going to pay for any new initiatives in these areas you announced at Vail you were going to now stress?

Sir, in the next few years would you try to reduce the deficit, would you spend more money far these programs that you have just outlined, or would you, as you said earlier, return whatever surplus you got to the people in the form of tax relief?

Governor Carter.

Mr. Reynolds.

Well among my other experiences in the past, I've - I've been a nuclear engineer, and did graduate work in this field. I think I know the - the uh capabilities and limitations of atomic power. But the energy - uh policy of our nation is one that uh has not yet been established under this administration. I think almost every other developed nation in the world has an energy policy except us. We have seen uh - the Federal Energy Agency established, for instance. Uh - in the crisis of 1973 it was supposed to be a temporary agency, uh now it's permanent, it's enormous, it's growing every day. I think the Wall Street Journal uh reported not too long ago they have a hundred and twelve public relations experts working for the Federal Energy Agency to try to justify to the American people its own existence. We've got to have a - a firm way to handle the energy question. The reorganization proposal that I have put forward is one uh first step. In addition to that, we need to have - uh a realization that we've got uh about thirty-five years worth of oil left in the whole world. We're gonna run out of oil. When Mr. Nixon made his famous uh speech on Operation Independence we were importing about 35 percent of our oil. Now we've increased that amount 25 percent. We now import about 44 percent of our oil. We need to shift from oil to coal. We need to concentrate our research and development effort on uh coal burning and extraction, with safer mines, but also it's clean burning. We need to shift very strongly toward solar energy and have strict conservation measures. And then as a last resort only, continue to use atomic power. I would certainly uh - not cut out atomic power altogether. We can't afford to give up that opportunity until later. But to the extent that we continue to use atomic power, I would be responsible as president to make sure that the safety precautions were initiated and maintained. For instance, some that have been forgotten; we need to have the reactor core - below ground level, the entire power plant that uses atomic uh - power tightly sealed and a heavy - heavy vacuum maintained. There ought to be a standardized design. There ought to be a full-time uh - atomic energy specialist, independent of the power company in the control room, full time, twenty-four hours a day, to shut down a plant if an abnormality develops. These kinds of uh - procedures, along with evacuation procedures, adequate insurance, ought to be initiated. So, shift from oil to coal, emphasize research and development on coal use and also on solar power, strict conservation measures, not yield every time that the special interest groups uh - put pressure on the president like uh this administration has done, and use atomic energy only as a last resort with the strictest possible safety precautions. That's the best overall energy policy in the brief time we have to discuss it.

Yes, I would. Some of the things that can be done about this is a change in the rate structure of electric power companies. We uh - now encourage people to waste electricity, and uh - by giving uh - the lowest rates to the biggest users. We don't do anything to cut down on peak load requirements. We don't have an adequate requirement for the insulation of homes, for the efficiency of automobiles. And whenever the uh - automobile manufacturers come forward and say they can't meet the uh - amendments that the Congress has put forward, this Republican administration has delayed the implementation dates. In addition to that, we ought to have a - a shift toward the use of coal, particularly in the Appalachian regions where the coal is located. A lot of uh - very high quality, low-carbon coal, uh - low-sulfur coal is there, it's where our employment is needed. Uh - this would - would help a great deal. So mandatory conservation measures - yes. Encouragement by the president for people to uh voluntarily conserve - yes. And also the private sector ought to be encouraged to - to bring forward to the public the benefits from efficiency. One bank in uh - Washington, fo- for instance, gives lower interest loans for people who adequately insulate their homes or who buy efficient automobiles. And some major uh - uh - manufacturing companies, like Dow Chemical, have through uh - very effective efficiency mechanism cut down the use of energy by uh - as much as 40 percent with the same out-product. These kinds of things uh - ought to be done, uh they ought to be encouraged and supported, and even required uh by the government, yes.

Governor Carter skims over a very serious and a very broad subject. In January of uh - 1975 I submitted to the Congress and to the American people the first comprehensive energy program recommended by any president. It called for an increase in the production of energy in the United States. It called for uh - conservation measures so that we would save the energy that we have. If you're going to increase domestic oil and gas production - and we have to - you have to give those producers an opportunity to uh - develop their land or their wells. I recommended to the Congress that we should increase production in this country from six hundred million tons a year to twel- a- a billion two hundred million tons by 1985. In order to do that we have to improve our extraction of coal from the ground; we have to improve our utilization of coal - make it more efficient, make it cleaner. In addition we uh - have to expand our research and development. In my program for energy independence we have increased, for example, solar energy research from about $84 million a year to about a hundred and twenty million dollars a year. We're going as fast as the experts say we should. In nuclear power we have increased the research and development, uh - under the Energy Research and Development Agency uh - very substantially, to insure that our ener- uh - nuclear power plants are safer, that they are more efficient, and that we have adequate safeguards. I think you have to have greater oil and gas production, more coal production, more nuclear production, and in addition you have to have energy conservation.

Mr. President, I'd like to return for a moment to this problem of unemployment. You have vetoed or threatened to veto number of job bills passed or uh - in development in the Democratic Congress - Democratic-controlled Congress. Yet at the same time the government is paying out, uh - I think it is $17 billion, perhaps $20 billion a year in unemployment compensation caused by the high unemployment. Why do you think it is better to pay out unemployment compensation to idle people than to put them to work in public service jobs?

Just to follow up, Mr. President: the - the Congress has just passed a three point seven billion dollar appropriation bill which would provide money for the public works jobs program that you earlier tried to kill by your veto of the authorization legislation. In light of the fact that uh - unemployment again is rising - or has in the past three months - I wonder if you have rethought that question at all; whether you would consider uh - allowing this program to be funded, or will you veto that money bill?

Governor Carter.

Governor Carter. So this shows a breakdown in leadership.

Under the rules, I must stop you there. And Mrs. Drew.

Right.

Now we have uh such a grossly unbalanced tax system - as I said earlier, that it is a disgrace - ah of all the tax - benefits now, 25 percent of 'em go to the 1 percent of the richest people in this country. Over 50 percent - 53 to be exact - percent of the tax benefits go to the 14 percent richest people in this country, and we've had a 50 percent increase in payroll deductions since Mr. Nixon went in office eight years ago. Mr. Ford has - has advocated since he's been in office over $5 billion in reductions for corporations, special interest groups, and the very, very wealthy who derive their income - not from labor - but from investments. That's got to be changed. A few things that can be done: we have now a deferral system so that the multinational corporations who invest overseas - if they make a million dollars in profits overseas - they don't have to pay any of their taxes unless they bring their money back into this country. When they don't pay their taxes, the average American pays the taxes for them. Not only that, but it robs this country of jobs, because instead of coming back with that million dollars and creating a shoe factory, say in New Hampshire or Vermont, if the company takes the money down to Italy and - and builds a shoe factory, they don't have to pay any taxes on the money. Another thing is a system called DISC which was originally designed, proposed by Mr. Nixon, to encourage exports. This permits a company to create uh - a dummy corporation, to export their products, and then not to pay the full amount of taxes on them. This costs our uh - government about uh - $1.4 billion a year. And when those rich corporations don't pay that tax, the average American taxpayer pays it for 'em. Another one that's uh - that's very important is the uh - is the business deductions, uh - jet airplanes, uh - first class travel, the fifty-dollar martini lunch. The average working person can't - uh - can't take advantage of that, but the - the wealthier people - uh can. Uh - another system is where uhh - a dentist can invest money in say, raising cattle and uh - can put in a hundred thousand dollars of his own money, borrow nine hundred thousand dollars - nine hundred mi- thousand dollars - that makes a million - and mark off a great amount of uh - of loss uh - through that procedure. Uh - there was one example, for instance, where uh - somebody uh - produced pornographic movies. They put in $30 thousand of their own money and got a hundred and twenty thousand dollars in tax savings. Well, these special kinds of programs have - have robbed the average taxpayer and have benefited those who are powerful, and who can employ lobbyists, and who can have their CPAs and their lawyers to help them benefit from the roughly uh - eight thousand pages of the tax code. The average uh American person can't do it. You can't hire a lobbyist uh out of unemployment compensation checks.

Yes. You need about, according to Congressional committees on this, you need about $10 billion. Now you listed some things - the uh - deferral on foreign income as estimated: that would save about $500 million. DISC, you said, was about 1.4 billion. uh - The estimate of the outside, if you eliminated all tax shelters, is 5 billion. So where else would you raise the revenue to provide this tax relief - would you, in fact, do away with all business deductions, and what other kinds of preferences would you do away with?

No, I wouldn't do away with all - uh business deductions. I think that would be a - a very serious mistake. But uh - if - if you could just do away with the ones that are unfair, you could lower taxes for everyone. I would never do anything that would increase the taxes for those who work for a living, or who are presently required to list all their income. What I wanna do is not to raise taxes, but to eliminate loopholes. And this is uh - the point of my first statistics that I gave you - that - that the present tax benefits that have been carved out over a long period of years - fifty years - by sharp tax lawyers and by lobbyists have benefited just the rich. These programs that I described to you earlier - the tax deferrals for overseas, the DISC, and the tax shelters, uh - they only apply to people in the $50 thousand-a-year bracket or up, and I think this is the very best way to approach it. It's to make sure that everybody pays taxes on the income that they earn and make sure that you take whatever savings there is from the higher income levels and give it to the lower- and middle-income families.

Governor Carter's answer tonight does not coincide with the answer that he gave in an interview to the Associated Press a week or so ago. In that interview uh - Governor Carter indicated that uh - he would raise the taxes on those in the medium or middle-income brackets or higher. Now if you uh - take the medium or middle-income taxpayer - that's about $14 thousand per person - uh - Governor Carter has indicated, publicly, in an interview that he would increase the taxes on about 50 percent of the working people of this country. I think uh - the way to get tax equity in this country is to give tax relief to the middle-income people who have an income from roughly $8 thousand up to twenty-five or thirty thousand dollars. They have been short-changed as we have taken ten million taxpayers off the tax rolls in the last eight years, and as we have uh - added to the minimum tax uh - provision to make all people pay more taxes. I believe in tax equity for the middle-income taxpayer, increasing the personal exemption. Mr. Carter wants to increase taxes for roughly half of the taxpayers of this country. Now, the Governor has also played a little fast and loose with the facts about vetoes. The records show that President Roosevelt vetoed an average of fifty-five bills a year. President Truman vetoed on the average, while he was president, about thirty-eight bills a year. I understand that Governor Carter, when he was Governor of Georgia, vetoed between thirty-five and forty bills a year. My average in two years is twenty-six. But in the process of that we have saved uhh - $9 billion. And one final comment, uh - Governor Carter talks about the tax bills and all of the inequities that exist in the present law. I must remind him the Democrats have controlled the Congress for the last twenty-two years and they wrote all the tax bills.

I suspect that uhh - we could continue on this tax argument for some time. But I'd like to move on to another area. Mr. President, uh everybody seems to be running against Washington this year. And I'd like to raise two coincidental events and ask you whether you think perhaps this may have a bearing on the attitude throughout the country. The House Ethics Committee has just now ended its investigation of Daniel Schorr, after several months and many thousands of dollars, trying to find out how he obtained and caused to be published a report of the Congress that probably is the property of the American people. At the same time. the Senate Select Committee on Standards and Conduct has voted not really to begin an investigation of a United States senator because of allegations against him that he may have been receiving corporate funds illegally over a period of years. Do you suppose, sir, that events like this contribute to the feeling in the country that maybe there's something wrong in Washington, and I don't mean just in the executive branch but throughout the whole government?

Mr. President, if I may follow up. Uh - I think you've made it plain that you take a dim view of the uh - majority in the Congress. Isn't it quite likely, sir, that you will have a Democratic Congress in the next session, if you are elected president? And hasn't the country uh - a right to ask whether you can get along with that Congress, or whether we'll have continued confrontation?

Governor Carter.

President Ford, Governor Carter, we no longer have enough time for two complete sequences of questions. We have only about six minutes left for questions and answers. For that reason we will drop the follow-up questions at this point but each candidate will still be able to respond to the other's answers. Uh - to the extent that you can, gentlemen, please keep your remarks brief. Mr. Gannon.

What I have said is that the president ought to have a chance to appoint a chairman of the Federal Reserve Board to have a coterminous uh term; in other words, both of 'em serve the same four - four years. The Congress can modify the supply of money by modifying the income uh tax laws. The president can modify the uh - economic structure of a country by public statements and general attitudes in the budget that he proposes. The Federal Reserve has uh - an independent status that ought to be preserved; I think that Mr. uh - Burns did take a typical, erroneous Republican attitude in the 1973 year when inflation was so high. They assumed that the uh - inflation rate was because of excessive demand and uh - therefore put into effect tight constraint on the economy, very high interest rates, which is typical also of the Republican administration, uh - tried to increase the uh - the tax uh - payments by individuals, and cut the tax payments by corporations. I would have uh - done it opposite. I think the uh - problem should've been addressed by increasing productivity, by having uh - put - put people back to work so they could purchase more goods, lower income taxes on individuals, perhaps raise them, if necessary, on corporations in comparison. But uh - Mr. Burns uh - in that respect made a very serious mistake. I would not wanna destroy the - the independence of the uh Federal Reserve - uh Board. But I do think we ought to have a cohesive economic policy with at - at least the chairman of the Federal Reserve Board and the president's terms being uh - the same and letting the Congress, of course, be the third uh - entity with uh - with independence subject only to the president's veto.

The chairman of the Federal Reserve Board should be independent. Fortunately, he has been during Democratic as well as Republican administrations. As the result in the last uh - two years uh - we have had a responsible monetary policy. Uh the Federal Reserve Board indicated that the supply of money would be held between four to four and a half and seven and seven and a half. They have done a good job in integrating the money supply with the uh - fiscal policy of the uh - executive and legislative branches of the government. It would be catastrophic if the chairman of the Federal Reserve Board became the tool of the political uh - party that was in power. It's important for our future uhh - economic security that that job be nonpolitical and uh - separate from the executive and the Legislative branches.

Uh Mr. President, the real problem with the FBI and, in fact, all of the intelligence agencies is there are no real laws governing them. Such laws as there are tend to be vague and open-ended. Now, you have issued some executive orders, but we've learned that leaving these agencies to executive discretion and direction can get them and, in fact, the country in a great deal of trouble. One president may be a decent man, the next one might not be. So, what do you think about trying to write in some more protection by getting some laws governing these agencies?

Governor Carter.

failure in the broadcasting of the debate, it occurred twenty-seven minutes ago. Uh the fault has been dealt with and uh - we want to thank President Ford and Governor Carter for being so patient and understanding while this uh delay went on. Uh we very much regret the technical failure that lost the sound as it - as it was leaving this theater. It occurred during uh Governor Carter's response to what would have been and what was the last question put to the candidates. That question went to President Ford. It dealt with the control of government intelligence agencies. Uh Governor Carter was making that response and had very nearly finished it. Uh - he wil1 conclude his response now after which uh - President Ford and Governor Carter will make their closing statements. Governor.

It is now time for the closing statements, which are to be up to four minutes long. Governor Carter, by the same toss of the coin that directed the first question to you, you are to go first now.

President Ford.