Carter Was Speechless

But both his friends and foes talked of lack of leadership

Rarely had a U.S. President seemed so strikingly mired in indecision. Just back from the ineffectual Tokyo summit, Jimmy Carter last week scheduled a major address on energy policy, telling aides that he wanted a "bold new approach." Then, just 30 hours before he was supposed to go before the TV cameras, he called off the speech without a word of explanation and holed up at Camp David. Behind in Washington he left baffled aides with almost nothing that they could say for certain--except that the President had gone fishing.

By week's end Carter's aides were insisting that he was in a whirlwind of activity at the presidential hideaway, though there still seemed to be little sense of direction to what was taking place. The President summoned his top political advisers--essentially the Georgia Mafia --eight Governors and assorted energy experts, environmentalists, labor bosses, businessmen and congressional leaders. In what was a kind of "domestic summit," he talked to them about energy, the economy and other issues.

Nonetheless, there was an unstoppable drumbeat of rumors echoing through Washington: the President was somehow settling the 1980 nomination question with Ted Kennedy; the President was shaking up his White House staff, perhaps firing top aides; the President was having a mental breakdown; the President was preparing to resign. As Washington waited, the dollar plunged on international financial markets. The New York Post summed up the spreading bewilderment by demanding, in its blackest front-page type: WHAT THE HECK ARE YOU UP TO, MR. PRESIDENT?

If Carter is to pull his presidency out of its nosedive and have a fighting chance of being renominated and re-elected in 1980, he will have to come down from the Catoctin Mountains with a dramatic answer to that question because at week's end the explanation for the Camp David mystery seemed to be nothing more--or less--than a spectacular display of White House ineptitude, followed by a desperate, last-gasp scramble to salvage something from the wreckage. By all indications from Administration aides, Carter canceled his energy speech because he realized, only 30 hours before he was to go on prime-time TV, that he was unprepared to say very much. In part, this was because of deep divisions among his advisers on energy policy. And he seemed strangely unaware of the uproar that his decision would touch off. Said a top aide of Carter's reaction to the Washington speculation: "He thinks it's funny."

But Carter's political advisers realized that he had to patch together some kind of program quickly. The official line on the Camp David discussions was that they were being held in a relaxed atmosphere, sometimes on the deck around the swimming pool adjoining Aspen Lodge. The President went jogging Saturday morning with some of the Governors he had invited to the retreat and his guests later reported that he was in a buoyant mood. In Washington, however, some Government officials were calling the domestic summit a watershed in the Carter presidency, a last chance to reverse the widespread impression that he is simply not competent to lead the nation. Said one Cabinet officer of the President's political advisers: "They're scared."

Well might they be. The impression of incompetence is so prevalent that it has plunged Carter close to the lowest poll ratings ever reached by a President. The figures: a 25% overall approval rating in the latest ABC News-Louis Harris poll, or one point below the nadir reached by Richard Nixon in a Harris survey two months before he resigned.* Ironically, it was an attempt to flaunt a brave image and improve the poll ratings that led directly to last week's fiasco.

The tangled series of events began in the Far East, while Carter was traveling to the Tokyo economic summit and South Korea. With him was Image Builder Gerald Rafshoon. When Rafshoon learned about the Harris poll readings, he decided that both Carter and the nation badly needed a forceful show of presidential leadership. Rafshoon sold Carter on the idea of making a major energy speech. One aide recalls that Carter gave his assent at 5 a.m. Far Eastern Time--which he was still operating on, though he was back in Washington--when he was obviously too weary to consider the decision carefully, let alone give much thought to what he might say.

Senior Administration officials were dismayed. They knew that serious policy disputes among the President's advisers could not possibly be resolved in time for a speech only a few days after Carter's return. One hot argument rages over whether to scrap or attempt to patch up the Government's ineffective gasoline allocation system, which has worsened shortages and lengthened gas lines in major cities. Another deep disagreement concerns development of synthetic fuels, such as oil burned out of shale rock, squeezed from tar sands or manufactured from coal. Secretary of Energy James Schlesinger, like many members of Congress, is pushing a plan for a multibillion-dollar program on "synfuels." Domestic Affairs Adviser Stuart Eizenstat wants to go slow, contending that synthetic-fuels development might cost too much and pollute too much. Carter's aides are also undecided on what kind of stand-by gasoline rationing plan to present to Congress in place of the one that was voted down in May, and on whether to relax clean-air standards to permit burning of more coal and high-sulfur oil.

But a speech had been scheduled, and the aides plunged gamely ahead. They decided to sketch an energy program in broad strokes, giving a rallying call to the nation but leaving out most of what was to be rallied behind. To ensure a maximum audience, the White House began beating the publicity drums. TV networks cleared time for a presidential address at 9 p.m. Thursday. Carter, though exhausted from his Asia travels, entered the Oval Office at 6:42 a.m. Monday. Later that day he called TV cameramen to the Cabinet Room to film him in rolled-up shirtsleeves, projecting the image of a deeply concerned Chief Executive who is determined to confront OPEC.

Zeroing in on OPEC is a strategy that was urged by Eizenstat in a June 28 confidential memo to Carter. The presidential aide forcefully argued that the oil cartel's most recent steep price hike could be an opportunity to shift the blame "for inflation and energy problems to OPEC [so that the Administration can] gain credibility with the American people." Stating that energy "is the only subject the public wants to hear about," Eizenstat urged his boss to deal with, "and publicly be seen dealing with, the major energy problems" every day for the two or three weeks following the Tokyo summit. Warned Eizenstat: "Nothing else [but energy] has so frustrated, confused, angered the American people--or so targeted their distress at you personally."

After Carter's well-publicized long Monday at his White House desk, he slipped away to Camp David for a quiet Fourth of July, leaving Chief Speechwriter Hendrik Hertzberg and his assistants to prepare Thursday night's address. At 1 p.m. Wednesday, messengers delivered Hertzberg's draft to Carter. Two hours later, Carter telephoned Vice President Walter Mondale to call off the whole thing. Why? The speech, said one White House insider, "was just awful"--a mass of vague generalities larded with arcane technicalities like "geothermally pressurized methane." Other aides speculated that Carter, having finally got two nights of sound sleep, realized that he had made a mistake in agreeing to give a speech.

That would have been bad enough, but the President compounded the damage by being mysterious. Such senior advisers as Eizenstat, Schlesinger and Treasury Secretary Michael Blumenthal were not even personally told that the speech was called off. All Press Secretary Jody Powell was allowed to say on Wednesday afternoon was that it had been canceled, and "I have nothing to add."

The dollar sank swiftly on foreign money exchanges. An alarmed Blumenthal, using an Army field telephone, reached Carter at a trout stream and persuaded him that he had to say something. Anything. Powell, who had been summoned to Camp David, then phoned a statement to Washington reaffirming that the President intends to propose at an early date a series of strong measures to restrain U.S. demand for imported oil. That, and heavy buying up of dollars by the U.S. Federal Reserve and foreign central banks, steadied the dollar slide.

Meanwhile, cruel jokes began circulating, even within the Administration. One official jested that Carter eventually would be produced in public, "if we can get him to put his clothes back on." Another wag quipped that the President had indeed gone fishing at Camp David, but "he is just standing there without a pole."

Aides tried to reassure the public about the President. One White House official reported that Carter's "mental state is about the same as always. He is still the same dull, dogged, determined, nose-to-the-grindstone fellow we all know." Physically, the President has aged markedly in office. His hair is noticeably grayer and thinner, his face lined, his complexion pale and sometimes splotchy. After two summits in two weeks, he returned to Washington, in the words of one insider, "just beat to hell." Even so, aides insist that Carter fundamentally is in excellent health and up to the job of steering the nation between the rocks of energy shortage, inflation and recession.

The passage will be tricky. Economic figures released last week gave a bit of cheer to the helmsmen: unemployment dropped to 5.6% of the labor force in June, the lowest figure since August 1974, and producer (essentially, wholesale) prices rose at a relatively moderate annual rate of 6.2%. But the best judgment of private economists is still that a recession either is on its way or has already begun, and that it will be worsened by the 50% oil price increase posted by OPEC since January. That boost will drain tens of billions of dollars out of the U.S. and worsen inflation, which at the retail level ran at a staggering annual rate of 13.4% in the first five months of 1979. Admitted Carter on the plane carrying him home from Korea: "The OPEC decision will make a recession much more likely." He predicted that it would add as many as 800,000 people to the jobless rolls by the end of 1980 (private economists' guesses run up to 1.4 million) and push the inflation rate 2% to 2.5% higher than it would otherwise be.

On the energy front, there was good news for Carter, but it was probably temporary. Gas lines shortened or disappeared in many Eastern cities as motorists adjusted to new odd-even sales restrictions and minimum-purchase requirements that seem to have ended tank-topping. But there also was more gas available, reflecting the delivery of fuel allocated to stations for July. The pattern has been for the stations to sell out supplies quickly, and run low at month's end.

Some more lasting relief from shortages may be on the way. The Saudi Arabian state radio twice promised last week an increase in oil production. Hopeful U.S. Government officials and oil-company executives guessed that the Saudis, the world's largest oil exporters, might raise output by 500,000 to 1 million bbl. per day above the present 8.5 million bbl. That would wipe out a quarter to a half of the current shortage in world markets --if in fact the Saudis do it. They have been issuing teasing, will-we-or-won't-we statements about production for weeks, and some expert speculation was that they will pump more only if the other members of OPEC jack up prices above the present average of $20 to $21 per bbl. In any case, a rise in Saudi production would not end the basic problem: the U.S. imports nearly half of its oil, and the supplies from OPEC are both uncertain in quantity and outrageously priced.

To begin breaking that debilitating dependence and manage the immediate shortages, Carter will have to make a whole series of decisions, none of them easy. Before helicoptering to Camp David, he pledged to correct what he called "the mal-allocation" of gas. But in a colloquy with Energy Secretary Schlesinger staged in the Oval Office for newsmen, Carter sounded ill informed on the subject. "Do you feel the allocation formulas are hurting the Northeast?" Carter asked. "No, sir," replied Schlesinger; all the formulas did was "help the West." He continued: "The effect is to ..." Carter interrupted: "Put the gasoline where the automobiles are?" "No," replied Schlesinger. " What it does is put the gasoline where the cars are not. It puts it in the rural areas where the people are no longer going on weekends."

Many experts in and out of Government believe that the allocation system is such a hopeless mess that it should be done away with. The trouble is, such a move would require scrapping price controls on gasoline too, so that a free market could steer supplies to areas where drivers are in most serious need and willing to pay top prices. Carter's political advisers fear that taking all limits off gasoline prices would both be very unpopular and work a serious hardship on the poor, who would have to be compensated somehow by the Government.

The synthetic-fuels battle is even more tangled. Last week Carter called the pushing of synfuel development "a major goal of my Administration." But how should it be done? By providing a guaranteed market at a guaranteed price to synthetic-fuel makers? By having the Government build plants to be run by private companies? How much production should be expected? At what cost? All sorts of figures are being voiced in the Administration and Congress: production of 500,000 bbl. to 5 million bbl. per day by 1990; federal expenditures of from $2 billion a year to $100 billion over the next decade. Opponents of all-out development fear not only pollution but that the Government might pour forth enormous sums of money and wind up with a string of white-elephant plants.

By week's end a partial decision had been reached. Carter probably will propose a Government corporation trust fund authority to provide $50 billion for synfuel development. Only $5 billion, however, would be capital paid in by the Treasury; the rest would be borrowed on money markets.

To counterattack recession, meanwhile, Carter's economic advisers proposed a quickie tax cut late this year if the economy seems to be headed for a real tailspin. The Administration began sounding out congressional powers like Senate Finance Committee Chairman Russell Long on what kind of tax cut they would accept. Carter is reluctant to cut taxes because that would shatter his increasingly unrealistic dream of balancing the budget by fiscal 1981, but so would a recession. The deeper danger is that a tax cut might further fan inflation.

Weighing such conflicting claims and then setting the nation's course is precisely the job of Presidents and just what much of the nation thinks Carter is unable to do. Far more is at stake than poll ratings or Carter's chances for reelection. There is a real danger, and it feeds on itself: as more citizens get the impression that the President is incompetent, fewer people listen to him and the more his ability to lead is in fact eroded.

Searching for consolation amid last week's confusion, one Administration official came up with this thought: "At least, when Carter finally gives that speech, he will have one hell of an audience." No doubt, but after last week's roll of publicity drums, followed by dead silence, followed by wild confusion and seeming desperation, that speech must be no less than Carter's best if he is to recover in the eyes of his countrymen. -

* This still did not qualify Carter as the most unpopular President in polling history; Harry Truman's rating hit 23% in the Gallup poll in November 1951, which helped persuade him not to run for re-election.

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