 President of the United States. Thank you all very much. Thank you. Well, welcome home. I haven't seen him yet since he's back from his very busy trip. And yesterday, happy anniversary of your 39th birthday. Well, it's a pleasure for me to speak directly to you, the editors, publishers and news directors in 35 cities from Utica to Tucson. Gannett represents one of the most creative forces in American journalism today. And under your able leadership, Al Newhart, Gannett has 85 daily newspapers, 13 radio stations, six TV stations, and a successful new venture that's reshaping the print media, your nationwide newspaper called USA Today. Now, I am going to take your questions, but I can't let an opportunity like this go by to say a few words about our economy and foreign policy with the hope that you will share a few of those words with your listeners, viewers, and readers. We've reduced the growth of government spending. We've pruned needless regulations and reduced personal income tax rates. We passed an historic tax reform called tax indexing that means that government can never again profit by creating inflation. And today, just over two years since these policies were put in place, we're seeing a vigorous recovery. The prime rate is only a little bit more than half what it was when we took office. Inflation has plummeted to 2.9% during the past year. Factory orders, retail sales, and productivity are all up from a year ago. And during the past 16 months, the stock market has risen sharply, boosting investment in productive sectors of the economy and raising the value of pension funds that so many millions of our people depend on. Unemployment is still too high, but last month it showed how fast it was dropping when it went down by nearly half a percentage point. Federal deficits pose a challenge, and some in the Congress are saying the answer is a tax increase. But it was tax cuts that gave birth to the recovery, and this recovery is boosting government revenues. Deficits are caused by government spending too large a percentage of the gross national product. The solution is for government spending to be reduced to a point that it neither causes a deficit nor interferes with the ability of the economy to grow. So I hope the Congress will help us reduce benefits or deficits by cutting spending, not by putting a bigger burden on the backs of the American taxpayers. Just as we're turning the economy around, I think we're bringing a new sense of purpose and direction to foreign policy. In Grenada, we set a nation free. In Central America, we're giving firm support to democratic leadership. And I believe that, thanks in large measure to the American example of what a free people can do, there's a rising freedom tide in the world today from Poland to Argentina and Venezuela. In Lebanon, the peace process is arduous and painful, but there has been some progress, in spite of the continued horror tales that we are subjected to. Talks have begun to broaden the government's base and to satisfy legitimate grievances, and our goal and the goal must be internal stability in the withdrawal of all foreign forces. In Europe, the NATO Alliance has held firm despite months of Soviet bluster. Sooner or later, the Soviets are going to realize that arms reductions are in their best interest. When they do, we'll be at the table waiting for them, ready to go on negotiating from strength and in good faith. As we pray for peace on Earth in this holiday season, the American people should know that because we've strengthened our defenses and shown the world our willingness to negotiate, the prospects for peace are better than they've been in many years. I'm convinced that historians will look back on this as the time that we started down a new and far better road for America. And Al, could I just say one other thing? I sure do like a press policy that is based on hope, legitimate hope, and not just undue optimism. I think the things that we've seen throughout the depths of this recession prove the quality of the American people, that in the depths, very depths of it, more money was given to charity and to worthy causes that has ever been given before in our nation's history. Today, the partnerships with schools, we call attention at the national level to the problem in education and suddenly business groups, communities, organizations are forming partnerships with schools throughout the country to help in whatever way they can. Name it and the people themselves are finding an answer for it. And I think you're right, I think when you look at a TV news program sometime in the national news and they have to announce that unemployment went down by hundreds of thousands of people in just a one month period and then they immediately switch to showing some derelict sleeping on heating grates and so forth to take the taste out of your mouth of that good news that they just given is the only excuse I can find for doing that. But you must have some questions so... I think he defers to you. This group met this morning with George Steinbrenner, the owner of the New York Yankees. He disappointed us by refusing to discuss his career plans for Billy Martin in 1984. Would you wipe out some of that disappointment by talking with us about your 1984 career plans? Well, I'll tell you, I'll be a little late with the answer. On January 29th, you shall know all, I will make a statement regarding my plans. And I don't know, maybe, I'll be a little late with the answer. I'll be a little late with the answer. I'll be a little late with my plans. And I don't know, maybe, maybe what Mr. Steinbrenner is going by is the old baseball superstition that, you know, if you're pitching a no-hitter, don't say anything about it. That was one of the hardest jobs for me as a baseball announcer when I was a sports announcer. The pitcher, you're going into the seventh inning and he hasn't allowed a hit and I wouldn't say it, I wouldn't mention it because it's supposed to jinx him. I'm waiting for your decision on 29th because if you're not going to stay here, I want you. Thank you very much. It's nice to have an ace in the hole. Mr. President, I'm John Quinn of USA Today. Mr. Secretary just said he went around the barn on this question. I'd like to ask you, sir, your own views after the fact on the decision not to have pool press at the Grenada action. And if that happened again, do you think that would be the policy to follow again? Not to have, but... A pool press representative. Well, I don't know how far George went around the barn. But there was no conscious decision by anyone in his department over there or in the White House that said now we must zero in and not let the press go. We only had 48 hours to plan that operation. We knew the Cubans were a lot closer than we were. The primary concern as voiced by the chiefs of staff was minimize casualties. So in that limited time, they planned what turned out to be a most successful and brilliant operation aimed at immediately getting to the locale of the some 800 students that were there and offering them protection and so forth. And I was responsible for only one part of that. I said that there's going to be a military operation in which civilians are not going to sit back here in the White House or in the government and look over the shoulders of the field commanders who were there on the scene and they were going to run the operation. Now, it was only when some of you started squealing that I discovered that part of one of their decisions had been that they would go in without press. I have to ask your understanding of this. The preparations that would have been needed, the word that would have had to go out just offered too much of a possibility of leak. I have found out that the White House I don't know how it holds the rain out. Sometimes I read memos in the paper that I haven't gotten yet. But we felt that it was absolutely imperative that we have the ultimate in security. We knew that a half a dozen other governments knew because they had requested us. I'm going around the barn now, George. I have to tell you this, that even there while we had to have some contact with them we did not actually even declare to them that we were going in, that we were going to do it or what our plans were. And it worked. Now, I won't do, in any operation of the same kind, I won't do what someone suggested. And that is that, yes, sir, we guarantee the press go along and we put them right in the front row of the landing barges so they'll be the first off. I won't do that. Yes. President, I'm Charles Overby from Jackson, Mississippi. I've covered your campaign since 1968 and I've heard you give some skin-winder speeches on tax deficits, budget deficits. What you said to us just a while ago does that mean you're rejecting Secretary Regan's contingency tax increase? And do you have in your own mind how much of a budget deficit might be too much? I think any deficit is too much. I've been preaching for the last quarter of a century or more that government but we should have had the rule that Jefferson advocated back in his day when he said that the one thing lacking in the Constitution was a rule that the federal government could not borrow a penny. Now, you might have an emergency like war where you'd do that. But deficits deficits are the result of a disease and to look always and focus on the deficit and ignore what brought them about when you have deficits the government is spending taking too big a share from the private sector and when it does that and over and above its revenues you can go one or two ways you can either borrow or you can raise taxes but in either case you are taking more money out of the private sector when that's already what the trouble is. So I think that the answer to deficits must be control of government spending and getting this government back to a certain percentage I can't tell you what that exact percentage is but I know that we're taking too much now. There ought to be a point that we can figure out is the optimum point at which if you go beyond that percentage point in government taking from the private sector you are interfering with prosperity and with a sound economy and once decided on that point we do that. So whichever way borrowing or raising taxes is just further going to harm the economy we need to zero in we've only gotten about 40% of what we asked for from 1981 on in spending cuts if we had gotten all that we asked for the deficit today would be 50 billion dollars less than it is. So this is now on taxes yes it could possibly be that in our organization it's hard to tell with a recession whether the tax structure that we have in place is sufficient to match what we think should be the spending outlay once as recovery comes down and we're sure that it is definite and we can do some measuring we can look and see did we overdo is there a room there for some tax increases so what Don Regan was talking about was a contingency tax that says to the congress if you will make the cuts that are necessary and the cuts that we're going to ask for and then that isn't enough yes we will have in mind as a contingency a tax increase then to flesh this out and go after the rest of the deficit so I feel that way I will make one promise I would resist and would veto any attempt that a tax cut that has passed for 1984 and matter of fact I believe the economy has got a better chance to continue recovering if there isn't one in 85 the original contingency tax we suggested would be one that would go into effect in 86 if the congress had done what we said and had made all the cuts that needed to be made or tax increase I'm sorry tax increase incidentally let me just warn you about something that most people have forgotten 1977 under the previous administration they passed some social security reforms and those called for years of increases in the social security tax and those go all the way through the rest of this decade those increases alone are going to match the tax cuts that we have made already all we did was head off further tax increases as to what they're taking out of your pockets by the end of the decade the tax rate is going up for social security to 7.65% from the employee employer so that's more than 15% and at the same time every year virtually they're increasing the amount of income against which that tax is assessed so you're going to be having some tax increases and they're not saying anything about those I think what they want is with people's tendency to forget they want to looking forward to the day when they can say they're my tax increases I didn't pass them and I don't want them to be a senator and publisher of Danville, Illinois the first federal pay grade is about 25% higher than the minimum wage have you looked at that and considered reestablishing the minimum wage as the least pay level for jobs just as we have to look with it the minimum wage I take it if I understand correctly the lowest federal pay grade is 25% higher than the minimum wage is we all have to live with the minimum wage as our lowest pay grade for the least jobs I've wondered if you've considered reducing that pay grade to the same level we live with the minimum wage as the lowest pay grade well I can't recall anyone's proposed any such thing or that we've even discussed that but I would have to tell you that I believe that a lot of our ills are due to the minimum wage I think we have priced and jobs out of existence by making the price for them too high and if you go back figures will bear out that every time the minimum wage increases there is an increase particularly in young people who have no job skill to bring to the market the very least that we should do and we haven't been able to get any response in Congress to this the least that we should do is have two stages and have a lower minimum wage today for young people who are entering the job market for the first time and have no skill to bring to they're the ones that are sitting on the sidelines because no one can afford to hire them that's precisely my point your lowest paying job in the federal government pays even 25% more than the minimum wage and I guess I'm not sure that the least job in government is worth 25% more than the minimum wage you get a lot of bureaucratic answer to that but no I think the minimum wage was really designed for the most menial of jobs the jobs requiring no particular job skill the entry jobs and so forth and I think it's been overdone and as I say it's caused some of our problems incidentally when you hear the well just let me say one more thing and then I'll she's going to tell me one more question aren't you the let me say that the the biggest percentage of unemployment that's keeping our percentage level so high is for teenagers young people and I sometimes think that this isn't a fair measurement of unemployment because what it interests you to know that almost 48% of those who are listed as unemployed teenagers are presently going to school they're looking for after school jobs or weekend jobs we all did I did when I was in school myself but to tie that as a measure of the nation's unemployment is kind of taking our attention away from the real problem which is the wage earner with a family to support the person that is out there with a job skill and no job to which he can apply it but I think we should ask some questions about unemployment I asked one question to the Labor Department and we've got a new answer already I found out that they weren't counting our military as employed and now that they do the unemployment rate is lower yes sir President I'm Bob Ritter from Olympia, Washington do you currently have any contingency plans that might include reducing military spending as a way to increase the deficit on military spending I ran on the idea that we had been starving our military for so long that there really was a window of vulnerability I think we've closed largely that window of vulnerability we haven't closed it completely we haven't caught totally up but we've made a great difference now with malice of forethought I asked Cap Weinberger to take that job he was my finance director for a time when I was a governor and he didn't earn the name Cap the Knife for nothing but what everyone particularly in the Congress seems unwilling to admit is that they have been themselves over there under his direction reducing the budgets as they find ways to save and ways to improve all these horror stories recently about the high price of spare parts those are our figures we're the ones who found those high prices and we're the ones who are doing something about it and we've already had a number of indictments we have had refunds we've had dismissals of personnel we're getting at that we sent some inspectors out that were mean as junkyard dogs and they found that this was going on but the way I feel that we have to look at defense is this you look at defense not as how much do we want to spend what is necessary to assure our national security what weapons systems what numbers of personnel and all and once you've decided on that then you figure out and figuring just as sharply as you can with a sharp pencil what does it cost to provide that kind of national security and if you've gotten it down to where all the waste is out and we've taken advantage of our reduction of inflation below what our anticipation was I can tell you that right now the defense budget that is presently being talked about has been cut by the secretary of defense 16 billion dollars before he came in with it now to go to the congress with this and then have them say oh no we only want to spend X number of dollars then you have to say to the congress all right then what is it that you want to do without what weapons system do you want to do away with or do you want to cut the pay for the military I can tell you that when I started here everyone said that we of high school graduates in the military that we have ever had in our history even back in war time when we were drafting so many millions we have the highest percentage above average the average intelligence level in the military we have a waiting line of people who want to enlist in the service we have the highest retention now of non commissioned officers when we came here the first year if we had gone to a draft we didn't have enough non commissioned officers to train the draftees and that's all changed and I tell you when I get a letter from a hundred marines stationed over in Europe and those marines write me as they did about a year ago in the budget talk and say if giving us a pay cut will help our country cut our pay I wouldn't cut their pay if I bled to death the response from them all of them and is just so remarkable their pride there I've made a lot of telephone calls to families those who have lost their lives and I hang up the phone in worse shape than they were on the phone I've never heard such pride I've never heard such willingness to accept that that this was necessary and I've learned that the hardest thing that a president will ever have to do as far as I'm concerned is issue an order that some of our uniformed personnel have to go into an area where there is a possibility of harm to them that's the one that's the only problem that ever causes me to lose sleep but now I think that the military budget the defense budget incidentally when we set out over a five year period we had expected to increase over the Carter projections $116 billion we have already ourselves cut $79 billion out of that $116 billion increase and still we have a military that is further up to readiness well you saw the result in Grenada and I wish you could have all been on the South Lawn when about 400 of those students from Grenada came there at our invitation and we had 40 of the military back from Grenada from all four branches and to see them all the same age roughly the medical students and the military and to see those students they couldn't keep their hands off those young men in uniform everyone wanted to tell them personally that they had saved their lives I had some come up to me and tell me that when they were escorted to the helicopters and there had been gunfire all around that our men in uniform placed themselves in a position that if there was firing on them they would be hit not the students they shielded the students with their their bodies and it was a wonderful thing to see I've got a great deal of hope and optimism about the future of this country now having weathered all the riots on the campus when I was a governor to now see the quality of these young people and their dedication I didn't mean to make a speech but I can't help it I will wound up on that particular subject all right thank you all very much