 Should we begin right away, do they want to take some pictures? No. No, fine. That's just our people doing that. Judging from the reports of the cabinet meeting yesterday, Reagan Revolution seems back on track. Well, it is still a working paper as yet, and we're going through the cabinet process with them, and we'll do the same with regard to the Treasury Department's tax simplification plan. What about that? Do you have any serious differences with it now, or are you really studied it? Actually, we haven't really gotten into that in detail yet, or seen it, of course, and seen the report. I think they've done a fine job, and it's a great study. But to get down to choosing whether there are some things or whether we want to reconsider or not, we haven't. We've been spending hours and hours item by item on the budget. On the budget. And so, right now, you would say the budget is the higher priority than the tax reform. Well, the two tracks we think are absolutely essential, and having to do with the deficit, in that the tax program is a part of our belief that growth in the economy is going to be a major contributor to the deficit going down. But the other track is the one that we have been dwelling on right now, which is the necessity for real budget reform. So the 34 I see in the paper, 34 billion you're saying, may not even, there may be more coming? Well, we expect more. We've set our goal higher than that. Right. And what we're trying to project is a reduction as a percentage of gross national product of the deficit in three installments out there. The first one's the most important because you're not going to get the others if you don't get the first one. Well, that's true. That's true. Have you thought at all, if you remember Frank Bow, the congressman from Ohio, asked for a 5% across the board cut after all these individual cuts are made and certain programs are abolished, and then just say, on top of this, I want 5% cut from all of these programs because any manager worth his salt could cut 5%. Yes. I know his theory, and I've said similar things about using the figure myself. Right. That ignores that what we've done so far in the cuts that we've already achieved, and now with the Grace Commission recommendations, that we have been aiming, and I have always felt that it's a real immoral simplification. The old argument, every time you tried to cut something, there are people who would stand up and object and say, well, what would you eliminate? Which program would you do away with? And I've always said, wait a minute, before you start doing away with the program, you find out what cuts can you make in the way the program is run. Well, we've made great achievements in that. We've reduced, first of all, by about 75,000 people, a number of people in government. We've had a task force working on management practices, and these have been achieved in many of the cuts that we've made so far in the defense situation. There, they themselves have made dramatic reductions in what their original 1981 proposal of the five-year program, and a great many of those can be attributed to management improvements, overhead elimination. Let me give you a figure, just one little incident of what can happen. We folded some 62 categorical grants into 10 block grants to local and state government. In doing that, we found that that reduced the overhead of administering those programs by 3,000 employees at our end. Out there at their end, local and state government end, it moved 885 pages of regulations that had been imposed on them down to 30 pages. So this is very definitely a part of our procedure. On the Congress seems to be saying, and a lot of the Republicans, that there's no way you can get these domestic things unless you do a freeze on military spending. Well, here again, whether freeze or not, first of all, we're not going to make any cuts, I've spoken already of the reductions we've made, we're not going to make any cuts in defense spending that are going to drive us backward with regard to what we're trying to do in overcoming the years of neglect and guaranteeing our security. But in the budget process so far, we haven't dealt with defense simply because Secretary Weinberger has been over there at the NATO meetings. When he comes home, we'll be talking to them. But I think that you've got to give him credit and give the Defense Department credit for what they've done already. The Defense Department has reduced by $116 billion the total of the five-year projected program that they had called for in 1981. They've come in every year. In fact, I've, knowing what Congress or certain elements of Congress try to do to the defense budget, I sometimes used to chide cap and say, look, Cap, why don't you leave this stuff in here and let them find it? And they'll be happy because whatever you go up there with, they'll try to reduce it further. But this gives me a chance also to say something else that hasn't been said any place that I know. All these figures, about $500 hammers and wrenches and so forth, it's all true. But nobody has pointed out that we're providing those figures. This is what has been going on, and this Defense Department now is finding that and correcting it. There have been hundreds of millions of dollars in rebates. There have been hundreds of indictments for fraud. There have been a number of convictions. Some have gone to prison. There have been dismissals. But the whole picture that has been given to the people is that this is something that this Defense Department is responsible for. Sure, and somebody else has found out. But aren't you really up against the general public perception that there's rampant waste in the Defense Department? I don't think there's any question. Has that been handled properly maybe from a PR standpoint? Well, I've said what I just said to you many times, but it doesn't get printed. Or it certainly doesn't make the evening news. But I think the people also have been treated to so many stories back over the years and when things like that did happen that they're prepared to believe this. The truth is we have made wonderful progress in the quality and the quality with regard to weapons and so forth. The quality of manpower, weaponry and everything else in our defense establishment. And as I say, we have also, we have definite programs going over there providing incentives for people who find extravagances. Even a hotline. You can call anonymously. Is there any possibility that you could go along with Senator Goldwater's idea of scrapping the MX in order to cut the deficit? Well, I have to wait and find out whether we're going to be talking to Barry. Whether what Barry is talking about is impatience with all of the restrictions that have been put on it up there on the Hill in Congress. And the continued cutbacks of we believe it is essential. It is the first attempt at modernization of our strategic nuclear weaponry of, well, in the last more than 15 years. And in that same period, the Soviet Union has come up with at least development of five new systems, completely new. We're playing catch-up. And if we're going to sit down with them in January and begin talking, arms reduction as they've agreed to talk, it would be ridiculous and foolish to start unilaterally cancelling out weapons systems before we do that. So we'll be talking with them. And as I say, I'm hopeful that Barry was talking about something else and not eliminating the system. Have you got any reservations about the tax reform plan put out by Treasury? And if so, what are they? Any reservations about it? Well, there may be a couple of items in there that I want to look at very carefully as to make sure that they would not be penalizing someone or taking away some necessary incentive. I'm totally different on foreign policy. What, if any, plans do we have, or do you, the administration have now to try to get some aid going back to the conference? Oh, we're going to try. I think the Congress or that portion of it that's been blocking us has been very irresponsible. The Contras are veterans of the revolution that put the Sandinistas in power. And it was a total revolutionary effort aimed at democracy. You only have to look at the promises they made to the Organization of American States, none of which have been kept. And what we're supporting are the people of Nicaragua who have now been subjected to a totalitarian Marxist-Leninist... But is there any realistic chance that such aid can get through Congress? Well, we're going to do our best. I think it would be disgraceful for us. Would you go to the people? I mean, would you do television or try this? One suggestion has been maybe recognizing a government in exile, which we could then aid overtly. Have you thought about that? Well, this would give us, we haven't, this would give us something that we would have to look at very closely. Because right now, we can honestly say that what we're trying to do is simply modify the existing situation... And return to the principles that all of them were fighting for, including the Sandinistas, according to what they said. Now it's been revealed that they didn't mean it when they said it. The other would probably present some problems, very definite problems. Well, another foreign policy issue, a different continent. You said that you wouldn't turn against Jonas Savimbi's people in Angola, but there are now reports that the U.S. is considering, along with South Africa, working with and recognizing the Angolan government and if the Cuban troops are removed. Is there anything to that and what would happen to the UNITA forces? Yes, this is all part of the thing that we've been negotiating out. Now, the Savimbi forces are not a part of the negotiations, haven't been, but at the same time Savimbi supports the removal of the Cubans from Angola and says there is no chance of reconciliation as long as they're there. Then it would be up that it'd be an internal matter between UNITA, Savimbi forces, and the present government. If we were asked to in any way help in achieving a reconciliation between them, we'd be very happy to do what we could to help and to see in what manner we could be helpful there. And we do believe that reconciliation is almost essential in that country between those two forces. And as I say, Savimbi himself believes that before anything of that kind can be attempted. But are you saying that as part of the agreement to remove the Cubans, the United States would not be weighing in against Savimbi in any kind of internal? No, that's an internal matter for them. And as I say, he himself says that he cannot achieve or they cannot work for reconciliation until the Cubans are out. What about calling for elections within the country and making that part of our negotiations? Well, again, I think the Savimbi and the other party do recognize it themselves as that's their internal problems. I say we won't turn them down if they believe that we in any way can be helpful in arriving at some kind of settlement. Since they're not part of the negotiating process, we sort of have to help them out. So far there have been very surprising, I think, to most people very few personnel changes in the administration since the election or for what, do you envision any? Well, I'm sure here and there are some changes in the cabinet. Here and there there may be some, but right now the only two we know of are the two that everyone else knows of. But you remember back when we were setting up the administration, I said I would ask people to come that I thought were qualified or best qualified if they could only stay for a matter of a year or two, however long they could stay and then we'd try to find somebody equally good. I'm gratified by the fact that not only have they stayed through the first four, but it seems that there's going to be quite a retention in this second four year period. But I can't complain if some of them during the second term come to me and believe they have to return to their own private lives and careers. I'll sure hang on to them as long as I can and I have no plans for making any changes. Have you asked Jean Kirkpatrick really to stay on at the UN? If she doesn't it seems that we'll lose her government. She and I are scheduled to have a talk very shortly and we had one scheduled which she had to cancel because of UN duties. I know how she feels about the United Nations. That place has a way of burning you out a little bit. I know how she feels in that. She has done very well. She's turned around what was a really tough situation for us in the UN where we were literally being picked on by about 140 other nations. She's made all the difference in the world. I don't know whether her desire is straight returned to academia or whether there are other things that would appeal to her in government. But believe me if there's a way to keep her in the administration I'll sure try. If I could return to the first topic we were discussing the budget and trying to reduce the deficit. I don't think Tom asked you about Social Security. I know that you pledged that you would not cut anyone's benefits. But in light of the reports that the administration is considering a 5% cut in pay for federal workers and so forth. Would it be a violation of your pledge if you were to forego the cost of living increase for one year? That wouldn't be a cut. Well I have to say that I didn't think I was talking about that. But I have found out that I guess my own wording was at fault. That it has been accepted that I made that pledge and so therefore I feel bound by it. This does not seem as serious to me as some people presented with regard to the deficit. Because if you really analyze it Social Security is not a part of the deficit problem. Social Security is totally funded by a payroll tax. And if you made a reduction in some way of Social Security you wouldn't do a thing for the deficit. That money would just go back into the Social Security Trust Fund. And so I don't feel that Social Security is really a part of fighting the deficit problem. I know that Congress incorporated it into the unified budget for reporting purposes. But as I say if you look at it there's no way that any savings at the Social Security end could go any place. You'd have one or two choices. Reduce the Social Security payroll tax or leave it in the trust fund for the future. And so this doesn't strike me as a tough problem. And I'll tell you something else. I am not going to give some of those practicing demagogues who have made this demagogic issue in the 82 election and who tried to do it again in the 84. I'm not going to give them a handle. But it looks as though some of the requests for this now are coming from Congress. I mean some people in Congress may be... I'll be glad to see you to their request. I'll be glad to look at anything that they propose. In the face of the deficits have you given up hope for achieving some of the new initiative you've talked about in the past such as tuition tax credits, enterprise zones? Not at all. Enterprise zones is very high on the list. I think that enterprise zones could probably be more effective in helping those people unemployed, poverty-stricken who need help, who need opportunity, more a part of that and of improving growth in the economy, which would further reduce the deficit than almost any of the so-called social programs that over the years have been a part of the Great Society. No, we want that very definitely. We want... and the tuition tax credit I think is just simple fairness. And we have not retreated from any of the social reforms that we asked for in the constitutional provisions and all. We're going to try for them, but right now we think that the two tracks aiming at the deficit and control of the budget and spending, we think that those have got to be the top priority. You've said before that they would be two separate legislative packages and you still hold to that. Yeah, I don't think we should put those into one package at all. Do you think the changes in the Senate leadership will have any effect on you getting your program through? Do you think it might be a little easier now? Well, I've gotten along very well with the leadership as it was and I think I'll get along with the present leadership. There's just a little different styles between Senator Dole, Senator Baker. Well, we've already had some meetings and gotten along just fine and I think he's going to be very supportive of our efforts to reduce the deficit. And not too much pressure from him right now on taxes? No, as a matter of fact, he hasn't said a word about that. He's heard you speak on this subject. Are you close to making any decision on the new Secretary of Education? No, we're delaying any appointment there because we've never given up our belief that the department should be eliminated. Now that doesn't mean we eliminate all the programs. We believe that they should be transferred back to other departments where they had fit in before they created a department of education. But we don't believe that the federal government has that important a role to play but it should have a cabinet agency at the federal level. Our federal aid to education only amounts to about 8% of the total. Education historically has been a local and state function. One area of federal support for education that many conservatives have questioned over the years, which exists now, is the expenditure of federal funds for research and development and promotion of new curriculum. Do many conservatives feel that that would be better left to the free market and to the local level and to get more of competition in that area if an attempt is made to eliminate some federal programs? Would that area be one that might be dropped? I think they'd all be looked at, all of them. Whether they were legitimately a federal function and thus should be maintained or whether in our federalism, that should be something left out there at different levels of government. But we haven't begun to look at that yet. We're still focusing on hopefully eliminating the department. What about stopping all government grants to students and instead just loans? In other words, there wouldn't be nothing but loans if there were anything from the federal government? Well, here I don't know. Again, as I say, we haven't really sat down and looked at some things of that kind. I do know that having worked my own way through school, I'm not averse to seeing that there's help given to other students who have to do the same thing. It just seems people have thought it much fairer that you make people who go to college have the will with all to repay it, pay it back. Are we out of time? Okay. There's been a lot of talk since the election of Pearl and Con about whether or not the election results represent a mandate for you or not. And I wonder what you think about that. Whether I use that word or not, let me just say, I think the people made it very plain that they approved of the course we've been on so far and what we've been trying to do. And I think they also indicated by their votes that they wanted us to continue on that course. In retrospect, do you think there's anything more that you could have done to help elect Republicans to the House and Senate? No, actually, I was surprised that there was such a cry raised that we hadn't done that, maybe because people hadn't been out there in all the districts. First of all, I did an awful lot of TV ads and radio tapes and so forth for our candidates, letters, solicitation, fundraising letters and so forth for all of them. Granted, there was a limitation on how much personally I could do and actually campaigning with them, because when you're the incumbent, you've got a job to do at the same time. But there, that was left to the Congressional and Senate committees. And where they said they wanted me to go, I went. I guess people were talking about the possibility of a nationwide television program, maybe a half hour in which you focused almost exclusively on the need to elect a Congress that would support you. Of course, I said it every place I... Well, you said it. And it was in... It was in the 30 minutes. In the 30 minutes. Oh, sure it was. And the Vice President did it also. No, I recognized that, but there have been people who said, well, there should have been like a whole half hour devoted just to that since you were so far ahead in the polls. I knew yourself and said, I'd win by an hour of margin if I could get... Yes. You know, what our polls showed also, though, that the problem with us in the House is the result of somebody else being in charge for the last 50 years in reapportionment because the polls show that a majority of the people who voted for members of Congress voted for Republicans, candidates, but we only elected a minority. Right. Look in your own state. You got the Republicans, I think, got a few more votes in California and what, 28? Many, many more. Was it 28 Democrats and 17 Republicans or 27? That's been going on for years. We are a sizable majority of American people voted for Republican candidates for Congress and yet only elected 40-odd percent of them. They've got us all bunched up into as few of districts as possible. Two or three more minutes. Got any yes or no questions? Yes or no questions. Okay, have you considered naming Tom Sol to the vacant chairmanship of the Council on Economic Advisory? Very frankly, well, I don't talk about anyone under consideration for an appointment until it comes time to say who it's going to be. I don't believe in embarrassing those then who might be considered or not. I have the highest respect for him, a fine man, but also I have to tell you that I have under consideration whether I want to fill that position or not. Why is that? Why is that? Well, because in the cabinet process we have and by way of the Treasury Department and others, I think that I get some pretty capable economic advice. In other words, do away with CEA totally. That's right, yeah. Then what about energy since we're talking about abolishing? Well, we still would like to achieve that. The man who's doing the job would like to achieve it, but so far we haven't been able to make a dent in that or in the education department up on the hill. Well, but in the budget do you look for calling for its abolition or breaking up its functions and distributing them? No, first this was legislated. We would have to get legislation that would eliminate that as a department. What meant are you going to ask for it? And then there would be, obviously there would be functions that would be moved to other departments. Okay, one last question. In the past you have steadfastly refused to involve yourself in Republican primaries. Do you intend to hold that position in the battle for the 1988 Republican nomination? Well, I've learned that making commitments this far in advance of anything is not the best idea, but I do have to say that I have always adhered to the idea that in this job you are the titular head of the party and as such you should let the party decide who the nominees would be. And so as I say, I still believe in that as a policy.