 United States. Ladies and gentlemen, I have an opening statement. In the day our administration took office, our top priority has been to rescue this economy from years of government mismanagement. We inherited the highest interest rates since the Civil War, the first back-to-back years of double-digit inflation since World War I, rising budget deficits and a national debt ready to break through the trillion dollar barrier. For years, government spending and taxation have grown faster than the underlying economy. The American people elected us to reverse that trend and that's what we've begun to do. Our program has only been in effect for some 40 days and you can't cure 40 years of problems in that short time. But we leave, we've laid a firm foundation for economic recovery in 1982. We said we would cut taxes and we've enacted the biggest tax reductions in history. And let's remember those reductions will barely offset the built-in tax increases already scheduled between now and 1984 that were adopted in 1977. We've slowed the growth of federal spending. We've cut the growth of regulations by a third. Interest rates and inflation are both heading down. Our reforms can stimulate new savings, new investments, new jobs and a new America. But one condition must still be met. This government must stiffen its spine and not throw in the towel in our fight to get federal spending under control. The budget savings, despite all the talk of austerity, have been accomplished without sacrificing necessary government functions and services. Even with the $35 billion cut so far, federal spending is still rising far too rapidly. The federal budget has doubled since 1975, tripled since 1970. Who can honestly look Americans in the eye and tell them spending is under control? Fiscal 82 is already five weeks old, but I have not received a single regular appropriations bill. Most of the bill's pending are over budget. It is imperative that the Congress meet its own spending target and move quickly to pass appropriation bills or a second continuing resolution that fits our September 24th request. I stand ready to veto any bill that abuses the limited resources of the taxpayers. It's ironic that those who would have us assume blame for this economic mess are the ones who created it. They just can't accept that their discredited policies of tax and tax spend and spend are at the root of our current problems. We will not go back to business as usual. Our plan for economic recovery is sound. It was designed to correct the problems we face. I am determined to stick with it and stay on course, and I will not be deterred by temporary economic changes or short-term political expediency. And now for the first question, Helen. Your recent statements on limited nuclear war, State Department memos, interviews have all hinted at possible intervention against Gaddafi, Castro. A high state of belligerency seems to soundify your foreign policy, and people say it's in disarray. My question is, were you misunderstood on the question of nuclear war? Are we going to intervene in the Caribbean or anywhere else? Are we going to provide a military shield for Egypt if it goes into Libya? I would have been just as disturbed as you are and just as confused by some of the things that I've been reading about our supposed foreign policy. Let me say that that statement started the whole thing with regard to possibility of spread of nuclear war. I can't say it was misunderstood. I don't think it was misunderstood by the editors who were in the room. I was having lunch with a group of editors. And I made a statement that I've made a number of times. I won't repeat it here, but it was an explanation of the whole strategic concept. And then, evidently, hearing it secondhand, because it wasn't written by anyone that was in that room, to my knowledge, it appeared in an entirely different context. And we go back and get the transcript of what was actually said, and I would stand by that. We have no plans for putting Americans in combat any place in the world. And our goal is peace. It has always been. And at the end of this month, we will go into negotiations with the Soviet Union on what I hope will be reduction of the theater nuclear weapons in Europe to the lowest point possible. So are you repeating those memos that have been publicized in connection with Libya and the Caribbean? We are interested, of course, in the Caribbean. This is why we've been helping Salvador, because we believe that revolution has been exported to that area and with design. Again, as I say, our economic help to El Salvador is three times the military assistance we're giving, and that military assistance is not in the nature of combat forces of ours, nor do we have any plans to make it that way. But yes, we continue our interest in preserving the Americas from this kind of exported revolution, this expansionist policy that is coming by way of, I think, the Soviet and the Cubans. Yes, Jim. With the budget deficit continuing to grow, have you decided are you going to try to raise taxes in some way in 82, 83, or 84, or are you going to see further budget cuts? And also, now having said that your promise of a balanced budget by 84 can't be met, when do you expect to see a balanced budget and what assurances do we have at this time that can be met? Well, with the uncertainty, Jim, of when we can bring ourselves out of this recession, which I think will take place in the first half of 82, I would hesitate to try and make a specific set of date or an amount with regard to budget deficits or when a balanced budget would take place. That is still our goal. That has to be our goal. The government has to return to staying within its revenues. Our goal remains the same. We recognize now that the likelihood of meeting it on the 1984 date has become an unlikely hood because of unforeseen changes. And again, as I say, we can't predict when that will be, but we stay on target that that is our eventual goal. I don't think, however, that just the balancing of a budget could justify any means to attain it. You could always balance a budget. If you put it in the backs of the people with tax increases, I don't favor that at all because every time you do that, you find it's like getting addicted to a drug because the very fact that those tax increases then reduces the prosperity and the productivity of the nation further and you find that you need more of the same and more of the same. You'll reach a point of no return. The reduction of government spending is the answer and the thing that we are going to attempt. And we have before the Congress now requests for further budget reductions and in January when we present the figures for the 83 budget in the out year of 84, we will be asking for more of the same. Whether there will be any changes in revenue procedures or not, that is a decision to be made and that too will be addressed in January when we present the other budget. Mr. President, I'd like to follow up Helen's question. You mentioned El Salvador and the importance that El Salvador has for the United States and this region. Yet the El Salvador government is rapidly losing ground and guerrillas already control almost one fourth of the land there. How far will the United States show to keep the Duarte government in power? Well, first of all, let me say that there's some disagreement, a great deal of disagreement about who is mostly in power or what the guerrillas might control. We have been urging and hopefully cooperating with a solution that would lead to an election and settle this dispute by peaceful means. It is true the guerrillas have switched their tactics now, unable to win a military victory. They have switched them to hit-and-run tactics against the infrastructure of industry and the economy, trying to bring down the government by destroying the economy. But I don't believe that we could accept without question that they are. There may be something of a stalemate in the inability to bring about a quick military solution to this, but we would prefer the other. How far are we prepared to go? As I've said, we're giving economic aid. I think we should continue to do that. I don't believe this requires in any way, nor have we considered the aid of the kind of actual military intervention on our part. But we are hopeful still that with the help of some of the other neighbors in Central America who feel as we do that we can bring about the idea of an election and a peaceful settlement. It is true about one thing. It cannot be denied. The guerrillas, with their terrorist tactics in El Salvador, have failed miserably in an attempt to bring the population over on their side. The populace is still in support of the government. Mr. President, in your exchange with the editors, I happen to have the transcript. I'd like to read you what you said. You said I could see where you could have the exchange of tactical weapons against troops in the field without it bringing either one of the major powers to pushing the button. Then Secretary Hague last week talked of the possibility of a nuclear warning shot as part of NATO's contingency plans. I would like to ask you first, if you endorse still what you said to the editors, and second, if you believe that the nuclear warning shot should be a part of NATO's plans. Well, I have not been a party to the contingency planning of NATO that has gone on now for approximately 30 years and which I think has proven itself a deterrent to military action in Europe for all this period of time. What you've just quoted that I said there, the discussion was in the area of, and I suppose it's hypothetical where you're talking about, is it possible to ever use a nuclear weapon without this spreading automatically to the exchange of the strategic weapons from nation to nation? And I gave what I thought was something that was possible that the great difference between theater, nuclear weapons, the artillery shells and so forth that both sides have, that I could see where both sides could still be deterred from going into the exchange of strategic weapons if there had been battlefield weapons troop to troop exchange there. I think there's high risk, there's no question of that. I think the thing we have to recognize and why our goal must be to seek peace is what someone said the other day, if war comes, is any nation with the opponents faced with inevitable defeat, take that defeat without turning to the ultimate weapon. And this is part of the danger and why we're going to pursue arms reductions as much as we can and do what we can to ensure peace. And I still believe that the only real insurance we have of that is deterrent power. Should there be a nuclear warning shot and I take it that you do endorse what you said in the context that you said? Well, I endorse only that I said it was offered as a possibility and I think you'd have to still say that that possibility could take place. You could have a pessimistic outlook, you would look on it or an optimistic. I always tend to be optimistic. Your other question though. The nuclear warning shot. Oh, well that, there seems to be some confusion as to whether that is still a part of NATO strategy or not. And so far I've had no answer to that. Mr. President, I wonder if there is any portion of the Saudi Eight Point Peace Plan that could be incorporated in the American Peace Initiative or that could be added on to the Camp David Accord? Well, one in particular. I know that there is also some dispute about what I'm going to say between the parties concerned but I believe and I have stated previously that I believe that it's implicit in the offering of that plan recognition of Israel's right to exist as a nation. And this has been one of the sticking points so far with the Arab world refusing to make that acknowledgment. This was why I have referred to it as a hopeful sign that here was an offer of a plan whether you agreed with it or not but indicated the willingness to negotiate which does imply the other part, the other point in the plan is that one of the eight points calls for all of the states of the region living together in peace and I think we all endorse that. Any other parts of it besides those two? Well, let me answer it this way. I think that the most realistic approach is the one that we are taking which is the attempt to bring peace in the Middle East must be based on the Camp David Accords and 242 resolution of the United Nations. Mr. President, your Secretary of the Treasury, Donald Reagan, yesterday gave a rather pessimistic view of the nation's economy. I think he called it a real downer that we were facing. Do you share his pessimistic view of the economy? Are we in for a real downer in your opinion? Well, I don't know what his definition is of a real downer. I think that we're going to have some hard times for the next few months. I think we're going to see a pickup in the economy and I think that Donald Reagan believes this also in spring or the latest early summer of 1982. The interest rates, as you know, have come down three and a half points since September and this has been one of the major causes of our stepping into a recession that while we had predicted, as you well know, a stagnant economy, and we refer to it as a soggy economy and so forth throughout the year, none of us had predicted the stepping over into recession. And it has changed some of the estimates and obviously has witnessed our second question here about where we're going. But I think all of us are agreed that we are going to come out of it in the next several months and we believe as our economic program starts to work and has more than 40 days behind it, the oncoming tax cuts will take place that are scheduled for next July and so forth. We think are going to bring about the reduction of unemployment and the stimulation of productivity and we've had some pretty hopeful signs already with regard to the producer's cost index that has just recently come to us. There are some members of Congress say that this B-1 bomber you want to build is a flying Edsel. The Congressional Budget Office says that it will cost twice as much as your people think it will cost. Your own Secretary of Defense calculates that it's useful time before the Soviets could keep it from penetrating Soviet airspace. It will be about four years. Are you going to reconsider? Do we really need the B-1? Sam, yes we do. I believe that this and the MX are both important parts of strengthening our weakened triad of strategic nuclear power. The B-52, which has been hailed at the moment as the one that could be our craft for carrying missiles and penetrating, was never built for that. It would have to be rebuilt so it's, you're not home free by just by using that older plane. There's a cost to that. It carries, well the B-1 carries anywhere from one and a half to two times the payload that it carries. The B-1 has a target on radar that's only a fraction of that of the B-52 and it has greater speed. But the problem that is necessitated that is a gap that remains between what has to be the ultimate use of the B-52 with their age and the development of the new tactical bomber. That is only in a state of research and study right now. We cannot guarantee the date that it will be ready. It is that gap when we would have nothing that the B-1 would fill. But the very fact that it's one mission of penetrating enemy airspace might be eliminated in a few years' time. The end of that gap as hopefully the other plane comes online does not mean that you scrap it. There will be other purposes and functions for which it can be used. So it isn't a total loss. As to the figure given by Congress, Cap Weinberger was my finance director for a while in California. And I trust his figures better than I trust theirs. And I think that we go ahead and I think that's a worst case situation that they're taking with regard to cost. Yes, ma'am. Thank you, Mr. President. Recently we've looked at unemployment that has nearly increased 20 percent and a minority portion of our economy that hasn't experienced an unemployment problem was three times that. Is there any program, including your urban enterprise program, that you feel will add some measure of decrease in the unemployment and the depressive state of economic state for blacks and other minorities in this country? Yes, there is. And that problem is not new with this administration. As you know, the unemployment of minorities has been greater always than it is with the majority, the white community. And I don't think we've lumped the figures together into one figure and say for black unemployment, ignoring the fact that that figure has been heightened by the excessive amount of youthful or teenage unemployment. It is not totally reflective of the earner for the household. But we think that our economic program is designed to rectify over the long haul this problem which has been with us for these 40 years that I've been talking about and needs correcting. It didn't just come into being for months, but also we are looking at very seriously the idea of urban renewal. Well, that's the wrong name for it. I've criticized that too much to use it. The enterprise zones, the specialized zones to hit targets of very high unemployment in our cities. And we are going forward with that. Mr. President, while you have made no decisions yet on your entitlements cuts for 1983 and 84, what is your feeling in principle about the cuts that have been proposed to reduce Medicaid and Medicare benefits and to also force welfare mothers to go out and seek jobs? Does that mean that the social safety net is really in tatters? No, it isn't. And the main goal in any of these reductions is still aimed at correcting those abuses that have come about through the interpretation of regulations to allow people who do not have real need that justifies their imposing on their fellow citizens for sustenance for them to still be able to take advantage of these programs. The person with real need, we still want to help. At the same time, when you say to force someone to go out and seek work, I think that the whole target of some of our social reforms like welfare always should have been to find a way to salvage those people and make them self-sustaining instead of perpetuating them under the third and fourth generation as wards of the government. And let me just give an example here of the type of thing that goes on that has to be corrected. We just recently received word of a little girl who has spent most of her life in a hospital. The doctors are of the opinion that if she could be sent home and receive her care at home, it would be better for her. The spending most of her life there and away from the home atmosphere is detrimental to her. Now, it would cost $1,000 a month for her particular ailment to send her home. Her parents have no way that they can afford that. And the regulations are such that Medicaid now cannot pay for that if she goes home. The alternative is Medicaid continues to pay $6,000 a month to keep her in a hospital when the doctor says she would receive better treatment and be better off at home, but her parents can't afford to have her taken off Medicaid. Now, by what sense do we have a regulation in government that says we'll pay $6,000 a month to keep someone in a hospital that we believe would be better off at home but the family cannot afford a 1-6th of that amount to keep them at home? Do you endorse the Schweiger proposals? Do you endorse the proposals made by your Health and Human Services Secretary? I have to tell you that those again are going to be presented as options which will be considered in an upcoming cabinet meeting, so I can't give you an answer on that too. I feel that we have to look at these programs to see what we can do, but as I say these will be presented as options that we have yet to go over and consider and see, make sure that they're not going to be considered. Mr. President, you say you want to stay on course with your September 24th program but there's some confusion about what remains of that program which has never really been detailed to the public or to Congress. Your entitlement program, for instance, you haven't, are you going to drop that as reported until January? The $3 billion in tax increases is that going to be postponed? George, we'll be talking about whether there's any, whether there's going to be or should be any revenue changes in January, but also the entitlements and it doesn't mean dropping them in any way. Those two will be presented in January with the budgeting process for 83, but those programs were never intended to go into effect until late in 1982 anyway, so even in January we will be, if that is the route we take, they will be in time for when they were originally scheduled. The problem has been with the Christmas holidays coming after all our discussions with our leaders in Congress that we we just can't, we can't produce or get anything done by Congress in this interim period and so it's the best advice that since they don't have to be set back by delaying their presentation until January, that's when we're going to do it. Precisely what will you be after Congress to do between now and January? Well, we've got that 12% cut before them. They've got about 14 appropriation bills up there. Not one has come to my desk as yet. Now they're discussing a second continuing resolution of the kind that took us all the way through 1981 and here we go into 1982 and as I say, we're waiting most of the appropriation bills that they're considering are above budget. The budget that we set. And as I've said, I will not stand still for budget-busting bills but whether they send those up or whether in this interim period they send up another continuing resolution, I don't know but if they do, I hope that it is within our budgeted figures. The first one was not, which means that in forced spending through a continuing resolution that was above our budget. Mr. President, what adjustments are you planning in your foreign policy structure or in your staff to avoid situations such as that last week when your secretaries of defense and state were making conflicting statements on nuclear policy and which made it necessary for you to call your secretary of state and your national security advisor into the Oval Office for a private meeting? Well, I called them in actually to find out and to urge that they, with their staffs just as I have with my own ensure that we're a little more careful there seems to be too much just loose talk going around but it has been exaggerated out of all reality. There is no animus, personal animus and there is no bickering or backstabbing going on. We're a very happy group and the the picture that we, the picture that has been given of chaos and disarray is a disservice to the country and to other countries and allies as well. We are not in disarray with regard to foreign policy. I think our accomplishments have been rather astounding. I have had 70 meetings with bilateral and multilateral with heads of state foreign secretaries ranging from Southeast Asia to Asia, to Europe, Africa and certainly here within the Americas. We have a better rapport established now between the three North American countries than I believe we've ever had. We have our allies I don't think we've ever had a stronger relationship than we have with them in Europe. We were supposed to be destroyed at the Ottawa summit and suddenly you decided that by some fluke we weren't and then came Cancun and I was not burnt at the stake. Everything turned out just fine and I had bilateral meetings there with 17 individual heads of state that were there. They were very pleased with the presentation we made about how to meet some of their problems. We have I think in the Middle East we've progressed there I think that I think that we've made great progress and rectified some things that have been giving the country problems for a time and tied with this as our economic plan and our defense program to refurbish our defenses so that I am greatly encouraged our meetings here with heads of state in every instance they have responded with statements to the effect that they had better relations than they've ever had before with our country better understanding of where we stand with relation to each other and I think that Al Haig has done a remarkable job as Secretary of State he has trusted and approved of in every country that we do business with and the only thing that seems to be going wrong is I think sometimes that the District of Columbia is one gigantic ear. One follow up. You've criticized the press for circulating what you call reports of disarray I'm wondering if you think that Mr. Haig's behavior may have been at play in these reports also Well, all that I meant by that was I must say that there have been times when we've been checked on is this story correct and we have been able to refute that the story is not correct and have then seen it still appear and be made public but all I would ask is, I know you've got a job to do and you're trying to do a job all I'd ask is all of us, I think it behooves all of us to recognize that every word that is uttered here in Washington winds up by way of ambassadors and embassies in all the other countries of the world and we should reflect on whether it's going to aid in what we're trying to do in bringing peace to trouble spots like the Middle East or whether it's going to set us back You gave a rather dramatic example of a person who could be better treated for $1,000 at home and $6,000 of Medicaid funds in the hospital Could that be taken to mean that you would approve the use of Medicaid funds for home treatment and let me just add to that when you talked about protecting the needy I aware that Secretary Schweiger's memorandum would submit for the first time since Medicaid started at the state's levy charges on the poor for the Medicaid treatment Well the idea in government medical programs of putting some minimum charge in which the recipient unless they are totally needy pays some share has been found to be very successful in reducing overuse of some programs Now again you're citing something that has not yet come to me if it is going to come as an option so we wait and see On the first part of your question which I think is the main question Yes let me give an example in California we have some programs in which the choice could be between home care for the individual or institution