 I know you're all wondering why we asked you here. Last Thursday evening, I told the American people that the road to economic recovery begins with a responsible budget now. I pledged to them my personal all-out commitment to work with the members of both Houses of Congress on both sides of the aisle to break the budget deadlock, and we've been doing that continuously. And last night, in cooperation with the Senate Budget Committee, we took an important step toward the balanced and fair compromise the American people want and our economy needs. We reached agreement on a three-year deficit reduction package, totaling $416 billion. Two-thirds of the amount will come from spending reductions and interest savings, only 23 percent from revenue increases, and while we realize no compromise can please everyone, this one meets the most important criteria. It will continue to bring down the growth in federal spending. It should measure financial markets or reassure, I should say, financial markets by sharply reducing projected deficits next year and in the years beyond. It will preserve our commitment to a stronger defense and to the all-important incentives to broaden the tax base by stimulating more savings, investment, production, risk-taking, and growth in the private economy. Let me emphasize one other point. This package includes measures to restore the solvency of the Social Security Trust Fund. What does I promise the American people? Social Security beneficiaries will receive their full 7.4 percent cost of living increase in July, and we will continue to protect the basic benefits of Social Security recipients in the future. And now with me this morning are some of the key leaders in the Congress that we've been working with in the past few weeks, and with their great leadership, and the leadership of many others from both parties, I believe we can put our country firmly on the road to economic prosperity, and I'm going to turn around and say thanks to these gentlemen right now for being with me. Thank you, Mr. President. Now I'd like to thank you. I may be premature, but a little bit of extra pain. We have to go to work now. We'll see you later. Thank you, Mr. President. Mr. President, you're at $40 billion dollars out of Social Security. How can you do it, Mr. President? How can you do that about cutting benefits? You said you'd cut that. This year is a plug that is simply put in there. Based on, you will remember, there is a task force working, a bipartisan task force on restoring the solvency of Social Security, the integrity of it, which we told the people a year ago was lacking, and at that time this was rejected, and there were people who told us in the debate that, oh, there was no danger to the system. They now recognize, yes, there is. We have put in that figure as what will be necessary in the restructuring of the program in order to restore solvency to the program. Why can't you put Alan Greenstein in a dark room and clock-lock the door like Lyndon Johnson did and tell him to go to work down and finish his study? They are going to work now, and they are working. Can't you do it quicker? Well, we've gave them till December 31st. If they come in with something earlier, we'll be very happy about it, but that still allows us time. Can you assure that there will be no cuts in Social Security benefits in the future? I have said to the delegates that I appointed to that task force that the people who are now dependent on Social Security must be assured that they are going to continue to get their benefits. Are you passing the Social Security buck until after the election, sir? No, that was decided back when the bipartisan agreement came to have a task force, a bipartisan task force. We made an effort last year to restore the solvency, and if you'll remember it was made into a political football and not by our doing, and it guaranteed the continued benefits as they are to the people on the Social Security. Mr. President, to make the system solvent, the 40 billion has to come from somewhere, doesn't it? Either from increased revenues or from decreased benefits. No, it could come from an entire restructuring of the program, looking back actuarially, looking back down toward people who are just beginning in the program. As you know, there is a gigantic increase in Social Security tax built into the system, passed when it went into effect in 1978. We had one increase in the payroll tax in January. There will be two more in the next few years that are scheduled to take place. And the task force is supposed, and that does not restore the solvency, even though the promise was made by the previous administration that that guaranteed the program's solvency until the year 2015. It didn't even agree or guarantee it beyond 1984. Mr. President, you've said repeatedly that you wouldn't balance the budget on the back, so the taxpayers. That's right. But you've now apparently agreed to large new taxes that the taxpayers will have to pay one way or the other, the American public. What made you change your mind? No. If you'll remember the original budget proposal we made, proposed $13 billion of additional revenues, not necessarily in tax increases, but in changes in the tax structure, advantages that people were getting that we did not believe had ever been intended in the structure. And all we've done has come up on the first year, $7 billion on that. Now, that does amount to, as that goes on, over the three-year period, when you institute something in one year, then that continues and is reflected in the growth of the economy in the years to come, just as the, but the main thing that... What's the figure you've agreed to in three years, you know? It will be, it's 20 and 35 and 40 in the third year. You have to add it as up to $75 billion. No, that's $95 billion. $95 billion, my magical law. Well, isn't that a large tax increase that the American public will have to pay, sir? Not when you stop to think that maintaining our present tax cuts as we will, that that amounts to the $358 billion tax cut over the three years. Now these, the things that we're considering are not the kind of things that are going to in Pingeon the incentive features of the way we have built in the business tax cuts and the individual income tax cuts. No, no, that remains intact. Indexing will not be slipped. Indexing will not be slipped. Mr. President, are you now conceding what the Democrats have been saying all along, which was that last year's tax cut was simply too big? No, not at all. I am suggesting that the fact that we have inflation virtually down to zero and that it has come down that fast and other factors in the economy that indicate that the recession is bottoming out indicate that we would have been better off economically right now if they had not made us compromise and if the tax cut had been retroactive to January 1st, 1981 and had been 10% not five. We really are not beginning our tax cuts in reality to have an effect on the economy until this 1st July tax cut. Let me if I could also say something else to many of you. You seem to have been confused about something and have referred a number of times that the budget that we first presented in February was a budget that included a $182 billion deficit for 83 and then increasing deficits beyond. Let me make something plain. The deficit figures are the figures if nothing is done. They were not. In other words, our original budget proposal would have vastly reduced those deficits but many of you have continued to refer that our budget proposal contained a $182 billion deficit. It did not. Mr. President, one other subject, please. Come over there. I wondered if you would comment and give us your assessment, sir, about whether the United States has a creditable role yet to play as an honest broker in that we've come down on the side very clearly of Great Britain rather than Argentina. Well, we stand willing, as we always have been, to achieve a peaceful settlement under the conditions of Security Council Resolution 502 which calls for both a ceasefire and a withdrawal. And I'm not going to single out any particular approach that we're pursuing, but we're open to every approach that can. We now have the help of the President of Peru who has involved himself in these negotiations. We'll do whatever we can to help, but it must be within that framework. Wait a minute, I promised him. On the Falklands, I think there is some concern that the Falklands could escalate into a greater war and some concern even that it could involve eventually the United States and the Soviet Union. What steps have you taken, if any, to try to head that off from happening, such as contacts perhaps directly or otherwise with the Soviet Union? I do not, frankly, I do not see the danger of this escalating to that extent. And the steps that we're taking are the steps that we've always been taking and that is seeking within, as I say, the UN framework this kind of a resolution that calls for ceasefire and calls for withdrawal of all forces while this is done. Now, so far there has not been agreement on that. Mr. President, are you committed to following the... I'm sorry, let's take glue and no more, please. Are you committed to following what that commission advocates at the end of the year, even if that means cutting the cost of living increases of Social Security recipients? Well, this is one... No, I have to say there I'm on record and I don't think they would do that. I don't think that the people who are dependent on Social Security should be frightened any more than they have been with the political demagoguery that's been going on about this issue. The people who are presently dependent on Social Security must be assured that they're going to continue to get their benefits. Thank you. The Republicans have agreed on now in the Senate. This plan? What if they don't buy it, sir? You can't pass it without them, can you? Well, it would be rather difficult for them to explain how they did not want to be a party to a plan that was going to reduce the three-year deficit by $416 billion and would give us deficits that would go down from 106 in this first year to 69 next year and to 39 in 1984 with a continuing line downward that makes certain a balanced budget in the next ever year. Are you going to bring them in? You'd say the Democrats had caused the recession to continue if they don't agree to this. If they can come up with a better proposal or one that will do this, we'd be very willing to listen. We want to work with everybody on this. Are you going to bring in the Bo Weevils and start trying to build your own coalition? My goal from the very first and the reason for the gang of 17 and everything else was that I believe the American people in this time of economic distress should have had the assurance of seeing the Democrat and Republican leadership in the Congress and in this administration stand before them together and say that we have agreed on a plan to help cure this recession and reduce these deficits and so far we have not been able to bring that about but we are going to continue to try. Thank you very much. Thank you very much. The gang of 17. What? What do you call them? The gang of 17. They named themselves that. They were 17 and they began naming themselves after they got to about 13 meetings as the gang of 17. Do you know what happened to the gang of four in China? But as I told Sarah one day, you know a sweet guy like me would. Five years ago. I know you're all wondering why we asked you here. Last Thursday evening, I told the American people that the road to economic recovery begins with a responsible budget now. I pledged to them my personal all-out commitment to work with the members of both houses of Congress on both sides of the aisle to break the budget deadlock and we've been doing that continuously. And last night in cooperation with the Senate Budget Committee, we took an important step toward the balanced and fair compromise the American people want and our economy needs. We reached agreement on a three-year deficit reduction package totaling $416 billion. Two-thirds of the amount will come from spending reductions and interest savings, only 23% from revenue increases. And while we realize no compromise can please everyone, this one meets the most important criteria. It will continue to bring down the growth in federal spending. It should measure financial markets or reassure, I should say, financial markets by sharply reducing projected deficits next year and in the years beyond. It will preserve our commitment to a stronger defense and to the all-important incentives to broaden the tax base by stimulating more savings, investment, production, risk-taking, and growth in the private economy. Let me emphasize one other point. This package includes measures to restore the solvency of the Social Security Trust Fund. What does I promise the American people? Social security beneficiaries will receive their full 7.4% cost of living increase in July and we will continue to protect the basic benefits of social security recipients in the future. And now with me this morning are some of the key leaders in the Congress that we've been working with in the past few weeks. And with their great leadership and the leadership of many others from both parties, I believe we can put our country firmly on the road to economic prosperity and I'm going to turn around and say thanks to these gentlemen right now for being with me. Thank you, Mr. President. Can I have a word with Mr. President? He may be premature but a little bit of a best of me. We have to go to work now. We'll see you later. Thank you, Mr. President. This is $40 billion out of Social Security. How can you do it, Mr. President? That figure... How can you do that without cutting benefits? No. That figure is a plug that is simply put in there. Based on, you will remember, there is a task force working, a bipartisan task force on restoring the solvency of Social Security, the integrity of it, which we told the people a year ago was lacking. And at that time this was rejected and there were people who told us in the debate that there was no danger to the system. They now recognize, yes, there is. We have put in that figure as what will be necessary in the restructuring of the program in order to restore solvency to the program. So, alright. Why can't you put Alan Greenspan in a dark room and clock-lock the door like Lyndon Johnson did and tell him to go to work now and finish his study? They are going to work now and they are working. Can't you make him do it quicker? Well, we gave them till December 31st. If they come in with something earlier, we will be very happy about it, but that still allows us time. Can you assure that there will be no cuts in Social Security benefits in the future? I have said to the delegates that I appointed to that task force that the people who are now dependent in Social Security must be assured that they are going to continue to get their benefits. Is the Social Security buck until after the election, sir? No, that was decided back when the bipartisan agreement came to have a task force, a bipartisan task force. We made an effort last year to restore the solvency and if you'll remember, it was made into a political football and not by our doing and it guaranteed the continued benefits as they are to the people on Social Security. Mr. President, to make the system solvent, the 40 billion has to come from somewhere, doesn't it, either from increased revenues or from decreased benefits? No, it could come from an entire restructuring of the program, looking back actuarially, looking back down toward people who are just beginning in the program. As you know, there is a gigantic increase in Social Security tax built into the system, passed when it went into effect in 1978. We had one increase in the payroll tax in January. There will be two more in the next few years that are scheduled to take place. And the task force is supposed, and that does not restore the solvency even though the promise was made by the previous administration that that guaranteed the program's solvency until the year 2015. It didn't even agree or guarantee it beyond 1984. Mr. President, you said repeatedly that you wouldn't balance the budget on the back so the taxpayer. That's right. But you've now apparently agreed to large new taxes that the taxpayers will have to pay one way or the other, the American public. What made you change your mind? No. If you'll remember the original budget proposal we made, proposed $13 billion of additional revenues, not necessarily in tax increases, but in changes in the tax structure, advantages that people were getting that we did not believe had ever been intended in the structure. And all we've done has come up on the first year $7 billion on that. Now, that does amount to, as that goes on, over the three-year period, when you institute something in one year, then that continues and is reflected in the growth of the economy in the years to come, just as the, but the main thing that... What's the figure you've agreed to in three years, you know? It will be, it's 20 and 35 and 40 in the third year. You have to add it as up to $75 billion. No, that's $95 billion. $95 billion, my master of law. Well, isn't that a large tax increase that the American public will have to pay, sir? Not when you stop to think that maintaining our present tax cuts, as we will, that that amounts to the $358 billion tax cut over the three years. Now, these, the things that we're considering are not the kind of things that are going to impinge on the incentive features of the way we have built in the business tax cuts and the individual income tax cuts. No, no, that remains intact. And indexing will not be slipped. Indexing will not be slipped. Mr. President, are you now conceding what the Democrats have been saying all along, which was, last year's tax cut was simply too big? No, not at all. I am suggesting that the fact that we have inflation virtually down to zero and that it has come down that fast and other factors in the economy that indicate that the recession is bottoming out indicate that we would have been better off economically right now if they had not made us compromise and if the tax cut had been retroactive to January 1st, 1981 and had been 10% not five. We really are not beginning our tax cuts in reality to have an effect in the economy until this 1st, July tax cut. Let me, if I could, also say something else to many of you. You seem to have been confused about something and have referred a number of times that the budget that we first presented in February was a budget that included a $182 billion deficit for 83 and then increasing deficits beyond. Let me make something plain. The deficit figures are the figures if nothing is done. They were not. In other words, our original budget proposal would have vastly reduced those deficits but many of you have continued to refer that our budget proposal contained a $182 billion deficit. It did not. Mr. President, one other subject, please. Come over there. I wondered if you would comment and give us your assessment, sir, about whether the United States has a creditable role yet to play as an honest broker in that great Britain rather than Argentina? Well, we stand willing, as we always have been, to achieve a peaceful settlement under the conditions of Security Council Resolution 502 which calls for both a ceasefire and a withdrawal. And I'm not going to signal out or single out any particular approach that we're pursuing, but we're open to every approach that can. We now have the help of the President of Peru who has involved himself in these negotiations. We'll do whatever we can to help. But it must be within that framework. Wait a minute, I promised him. On the Falklands. I think there is some concern that the Falklands could escalate into a greater war and some concern even that it could involve eventually the United States and the Soviet Union. What steps have you taken, if any, to try to head that off from happening such as contacts perhaps directly or otherwise with the Soviet Union? I do not... Frankly, I do not see the danger of this escalating to that extent. And the steps that we're taking are the steps that we've always been taking, and that is seeking within, as I say, the UN framework this kind of a resolution that calls for ceasefire and calls for withdrawal of all forces while this is done. Now, so far there has not been agreement on that. Are you committed... I'm sorry, let's take glue and no more, please. Are you committed to following what that commission advocates at the end of the year, even if that means cutting the cost of living increases of Social Security recipients? Well, this is one... No, I have to say there, I'm on record and I don't think they would do that. I don't think that the people who are dependent on Social Security and by the political demagoguery that's been going on about this issue, the people who are presently dependent on Social Security must be assured that they're going to continue to get their benefits. Thank you. The Republicans have agreed on down the Senate. What if they don't buy it, sir? We can't pass it without them, can we? Well, it would be rather difficult for them to explain how they did not want to be a party to a plan for the three-year deficit by $416 billion and would give us deficits that would go down from 106 in this first year to 69 next year and to 39 in 1984 with a continuing line downward that makes certain a balanced budget in the next ever year. Are you going to bring them in? Are you going to bring them in? Are you going to continue if they don't agree to this? If they can come up with a better proposal or one that will do this, we'll be very willing to listen. We want to work with everybody on this. Are you going to bring in the Bo Weevils and start trying to build your own coalition? My goal from the very first and the reason for the gang of 17 and everything else was that I believe the American people in this time of economic distress should have had the assurance that the Democrat and Republican leadership in the Congress and this administration stand before them together and say that we have agreed on a plan to help cure this recession and reduce these deficits and so far we have not been able to bring that about but we are going to continue to try. Thank you very much. What? They named themselves that. They named themselves 17 and they began naming themselves after they got to about 13 meetings as the gang of 17. You know what happened to the gang of four in China? I told Sarah one day you know a sweet guy like me would.