 of the United States. Good evening. I have a statement. We have an important visitor in Washington, Jose Napoleon Duarte, the president-elect of El Salvador. The president-elect and I yesterday issued a joint statement in which we agreed on three major objectives for Central America. The strengthening of democratic institutions, the improvement of living standards, and increased levels of U.S. security assistance to defend against violence from both the extreme left and the extreme right. The election of Jose Napoleon Duarte is the latest chapter in a trend toward democracy throughout Latin America. In Central America, El Salvador now joins Costa Rica and Honduras in having a democratically elected government. Democracy in Central America is a fundamental goal of our policy in that region, but continued progress toward that goal requires our assistance. Most of our aid, three-quarters of it, is economic assistance, but security assistance is essential to help all those who must protect themselves against the expanding export of subversion by the Soviet bloc, Cuba, and Nicaragua. Also, as I said in my speech to the nation on May 9th, we must support the democratic aspirations of the people of Nicaragua and oppose the Sandinista aggression against their neighbors and who seek genuinely democratic elections in Nicaragua as the Sandinistas promised the OAS in 1979. Peace can only be achieved in Central America if the forces of democracy are strong. We strongly support multilateral efforts toward peace, especially the Contadora process. However, no lasting peace settlement through the Contadora process can be achieved unless there is simultaneous implementation of all the Contadora objectives, including genuinely democratic elections in Nicaragua. The freedom fighters in Nicaragua have promised to lay down their arms and to participate in genuinely democratic elections if the Sandinistas will permit them. Our Congress faces some historic decisions this week. Those who struggle for freedom everywhere are watching to see whether America can still be counted upon to support its own ideals. The people of El Salvador are watching. The freedom fighters of Nicaragua are watching. Nicaragua's threatened neighbors are watching and the enemies of freedom are watching as well. Our balanced policy can succeed if the Congress provides the resources for all elements of that policy, as outlined in the bipartisan recommendations of the Kissinger Commission. But if the Congress offers too little support, it'll be worse than doing nothing at all. The success of communism in Central America poses the threat that 100 million people from Panama to the open border on our south could come under the control of pro-Soviet regimes. We could face a massive exodus of refugees to the United States. The Congress has the opportunity to reaffirm our commitment to brave people and risking their lives for the cause of liberty and democracy in Central America. The Congress also has the opportunity to reaffirm our bipartisan tradition, which will tell the world that we're united when our vital interests are at stake. I'm asking the members of the Congress to make that commitment. And now, tonight's first question will be from Maureen Santini. And incidentally, this is a double first for Maureen. Her first, first question in her new role was the AP's Chief White House correspondent. Maureen. Mr. President, it's been reported that you are willing to provide U.S. air power to keep oil tankers moving through the Persian Gulf. Could you tell us what the Saudi response has been to your proposal and under what circumstances the United States could become militarily involved in that region? Well, Maureen, I've seen all the stories and a lot of them based on speculation already. No, what we have kept in touch and are keeping in touch with the Gulf states and with our own allies, but we have not volunteered to intervene nor have we been asked to intervene. And we've communicated with them regarding that, and so far it seems as if the Gulf states want to take care of this themselves, they're concerned as I think we all should be not enlarging the war. Do we have a contingency plan for doing so if they can't take care of themselves? Well, if they ask us for help, we have, obviously, we've thought in terms of what we might do, but I don't think that's something I should talk about. Helen. Senator Burt says that our relations with the Soviet Union have reached the lowest point in 20 years. Did you misjudge the Russians or your hard-line policies responsible for boycott of the Olympics, break up of the arms negotiations, step up offensive in Afghanistan? Norma, this holds off our post. No, Helen, I don't think I'm responsible for any of those things. And if these are the lowest state that we've had for 20 years and not too long ago, just a matter of days ago, I gave to George Shultz one of our very eminent national news magazines for him to see an article on this very subject. And the article, it was an April issue. And the article cited that we had the lowest relations we'd ever had and the President was to blame for that and his vacillation and so forth and so on, except that it was April of 1980 when they were saying that about our relations with Russia. And I have to say that today, no, we didn't walk away from the negotiating table. We made every effort to prove that we were ready to be flexible in trying to negotiate a reduction of weapons. And as for the Olympics, the only thing as a government that we did in the Olympics was ensure them and meet virtually every request that they made with regard to their people there, up to and allowing their cruise ship to anchor, and we were going to spend about a half a million dollars on protection for that ship. There's a heightened validity and six eminent world leaders today said that we're headed for global suicide. What are you going to do about it with this arms race? I don't think we are, and I don't think we're any closer or as close as we might have been in the past to a possible conflict or confrontation that could lead to a nuclear conflagration. I think the very fact that we're stronger, yes, the Soviet Union is unhappy. They're unhappy because, for the first time in a couple of decades, we are preserving our security ability. We're building up our military and we're not unilaterally disarming while they continue their massive arms buildup. And I'm sure this makes them a little unhappy about that, that things aren't as easy as they once were. But when they're ready to come back to the table, it probably or might not be till after the election, I don't know. But I think that the world maybe is a little safer than it has been in the past. Mr. President, on the Persian Gulf again, is it true that you have written to the Saudis saying that should they ask the United States for aid, that we are willing to supply air cover to protect the oil nation? You specified what we would do, but we have told them because I made a statement earlier that neither we nor the western world as such would stand by and see the straits or the Persian Gulf closed to international traffic. Mr. President, and then in your judgment, what is the likelihood of American servicemen being involved in some kind of shooting war shortly or in the near future in the Middle East? I think very slight. I can't foresee that happening. You cannot foresee that happening? Does things stand now? No, I don't think so. Mr. President, you said America's vital interests are at stake in Central America. What will we have to do if the Congress does deny that security assistance to stop the threat of Soviet sponsored regime taking over all of the countries that are up to our southern borders? What do we have to do to... Suppose the Congress does not vote the money that you need for the freedom fighters, as you call them. What then would be required to do to prevent this scenario from developing? We'd be in a very difficult position, and so would they. But I have great hopes that after President Duarte's visit here and meeting with as many of the Congresses he did that there's some reason for optimism. Yeah, Andrea. Mr. President, there are reports that the administration has gone around Congress and continued to increase military and intelligence activities in Central America by channeling money through accounting tactics, tricks of accounting through the Pentagon to the CIA. While you can't discuss covert activities, can you at least assure the American people that you have not had this administration go beyond the will of Congress in increasing the spending for military activities in Central America? Andrea, we followed no procedures that are any different from what has been done in past administrations, nor have we done anything without the knowledge of the Congress. We were told, Congress was told about a month ago that if Congress didn't appropriate the money, the CIA supported Congress would run out of money by now. Now Congress has been told that the CIA has enough money to get through the rest of the summer. How is that possible without the knowledge of Congress? Well, unless they guessed wrong on the first date, but I thought that they were closer to being out of money than they apparently are. But I don't think any... Well, nothing of that kind could take place without the knowledge of Congress. Sam? Sir, interest rates are going up. The stock market is going down, and some economists say we're going to be into a recession perhaps this fall. Do you think we're headed for a recession? No, I don't think we are. And there's always some pessimists out there. But I think all of the indicators show that if anything the economy might be getting ready to level off a little bit from that 8.8% bulge that we had for the first quarter, and which I think was a little out of line, but which was probably based on inventory building. The end sales figures did not keep pace with that level of growth. So a great many businesses were building up inventory which accounted for the 8.8%. We are still estimating that we think for the year the economic growth will be about 5%. But all the other indicators. Last month housing starts at a rate of $1,960,000 a year permits at $1,700,000 personal earnings up and inflation the producer's price index just the other day that came out which is the one that indicates what the cost price index is going to be. That was a zero increase. Sir, a few weeks ago in Dallas you predicted by the end of the summer that interest rates would begin to drop. What was your prediction today? I expressed my belief an optimistic belief that before we were through with warm weather we may have to have a warm September ahead to that but summer isn't over until then. Let me go back here. Two questions on your upcoming trip to Europe. First, are you concerned in any way that the planned demonstrations in Ireland will marvel as supposed to be a friendly homecoming for the television cameras and secondly you have gone to economic summits for four years now and told the allied leaders that American interest rates will be coming down and the deficit will be coming down given the fact that interest rates are going up why should the allied leaders believe you if you sing the same song or say the same things this year? I think that the interest rates one of those things that can be volatile they slid up here and the interest rates they have if you compare them to what they were when we started they are well down so there was a little increase recently which I think represented fear in the marketplace of possible return of inflation I don't think it was necessary and I still hold that those conditions are or they are doing that is really unwarranted the rate of money increase right now is well within the guidelines set by the Federal Reserve and it is commensurate with our increased growth and yet it is not at a point that would add to inflation so I am still optimistic that those interest rates we are going to see them continue to come down to the deficit I am also going to be optimistic and tell you that I think that everyone has been overestimating not that it isn't a serious problem it is but I think that they have been overestimating the amount in the out years and the projections of what the deficit will be are you concerned about the Irish demonstrations? I think that is just Irish hospitality they know that I haven't I haven't gone any place in years that there hasn't been a demonstration at home Charlotte your administration has said that once we build up our military strength the Russians would have an incentive to come to the negotiating table you have said that we have built up our military defenses why have the Russians not returned to the negotiating table? well as I say maybe they are waiting for the election to be over but no we have built up on the other hand they can see for example the modernization of our strategic weapons which are all important the peacekeeper the Mx they can see the contest that is going on as to whether that is going to be built or not and this can't help but be encouraging to them but I think it is true they came to the table and I think they only came to the table because they believed in our determination to continue our military build up and they left because their whole propaganda campaign against the deployment of the Pershings and the cruise missiles in Europe which was agreed to in 1979 by this country when NATO requested it and we are keeping that promise but at all the time that they were negotiating with us they kept on building and adding to their stock of SS-20s now these are triple warhead missiles that are intermediate range targeted on all the targets of Europe but also they have been adding them aimed at targets in Asia and it was for this in response to this that NATO asked for an intermediate range weapon that could be based in Europe targeted on Russia and we have we are providing that it won't in any way match the 1350 or so warheads SS-20s but we believe it will be enough for a deterrent the use of a deterrent is to have the enemy know that if he is contemplating some rash action the cost to him might be more than he cares to bear so we are going forward with this they had waged such a campaign to stop it and I think they made this other move to hopefully hope that the our allies in Europe might change their mind and cancel out their request well the allies stood firm I don't think the alliance has ever been more solidly together than it is right now Mr. President, given the coolness of our relationship right now do you think the Russians have a problem of saving face perhaps and returning to the negotiations if so would you be prepared to offer some overture to make some overture that would be that positive sign that they ask for in order to come to the table without a loss of face Charlotte I don't think it would be proper for us to do something some concession that would make it look that we rewarded their intransigence and their walking out of the meetings but we have pursued and we took the lead in this negotiations on a number of other matters between our two countries that have nothing to do with strategic weapons and we have been making some progress in a number of those negotiations so I don't think things are as bad as they are being painted let me switch around a little bit here Mr. President the Civil Rights Act of 1984 is expected to go to House committees tomorrow because of the Supreme Court's decision in the Grove City College case the bill restores all inclusive prohibitions against sex, race, handicap or age discrimination at institutions with federally assisted programs do you support this measure? there is some lawyer watching this legislation very closely the court decision was based on the way Article 9 was written by Congress and it was the way we interpreted it also there is legislation to reverse the court decision with regard to Title 9 that will prevent discrimination against women in educational institutions that are getting funds from the government we support that there is legislation that has been proposed and I don't know just which they're going to take up tomorrow there is legislation which is so broad that actually it would open the door to federal intrusion in local and state governments and in any manner of ways beyond anything that has ever been intended by the Civil Rights Act that kind of legislation we would oppose Mr. President, you said earlier that if asked the United States would assist the Persian Gulf States in keeping straight up when moves open are there any circumstances where American interest could be so threatened that the United States would act unilaterally or without a request from those states? Well again, I can't foresee that we probably would be among all the importing of oil nations we would be the least hurt by any shutdown it is our allies, it is Japan it is our friends in western Europe who would really be in trouble if there was any stop to the Middle East oil actually only 3% of our oil supply now thanks to decontrolling oil and increasing domestic production only 3% is involved in the Persian Gulf for us and we have increased our stockpile of oil to four times what it was when we came here so I can't see a kind of emergency that would do this but also remember we are in consultation also with our allies with those nations that would be affected because we're not contemplating anything unilaterally here this problem is one that affects all of us what would the United States do to help its allies in the event of an oil cutoff would we give them oil from the strategic reserve? we have had people in consultations with our allies and they've been holding meetings on discussing contingencies of this kind we would not hold back on immediately turning to our reserve but I'm not prepared to say we've made any specific plans Gary Mr. President some of your top government's advisors suggest the interest rate question could be the cutting edge in November for the election with some of your people saying that the Federal Reserve Board has had too much control of the interest rates other saying that they haven't had but they've been too harsh the criticism has been too harsh to the Fed what is your position do you think the Fed should loosen up on the money supply? as I indicated earlier Gary we're right on target with it now it is true but a short time ago there was a dip below their regular line and I think this was one of the things that caused some panic out there in the money markets because usually or in the past on a number of occasions such as background 79 and 80 such a dip was then followed by a real loosening of the strings we went to 21.5% interest rates and double digit inflation for two years and so forth but it is possible that's not an exact tool the money supply sometimes and judging on a weekly basis the way they do sometimes there can be an inadvertent dip or an inadvertent splurge so I don't know whether the time when they got below their line was inadvertent or not but they are back up on target and where they should be with a normal rate of increase tied to the increase in economy Mr. President the White House and the Pentagon worked very hard yesterday to tell people they shouldn't really worry about the new nuclear missile submarines the Soviet Union says they placed off the American coast can you tell the American people that these new missile subs are not any cause for concern is there anything the US must do to respond to the Soviets if I thought there was some reason to be concerned about them I wouldn't be sleeping in this house tonight the no this isn't really anything new they're announcing and they're publicizing but those submarines off both our coasts they've had submarines in and out and paroling or patrolling there for extended periods of time maybe there's one or two more than have been there at one time in the past but I think it's I think again it is in keeping with their talk about putting the Pershings in Europe and that they're now going to show us that they can do something in return if we do that so they have the submarines offshore but they're aren't they pose any particular threat at all Jerry Mr. President for any consolation to you I've written all my relations in County Kerry not to demonstrate seriously until you and I are safely out of the country but I wanted to ask you if you have any message for the Soviet government or for the Sakharovs about the possibility of getting them out of the country so that there's any deal or any trade that can be made that would save their lives I just on this one I have to say we're as concerned as anyone deeply concerned Mrs. Bonner has a very serious heart condition she is a physician herself she's a war hero also she was wounded three times in World War II she was permitted to leave Russia once and had medical treatment for her problem outside the country and I think it's only natural that someone would want to go back to the person that had treated them before but I can't go further than that because this is a little bit like when I put a moratorium on myself before I was here and talking about the our people in the embassy in Iran I just have a feeling that anything I might say publicly could be injurious to her chances I just hope and pray that the Soviet Union will do the humane thing and let her go Mr. President, after the bailout of Continental Illinois Bank some experts are concerned about the soundness of America's banking system you have pushed for deregulation but are you now concerned that your administration will have to bail out more big banks because like public utilities for example they cannot be permitted to fail no, these this particular bank and the so-called bailout is maybe is by the banking system itself and it's been done before the protection has been offered to the depositors and obviously everyone would like to hope that the bank won't fail but if it does the people who would be injured would be the stockholders and no I do not see that this is any threat to the banking system much, this is one bank that needs some help Mr. President, the other day Treasury Secretary Reagan raised the possibility that your administration may push Congress for passage of two separate tax bills in 1985 one to simplify the current tax code and the second to raise new revenues in order to shrink the budget deficit if you're re-elected are higher taxes a good possibility next year I have to feel I haven't had a chance to talk to Don about this I have a feeling that he started probably trying to clarify and make it ever plain that if we have a reform plan and a simplification of the tax structure it won't be a gimmick in order to raise revenues so he was divorcing any tax increase from that now speaking of a tax increase in addition to that the only thing I could think is that he was possibly feeling that if we get to the absolute bottom of where we can get government spending and it still would then turn out to be a higher percentage of the gross national product then our tax structure provides then you would have to review the tax structure to see if you knew that you could not get any more cuts reductions in the cost of government to make the tax structure match that I have said that myself but we're not anywhere near that and I'm not looking for any tax increase that soon we've got a long way to go in cutting government spending government is taking too big a chunk out of the gross national product out of the private economy Mr. President you have said in the past that you have no intention of sending US troops into combat in El Salvador and President Elec Duarte said yesterday that he has no intention of asking for US troops to go there but despite these denials who doubts linger while Ramondale insists that your policy will lead to US involvement down there can you say unequivocally tonight that you would not send troops down to El Salvador even if it appears that without them El Salvador might fall to the communists First of all Mr. President Duarte made it very plain that they would never request American troops we have never had any consideration of doing that or any thought of doing that at all the I don't know how I can convince anyone that but all you'd have to do is look at all our friends and neighbors in Latin America and probably as a hold over from the past we'd lose all those friends and neighbors if we did that they want our help they know they have to have our help and in the manner in which we're giving it in military support by training and supplies and equipment and so forth but they don't want American manpower but if El Salvador clearly were going to fall to the communists would you feel it's in the US interest to send our troops in there and stop that or would you allow the country to go communist well you're asking me for a hypothetical question I think that I would be very foolish to try and answer Sir, as people on your staff and people in the justice department are well aware of some of the shenanigans of the Betz contractors are referred to general dynamics and some of their staple mates if you want specific names I can give them but I wonder if you are going to leave this curtain down on this national scandal are you going to see that it's brought out and that the 650 billion tax money that was allowed to go in settlement from the Navy to general dynamics a while back if you'll see if that's collected Sarah, I have to tell you that all of this about defense spending and the spare parts high prices and all of that I have said this before I will say it again this has been a past practice but it's our administration it's under cap Weinberger because we're the ones who found out these things were going on that you haven't come out and told us all about it yet and we are waiting to hear I have told you and there's been a report from the defense department there have been hundreds there have been hundreds of indictments there have been convictions for fraud there have been rebates from companies of all kinds but what? Sarah, you've been here longer than I I haven't been here long enough to call $600 million Piki Yun I want you to collect it I want you to get it back President, I was wondering sir if you could give us your definition of holding firm answer to Charlotte's question you said our allies in Europe are holding firm and accepting missiles yet the Dutch government here is going through a little rain dance here because there are people that want to take the new missiles you should sort of tell me how that is holding firm well the decision must be made by the Dutch cabinet cabinet of the Netherlands and the parliament and they have not yet taken up that issue or made a decision on it they are slated to get some cruise missiles there but in the other countries basically Italy, Germany the other NATO countries are all going forward the bases are being erected for the missiles including the Pershings and as I say not just on that issue alone but I have to tell you that some time ago when we came here we found there was disarray in the NATO alliance and that no longer holds true today I think we're closer than we've probably ever been well the Dutch government reverses and changes their mind are you fearful that will set off a chain reaction among the other allies where the situation is at best tenuous no, I doubt that they would there might be another country or so among some of the smaller allies that might follow suit but the rest rest assured wouldn't Mr. President you said a little while ago that you felt that the world was a little more secure place since you've been in power how do you count for the fact that so many people so many countries think that during the last three and a half years the world has moved closer to war rather than closer to peace I would say that that is because that's all that most of the people have been hearing in political dialogue from one side since we've been here in the three and a half years that I somehow have an itchy finger and I'm going to blow up the world and that has all been duly reported by so many of you that that is the tone that the people have been getting and it doesn't do me any good to tell you that having seen four wars in my lifetime I don't know of anyone in or out of government that is more determinedly seeking peace than I am and my goal is the total elimination of nuclear weapons if we can get those fellows back to the table and get them to start down that road of mutual reduction then they might find out what common sense it would mean to eliminate them but I would also point out that if we're that dangerous in three and a half years why is it that while the Soviets are still carrying on in Afghanistan and backing the forces in Campochilla the North Vietnamese forces there but all those gains that they were making in the few years before we came here Ethiopia South Yemen and Gola all of those things they haven't taken another inch of territory since we've been here I think Mr. President what the ordinary person is seeing is that the United States is rearming heavily the Russians are rearming heavily and the ordinary person says what is going to be the outcome of this arms race nobody is at any table No it is as simple as this the Soviets this is new for them they're up at full pitch I doubt if they could expand their military production any place beyond where it is right now or the rate that it is on the other hand they know that when for the first time in as I say decades they see us determined to refurbish our defenses they know that they can't match us if there is such a race which means that the only alternative for them is to watch us catch up or to sit down at the table with us and work out something in which they won't have to run the risk of someone being superior to them militarily Helens told me I'm all through in the wrong set ok thank you I'd like to answer his question