 President of the United States. Good evening. Please be seated. I have an opening statement. On December 27, terrorists, as we know, attacked Rome and Vietnam international airports with the latest in a series of atrocities which have shocked the conscience of the world. It's clear that the responsibility for these latest attacks lies squarely with the terrorists known as Abu Nadal and his organization. The number of his victims increased by 19, among them five Americans including Nathasha Simpson, an 11-year-old girl. Many others from around the world were wounded. We shall make every effort to bring Abu Nadal and other terrorists to justice. But these murderers could not carry out their crimes without the sanctuary and support provided by regimes such as Colonel Gaddafi's in Libya. Gaddafi's long-standing involvement in terrorism is well documented and there's irrefutable evidence of his role in these attacks. The Rome and Vienna murders are only the latest in a series of brutal terrorist acts committed with Gaddafi's backing. Gaddafi and other Libyan officials have publicly admitted that the Libyan government has abetted and supported the notorious Abu Nadal terrorist group which was directly responsible for the Rome and Vienna attacks. Gaddafi called them heroic actions. I call them criminal outrages by an outlaw regime. By providing material support to terrorist groups which attack U.S. citizens, Libya has engaged in armed aggression against the United States under established principles of international law just as if he had used its own armed forces. We've urged repeatedly that the world community act decisively and in concert to exact from Gaddafi a high price for his support and encouragement of terrorism. The United States has already taken a series of steps to curtail most direct trade between our two countries while encouraging our friends to do likewise. Terrorists and those who harbor them must be denied sympathy, safe haven, and support. In light of this latest evidence of Libya's growing role in international terrorism, it is clear that steps taken so far have not been sufficient. Tougher, more comprehensive measures are required by the international community. Accordingly, I signed today an executive order stating that the policies and actions of the government of Libya constitute a threat to the national security and foreign policy of the United States. Congress has been notified of my decision. Under the authority vested in me by the Constitution and the laws of the United States, I've taken measures to end virtually all direct economic activities between the United States or U.S. nationals and Libya. These measures, some of which take effect immediately and others no later than February 1st, impose a total ban on direct important export trade with Libya except for humanitarian purposes. They prohibit commercial contracts and other transactions with Libya, including travel-related activities other than those needed for journalism or to carry out this order. I call on all Americans in Libya to leave immediately. Those who violate these orders should know that they will be subject to appropriate penalties upon their return to the United States. Let the government of Libya understand that it is fully responsible for the welfare of those Americans still in Libya and that Libya will be held accountable for any attempt to harm them or restrict their freedom to depart. Our differences are not with the people of Libya but with Colonel Gaddafi and his regime. We've taken these steps after much reflection and in full awareness of the economic consequences which the United States stands to incur as a result. Civilized nations cannot continue to tolerate in the name of material gain and self-interest the murder of innocence. Gaddafi deserves to be treated as a pariah in the world community. We call on our friends in Western Europe and elsewhere to join with us in isolating him. Americans will not understand other nations moving into Libya to take commercial advantage of our departure. We will consult with all our key allies to pursue the goal of broader cooperation. Italy's Prime Minister Craxi in whose country one of the recent attacks occurred properly emphasized the necessity not only of coping with terrorists but identifying, quote, those states that guarantee terrorist protection and the possibility to arm and organize themselves to carry out their bloody raids, end quote. Gaddafi's Libya is such a nation and we call upon other nations to join us in denying it the normal economic and diplomatic privileges of the civilized world. If these steps do not end Gaddafi's terrorism I promise you that further steps will be taken. Thank you and that concludes my statement but wait, before taking your questions let me extend a warm welcome back to one of your colleagues, Sarah McLendon. Sarah's been absent for a while but she's back now and I'm delighted. Sarah's a true Washington institution who's seen a lot of history that she's covered aggressively and fairly. Sarah's kept several of my predecessors eight presidents in all and me on our toes over the years and I'm truly honored that she chose tonight for her first public appearance and I had a feeling she wouldn't miss this so you see it's not that we haven't been holding press conferences I was just waiting for Sarah to come back and in honor of her return I'd like to offer Sarah the first question don't worry Mike you'll get the second one Aaron Thank you Mr. President that's very nice of you and I appreciate it Sarah I want to call your attention to real problem we've got in this country today the hospitals and the doctors ascended the elderly sick home too soon before they're really ready to go and that makes a burden on their families this all seems to be based on the Medicare payment formula and I know that there's a fear across the land from Graham Rudman for fear that the Medicare payments may be reduced further I wonder if you can't have your experts make a solution to this we have been sir I can't tell you what the final decision has been in this we have been looking at this entire program things that can be done and should be done and also the possibility we're looking at as to whether we can't find something to take care of catastrophic illnesses I tried to do this when I was governor in California and I couldn't get any public interest in it at all I guess everyone has a feeling it will never happen to them but we are looking at this as to what we can do with regard to some of the problems that have arisen because you know the program has expanded in cost greatly medical care and well health care generally has been one of the highest factors in the increase in inflation so I promise you we're looking at it I thought about the fact that Canada gets some medical care with a little extra taxation but practically free why couldn't we start something like that well we're looking for answers alright Mike Mr. President Mr. President you said in your opening statement that there is irrefutable evidence that Colonel Gaddafi was involved in the airport attacks the European allies seem less convinced what proof is there of Gaddafi's involvement in those attacks Mike the only thing I can say in answering that question and I can't do all that you would like to do because there are things that should not be revealed but I can assure you that we have the evidence of the amount of training that has been given that too he has denied I don't think he's capable of telling the truth about these things but we do know we know the location of training camps for terrorists and we also know that Abu Nadal has more or less moved his headquarters there in Bolivia so we speak with confidence and I would like to remind you that when these in the first moments or days or hours following these last two he did openly praise them as heroic undertakings and then very shortly long about the time that the Coral Sea was leaving Naples and it was only leaving because it's leave time there was up but he suddenly decided that no he was distressed by these acts of terrorism I think he was speaking more honestly the first time Do you say that you could prove that you have conclusive evidence that he, Colonel Gaddafi is personally involved in those attacks that killed Natasha Simpson and the others We are satisfied that yes his regime and I don't think that his regime is doing anything without his his guidance Ellen For some 40 years American presidents have been confronted directly with the Middle East problems you and your predecessors have often spoken of the legitimate rights of the Palestinians My question Mr. President is how do the Palestinians attain these rights, how do they rid themselves of foreign occupation should they emulate the US back freedom fighters in Afghanistan the Contras in Nicaragua or is there a peaceful way and I'd like to follow up Well the peaceful way is the thing we've been trying to promote Ellen the idea of peace between the Arab states and Israel and we have emphasized from the very first that the problem of the Palestinians must be a part of any solution but I would also like to point out that the Palestinians virtually every Arab country has thousands and thousands of Palestinians in fact some of them they're practically a majority of their population so they are in a number of countries and in many of these countries they are not made citizens of those countries, they're allowed to live there and so forth but they don't have passports, they don't have all of the privileges that a citizen of the country would have and there has to be a solution particularly we're not talking about all of those they seem to be content with where they're living but those that became refugees the great refugee camps that we found in Lebanon those are the ones that are literally people without a country and we think there has to be a solution found for them the reason that we have not approved the dealing with Arafat and that the PLO is because how could they sit in a peace conference when they deny the right of Israel to exist as a nation and have refused to endorse or support except the two resolutions I think there are four or four two and two three eight of the United Nations to Israel accept the existence of the Palestinians and will the United States continue to give Israel the veto power over any Palestinian negotiating for their people and I don't think that they ask for that there is and I would say this of any other country that they're working with that you can't ask them to negotiate with the table saying that they start from the negotiating position that Israel doesn't have any right to exist and this is the main thing it's the reason why we have not felt free to talk with Arafat either until he gives up that that position Mr. President you have said that your policy towards terrorists is swift and effective retribution and after the Akili Loro case you have been able to hide but isn't this one more case where there is no retribution and where the people behind the terrorism have in effect been able to hide now you mentioned the people behind the terrorism I'd like to point out that all this talk that there's been about harsh talk and no action and so forth but I recap just a moment here two of the great terrorist actions against the United States took place in Lebanon the slaughter of our marines there but in both cases the perpetrators of those acts died with the victims they were suicide attacks now we've made every effort to try establish well who who brought these people there they certainly can't be questioned how did they get there now we've had two more recent attacks but in these two attacks the perpetrators are either dead or seen or they're wounded in hospitals under arrest but again here is a better opportunity now this wasn't something of a suicide attack as Gaddafi himself has referred to more suicide terrorist actions in other words finding some poor souls that fanatic enough that they can be told that they got a free ride to heaven if they'll go out and give up their own lives innocent people the only actual case where there were terrorists and there they were and we knew their location and where they were trying to go and we brought them down and that was the Akili Loro case and turned them over to the Italians at their request it was their territory and their ship and they wanted to do the prosecuting and they will be prosecuted we have I know it appears that we sit here and are not doing anything I'd like to tell you something that we have done we have actually recorded in the last year and know that we have aborted 126 terrorist missions now I won't go any further and I'm not going to tell you how this was done but in our intelligence and working with the other countries we have been able to anticipate and as I say abort that many terrorist missions if I may follow up you seem to be saying that in this particular case in terms of going to the source going after Abu Nudal or going after the Libyan training camps it's basically going to be next time for a military strike and I wonder given your criteria which are that there has to be a direct link between the terrorists and the target and that no innocent civilians can be hit why should Muammar Qaddafi or Abu Nudal believe you I'm not going to talk beyond the action that we've taken here I am not going to make any comment as to whether we have other actions in mind or what might be done I think that Mr. Qaddafi would be very happy if I did answer such a question but I'm not interested in making him happy and Gary were any of these terrorist missions that you say the United States aborted in the United States or their location or anything further on it I'm just going to assure you that we had the intelligence that led us to be able to do that they weren't all in the United States or I don't know how many I haven't got the count before me right now Sam President you signed a directive which would have required a great number of government employees to take lie detector tests for security purposes but when Secretary Shultz publicly complained you changed your mind and cut back on that directive and one of your aides said to reporters that you really haven't understood what was in it when you signed it my question is did you understand it when you signed it originally and if so, why did you change your mind if there was an aide that said anything of that kind he wasn't an aide no when Secretary Shultz came back he had been accosted by the press in Europe and they were leading to believe that I had okayed carte blanche the two and a half million federal employees subject to lie detector tests and they would be tests based on their personalities or their own personal lives and so forth none of this was true and the document I signed was not changed nor did I change my mind I was able when the secretary and I had a chance to talk when he came back to point out that what I had signed was a directive that was creating an investigative policy that we were I did not create it in that I asked for and was proposing that we we come together on a policy for heading off espionage and therefore out of the thousands and thousands of employees there is a very limited number that actually deal with classified material or could possibly be involved in this and I recommended among other things that this be included as an investigatory tool in such investigations and it would be limited to what we were trying to find out espionage and whether to head it off or not so whoever was telling that and I've seen it and heard it and so forth and I've sat there fidgeting in my chair because it wasn't true that's what I signed and that's what still signed and Bill's made the point that he doesn't believe lie detector tests are accurate that often they catch people who are not guilty and even let people who are guilty go I take it you think they are accurate I think that it's a useful tool I know that he does not have too high an opinion of them and I think that he was thinking also if you're going to have one of those in which you get into people's personal lives and so forth but also there are others who have evidence in them in such an investigation where you are directly going at a subject one of the things that they've done and the record of polygraph tests throughout our land has proven that they have been responsible for more confessions than anything actually proven there that the very nature of the test has led to a multitude of confessions of various crimes and so forth alright Bill Mr. President, the last time you asked the Europeans to take any sort of sanctions against any of the states which might be responsible for terrorist acts you asked them to stop flying commercial flights into Beirut the policy was not a notable success the Europeans have proven extremely reluctant is there any reason for you to believe or for us to believe that things will be any different this time because you are asking them yet again I don't know, we're going to consult with them I don't know that we're going to outright ask them we're going to tell them what we're doing they have told us in the past that well the limited actions that we had taken against Libya earlier were rather ambiguous so we're just now we're taking some that are a little unambiguous and maybe that will change some of their minds maybe some of them may may have problems of their own in their own economies that are going to we're just going to render this nearly impossible but we're going to consult and see how much cooperation we can get if they can't do it it severely curtail the effect of your sanctions doesn't it frustrate you maybe frustrating but we're going to go on with what we think has to be done how seriously do you take the threat of Mr. Gaddafi that if there is some indication of Israeli or American military retaliation that Washington DC will become a target for kid squads well I wish he was planning to do that himself I'd be happy to welcome him but no I how can you not take seriously a man that is proven that he is as irrational as he is and things of this kind I find he's not only a barbarian but he's flaky Gerald I have a domestic policy question Mr. President you seem to be one of the few people in your administration who seems to believe that you can have a 3% real growth in defense spending and still satisfy the Graham-Rubin balanced budget amendment if you are wrong sir are you willing to settle for less defense spending or will you eventually have to raise taxes to meet the bill 87 budget as you know in the budget resolution that was passed by the Congress itself it called for a 3% real growth in defense spending and this is what we're incorporating in our 87 budget that we'll be coming forth with pretty soon a lot of people say you have to raise taxes eventually and you know you said in 1982 that you wouldn't raise taxes and then you did and you'll say it over the years Social Security benefits and you later change your mind on that we had a bipartisan commission on Social Security I have never thought that Social Security plays a part in the deficit it doesn't because Social Security is supported by its own tax and that tax can't be used for anything else so it's playing games to pretend that Social Security is a part of the budget and can affect the deficit as a matter of fact only because the bookkeeping in ink would look like the deficit was smaller if you could count as an asset the Social Security tax well I think that's not playing fair with the people so we've taken it out tax increase under all circumstances no the tax increase let me just say here and the one that you mentioned yes I got burned because I agreed to a tax increase that in reality was really getting rid of some of the Christmas tree ornaments that were hung on the original tax program our original tax cut some of them weren't things that we had advocated but I was promised $3 cut, $3 in spending cuts for every dollar of increased revenue I never got the $3 so I'm like that fellow in the story I'm still yelling pay the $2 only $3 in my case but the thing the tax it's not being stubborn about that it's just being that if you look back at history every time that you have sought through tax increase to increase government's revenues you find out that you have placed a block in the path of progress and economic growth and you wind up with less revenue at higher rates now the tax situation we're getting we're getting the same percentage of gross national product in tax revenues at the lower rates than we've been getting before and the answer to more revenues for government is economic growth I believe that a tax increase would run the risk in fact I'm almost positive that it would be more than a risk it would set back the economy and could even trigger possibly a slump so we've gone on now for the last three years we've added almost 9 million new jobs we have 110 million people that are employed the highest percentage of the potential working pool ever in our history is employed the stock market today set a new high again all time high it's now $15.65 went up $18 and something and I think for us to turn around on something that in the past has proven that every time tax rates are raised you've got some people in the country that are waiting with a choice program of their own to spend that money not to use it to reduce the deficit we're going to keep on trying with these next five years to get down to a balanced budget through spending cuts then if that isn't enough and if we're convinced that we have government down where it cannot go below that and perform government functions and services then it would be a time to look at revenues but not now yeah Mr. President are you now looking forward to a second summit with Mr. Gorbachev in September or the fall perhaps rather than in June and what has led to that slippage I don't know someone on their side has suggested later in the fall we thought that June would be at least time to do it and not get around to waiting and saying that it's got to be a year between visits in fact the last words of the secretary general to me when we said goodbye was that we should keep in touch and not just wait until there was another meeting but to keep on with what was started there and I had said to him proposed that it might be in late June and he nodded his approval of that when he accepted my invitation now others have perhaps suggested that it should be in another time but we there hasn't been a date set and they haven't other than a suggestion they haven't given us any reason why they think that later in the fall would be better than than in June in terms of the atmosphere between the US and the Soviet Union the other day the Soviet officials were complaining about such things as Rambo movies and Rocky movies which cast the Soviets in a bad light do you think that's an appropriate sort of thing are you talking to your friends in Hollywood about the kind of movies being made these days no I was talking to my friends in Hollywood back at a time when they seem to be making pro-communist pictures President back on the subject of terrorism what effect if any do you think the actions you have taken today will have on the welfare of the US hostages in Lebanon well I think we're talking about two separate subjects here even as to the nature of the people that are holding them and the other terrorists that we've been talking about but I can only tell you that we continue and have been we have been meeting with talking with and a number of individuals a number of other governments following every lead that we can that would lead to their rescue and we're not going to let up until we're successful in that again I can't get specific on the things that we're doing other than that it is a constant and all-out effort but I think that it would be counterproductive for me to to explain any of the things we're doing can you tell us what you know about their welfare we have no reason to believe that they are not I hesitate to say well treated let let us say that apparently they're in reasonably good health this could be expected view of their incarceration President in connection with your next meeting with General Secretary Gorbachev the Russians in response to the terrorist activities that you have been talking about this evening have made some very defensive statements of Libya and of Qaddafi and as you know they supply Libya with a good deal of their military equipment and possibly some of the training some of which may be then passed on to the terrorists I would like to know when you sit down and talk to General Secretary Gorbachev or if you're in communication with him before your next meeting do you intend to bring this up and suggest to him that they could be more forthcoming in areas outside of your direct talks and make the climate better yes this was very definitely one of our conversation or one of our topics in our one-on-one conversations about why why we had a suspicion of them and it was it was incorporated in a subject that I had brought up in which I said that it was obvious that both of us suspected the other distrusted the other and that it was going to take more than words but take deeds for us to eliminate that distrust and if we could do that then we could get on with the business of reducing arms and so forth instead of looking at each other as antagonists all the time Would you consider directly communicating with Gorbachev about this recent incident and about possibly using his leverage with Gaddafi? I, again you're getting around to details that I don't want to get into Your response to the terrorist incident have been different if there were not more than a thousand Americans still in Libya Well very obviously they have to be a consideration as you will recall the first time that we took some economic actions there were roughly 8,000 Americans in Libya and we asked did not order and did not declare an emergency but asked them to come back and now there are between 1,000 and 1,500 there but yes you have to consider them as potential hostages I may follow up you said earlier that you thought Mr. Gaddafi was flaky do you seriously think that he might be emotionally or mentally unbalanced oh no I won't I used that in the term that we use it in conversation about someone no I just think that the man is a a zealot he's pursuing a revolutionary cause that could affect a great many countries and you only have to look at his performance in Chad in which he then violated the word that he had given to France with regard to his aggression there and other places and I just I feel that you have to be unguarded against virtually any kind of act President how safe or how risky do you think it is for Americans to travel to Europe these days and are you satisfied that our allies have redoubled their efforts for airport security as you asked them to do last summer I think there's been great improvement in airport security and yet when you have suicide attacks as we did in the Roman Vienna airports you have to ask yourself what can be done about that to prevent it I I have to feel that well as a matter of fact in recent travels over the holidays I can't tell you how many people of the type that could be expected to be taking European trips or world trips how many of them went out of the way to tell me that they would plan no such trips under the present situation so will you be looking for a working farmer to replace Secretary of Agriculture Block who resigned today well I certainly am going to want someone just as Jack was who has all the experience that is necessary in that field and yes it would be fine if we come up with a working farmer would you agree with Secretary Block that we've turned the corner on the farm economy and are headed for better times I think we have the farm program and he he stayed until the farm bill was completed and signed and it is one that it's going to take a little patience for a time you can't do something instantly pull out a rug that's been there for a great many decades but we think that we have a program now that is going to help maintain an income for the farmer at the same time that we get agriculture back out to market control and not government regulation and control I think we all ought to heed the fact the greatest sympathy for them and I think that we have a great responsibility because a lot of their problems come from government instead of government helping and the proof of that is if you look at those areas of farming that are not a part of the government programs and subsidies and so forth they are not having the economic problems that the other part of farming is having oh alright well thank you all very much good night I'd like to do this again next month Sarah will be here last week