 Good afternoon. I'd like to begin with a few words about the Middle East. The tragic and brutal attack on our embassy in Beirut has shocked us all and filled us with grief. Yet because of this latest crime, we're more resolved than ever to help achieve the urgent and total withdrawal of all American forces from Lebanon. Or I should say all foreign forces, I'm sorry, mistake. With this in mind, I've asked the Secretary of State to visit the Middle East next week. His primary purpose will be to bring to a successful conclusion the negotiations in Lebanon. We are hopeful that an agreement between Lebanon and Israel can soon be concluded under terms which provide for the security of the borders. I must stress that until all foreign forces are out of Lebanon, that country cannot assert its sovereignty and begin real reconstruction. These are basic goals of our Middle East policy. I have a second subject. Economic recovery received a big push forward in March thanks to our continued progress against inflation. Prices rose by only one-tenth of one percent last month and by only 3.6 percent over the last year. We've had virtually no inflation in America for the last six months. And that's welcome relief for every American family after the double-digit inflation and record interest rates of 1980. We know that zero inflation can't last forever. Energy prices have firmed a bit in recent weeks. Nevertheless, evidence indicates that the underlying rate of inflation has fallen below 5 percent, something the experts said couldn't be done. With inflation down, interest rates down, and workers being called back, this is no time to sabotage the recovery we've worked so hard for with a quick political fix. The battle over the budget now moves to the arena of the Senate floor, and I intend to marshal every resource of our administration to protect the interests of the American people. We're determined to fight unfair and unwise tax increases on the people, to restore defense spending to a level that ensures U.S. security, and to reduce inflationary domestic spending. Yes, Bill? President, recent published reports indicate that King Hussein apparently views the Mideast peace process as just about collapse. Can you offer us today any concrete indications that there is still some chance to save your peace plan in the Middle East? Yes. That's why George Schultz is going there. But that statement with regard to King Hussein, I've been in communication with him both by phone and by cable, and that hasn't been the position he expressed to me. All that really happened was that the effort to persuade Arafat as a representative of the PLO to allow Jordan to represent the PLO in the negotiations that will follow the removal of forces from Lebanon, he came in with an amendment to what had looked like his willingness to do this, calling for measures that Hussein could not agree to, I could not agree to, none of the other moderate Arab states could agree to, and so they told him that until and unless they came up with something different than what they had proposed, this came from the radical element of the PLO, why we would, all of us just have to go our own way. But since it seems unlikely that the PLO will go along with Hussein, how can you pull it out? Well, maybe we're making the PLO more important than they are. The negotiations don't have to hinge on the PLO being present. President, if I can return to the last part of your opening statement, what you were referring to is the fact that the Senate Budget Committee yesterday voted against your programs on taxes, on defense, and on domestic spending. How do you explain the rejection of really your total program by a Republican-controlled committee, and don't you really have to compromise more than you have so far on the budget? No, what actually happened there was that the only way we could have been victorious in that committee was to get every one of the 12 Republican votes, even one defector, and we couldn't have gone out, so it was simply decided to put it down on the floor and take the matter to the floor. And that's what happened. And as for compromise, aren't you going to have to compromise more on defense and taxes and domestic spending? We have proposed to compromise, but certainly not to the extent that the committee turned out, because that would be very irresponsible, and it would be irresponsible in my part to not call it irresponsible. Yes. Mr. President, are you willing to accept that the third year your tax cut might not be put in place, or are you willing to accept a smaller increase in the defense spending than what you proposed? I believe that we're going to seek an increase over the figure that came out of that committee, obviously. We have announced in the beginning that there is a willingness, we have found that we can go somewhat below the original figure that we first introduced in the budget. This has come about through the change brought about by the committee on the MX and all, on better progress in inflation, some things of that kind. So we are, there is a compromise figure on that that has been presented to the chairman of the committee, and he knows about it. With regard to the taxes, no, there's no way that we can give up on this third year of the tax increase, nor can we give up on the indexing, which is strictly for the benefit of those in lower and middle income ranges, because they're the only ones who can be shoved into higher tax brackets by the cost of living pay increases. Mr. President, the Republican Senate voted overwhelmingly yesterday to reject the administration's plan on withholding, to delay it for four years, amounts to killing it, and with Senator Armstrong we understand who prevented the members of the budget committee, the Republican members of the budget committee, from being unanimous. What has happened to Republican unity? Why is it, why are you having so much trouble with your own people in the Senate? Well, this particular issue here, I thought that yesterday's vote in the Senate on the withholding was quite a triumph for the people who are not paying the taxes they fairly owe. And we'll see what happens in the other house when that goes to the other house. But it's a, seemed little strange to me, and this great revved up effort that happened, that that bill was passed without any problem or any protest by both houses of the Congress to have withholding of interest and dividend income. It is not a new tax. It went through the 82 election and it wasn't even mentioned or was an issue or not. And then suddenly a very successful lobbying effort went forward. And the simple fact is that what was voted in the Senate was to allow people to go on cheating on their income tax rather than making them pay their fair share. Your own strongest conservative partisan, such as Senator Kaston and Senator Armstrong, are not backing you on these important measures. My question was, what has happened to the United Front that you use in 81 and 82? Well, in this particular instance they went their own way. We'll see what happens on some other, because it's scary. President, with that overwhelming Senate vote and the likelihood of a House vote, perhaps of similar proportion, are you still planning to veto that bill in light of perhaps a veto-proof vote by the Congress? As I've said many times before, in this case, I've said an apple can be an orange. In this case, a bad apple might turn out yet to be an orange. We'll just wait and see. And I'll make up my mind on that when I see what happens in the House. It might not get through the House. But are you predisposed at this time, because it is, they're trying to give you, as they said, wiggle room to get out of this thing because it's veto-proof, would you, in light of the overwhelming vote of both Houses, if it should happen, would you veto it? Do you feel that strongly about it? I feel strongly about it. That's all I'll say in advance. President, you mentioned a few moments ago about the radical elements of the PLO. We understand that the White House now has intelligence information that not only the Libyans but also the PLO have been aiding the Nicaraguan government and the Salvadoran leftist gorillas. Can you tell us more about what the PLO is doing? I understand there's some 50 PLO pilots down there and what you're going to do about it. I can tell you that the report is true. They, like others from the communist states, have been in there and are in there. And the episode with the Brazilian hauling of the planes from Libya the other day, when the aspirin they were supposed to be carrying turned out to be hand grenades and things, is just further evidence of what we've said all the time, that there are outside forces, all of them principally aligned with or sympathetic to the communist bloc, who are in there and intervening in the legitimate affairs of those countries. But if the PLO is doing this, should we be dealing with them or trying to bring them into the peace market? There has to be a solution to the problem of the Palestinians. Now no one ever elected the PLO among the Palestinians. I don't think that what an element of that group is doing should turn us away from trying to find a solution to the problem of hundreds of thousands, millions in fact, of Palestinians who aren't radicals and who simply want something of the homeland. Back on the defense budget, if I might, do you ask Senator Da Vinici to postpone his mark-up for three weeks? And I'm wondering if you feel in retrospect that if you and your advisors had gone to the senators in that period of time, you might now be in a different position that you might not have been able to get the cooperation in those 12 votes you need. It just wasn't that easy. You, as I said before about the, about a defense budget, they're talking dollars. They're looking at and wanting to simply cut dollars. We have to look at things. What do we feel we need to meet our defense strategy worldwide? And if they want to cut money, we have to look and say, where can we responsibly eliminate one of these factors or more that we think are necessary for our national security? And so, all we asked for time was to study and see could we cooperate with them? Could we meet some of their demands on this without setting back the progress that we've made in closing that window of vulnerability? And it's just a different way of looking at things. Up there, they simply looked at the money as if you could make a percentage cut across the board and it wouldn't have any effect on your military capability. You still think you're going to be able to put it back together again on the floor to get the defense budget somewhere near what you think it should be? Yeah. And I got to go back further. I'm staying down front here too long. Mr. President, are you going to be speaking out publicly soon about alleged Soviet violations of current treaties? And if the United States does believe that the Soviets are now violating treaties we have with them, does that make it very difficult to reach agreement on any new treaties? No, but it imposes a responsibility on us to be more careful in a new treaty than we've been in the past. Whether I'll be speaking out or not depends on a study that is going on right now on a most recent testing of a missile. There have been evidences in the past when we have had indications that we thought possibly meant a violation of previous agreements. Unfortunately, those previous treaties are so ambiguous that it amounts to loopholes. And when, as in this most recent case, we feel that there is possible evidence that there was a violation, an interagency task force of experts reviews all the findings that we have. And then they report to my own advisers and then to the National Security Council, all of them looking at this. If there is then further evidence that we believe can be obtained from the Soviet Union and asking them directly the answer to some questions, that enters into it. And that's all before it gets to me. And the problem is trying, it is so ambiguous, that it is difficult to establish and have hard and fast evidence that a treaty has been violated. This most recent case, for example, is one in which the Soviet Union says that they were testing an improved version of a missile that is already proper under the treaty. The evidence that we thought we had indicated that very possibly this was a new missile, which would be in violation. Now, all I can tell you about this is that if this is like the past ones have been, if you can't get that kind of courtroom evidence you need, then you can't make the charge of violation. But what I've said is we've learned enough since we've been here to know that any treaties that we arrive at with regard to arms limitation or reductions with the Soviets, we're going to make sure they are not ambiguous, that the things, the clauses that are in there are hard and fast. Are you concerned if you do speak out about possible violations that this will set back the effort for negotiations with the Soviets? No, no, not really. No. Thank you, Mr. President. Well, I still never got beyond the third row. I will. I will. Okay, thank you.