 How are you? How are you, sir? Good to see you. How are you? Good to see you. I've had breakfast. Oh, have you had breakfast? Yes. Nice to see you, Jim. You know, if there's any here. And this gentleman over here. Come shot of Sikosky. Nice to see you. Nice to see you. Well, please, sit down. I think I'm two minutes late. I apologize. Good morning. I'm sure there's nothing going on in the world. So that would have taken you a long time. Could I make a little statement? Absolutely. Absolutely. Absolutely. How will we do it? All right. I don't, I don't want to spoil anyone's breakfast by dwelling on the positive. But I can't resist calling on the positive. I can't resist calling your attention to some good economic news. Yesterday, of course, you know that we announced that retail sales for January were up 2.2%. Well, today at 9.30. So you can say that you had this from a knowledgeable White House source who doesn't care if you name him. We will announce that industrial production in January rose 1.1%. And that's up from an average of 7 tenths of 1% in the last quarter of 83. So we believe the recovery remains solid non-course. Enjoy your breakfast. Well, to begin with, all set, the ground rules and then move into a few comments. Ground rules will be on the record as usual. And as we do once a year, when we get to see the president, we embargo to the following morning for AM's tomorrow. Now, Mr. President, I think I know I speak for all the people here on this. We're also very happy to see that, and we leave too, to see that you have to, that the reports about your well-being are to paraphrase Mark Twain greatly exaggerated. At least from where I sit, you look like you're in great shape. I've never felt better. Now, I want to thank you for having our group in this morning for its 18th year of getting up much too early as far as most of these people here are concerned. And it is indeed a rare honor having you as our guest, but at your diggings. And what a lovely way to do business. And incidentally, I want you to know right away, that right away on last Friday, I was just absolutely certain that you wouldn't go to Moscow. I knew right away that you couldn't possibly cancel out on this opportunity to meet with this illustrious group. Now, my first question, Mr. President, is this. It certainly relates to your opening remarks. But are you sorry, or perhaps just a little sorry, that you retain Mr. Volker? Are you satisfied with the way he's tuning the economy? Well, now, that's a question that, let me answer it this way. We know that they have a target range, of course, that the money supply will be kept increasing proportionate to the growth of the economy. All I am asking is, in monetary policy is, that we have an increase that is commensurate with that growth that can continue the recovery without returning us to inflation. And beyond that, why? I'm not going to comment on our relations with the Federal Reserve Board. But in view of the growing anxiety about that massive deficit, Mr. President, this is evidently being reflected in the stock market, are you ready now to move more quickly and more forcibly to deal with that problem? Any chance now some new taxes are what you may call revenue enhancements? I don't think that new taxes are the answer to the deficit problem. And I have to say that I don't believe that the deficits are the problem with Wall Street. I have been led to expect for some time now that what we're seeing right now would take place because the spread between the return on bonds as to the return on equities, stocks, is so great that what we're seeing is a transfer of funds from equities into bonds because of the gain there. And I don't think any of us can quarrel with that when it takes place. I'm sorry about it. But I would like to remind us yesterday the market went up a spurt of almost 13 points. But also the Dow Jones average is several hundred points higher than it was three years ago. We came here in 1980. So I don't think that this is a reflection of concerns about the economy. Just as I believe that the interest rates are where they are, though, because of a still hesitation as to whether we really mean to keep inflation down and keep going in that path. Remember, there have been seven recessions and recoveries since World War II and prior to this last one. And in every one of them, they were almost immediately, just a few years, followed by further trouble and higher inflation rates. Let's see Bob Thompson's hand and then Joe Kraft that has a question. He said he wanted to maintain equilibrium between East and West. What does equilibrium mean to you? Is there now a balance, a fair balance? Do they have to get stronger? Do we have to get stronger? I think that we've gone a long way toward redressing what was a great imbalance with the Soviet Union back in the campaign. I was referring to our problem as having opened a window of vulnerability. I think we had. I think we've gone a long way toward redressing that, but we still haven't done it to the extent that part of our redressing is still promised, that is, of the deployment of the MX missile, the putting on line of the B-1 bomber. Those things, I think, are necessary to give us what I believe would be a sufficient deterrent power. I don't think it still makes us equal to them. And I still am determined that the answer for both of the superpowers is to arrive at an agreement on real reduction of nuclear weapons. And my hope is that once started down that road, we will realize those weapons should be eliminated. Do you feel more optimistic this week than you did last week? As a result of this instrumental speech? Yes, I do. Joe Kraft and then Bob Adams and then Bill Wingo, and I'll start looking again in the morning. Let me follow up that last question, Mr. President, by asking why do you feel more optimistic? Has anything happened between Mr. Chinenko and Vice President? No. Well, they had a meeting, a half-hour meeting, and I have heard from the Vice President about that meeting. While Secretary Chinenko did not retreat from his, from the basic Soviet positions at the same time, he expressed a desire for better relations. He felt that we must both take apart in seeing that regional conflicts did not get out of control, that there should be safeguards against any inadvertent use of nuclear weapons. In other words, he spoke, his whole tone and his words were such that indicated that he believed that there was an area for us to come to agreement on these things. In pursuit of that area, Mr. President, does it make any sense to you to perhaps upgrade the representation, to have a special representative, or to do some things that go beyond Secretary Schulz and the embassy there? Well, some of what you suggest has been a part of our policy for some time now. We seek whatever channels will be the most productive for us. On the other hand, I can't talk in much detail because I think what you're mentioning is what I have always referred to as quiet diplomacy, but a lot more can be achieved in that way than if you get out in front and run the risk of putting anyone in a political position such as the Secretary is out there where he is forced to stand or take a hard position for fear of looking as if he's influenced by, or maneuvered by others outside his own country. There are reports out of Beirut this morning indicating that President Jamile of Lebanon may be on the verge of abrogating the May 17th agreement with Israel. I know the United States still supports that agreement, but if it were necessary for the Jamile government to survive, would your administration be willing to, in effect, swallow hard and accept the abrogation of that agreement? Well, I have to say with regard to the agreement, since we're not a party to it, and we did help and encourage development of it, we're not a party to it, so there's no way that we should have a position one way or the other on whether it is abrogated or not. That is up to the parties involved. And no, it would not change our position that as long as there's a chance for peace there, we're going to keep striving. So even if the agreement were abrogated, would you continue supporting the government of Jamile, is that correct? We went there with the idea that the answer to those great problems was a government in Lebanon that could resume authority and autonomy over its own territory and with the absence of all foreign forces, and that was just one of the steps involved in the overall peace plan that we had in mind. So we're going to continue striving for that. Bill and Carl and Ted here. Mr. President, we've done well in bringing down unemployment and inflation, but in foreign affairs we've suffered a series of outrages and humiliations. Two of our embassies have been bombed. The Marines have been bombed to no purpose. The SS-20s, which our INF policy was supposed to stop, are being deployed at a greater rate and we're getting more missiles. We've suffered a monumental trade deficit. And I just wondered, during the campaign when people ask, are you better off in foreign affairs than you were four years ago, how are you going to respond? Well, I think we are. I know that these tragedies have occurred and I know that there's a worldwide wave of terrorism, but I would have to say that for the better part of a year, for example, our Marines were in Beirut along with the other nations of the multinational force and without casualties and without the kind of things that we've seen in the last few months. And there began to be real progress, the meetings in Geneva, the PLO, of course, being taken out of Lebanon, the agreement of the Israelis to start withdrawal and so forth. I think that these terrorist attacks attest to the success that we were having. They were determined, and are determined, those who don't want a peaceful settlement in Lebanon, those who have other goals, know that the multinational force is an obstacle to their goals and so they've taken up this practice. Terrorism is, while it isn't, you can't say a completely new form of warfare, I don't think we've seen in the world before seen it used to such an extent as we are now, and it is the most difficult thing to anticipate where and how they're going to strike and to answer back. So I don't exceed to your proposition that we have been subjected to a great many humiliations as a nation and so forth. I think we have made progress. We haven't seen the Soviet Union, for example, take on another client state since we've been here. Carl, Ted and then over to Bob Milvack. Mr. President, in the weeks before you announced the redeployment of the Marines in Lebanon, you used a very strong language to criticize Speaker O'Neill and others who were calling for a pullout. There's two questions about that. One is, do you think that your statements at that time and the time when you were in fact considered strongly a redeployment if not a total pullout created credibility problems for you and your administration? And secondly, how long do you anticipate the Marines staying on the ships off the coast once they are pulled off the land? The length of stay will be determined by what happens and whether we succeed or not, and it will be no different in length than it would be if they stayed in their positions on shore. From the moment of the terrorist attacks and the recognition that, just as I've said before, that there isn't any way to anticipate those and certainly limitations on how you can guard against them, we have been studying how we could continue to fulfill the mission of the multinational force and at the same time provide greater security for our forces. The remark, and maybe it was facetious in a way or flippant when I responded to a question out in the Rose Garden about the speaker's position versus ours, was because my understanding was that he was suggesting that we bug out and that we just turn tail and run. And all the we were considering and had been planning for quite some time was how to continue the mission, but with a restationing of our forces, an improvement in that. And as long as there is a chance for peace, we're going to stay there. That's what our original mission was. So in other words, you expect them to stay possibly up to the full 18 month period of the authorization? In the offshore position you're talking about. Yes, we hope that there won't be that long and things do seem to be moving. Sometimes not exactly the way we would like them, but there's still a reason for hope and we're going to stay there as long as there is. Ted, then Bob, then over to Andy Klass. Mr. President, as a gesture of goodwill toward the new leadership in the Soviet Union and in an effort to break the ice on the nuclear arms negotiations, would you consider suspending further deployment of U.S. Pershing II and cruise missiles in Western Europe for a period, perhaps, for the rest of this year? No, I don't think we should. The intermediate range missiles of the Soviet Union number well over 1,000, someplace in the neighborhood of 1,500, 1,350, something of that kind, with nothing comparable as a deterrent force for NATO. Now, NATO, our allies asked for this deployment of missiles in 1979 and it was agreed to by the administration at that time. We inherited that situation and agree with the fact that there should be such a deterrent policy or force there. I think that the Soviet Union made it very plain during the negotiations that their target was the prevention of our deploying those missiles. I think that the answer to getting a limitation on those missiles and I still believe my original proposal of zero option on both sides was the most sensible answer to get them completely on both sides out of Europe. But I think the best chance of getting agreement from the Soviet Union is dependent on us having that deterrent force and I think it would be a retreat and it would not do anything to speed up negotiations with them if we now fell back and delayed deploying. Bob, you're next, then Andy, and then over to Pat Ferguson and over here to Lon. Mr. President, in your state of the Union you talked about tax simplification for next year, in 1985. Did you give us some idea without getting into the details which I know are not set on what your ideal concept of a simplified tax system would be particularly in regard to the top marginal rate? Well, Bob, if you could really have the ideal and I can't and this should not be taken as any indication of what we're thinking because we're looking at everything. I have often felt about the income tax that it is the only financial obligation that our citizens have in which the burden of determining how much we owe falls on the individual and at the same time the government reserves the right to penalize and find the individual if they make a mistake in their estimate. Now every other thing, your property tax bills that you owe any place else they send you a statement of what you owe. They don't tell you how much you've got to go to the expense or the effort of getting legal advice and finding out how much you owe. I think the income tax is more onerous to the people of this country on the basis of the difficulty of filling it out than it is from the amount of what the tax may be. So we are and it wasn't a case of just waiting until the election is over. It's a case of going at this with the idea of a long-range reform to see if we cannot broaden the base of the tax, make it simpler and at the same time find a way to collect that money that is not being paid in tax and I'm not talking about loopholes now. I'm talking about people who actually owe the tax and are avoiding payment and it amounts to enough to sizeably decrease the so-called deficits. Andy? Andy and then back to Pat over to Lars and then Henry Brandon. President, I'd like to get back to the problem of the stored arms from negotiations. Do you see any possible benefit in now expanding the negotiation to take into account a whole range of nuclear weapons possessed by both sides, not only the U.S. missile, but also the strategic weapons perhaps the bombers so that the negotiations could proceed on a broader and wider plane and perhaps achieve a broader and wider result. We have already made such a proposal and the Soviets have not responded to that. We originally in the start talks thought that the most destabilizing weapons, the weapons that cause the greatest fear among people, are the ones in which you push a button and a half hour later the world blows up and once the button is pushed there's no retracting or taking back. We viewed bombs and missiles from submarines as being less destabilizing because they were carried by a conventional weapon you might say in which not only could they be called back but people have a concept from previous wars that those carriers, launchers, planes, submarines can be intercepted and destroyed. We have since and because of problems that the Soviet Union presented to us on that score we have since agreed we'd never meant that we were going to rule out submarines and planes. Our intention was that those were going to be a latter phase once we resolved the missile problem. We have now put the whole thing on the table and said to the Soviet unions we're willing to discuss all of those as a package and they have not responded. Only the fact that as I say he expressed his concern about nuclear weapons and about the need to find some answer to this threat. Pat, Lars, Henry and Jack Cole. So therefore, which brings up two questions how can you answer this year during this campaign year charges that the Marines who died there were sacrificed for a nebulous role that didn't succeed and would you send the Marines in again against the advice of your chief? No, they did not die in vain. If we just gave up and pulled out we would then have written them off as sacrificing for no purpose. Remember the original situation with a war going on right in the heart of Beirut at the time with a PLO and terrorist bands running loose and even occupying portions of Lebanon, the northern border of Israel being assailed by these terrorist bands with missiles and artillery being fired across and civilians and the Israelis invaded and set out to go 25 miles and then found that the bands only retreated ahead of them and the problem was still there all the way to Beirut and the government which had been in a shambles in Lebanon for a decade with the internacing war that was going on or the factional strife we and our allies agreed on sending in a multinational force trying to persuade the foreign forces to leave and were successful with the PLO then the Israelis agreed to withdraw and started a phased withdrawal the Syrians who had agreed previously then dug in their heels and said no they wouldn't go and I think this is the main stumbling block and the idea was that the multinational force would provide some stability once a government was established and a military force had the capability in Lebanon to move out and take over control of the areas that had been occupied by the Syrians and the Israelis and the PLO that was the mission to offer some stability knowing that the Lebanese government and military probably could not do all the jobs could not keep a force back and send forces out at the same time we were going to train and supply and did and have trained and supplied the Lebanese armed forces they are well trained and a better fighting force than the recent engagements and the ones of the last 24 hours and so forth indicate but the problem was that we have had the the split and those the Muslim troops walking away deserting and refusing to stay with the military so they are limited in size and number but all of this was going on and this was the purpose of them as I have said in being there and I have to say that I have been in contact with the families of the men who have lost I have been greatly impressed by the attitude of parents and widows and their belief in the mission and over and over again they have told me that their sons and husbands in writing to them believed in what they were doing believed there was a purpose in their being there and in that first year before the terrorist activity started against them I have also received letters from Lebanese people telling me what their lives would have been like had our forces not been there and blessing us and thanking us for them being present where would you then send them back Mr. President their lives are in danger lars Mr. President one of the some could be to find out the possibility of life they are not much experience of the outside world the American President can find out what their fears are if you regard such a summit meeting as useful and a significant educational purpose are we talking about a summit meeting with the Soviet leaders I definitely feel that there are so many matters that should be in the agenda that there should be an agreement on an agenda but also a willingness expressed on the part of both parties to seriously deal with those matters I am tempted by what you said about educating them I've never been in Marine One flying at a low altitude over our cities and looking down at the homes that are working people live in and all without fantasizing what it would be like to have Soviet leaders sitting there and be able to point down and say that's where the workers in America live they live like that how long are you going to cling to that system of viewers that can't provide anything like that for these people but I'm sure that they have there have been enough trips by their leaders and most of them they have an understanding of the system it's just a shame that we can't convey the difference to the people of the Soviet Union Henry I think there's got to be something we can settle Mr President would you be prepared to replace the U.S. Marine with a U.N. force and if so would you then in order to get Soviet agreement to withdraw the fleet from the Lebanese coast well I'm not going to say anything about that last part of the question here give away any thinking on that count but as to the U.N. force that I would have preferred from the beginning it was the Russian veto and the Russian objection to this that made it necessary for us to turn to something other than the U.N. force but this would have been a legitimate function for the United Nations and what I've always believed the United Nations was set up to do I would like to see them there I've got Jack Cole and I'm going to go to the other table over here next and I'm going to get more contracting and I'm going to get Jerry then I'll come back to you Mr President the warfare among your top advisors on the deficit seems to have died down at least temporarily but most business leaders and economists I believe consider the deficits a serious threat to economic recovery do you agree with them on that point to no I I don't but that doesn't mean that I don't take the debt seriously I've been out preaching on the mashed potato circuit for the last quarter of a century about the deficit spending that has been a policy of the Democratic Party for a half a century now in which it was very consistent and they never had any objections to or even brought up the matter of deficits being a threat to anything now suddenly they've discovered deficits I'm pleased about that and determined that we are going to do something about them but for example this thing that deficits are responsible for the high interest rates check with the situation with the other industrialized nations and you will find out that our deficits even at the worst as a percentage of gross national product have not been as great as theirs and as a matter of but it is true the threat to me the deficit is the result of what is basically wrong and that is that the federal government or government in general in this country is taking too big a share out of the private sector and there must be a way for us to bring this down back when I was getting my degree in economics and being given reading assignments out of economic books that were written by men who had predicted only weeks before the great stock crash and the great depression that they saw no reason why stocks should not continue to rise indefinitely governments federal state and local were only taking a dime every dollar earned in this country and one-third of that paid for the federal government and two-thirds of that paid for state and local governments and now those governments are taking well above 40 cents and I've heard the figure 44 I haven't checked it out definitely since out of every dollar and two-thirds of that goes to the federal government and only one third to state and local government I think that the problem is not just curing the deficit the problem is to arrive at a decision as to what is a share the optimum share that government can take from the private sector without becoming a drag on the economy and get government back to within that figure more further however if the deficits were lower I think interest rates will come down when the money lenders are convinced that the threat of rolling back into inflation again is gone they're not going to put that money out there at an interest rate and not protect themselves against the depreciated value of the money they'll end Mark and Jerry and then over to George and to Mark Mr. President in spite of the fact that the United States has committed force to Lebanon it appears that Syria is on the verge of prevailing over US policy but the question is what would you have done differently if you had it to do over again both ask the Lebanon and if the case the matter arises of having to use force again does the Lebanon example teach any lessons for how to use American force No, I know all the problems of the Middle East and I know along this has been going on the answer to the Lebanese problem was a Lebanese government in control of its own territory without the warlords scattered around with their own militias there was virtually no government to speak of in Lebanon there could be no solution to the problem unless there was a government and a broader based government that then took in those warlords and eliminated that kind of division and until the neighbors of Lebanon had some assurance of security particularly Israel and its northern border I don't know what we could have done differently and our search was for peace and I think I think we were right in doing that if if that is to be denied if they cannot bring about that peace there I don't have any regret about our having tried it was a legitimate effort it was all we could do what would be the alternative going to war with a country like Syria and I don't think that's an answer either but one thing we are going to move forward now at this stage we were stopped for a while because of the crisis in Lebanon we are going to move forward with promoting the overall Middle East a peace plan that we had of peace between the Arab nations and the and Israel how do you propose to do that? well this was part of the subject of our meetings yesterday and the day before with Mubarak and King Hussein and both are very much in favor of this believe in it and think that we should move ahead regardless of the situation in Lebanon even though we continue to do what we can in Lebanon and this is what always has been our belief that the peace process would develop if some of the moderate Arab states would take the lead in negotiating remember we start with a situation in which basically the Arab states have simply said we do not recognize Israel's right to exist as a nation and so you had the two armed camps Sadat broke that with the treaty of peace with Egypt basically what we're seeking are more Egypt's Jerry you're next may I break in this for one question here you've been in and out of this subject but could you tell us if there's as much precision as you can your reading of this new Soviet leadership do you perceive a softer line a harder line or just to continue them because we're all reaching for this answer you know you tempt me very much we had an ambassador once some years ago to the Soviet Union and he said the second most stupid thing a man can say is that he understands the Russians he understands the question and I've always been curious about what was the first most stupid thing but it's tempting we're groping and you're so close to the answers I have to say that I believe just from the brief meeting that has taken place I do believe that there is the very fact that it is a new leadership that there is someone there who is not going out on record as making statements that he would then have to retract in order to change a position or moderate his position yes we're going to try and take advantage of this to establish contact communication issues that divide us and see if we can't indicate or prove to them that they would be better off if they join the family of nations not quite the answer I'm looking for but maybe I'm asking too much but only apart from your probing that's coming about how do you read the possibilities with this new leadership I mean only apart from before your probing began well because at least we have making statements to to our vice president his opening positions that he himself sought or would seek a better relationship you're taking that at face value until until they prove otherwise alright gerry and sorry Mr. President despite the legitimacy, technical legitimacy on the Jamile government President Jamile now is in control about as much territory as you own in the Santa Ines Mountains and I wonder what your threshold of pain is for continuing the U.S. commitment to this particular government and should it fall or be replaced by another legitimate government in Lebanon would you also support the aspirations for Lebanese sovereignty of whatever that government I'm getting into a hypothetical situation here of what is I just have to say as long as there is a continued effort going forward there to bring about a peaceful and a political solution to this problem then we'll do what we can to help and I think the other nations feel the same way we're dealing right now we don't do these things unilaterally we're working in close contact with the other governments and I don't see any alternative to that the there's no question about how vital that entire area the Middle East is to the free world probably more so to our allies than to us but that doesn't make it any less important and if there is a chance for example what would an alternative be a war between Syria and Israel again as we've had so many times do any of us believe that a president of the United States could ever stand by and see Israel destroyed the area is vital to us I was raising the point that President Jamile doesn't control very much I know what would you do if you faced with a new government in Lebanon President Jamile if it would be a government that again could achieve autonomy and sovereignty over its own soil and the removal of the foreign forces that are now in there all right George then Mark and then Rick Mr. President now Mr. President former President Nixon said that the Soviet leadership if only to show that you are not in his words a reckless cowboy and you just stated that we are not certain of the Russians that it's stupid to say we know the Russians why is it wrong to have a get-a-coin at summit if only to show that you're not in President Nixon's words a reckless cowboy and for us to understand them better what is wrong with that the advice I've had from people who have been dealing with Russia over a number of years has pointed to the dangers of well we had one president who did hold a get-acquainted meeting and immediately expectations worldwide went up of some healing of the differences between these two superpowers and they got acquainted and the meeting ended and it was a great let down because nothing practical was accomplished and I don't know whether they really believe that I'm a reckless cowboy or not I only got to play in a couple of westerns and I wanted to play in more I liked riding the horses but maybe I could send them a print of Bedtime for Bonzo but no I think they have to be convinced that I mean it about disarmament and I mean it about peace Mark, you're next and then Rick and then Al and then I forgot Bob over here and then over to Phil Jalen I hope I can remember that Mr. President, even your most vocal critic two-thirds of whom are in this room right now I know a significant change you were elected on a pledge to increase dramatically defense spending and cut taxes by a third after that fulfillment of that pledge you're now seeking a second term what sacrifices are you asking of the American people and the second Reagan administration and particularly, especially of high income Americans who have not been affected by your pledge? Boy, where did that come from? I sense there a suggestion that some of the criticisms of the team of eight that is out there everything we've done was beneficial to the higher brackets and the higher levels that just isn't true I think when you reduce inflation where for two years instead of being double digit it is below four percent you have benefited people at the very bottom of the ladder more than anyone else a person earning $5,000 a year at the beginning of 1979 by the end of 1980 people would only buy $4,000 worth that's a pretty big cut 20% at an income that is a little more than half of the poverty level the people that are better off today incidentally in our tax structure the only thing similar to this tax cut that we put into effect was Jack Kennedy's tax proposal back in the 60s and it was phased in I believe over two years I remember correctly instead of the three that we used and it's kind of interesting to note that his tax program gave greater relief to the top five tax brackets than ours did also that he gave greater relief to corporations than our tax program did so I think that the whole matter of what we've accomplished is the fact that we do have growth of the kind that I mentioned here we unemployment is not too far above percentage wise now where it was when we took office in spite of the great depths of the depression to which it went and for 13 months now we have been putting an average of 300,000 people a month back into jobs I mean, I said we haven't the program, the recovery program has accomplished that Any sacrifices though Mr. President do you ask that American people particularly high income Americans the sacrifices that we're asking are really sacrifices maybe of some rather privileged special interest groups to help us make government more efficient and more and that doesn't mean that we're throwing the needy out into the snow at all what it means is that we're talking about permanent government structures that have been built up in which the needy have become their clientele and rather than trying to make these people self-sufficient to they don't want to lose the clientele and this is true not only of government but true of what I've referred to as many special interest groups but if I assume that you mean should we attack the deficits by way of increased taxes I on that with this whole problem about how much money the government is taking out of the private sector with regard to borrowing government borrowing aren't they taking wouldn't they be taking the same amount of money out of the private sector if they did it by taxes instead of borrowing so I think that the we've tried to keep the programs that and the taxes and all of proportionate across the board for our people now speaking of the upper limits and then I'll quit on this let me just point out that the top 10% of earners in this country pay 50% of the total income tax and the top 50% of earners pay 93% of the tax so I don't think that there's they are exactly having a free ride we're near there final 10 minutes it's Rick and then it's Al and then it's Bob Fischerberg and Phil and then David Broder that may be it we never can tell we could have more if they'd ask some yes or no questions I think they have been asking some Mr President Mr President two related questions on Lebanon one how quickly would you like to see United Nations force put in there and secondly what would be the function of the Marines offshore if they have not been able to protect the Lebanese government while they've been on shore well it wasn't a case of protecting the Lebanese government on shore it was a case of they were there to offer that stabilizing thing while the government organized itself and its military was trained and as I've said we've done a very good job of that and equip to begin taking over their own country as to the UN force when would I like to see I would like to see them in their day before yesterday that's theoretical let me rephrase the question let me say that the function was what you've said it was not what I said it was if they couldn't do that on shore how are they going to be able to do that offshore because basically I think the presence of the modern national force there was a certain amount of psychology in it it was the presence there and that presence is still there and they can be instantly assured if there is any need for it as long as they are there and not back in the United States that I think that that psychological situation still prevails and that is true also of our fleet being offshore I think what most of us see is a government whose authority is crumbling and whose area of control is shrinking which seems to be the opposite of what the administration policy was seeking if the marines are taken offshore and kept there how is that purpose going to be achieved with them offshore if we can't do it on shore well I recognize that the people I called warlords are the ones who are moving into Beirut and assuming more control of the territory at the same time the government continues to try and negotiate with those very people on a sharing in the government and that has not been ruled out as yet and until it is as I say you have to keep trying Al let me take it back to the economy Speaker O'Neill as you know is charged that you are this is genious of this deficit reduction because you are really not willing to consider serious tax increases because of your expense budget today you told us you don't think the deficit is responsible for high interest rates nor the stock market problems and that you are not willing to accept any significant tax changes we sit down and let's this election year in a bipartisan fashion as we did with the social security problem let us come forth with a program aimed at the budget and we said that everything would be on the table with our association they wouldn't meet finally we suggested dates even earlier than February but we suggested 2, 3 and 4 of February they came back with a date of 6 knowing I was scheduled to be out of town then there was a brief meeting in which virtually nothing was done and they walked away from it And now they've gone on a 10-day recess. That's why I came back, because I just love to be in Washington when they're gone. All right, now, right now, if we had obtained the spending cuts we asked for, the deficit would be $40 billion less than it is. We have never gotten over about 40% of what we've asked for in spending reductions. We said that everything would be on the table. Take the, you mentioned defense, and they have talked a great deal about this. During the campaign, I said that was asked repeatedly and in public meetings asked, if it came to a choice between deficit spending, balancing the budget and defense spending, which side would I come down on? And I said, viewing the situation at the time, I would have to come down on the side of defense. I never made that statement in a public meeting that I did not get literally an ovation from the people, because they were aware of how far we had drifted in letting our defenses go. Now defense, you don't start defense by saying, let's spend $300 billion. You say, what must we do to ensure our national security? And then you find out and add up, how much does that cost? We have already this year reduced our original position on defense by $16 billion. I said to Cap one day that maybe we ought to leave it in there and let the other fellows find the $16 billion, but we didn't. We played square and came in with what we thought was a necessary figure. Now the opposition only talks dollars. What we've said is, we'll put this on the table, we'll put taxes on the table. As well as everything else for negotiation. Now let them come in with a defense program that they can claim will ensure our national security and allow a lower figure than ours, and we'll certainly take a look at that to see if this is true. But that's the way this must be judged as well as other government programs, is can you do the job for the amount of money we're talking. They've done nothing but talk about broad across the board cuts in spending without any regard as to what would be cut, except when it came to their district in the closing of a military installation and then they were very much in favor of that kind of spending. Now we still want them to come back to the table and we want to sit down and negotiate greater cuts than we put in the budget. We put in, put a budget out that is basically calling for the cuts they refused to give us last year. We don't think it's enough in cuts. We think there are areas of, yes your term, revenue enhancements, without actually increasing the rates, things that would broaden the base of the tax base. And so far, I don't know whether they just want to think they've got an issue now or what, but they have not been willing to meet on an effort to make sizable and put us on a declining pattern of deficits to where we can look down the road ahead toward a balanced budget. Mr. President, I've recognized three more questionnaires here. Can we take them? We're running close to the time. If they try to be brief. Yeah, I'll try to be brief. I meant, I said the questionnaires, Bob, Phil, and finally, final question, David Boeder. All right. Mr. President, back to the Middle East, if we may. Several minutes ago, you mentioned that you'd like to work with President Mubarak on a Middle East peace plan, but only yesterday here in Washington. The President made two statements which were directly counter to your policies and your views as one statement suggesting that the United States should open a direct dialogue with the PLO and later a statement to the effect that the removal of the Marines would be a disaster that would cost the competence of our friends in the area. In view of such statements by a leader of an Arab state on whom we are going to depend, what's your basis for competence for working with President Mubarak for a Middle East peace plan? Well, those two things that you're speaking about, he said in his farewell remarks, but I'm remembering what we said in several hours of discussions, the three of us together. And it is true that he probably believes more strongly than some of us do that Arafat is the legitimate representative of the Palestinians. We all agree that the Palestinian problem is basic to the peace process, that there must be a fair settlement of that problem. His idea of withdrawal of the Marines, no, he was speaking out against those who are suggesting bring them home, just abandon ship and come home. That he thinks this would be disastrous, so does King Hussein, that matter. But in the conversation, when he learned what it was we were doing in the redeploying, he's perfectly satisfied with that as long as the presence is still there in that end of the Mediterranean. Till? President, this is an election year as we all know and not therefore necessarily a great year for making peace in the Middle East or leaning on the Israelis in particular, which is one of the things that worries the moderate Arab. They notice when you talk about them taking the lead and I gather you're encouraged by that, that Israel has rejected your September 1st, 1982 initiative, rejected it on September 2nd, said it was a threat to Israeli security and a violation of Camp David. Twice now, then and a year later, you've identified the settlement policies of Israel as obstacles to peace. Israel has ignored both of those statements. What can you give the moderate Arabs to work with in their efforts to take the lead on this if they do not see any evidence that we have any influence over Israel and Israel has rejected your plan? I see much of what people are saying before they get there to the table. It's a little bit like those days when I was a union negotiator with management and you make your position as strong as you can in advance of the negotiations hoping to do as well as you can. The basis of any negotiations, I think, must involve an exchange of territory for peace and security and secure borders. And so you were seeing, I think, each side making its position as strong as it can before they get into those negotiations. I must tell you that after the talks yesterday, found that both the king and the president of Egypt are great believers in the Camp David Accords and the N242, the UN resolution and believe that the negotiations must go forward in that framework. And as I say, I think that Israel wants to go to the negotiations in as strong a position as possible but that is what must be dealt with and what the exchange can be. And I think the great value to Israel is if they could be shown the peace and really secure borders that they would no longer have to destroy their economy by remaining an armed camp that it would be worth it. And finally, David, I come in hoping for a political question. Maybe we won't get one. I won't disappoint you. In the coming campaign, Mr. President, do you want to debate your Democratic opponent and what preference would you have as to timing or number or format of such a debate? Well, I'm not prepared at this stage, Dave, to go into anything about what the details might be or the format or anything of the kind. But I just have to say, in principle, I have always supported the debate idea and would be willing to debate. I'll wait for the details to be proposed later. Well, Mr. President, are you following that? David? I want to thank you again for your hospitality and to say once again that we love having you as our guest and at your place. I think we all agree that the fair is a lot better here than we normally get. So if you can work out, maybe you can just have us over some time and just to eat, you know, something like that. And then you bob in for a couple of questions. Well, we might do this and I ask questions. Or yes, yes. After we ask for an hour and then you ask us for an hour. I love that. That'd be a brand new format. You wouldn't like to just come and let me ask. OK, OK, OK. Thank you so much. Well, listen, thank you all. It was very nice of you. I got to say something that I wanted to say. You know that you've been spending a lot of your time here. You met him last year. Do you know, Charlotte's like kind of voting