 Please sit down. Thank you very much. And I understand there's been a change of signals here. Heavenly, they don't think you've had enough briefing so far this morning, so I'll be a before-lunch speaker instead of an after-lunch speaker. And then, after lunch, we'll have a dialogue and have questions and answers. So good afternoon and welcome. We're delighted to have you here. I know, as I say, that you've been briefed, and I'll try not to plow the same ground twice. And then, after lunch, questions. But first, let me just say the United States has and will continue to do everything possible to help head off hostilities between Great Britain and Argentina. We believe a war would not only be tragic for both sides, but dangerous for world peace. And we won't falter in our efforts to help prevent that. We're also working for a budget compromise that doesn't alter or weaken the focus of our economic program. As you know, there have been intensive bipartisan talks over the last several weeks between representatives of the Congress and the White House over the budget. And I'm following those talks with a certain amount of interest. They are approaching a climactic stage, and I want to express today my strong hope that they succeed. We've tried to approach the undertaking in a constructive and conciliatory spirit. We'll continue to do so in the days ahead. It's not just the Congress. It's not just the White House. It's the country as a whole, millions upon millions of hard-working Americans who need a sound budget. And we must join together to bring down deficits, bring down interest rates, and revive the economy. I think our program, which is barely six months old, goes to the heart of the most deeply ingrained economic problem that we inherited, that government has been spending and taking too great a percentage of the gross national product for itself. It's been like a ball and chain on economic growth with taxes so high that personal savings in America have been the lowest of all of the industrial states. So we haven't had the capital pool we need to fund spending by government and make capital available for home mortgages, for business investment, and so forth. Far from helping us to balance the budget, high taxes fueled increases in spending that reached 17% in 1980 alone. You know, I keep asking one question that still hasn't been asked. If higher taxes are needed to reduce deficits, why did a $300 billion tax increase between 1976 and 1981 leave us with $318 billion in deficits? The one sure way to reduce projected deficits, bring down interest rates and still encourage growth is to reduce government share of the gross national product. In other words, reduce the increase in both government spending and taxing. We must shrink Uncle Sam's appetite for credit without preventing the taxpayers from producing and saving more to get our economy moving again. We're starting to do this. We haven't cut spending in absolute terms, we've just cut that 17% spending growth of 1980 nearly in half, but we're still increasing spending. We reduced tax rates by 5% last October, but that was too little and too late to offset a personal tax increase of $41 billion last year which helped drag the economy down and make the recession worse. It's ironic to hear the same people who insisted our tax program be administered in drops rather than spoonfuls, now saying the medicine evidently didn't work. Well, the medicine will work when the patient finally begins to get it. And the first real dose begins with a 10% tax cut in July, followed by an additional 10% tax cut a year later, tampering with a third year of the tax cut or saying, all right, we'll keep that third year, but then we'll increase taxes again in the fourth year and every year after that would inflict major damage on the economy. It would increase the tax bill of families by hundreds of dollars and prevent us from achieving the $260 billion increase in private savings that our tax program is designed to bring about and that we expect by 1984. And it would further weaken the competitive position of US products in the world economy. We hear so many judgments made about compassion who hasn't, our administration I think has compassion for those in need, but where was the compassion in those bankrupt spending policies that brought the pain of high inflation and interest rates to so many people? Where's the compassion now in raising tax rates again on our people, making it even harder for them to work and compete? For all the talk about our so-called massive tax cut, it will barely offset tax increases that were already built into the system, including the social security tax increases that were passed in 1977. Another installment on that increase went into effect last January and there are more to come in the years ahead. And they will end up with a great percentage of our working people paying more tax in social security than they're paying in income tax. Another point our tax cut is said by some to favor the rich, well that simply isn't true. 74% of the tax savings goes to the lower and middle class who presently are paying 72% of the tax. The old system of pushing everyone into higher tax brackets only chased the wealthy into tax shelters and encouraged the growth of the underground economy. By reducing tax rates, we provide incentives to get more Americans back in the mainstream paying taxes again. And we're thinking about having some people going around to encourage them to do that. Sometimes a poll will ask, would you give up the third year of your tax cut if it would help reduce the deficit? Well that's not a fair yes or no question. It suggests that higher taxes automatically reduce deficits and as I've said, history proves otherwise. When people are permitted to choose between federal spending cuts or increasing taxes to reduce projected deficits a big majority, 77% in the most recent NBCAP poll invariably choose spending cuts. I think the people are sending a message of common sense if we'll just listen. They're asking their government to have enough courage to bring federal spending under control not just for a quick fix but permanently. That's the only way to restore confidence in the money markets for long-term lending, bring interest rates down more and then keep them down. We've brought them down from 21.5% to about 16%, but that's not good enough. Inflation has dropped from double digits to an annual rate of 4.5% for the last six months and wholesome prices, wholesale prices even registered a net decline for the past two months. Our progress on inflation means the cumulative increase in America's purchasing power which has received little attention. It far outweighs the impact of budget restraint in various programs which has received so much attention. With cooperation from the Congress on spending, I think we can have a strong recovery. Perhaps you'll have some questions now after we eat and that's the end of the after lunch match. To all of you in the business you're in and that I started my life out in, I just have to tell you that one lesson I learned very early back then come in very handy in the years since and even in government. You'll remember, well not all of you, but some of you back in the day when there was no tape and transcriptions were relatively new and you put on a drama on radio, the sound man didn't have tape sounds. He had a great big cart on wheels equipped with all sorts of things to make all sorts of sounds and at the rehearsals of the drama. He would then be experimenting with what would make the sound effect necessary to the drama. And in WHO Des Moines one time in about two or three days of rehearsal for a radio drama, we watched the sound effect man who had to have at one point an important point in the story the sound of water falling on a board. And he tried rice on a drum, he tried dried peas on cardboard boxes, he tried everything you can imagine. And finally desperately, he tried water on a board and it sounded just like water on a board. And I think that that's a pretty good lesson for government to heed every once in a while with our approach to problems. Thank you very much. It was. I've had the request for the first question here. Question, is this some sort of the beginning of an attack or an assault on the meeting? No, and the thing that you've just asked about, out in Oklahoma, I had met with a group and the publisher and some others from the paper out there and we were sitting around having a conversation about this and what I actually protested was that I felt that the news media in general was just creating such a drumbeat of pessimism in this time of recession that I've always felt that there is a psychological factor in recession and that if you just keep hammering at this you add to the recession, you have people that suddenly say well I won't buy something this or that or I won't do what I was going to do because of the fear of it. And actually I think some of this pessimism is, it can't really be justified as news to constantly day after day go out and find some individual tragic as it is for anyone who's lost a job or is laid off but to dwell on that and on the individual problems of someone instead of a balanced picture of what is the situation. For example, bad as this recession is and let me say no one in this room can claim any more of a traumatic feeling about the unemployed than I can because I was looking for my first job in 1932 in the depths of the Great Depression and I saw my father lose his job opening an envelope on Christmas Eve. So I know the tragedy of unemployment but how many people know for example that today, the basic strength of our economy which is going to have to be the factor that brings us back to normal is such that today we are almost at a record high in the percentage of people of working age who have jobs in this country. The record was 59% and today 57% of the people of working age have jobs in spite of the high unemployment. Part of the unemployment is not as much recession as it is the great increase in the people going into the job market and ladies I'm not picking on anyone but because of the increase in women who are working today and two worker families and so forth and that was what I was criticizing was let's have a little optimism, let's have some stories for example about the Ed on the air last night or the automobile dealer here in the vicinity who's himself lowering the interest rates to 9.5% for people that buy cars at his place. I think free enterprise has got some muscle left that can still help. Well I don't think we are helping someone who's or dealing with someone who's sending gorillas to other countries and the violation of human rights. I think if that is aimed at the El Salvador thing I think there are countries there that we're not dealing with who are sending aid and personnel into El Salvador to help that movement. I think the election kind of straightened the record out on El Salvador and what the people there want and we want to help them get that. On the drug traffic, this is much more difficult. We are working in cooperation with many governments of countries where we know they are the source of the drug and they are cooperating with us in trying to stop that traffic. There we have to recognize that our own country does not have completely clean hands. There is a great deal of marijuana produced in the United States. So unless we could be 100% able to find and apprehend or do away with that we would be as much of an offender as some country that is trying as hard as it can to eliminate the drug traffic from its country. According to the United States Department Cuba is helping the drug traffic. Being in the power for drug traffic. Well in Cuba we don't have any dealings with Cuba if they'd ever like to rejoin the civilized world we'd be very happy to help them but not under the present circumstances. And let me also say this about the drug traffic. We are launching a program here and have got it started more than we've ever done before but I am still of a belief that while you do your utmost to intercept the drugs we're not going to lick that problem in our country until we take the customer away from the drugs. The most effective answer is if we can get to our young people particularly and be successful in convincing them they don't want to go down that road. Instead of trying just to take the drug away from the customer let's turn the customers off so they don't want the drug. There was a young lady back there. Mr. President I'm from South Carolina pushing right specifically to that. Recently your secretaries of energy commerce and state sent a letter to Mexico inviting officials there to participate in the United States in privately owned nuclear fuel reprocessing center. Now experts tell us that such a facility is only feasible at the Barwell facility in South Carolina so do you favor using Barwell in a federally funded or privately funded nuclear fuel reprocessing facility? I think that in the whole energy field that our best bet is again is still the private sector free enterprise and I think that government has particularly with regard to that type of fuel I think that government has a great responsibility to ensure that there are rules for safety that will be applied. But what about volume? That what? But what about? Oh, well I'm afraid you've asked me a question that Jim didn't bring me up to date on. I'm going to have to check with Jim Edwards on that and find out. Then another young lady there. The states to be divided up. Are you attending to put any strikes on them to see that they are divided up on a per capita basis? In North Carolina for instance when some of the cuts are being distributed per county and it's very disproportionate per capita basis even when the money is being collected on a per capita basis. And the second one on the subject of tuition tax credit that you announced yesterday how are you going to present that to be used to cause functional segregation? Well we have a proviso in the legislation we're going to send up that it cannot be used in any way to promote segregation to answer the last question first. But we recognize also that as you say functional could take place. We discussed this at our own table here. I don't really believe that's going to turn out to be a problem because first of all our tuition tax credit is proposed for the lower and middle income people. There will be a cap on earning level above which there will be no tuition tax credit. Second the overwhelming majority of students in the main private schools of the parochial schools the religious schools in America. The overwhelming majority come from families with incomes of $25,000 or less. And in Chicago for example 40% of the students in the Catholic schools of Chicago are black. And there seems to be a greater urge on the part of our minority citizens to get that kind of education because in too many areas the public school system apparently is just not doing the job that they want done for the children. So we'll make very sure that they're that cannot be distorted. Oh, per capita and so. I don't know whether there are so many categorical grants, block grants and so forth. And if we're talking about federalism every provision is going to be made for a pass through from the state level and it would have to be based on the needs of the various areas. That's being worked on as we continue and the federalism program isn't dead. We're still working on it. Thank you very much. I know I've just been told this. I think there's some of my hands that have been up quite a while out here and the gentleman's just behind you. Mr. President, first off I'd like to piece of all just to thank you for inviting us. Certainly to go and see him again and see you in less than a while. My main question is since we do enjoy more of this one-on-one, and you're various leaders, would you consider the possibility of restituting what was at one time used as the regional news conference or news meetings? And if so, would you entertain an idea of what's coming to reason about Carolina or two-state Carolina's news? Well, let me say this was also discussed at the table here. I am going to discuss this because I believe on trips that I make, I don't know that we could make special trips just to have a news meeting, but I would think that it would be, it'd make a great deal of sense when you're in an area to have a press conference in which the national press is not barred, they can attend but limit the questioning to the local and the regional press who don't ordinarily get the opportunity they get here in Washington. Now, I've just been told that I have a bill signing ceremony, darn it, and they tell me that I have to get out of here. What? What would be your national question? What type of position do you feel that's going with the United States? If a peace is not negotiated between the, between the Argentine and the United Kingdom on the Falklands, what position that would put us in? You've asked a question that I just can't answer for the simple reason that these negotiations now, Alexander Haig has arrived, he's down there now in Argentina, and they're so delicate, and everyone is watching every word that's said that for me to answer in any way, a question of that kind just might upset things that are going on. I'm just gonna keep my fingers crossed and we're making every effort we can to have a peaceful solution to that problem down there. And I just, I really can't make a statement of any kind that might be misinterpreted or resented by someone involved in the negotiations. So now I'm, I, she'll get mad at me, I just can't do it, I'm sorry. Let me just say, the next time we do this, I'm gonna overrule those people that thought I ought to make some remarks and we'll just give it all to question and answer so we can get all those hands.