 I'm happy to introduce the President. Mr. President. See, Karna, all of these cameras are on my bad side. Well, it is wonderful to have you all here today. And although I greatly enjoy the back and forth with the White House press correspondence, I do look forward to speaking with some of you who've managed to permanently escape the snares and traps of life in Washington. Being in the business you're in, I know that you're aware that after two years of back-to-back double-digit inflation, we brought it down to 3.9 percent for 1982. You might not know that for the last three months of 82, and this is significant, I think it certainly is in my mind, inflation was running at an annualized rate of 1.1 percent. Now, this has made an enormous impact on real wages. For the first time in three years, they increased by 1.8 percent in 1982 and in the last three months of the year at a 3.5 percent annual rate. Interest rates have dropped significantly from the prime rate was down nearly 50 percent. And in December, the economic indicators, the index, was a full 6.2 percent above last March's low point. Housing starts are also up by 45 percent during the last quarter. The new home sales have grown 75 percent since April of last year. Housing permits are up 61 percent, I'm sorry. And the inventories of unsold homes are now at the lowest levels in more than a decade. Auto production in this quarter is scheduled to increase 22 percent over last quarter, and General Motors alone is recalling some 21,400 workers. The sharp decline in unemployment last month, which is usually the last indicator to show any upturn out of a recession, was the most heartening sign of all. We still have a long way to go, but we've turned the corner and are moving forward. And I'm proud of one thing, we didn't panic when we hit the heavy weather and go for the fast bromides and quick fixes, the huge tax increases or wage or price controls that were recommended by a number of people. I think our stubbornness, if you want to call it that, will quite literally pay off for every American in the years ahead. The second issue I want to mention is defense spending. And I won't launch into another statistical report and tell you this year that defense spending is only 26.7 percent of the federal budget. I won't even tell you that the Soviets are still outspending us by devoting 13 to 14 percent of the gross national product to defense while we're devoting 6.7 percent of ours, only about half the rain. I could tell you about the strides we've made at the Pentagon under Cap Weinberger's superb leadership. During the six months ending September 30th, 1982, the end of the fiscal year, the Department of Defense Auditors had identified more than a billion dollars in potential savings on waste and fraud and from management efficiencies. Over the next five years, through multi-year procurement and other acquisition initiatives, we'll save over an additional 15 billion dollars. That's more than the entire budget for the Department of Housing and Urban Development. 32 percent more of active duty units are combat-ready and re-enlistment rate is up at 68 percent. That's the highest since 1964. But you know our progress in that goes far beyond statistics, beyond bombs and rockets and budgets and bureaucrats. The real issue is the security of the United States and the American people, our willingness to bear the burden that comes with freedom. We have begun to correct a decade of neglecting America's defensive needs, but we've only begun. President Kennedy once said that there was no discount on defense. He was right. And I think the American people knew that he was right. The defense issue is one of the most potent in American politics. And time after time, the American people, when given the facts, have made it clear that they support a strong defense program. They've never had patients with politicians who want to have a fire sale on national security or a bargain basement military. But right now, they've had a drumbeat of criticism based on false charges. Defense spending is not the cause of our economic problems. And without it, we'd have no chance of negotiating on arms reductions and getting an agreement with the Soviet Union in that field. And that's all I'm going to talk about now because I know you'll have some questions. President, there's been a special congressional election involving one of the chief architects of your economic program down there Saturday. My question is, do you see that election as a referendum on Reaganomics and how do you view the outcome? How will it affect getting your budget proposal through Congress? Well, I think it would have an effect either way. I recognize, though, that it may be portrayed as being a referendum on some policy of government. On the other hand, there are some other issues in there. Here is a man who had the courage to... He could have just changed parties and stayed in the Congress. But he said no. He had run and won as a member of the Democrat Party and he felt that it was only fair that he go back and give them a chance now knowing that he has switched parties. I admire his courage very much, his principle. And I admire very much his mind because he was an outstanding help to us in getting our economic program started. So obviously, I've got a great interest in how he does down there and I'm going to watch him with great interest. Yes, I'm sure that it would be taken as a referendum in some way as by many people if he's turned away. John Mulfer to the Montclair Times, sir. Do you feel that the Windsor War is helping you keep the defense budget from being cut? You know, I asked somebody the other day having looked at a couple of installments of that myself. I said, do you suppose that this could be a help to us? Because it reminds us of how blind so much of the world was to the threat that many years ago. And of course, how much of it is? It's more than half the population of our country today. It was born after the World War II, so it's kind of like the Civil War must have been when I was born. Mr. President, you've had a great deal about that, but there are some problems in primarily agricultural and energy-producing states, Oklahoma being one of them, a combination of wheat farming and farmers going bankrupt and very concerned, and an oil industry that is staggering right now under not only windfall profits taxes, but new excise tax being composed of per barrel price of what I understand now is $7 a barrel. They're worried about incentives to produce. Why should they buy it? Well, we hope they'll keep on producing. I remember that when I first proposed decontrolling oil, getting rid of the government controls, voices were raised saying that the price of gasoline would go to $2. Well, I've always believed in the marketplace, I confirmed it because the price of oil has gone down. I think that maybe the marketplace is still going to take care of it. I never was in support of the windfall profits tax. This new proposal, I think if you look at it fairly, is a tax that I hope would never be put into effect, that or the sur-tax. What we did was propose a tax that would only be implemented under certain conditions and one of the primary considerations was only if the Congress had joined in continuing to reduce federal spending and get the cost of government down. And if they haven't adopted those proposals and done that, then this tax bill would never go into effect. There were some other things also that we still had. We had to be definitely out of recession and the deficit had to be a certain percentage above the gross national product. With regard to the farmer, we're doing a number of things and working on this very much. The farmer is truly a victim of the cost price squeeze. And the farmer is one who many times borrows to plant and through harvest and then pays back. And with the high interest rates, they have been really caught in a trap when their price of their product went down. So we're doing everything from working on promoting international markets more export for them to meeting some of their problems and some of the problems of soil conservation. We have a plan that we've proposed also and many farmers are most supportive of it and that is rather than cash helping in their problems, using that great surplus that the government owns and that is stored in government surplus which hanging over the market has a tendency to depress prices just psychologically by virtue of its being there. And we're talking about a trade in kind that a farmer who leaves idle some of his land in the interest of soil conservation will give him the amount of crop that he would have raised out of that surplus. Maybe we can get rid of that surplus. I'm going to have to move out there a ways. Well, I think that at first of all it is too early for anyone in this position to make a decision on that. So my answer has always been if you state too early one way you're a lame duck and if you state too early the other way then everything you try to do is viewed as being politically inspired and so my safest answer is I will let the people determine whether I should run again or not. Newsweek stations in Detroit. Some of our auto workers in West Germany have taken pity on the unemployed auto workers in Detroit and they're sending food parcels to them and they've discovered that it's not practical because the cost of transportation is worth more than the food. They have further proposed that U.S. military aircraft be used to airlift some of these supplies sort of a reverse Marshall plan. Would you be willing to authorize the shipment of these donated goods to Americans to Detroiters in particular or a military aircraft? And if you do accept that plan would it be a recognition that we need a Marshall plan? Well, I don't think we need a Marshall plan that we cannot provide. We provided the first Marshall plan. I think we can provide the second. I had heard about this situation and have not had an opportunity yet to speak to Secretary Weinberger about it. I think it would have to be if it were done and I would have no quarrel with that doing I think it would have to be in planes that were making regular runs because we could just simply add to our deficit at a greater cost than again the food would be worth if we were to set up a regular transportation line and planes don't fly for nothing. No, but something that we were speaking about here earlier and I would like to pass this on to any and all of you for your communities. We've had for a year a task force of citizen volunteers called the Private Initiative Task Force that was out finding out what the people can do at a volunteer level, at the people level to help with many of the problems that we have and they've concluded a year's work and we now have a computer, manning staff here in the White House, a computerized program that contains more than 2,500 programs that arrange everything from things of this kind providing food to the needy to intercepting and heading off dropouts in school every kind of program that you could imagine some of them totally volunteer some of them combination of volunteer in connection with public officials through grant programs 2,500 or more of them with the names, the communities where they're successful the names and the phone numbers of the people who manage them and for anyone in their communities and for you who are in the business you are in of communications to put people in touch with this to find out how someone else is solving a very real problem that you have in your community I highly recommend it because out of all of this problem that we have it is amazing the ingenuity the American people, the willingness and their ability to come together and solve many of these problems incidentally in connection with this need the Air Force could or not I want you all to know also that the problem another one that we happen to be talking around the table here of the people with no shelter that are on our streets now our military is already checking on military installations for barracks space that can be made available for shelter Mr. President, at Leashes from National New Hampshire we've been reading it in the union later in recent weeks and hearing from our senior senator Gordon Humphrey that they feel they're moving away from the policies and principles that got you elected how would you react to those statements by them? Well I had a fine conversation with Nackie Loeb recently we ran across each other when I was in Boston and I know that it can look that way I'm not retreating an inch from where I was but I also recognize this there are some people who would have you so stand on principle that if you don't get all that you've asked for from the legislature while you jump off the cliff with the flag flying I have always figured that a half a loaf is better than none and I know that in the democratic process you're not going to always get everything you want so I think what they've misread is times in which I have compromised for example our entire economic program I propose three ten percent a year cuts in the income tax retroactive to January 1st 1981 there was no way I could get that with the House of Representatives dominated by the other party so I settled for a five percent cut the first year not retroactive but on October 30 or October 1st the beginning of the fiscal year then two following ten percent cuts well I think twenty five percent a little delayed in starting was better than going down fighting not getting anything at all and I wish that I could get more people to to realize no I have not retreated from what was our original purpose I am very stubborn in that regard and I'm just going to have to try and communicate better and make people realize that you know I come back and I ask for more the next time around excuse me wait I'll take the lady and then come back to you for some type of jobs bill that goes beyond are you willing to compromise now when can we expect to hear a compromise well some of the things that have been proposed are the type of job bills that we've used in the seven other recessions that took place after World War II up until now they were make work job programs they were temporary and they increased the deficit spending they set back the economic recovery and no one had any attention to the people who lost jobs over here in the private sector as this money was moved over here to create jobs we disagree with that but what we do have in our budget already and we are working together for a bipartisan approach to this is that we are looking at all the agencies and departments of government that have already built into the budget programs of construction of maintenance upkeep and so forth that they need and with the idea of accelerating those and wherever they have them scheduled doing them now but we also have in the budget and we have passed job training and we have some approaches to working with the states in their own unemployment insurance to see if this cannot be utilized not just as insurance payments or benefit payments but utilized to further job training and even for relocation from people for where there are no jobs to other places where their skills might be desirable all told we've got 93 billion dollars in the proposed budget for the needy and for the help to the unemployed and we have a program that is several billion dollars already that I think when they have time to study it that it is dealing at work but it won't be make work legitimate work such as the highway program the five cent gas tax for that and to all of those of you who said that I had stood in a press conference and said I would only give in to a gas tax if there was a palace coup at that time I was talking the gas tax had been proposed as a contribution to general revenues but more than a year ago the secretary of transportation had brought us a report on the state of the highways and the bridges in our country and the very risk of it was almost an emergency situation and I asked him then if he would come back a year later with it because of our economic problems he did and that's why the present gas tax is devoted completely to the repair and the building of those bridges and so forth and is already taking an effect in employment in the various states for construction pretty hard for a president to say it's up on Capitol Hill but our people are in contact with them and talking about it Right Roger Sharpe with WNBC in New York earlier this week you voiced some criticism or at least frustration over the really attitude on the discussions with the pullout in Lebanon do you think the report now from the judicial commission on the massacres in Beirut will help speed up this process or do you think it will further complicate it? Well I'm really afraid to comment on that either way that's a strong democracy it's an internal matter and I think we stand back and keep hands off of an internal matter of that kind we have sent Phil Habib back with further recommendations in the plan that we had originally proposed we hope that we can accelerate the withdrawal not just of the Israelis but of all the foreign forces the Syrians and the remnants of the PLO that are still there because we believe that it is essential to the overall peace plan that I proposed must be the re-establishment of a government in Lebanon that will be sovereign over its own territory and that can't happen and we can't get the cooperation we need from all parties until everyone withdraws to their own borders and we're going to continue along that plan can I take just a couple more I can only tell you that the only cuts that we've proposed are cuts that are aimed at eligibility that ensures that what we're doing is going to people who require the help many of our programs the eligibility requirements that have gone on over the years have been weakened or loosened or administrative practices have been such that we found that we're helping people that really are not eligible for that help we are providing in the budget that we've submitted we will be providing 95 million meals a day in this country now some people I've seen have suddenly seized upon a figure that has to do with school lunches and they said ah there's a reduction in the number of school lunches yes there is because for one thing there's a number of children in school that is fluctuated maybe the baby boom is over but suddenly their enrollment has dropped so there isn't that need we also have eliminated from school food programs a number of rather exclusive high priced schools in which there's no question of the ability about the ability of the parents of the students in those schools to provide for them and between those two and between ensuring that the eligibility rule either reduces the food support for students from families with incomes that are above a level where they should not be getting help from their fellow taxpayers we haven't harmed anyone who has real need they'll all be provided for and as I say 95 million meals a day the I've noticed that in the criticism that we've with regard to food stamps there are more people provided for in our budget than have ever received food stamps before the amount of money being spent on food stamps is greater but what we have cut is a projected increase that was based again on standards and eligibility for example we have already uncovered over a billion dollars in error and fraud in food stamps and we don't think that the people that are paying for the food stamps should be helping those who are fraudulently using food stamps the safety net is intact and is providing for those people that have real need can I I've got to go one more I know I'm sorry we read so many studies about how tax dollars leave the Midwest and the Northeast and go to Washington and then the distributed to California, Florida, Texas for defense spending what can we do to make defense spending more equitable for the entire country and to turn off the outflow of dollars from the Midwest and the Northeast and just make it a little fairer for everybody well in this regard the government is a customer and the first requirement is to give the contracts where the product is being made and where you can get the best the best buy for the money invested so national defense has to be the first priority we have and do make efforts where there are items contracting that can be spread more in the civilian nature not particularly weaponry we have made efforts to aim at the economically distressed areas to spread that more evenly but for example if you're going to build warships you have to go where the shipyards are if you're going to build airplanes you have to go where the airplane companies are but since the target is the security of the entire nation it's only fair that the entire nation pays for it we could say the same thing couldn't we about private industry that certain states have almost a monopoly on a particular industry that services the whole country and so the people in all those other states but then by the same token the people in those other states make things and grow things that are sold nationwide and we've never had in our country a kind of making state border lines like national lines with tariffs and so forth I feel that what probably is more irritating than to some whether the money goes back for something the government must buy as any customer has to buy something and we go where it can be sold is the truth that in many of the government programs practically all of them it is true that there are a number of states in the union that are considered the rich states and the amount of tax money that they provide to Washington when it is redistributed in programs is redistributed to other states that are not paying proportionately the same share and it's based on the idea that some of those other states have greater need this is one though that I think should constantly be watched that a little cluster of states industrial states for example don't wind up supporting the people in others my criticism of many federal programs over the years has been and we're trying to correct this has been that when suddenly the federal program government says we're the only ones that can have a program of aid to rapid transit well then you find since 75% of the people live in cities the cities are where they have the rapid transit so that 75% of the people are paying the taxes and couldn't they do be much more efficient and do it better if they tax themselves at the local level because if the people in Chicago are being taxed to help metro Washington DC or rapid transit in New York but the people in New York are being taxed also for the rapid transit program to help the people in Washington and in Chicago and maybe if the federal government just get out of the way and say look we'll give up the tax source and you just do what you want to do for your own problem here at home because the federal government has a larger carrying charge than most local and state governments have and I think that there's a lot of room and these are some of the some of the controversial things we've been trying to do and we're sending our missionaries up on the hill as often as we can to convince them that it would make more sense if local governments and incidentally we haven't done enough to tell you how far we have gone with our federalism program and how much we have re-altered the whole structure of government in turning back to states and local communities functions they can perform better than the federal government can perform for them now I know that I have to go and I know there are thousands that's got to be the last one and then I'll go alright wait a minute you're talking about a second minimum wage a different minimum wage for them yes the figures that we have seen going back to its very beginning and then every increase that went on you can look back at that and the line on the chart of unemployment for teenagers or young people goes right along increasing with the increase in the minimum wage in other words young people basically do not have a job skill they're entering the job market for some job that they afford to hire an unskilled person for and teach them whatever needs to be taught but many of those jobs are jobs that if you make them too expensive the employer just does without the job being filled and I have believed for many years and my experience as governor and working with youth groups on this that the minimum wage which is really based in mind of the mature employee the person with some job skills and so forth this never should have been applied to young people that are going to school that are looking for summer jobs that are looking for after school jobs and so forth and I think that the best thing that we can do I know that it would be this again your question about my retreating I know to be hopeless to ask to eliminate that for such young people that would be the right thing to do to take you way back before there was such a thing when I got my first summer job was with a construction gang that was remodeling old homes and reselling them and before the summer was over I ended up laying hardwood floor shingling roof painting did everything but electrical and plumbing and there wasn't there weren't any government programs that made the employer have to hire an auditor and deduct from my paycheck or social security or other programs of that kind he could just reach in his pocket every week at the end of the week and count out what he owed me and hand it to me in cash and I wouldn't give up that experience I had for anything in the world and I think that young people today are in that same situation would like to do that but today it's not only the minimum wage but with all the many useful social reforms that we've put in of unemployment insurance and social security and other things of that kind we have made the wedge for the employer the difference between what the employee actually gets and what it costs the employer to hire him so big that he just can't afford to take those young people on with regard I know I mentioned the untouchable social security but I remember when I was doing the GE theater and they one day wanted our three year old daughter to be in a commercial now she wasn't starting to make television a career at three years of age I don't think she was ever going to have a job again for many many years but I thought she was cute and I thought if they want a photographer and put her on TV I'd like to see that too so I spent four hours downtown with my three year old getting her signed up for social security she was going to get the minimum the guild minimum for doing the commercial which I think then was $50 but she was signed up and that was all deducted so forth well I know that I've taken I can't get to all the hands that are here and it's very heartbreaking I wish I could I'll tell you those of you who didn't get your questions asked if you write them down and leave them with Karna in your name and address I guarantee you I will answer them in writing and send you the answers in writing and I thank you all very much again for being here it's been a wonderful experience and I hope we see each other again soon alright thank you