Albert Thomas Convention Center, West Hall
April 23, 1980, 8:00 p.m.

Howard K. Smith

George Bush
Ronald Reagan

  MR. SMITH:  Thank you, Mrs. Hinerfeld.

 Good evening, ladies and gentlemen.  We are very pleased tonight to have two Candidates for the Republican nomination for the Presidency of the United States:  former Ambassador George Bush of Texas, former Governor Ronald Reagan of California.

  Gentlemen, before we begin, in response to the League of Women Voters’ announcement today that it will sponsor the Presidential debates after the conventions, as it did four years ago in 1976, let me ask if nominated by your party, would you agree to participate?

MR.BUSH:  I’d love to debate in the Rose Garden.  I think that would be extraordinarily—yes, sir, I would.

MR. SMITH:  Thank you, Ambassador.

MR. REAGAN:  I can’t wait.

MR. SMITH:  Thank you very much, gentlemen.

This evening’s forum will last just 60 minutes.  As you both have agreed, there will be no specific time limits to what you have to say.  You will have an open discussion on the issues.  You can address comments and questions to one another.  I will reserve the chairman’s privilege of occasionally asking a question if I want to change the subject and think it’s wise to do so.  And towards the end of the forum, we will accept questions from the audience; and after that, there will be brief closing statements by you.

The first question:  Ambassador Bush, everyone, including your opponent, has congratulated you on your stunning victory in Pennsylvania yesterday.  In the course of the program, Face the Nation, on Sunday, you said you hoped to win because you had adopted the strategy of hammering away at the differences between you and Mr. Reagan.  And one difference you mentioned was, you said, in your words, was Mr. Reagan was overpromising the American people.

Could you explain that, and, if the spirit moves you, could you respond?

MR. BUSH:  First, it was Meet the Press.  I don’t want to put in a plug for the wrong outfit; and, secondly, I also made the point that what we must do is defeat Jimmy Carter.  I mean I got that into focus, and that I wanted to get these differences out with the Governor so the voters could make a good determination.  I hope that’s what’s happened in Pennsylvania.

 A big difference, for example, that the Governor and I have regards this tax cut.  He feels—I don’t want to put words in his mouth, and he is here to defend or explain his position—that you can cut taxes by 70 billion the first year.  The WALL STREET JOURNAL attributed the figure to the tax cut idea to 90 billion the first year, cut inheritance and gift taxes—we computed that at $5.4 billion—and still balance the budget and still increase defense spending.

 President Kennedy suggested this cut.  It was implemented by Johnson.  The cut was 11.4 billion.  It resulted in a $4.4 billion revenue loss.   Inflation then was 1.8 percent.  Today it is 18.  Investor confidence was out there; today there is none.

 So, in my judgment, that economic program would exacerbate the deficit.  It would result in less stimulation of the economy because of the conditions.  And I believe that before we can have massive across-the-board tax cuts, we’ve got to get the budget in balance.

So, I am proposing a $20 billion, as opposed to 70 or 90, supply aide tax cut to stimulate savings for home to stimulate business. 

That is a major difference.  There are plenty of others, but I do want to give the Governor a chance to respond.

MR. SMITH:  Governor?

MR. REAGAN:  That is, indeed, a major difference; and I still believe firmly, and I think there are some differences of opinion about figures.  Four times in this century we have had across-the-board tax cuts, all of which have resulted in such an increase in prosperity that the government even in the first year got increased revenues, not less.  In the Kennedy year, the total revenues for government, and, of course, government was much smaller then, about $109 billion instead of the 600 that will be coming up in ’81, but according to the figures then, but the federal government got some $5 billion in additional revenue and got about $1.1 billion additional revenue in the income tax.

But let me point something out.  George mentioned the differences here.  Under Jimmy Carter, the tax burden, as a percentage of the gross national product, has reached the highest level in the history of our nation.  It is also the highest percentage of personal income that it has ever been in our history.  Now, under the President’s revised ’81 budget, the total Federal taxes are projected as $628 billion.  Of that, 283.1 will be individual income tax.  That’s 115 percent increase in that tax since he took office.

Now, over the next 10 years, if things aren’t changed, it is estimated that the total tax increase on the people of America will be one-and–a-half trillion dollars.

Now, rather than the Kemp-Roth Bill, which I support, the idea of a 10-percent cut across the board, the income tax, administered over a three-year period to a total of 30 percent, I believe will stimulate the economy, will create jobs, but it will not reduce federal incomes.  It will only reduce the increase in taxes, because we are going to be faced with an increase in taxes that is far beyond our comprehension right now.  And if we figured that cut as a percentage of $628 billion, you would be reducing the first year less than five percent, perhaps about four percent, in the total tax revenues that the government is going to be getting.  But I believe at the same time history has proven in all those other tax cuts, I believe that will stimulate the economy, more people will be working and it will be contrary to the Carter policy now of fighting inflation by adding millions to the unemployment roles.

And so I support and stand by the idea of incentive taxes geared to the free enterprise system that will provide incentive to increase productivity so we can compete in the international market which we can’t do on even terms today.

MR. BUSH:  I agree with that, but the difference we have is that it is my understanding the Kennedy tax cut implemented by Lyndon Johnson, resulted in a $4.4 billion deficit; and inflation then was 1.8, not 18 percent.  Investor confidence was high, not low; and it is my perception that that tax cut applied today in the same percentage, the same numbers, would result in an inflation rate of about 30 to 32 percent.  And so I would—I couldn’t agree more about the percent of our gross national product taken by taxes, but I believe the first thing we must do is get in balance.  Incidentally, not the way Jimmy Carter proposes, by higher and higher taxes.  Get in balance by the reduction of expenditures, get in balance by a $20 billion supply side tax cut and then begin to reduce rates.

But if we risk with investor confidence where it is, a deficit that’s going to be up already, I think, 37 billion, $30 billion on top of that, I’m afraid we can’t break inflation, and we’ve got to do that and do it fast.

MR. REAGAN:  Well, George, we’ve got to do that.  And, of course, it goes without saying, and I certainly believe in reducing the cost of government far more than the phony decrease that Mr. Carter has proposed.  But when you suggested, as you have, about a $20 billion dollar tax cut, that is less than the federal government is going to get in a single year, undeserved, from people that just received cost-of-living pay raises and were pushed up into higher tax brackets.  That amounts to more than $20 billion.

MR. BUSH:  But if we get that in balance and then do what I say, start reducing the rates, that is the key thing.  Your plan in my judgment and the judgment of many economists would risk exacerbating that deficit.  And today our creditors abroad, our economy is linked to foreign economies, and they take a look at us and see us living at deficit after deficit.  You cite the Kennedy tax cut.  There wasn’t any surplus then.  There was a deficit resulted from that scheme.  Arthur Laffer, the economist that proposed it, he himself says, “I don’t know whether it would work.”

I don’t believe we can take that kind of risk, Governor, and I would not propose it.

MR. REAGAN:  George, how much more risk is there in just going along with what we’ve been doing?

MR. BUSH:  That’s not what I propose.  I propose something very different than just going along.

MR. REAGAN:  Let me just say one other thing:  I have heard for a great many years that we can’t possibly reduce taxes..  This is Washington’s cry.

MR. BUSH:  I agree.

MR. REAGAN:  We can’t reduce taxes until we reduce government spending.  And I have to point out that government does not tax to get the money it needs;  government always needs the money it gets.  Now, your son can be extravagant with his allowance, and you can lecture him day after day about saving money and not being extravagant or you can solve the problem by cutting his allowance.

MR. BUSH:  But the program I’m putting forward cuts the allowance, cuts on the spending side.  It doesn’t risk this “promise everybody everything,” because you cut taxes $210 billion, you favor increasing defense and you favor cutting out inheritance and gift taxes;  and I believe that you’re going to end up with a much bigger deficit.  And that’s where you and I differ.

Listen, you talk to me about gross national product and percent of taxes.  My whole program is based on getting tax relief.  But I am not going to do it in a way, popular though it may be, if it’s going to, in my view, make that deficit—

MR. REAGAN:  There is one last point I want to make.  There is one last point we haven’t touched on.  We are talking as if those dollars that are saved in taxes are not going to have any effect, no multiplier effect, when they are in the people’s pockets and they’re used out there in society.  And it has been proven that there is a far greater multiplier effect and creation of prosperity in money spent by the people and invested by the people then there is when it is spend by government; and, therefore, we’ve got to recognize that that money isn’t going to be buried in a tin can in the backyard.  It’s going to be used to buy things.  And when we buy things, productivity is going increase; people are going to put it in the savings account; then we’re going to have the capital to invest in new plant and equipment and research and development.  We have the highest percentage today of outmoded industrial plant and equipment of any of the industrial nations in the world.  We can’t compete evenly with the, because we don’t have the capital investment to put into business anymore.

MR. BUSH:  That’s why my cut—

MR. SMITH:  You’re getting close to—

MR. BUSH:  --is a supply side tax cut.  That’s what will stimulate production.  That’s the cut I want.

MR. SMITH:  You’re getting close to something you agree on.  I want to try and keep you from agreeing.

Governor Reagan, there’s a question I have to ask you, the front runner always gets shot at more than anybody else;  he is the point man, and there is a volley I must ask you about and you should have a chance to answer.

Many observers have said that many of the facts that you use in your arguments are wrong.  You’ve spoken of the Kennedy 30 percent tax cut, when it was really 18 percent.

MR. REAGAN:  That was the first year.  It was a two-year tax cut, Howard, and it was 27 percent.  And I think that’s close enough to round out to 30.

 MR. SMITH:  You have spoken of a Government Accounting Office study showing either 11 billion or 50 billion dollars waste in government and the GAO says it doesn’t have such a survey.

MR. REAGAN:  No, it turned out it was the Justice Department gave that figure.

MR. SMITH:  And you said that it costs the government $3 to provide $1 worth of benefits, and HEW says it costs .12 cents for a dollar of benefits.

MR. REAGAN:  And I wouldn’t believe HEW if they were here in the room saying it.

MR. SMITH:  There were several other facts like that cited and you dispute those or—

MR. REAGAN:  Well, I’d like to.  Something just happened tonight.  The UPI and a pretty good writer, Don Lambreaux, just has come out with a story that has to do with one set of figures I used about how many employees the Carter Administration had added back.  And it seems that one of the networks, which shall be nameless, went on the air and they had gone to a fellow in government to ask him and he said, why, there were only 6,000 added in all these three years under the Carter administration.  But. Mr. Lambreaux goes on to say that, while my figures might not have been fully accurate at this time, I appear to be closer to the mark.

He says that in the last three years the total number of government workers has grown by at least 63,282 not 6,000.  I had said 131,000.  But, then, he went on to point out that there are about 145,000 persons officially work for the Department of HEW;  however, HEW is also paying the salaries of 1 million additional workers who labor for the HEW in state and local governments, universities, consulting firms and other organizations.  Moreover, federal revenue pays the salaries of 77,000 state workers in the U.S. employment and unemployment offices around the country.  All of these workers, who collectively add millions to the rolls are excluded from the government’s employee records.   How much of their numbers increased over the last three years no one knows because no official count has even been taken.  When this is added to the nearly 5 million civilian and military employees on the government’s official rolls, we see that as many as 14 million people are working for the government.  And this means that at least one U.S. worker one of eight owes his job to Washington.  And he concludes saying, “Thus, Reagan’s 131,000 increase in perfectly possible and may, in fact, actually understate the real rise in federal employment.”

MR. SMITH:  All right, sir.  You have covered that point.  Now, how about the other points?  Do you thing that occasionally you do make a misstep?

MR. REAGAN:  Certainly, anyone that’s standing up without notes and ad-libbing answers to questions is going to slip up:  one, on some oil figures, comparing Alaska and Saudi Arabia.  The figures weren’t wrong, but if all the things that I’ve read and I’ve studied and researched on that, I attributed them to the wrong report and gave U.S. Geological Survey the responsibility for having used those figures.  And, so, again, they checked simply with U.S. Geological Survey who said “those figures weren’t in our report.”   But I found that that’s all I had done in that particular one.

What were some of those others you mentioned there, because I have been waiting for an opportunity to do this.  I have confidence in the facts and figures that I’ve used.

MR. SMITH:  I don’t want to insist on them.  You said it cost $3 to deliver $1 in benefits.

MR. REAGAN:  Oh, well, I’ll tell you.  This one did appear in an account by an economist, and I will admit, that not having any chance to check it with the economist, I took the figure that was used for redistribution of income outside of Social Security to people below the poverty level, and I took the figure of those below the poverty level and divided it into the total figure, and it came out that if the people below the poverty level were getting all the of the money in that budget, a family of four would be receiving $27,000 a year, which is about four times as much as they are receiving.  And I figured that made three to one over it.

MR. BUSH:  Let me—

MR. SMITH:  Do you want to talk about that?

 MR. BUSH:  In my view, what we ought to be doing something about the employee thing.  You know, Jimmy Carter fought the Leach Amendment that would have set a ceiling on federal employment through attrition.  Nobody would have been thrown out of a job; but as people left, some would not be replaced.  He fought against that.  He campaigned on less people employed.

I drove by the EOB the other day and across from it is a building I am told is staffed, maybe some on temporary assignment, by people really working for the White House.  White House staff is grown.  They don’t feel any of this recession.  They don’t feel any of these layoffs that the steel workers feel or felt or some of the people around here are beginning to feel.  And so that’s what I’d do on that one.

On energy, I don’t believe, frankly, that there’s enough oil in Alaska within the reasonable future to replace the 9 million barrels a day we get from overseas.  I believe a decline curve has already set in on Alaskan oil.  Some companies have already started pulling out of Alaska.   And so my energy program is not just decontrol and figure we can get it all in Alaska, but it’s use alternate sources of energy.  Go with decontrol, of course, but use alternate sources of energy as well.

MR. SMITH:  Let me ask you both about something that is just developing now and that is that famous recession we have been waiting for, but which is now at last beginning to happen.  It may be there when either of you may become President.  What is your tendency:  to let a recession go its length in the hope that it will reduce inflation, or try to halt recession by things like government expenditures or tax cuts that may stimulate inflation?

Governor Reagan?

MR. REAGAN:  Well, I don’t believe the alternative to inflation is recession.  I think that’s old-fashioned economics.  I don’t think that you have to trade unemployment—and, incidentally, President Carter as a candidate said that he would never fight inflation by using unemployment.  President Carter in his present economic message has said that as a part of his fight against inflation, unemployment is going to be allowed to go up one to one-and-a-half or two percentage points.

Now, this is self-destructive, because for every single percentage point that you add to the unemployment rolls, you add 25 to 29 billion dollars to the federal deficit, both in the loss of revenue from those no longer working and in the benefits that go out to them.

No I would do the things that I have talked about in regard to cutting of government, and I can point to some experience in that same situation.  When I became Governor of California, it was just like the federal government, bankrupt, and with a deficit, and a mounting deficit.  And I know that some of these things work.  I would even go back to an example that happened since I was Governor in California, Prop 13.  Everyone in the country heard the horrifying tales of what was going to happen if they cut the property tax as much as Proposition 13 said they were going to.  Well, it has been in effect about 18 months now.  And the result is there are 100,000 fewer public workers.  But the private sector in these 18 months has created 532,000 new jobs, and the State of California would up with a $3 billion surplus.

MR. SMITH:  Ambassador Bush?

MR. BUSH:  I don’t believe there is an economics total soft landing.  I don’t believe it.  It is not in my concept of economics.  I believe you are going to see some increase in unemployment, but I believe that way you fight that is to stimulate capital formation, risk-taking and production.  And the way you do that is through this kind of approach to cutting taxes I talked about, as well as fighting the inflationary side by getting government spending under control.  And I believe it would work.  There are programs that will help for retraining.  I like the idea of training people in the private sector for jobs that exist through tax credits rather than train them up in a SETA program that gets some kid’s hopes up.  He really wants to work, gets his hopes up, and then there is no government job for him, or any job for him.  Train them for jobs that don’t exist.

So I’m afraid you’re going to see unemployment creep up.  I would fight that by production, supply side tax cuts, stimulating the private sector, and I believe that would work if you hold government under control.  But you can’t go and risk making the deficit bigger at the same time, otherwise you still have that inflationary problem.  My problem with Jimmy Carter, when he came in he addressed himself to one thing:  stimulation of the employment sector and lowering unemployment.  And he did that to some degree for awhile, but inflation went right off the charts because of these reckless deficits.

MR. REAGAN:  Well, but he did other things to create the reckless deficits.  He said that he was going to streamline government, and he streamlined it.  He created the energy industry that’s got a budget as big as the total profits of the major oil companies.  He has now created the cabinet level, National Department of Education, with more millions of dollars.  He’s got the biggest staff, as you pointed out, in the White House, I think, of any President that we know of.  I think that he was going to trim things has—I laughed when he called Teddy Kennedy the biggest spender in the Senate.  Well, he’s the biggest spender that has ever been in the White House.  I feel when you said, again, stimulate, provide incentive for increased productivity.  The American worker today is saving the lowest percentage of his earnings at any time in the last 30 odd years.  And a Japanese worker can save five times the percentage of his earnings than an American can;  a West German work, three times.

It’s that money that is not going into savings accounts, not going to insurance premiums, that is not there as capital to invest in private sector.  And the only capital investment they’ve been able to make has been mandated on them by this government to meet certain federal requirements, either in safety or environment or whatever.  It’s added to production costs.  It’s reduced productivity, and I want to see an increase in productivity, too.  And all I can say is I think the system you are talking about we’ve been trying for a lot of years, really, off and on.  And I think it is time for something new and I think what is new is let’s believe in the people once again, that they can spend their money smarter than the government can.

MR. SMITH:  Let me ask you a question that is almost philosophical.

Ladies and gentlemen, please suppress your enthusiasm until we’re finished, because people will think someone is taking sides and we don’t want them to think you are.

Mr. Reagan and Ambassador Bush, you blame the government for many of our ills, but in many ways is not government absolutely essential and hasn’t it many achievements to its credit?  The most productive industry we have is agriculture, and its productivity is due, mainly, to government activity and the research stations.  The World War II, the government created an aluminum industry, when private industry wouldn’t touch it, and sold it then to private industry.  And our most spectacular achievement lately, the putting a man on the moon, was a government project, a government plan, which private enterprise carried out.

Aren’t you underrating the effectiveness of government?

MR. BUSH:  No.  I don’t think government adds to production.  You can cite an example of the aluminum industry, now much better done in the private sector.  And when you have a war-time economy, of course you’re going to have government intervention in certain things; stimulation of ship building, for example.  But tell you what is happening; government has moved in on the private sector with so much regulation.

I built a business right here in Texas.  Started it from scratch.  And when we started out there into the Gulf to drill a well, we needed I think it was two permits.  Today I am told it is 12 permits.  Every time you turn around, there is too much regulation.  Yes, government does some things, and they can help people, and they do help people.  And I’m not an anti-government people, person.  They provide for the defense, and there are certain functions that government has that are compassionate, and I think good.

And I have a difference with the Governor as to whether you turn everything back to the states of not:  welfare, for example.  I think there is room for a partnership there.  But what government does is not productive; and we ought to be cutting it back, because it isn’t adding to this productivity that I think is essential if we’re going to beat inflation and give the bypass citizen, the person in the Fifth Ward of Houston, that has been bypassed, give then an opportunity to have a running start as they get into the work force.

MR. SMITH:  Mr. Reagan.

MR. REAGAN:  Yes, Howard, I brought some figures along here because I thought they might come in handy someplace, and here it is.

If Americans, since 1950, in the last 30 years, had been able to save and invest, if our economy had only grown one and a half percent more a year, our incomes would be 50 percent higher; jobs would be plentiful; we’d have a balance budget; lower payroll taxes, instead of higher; stable prices; a solvent Social Security program; and our industrial economy would be three times as great as that of the Soviet Union; and we would have unquestioned military superiority.

Now, you mentioned—I agree, too, there are legitimate functions government must perform.  And the basic three that are outlined in the very basis of our government and our constitution is that the federal government exists to protect us from outside aggression; our national security to protect us from disorder within; and to guaranty the stability of our money.  And in all three of those at the moment we could say this administration has failed.  They have not protected our national security.  They have let it decline to where we are in the most dangerous point we’ve been in that I can recall.  They have—we know about disorder in the streets and crime and so forth.  And the third one, also, the stability of our money, the dollar is worth less in relation to other currency than it’s ever been in our history.

MR. SMITH:  Gentlemen, you both stated your viewpoints.  Now, to move things on to another subject.  There was supposed to be a third man here tonight, Congressman John Anderson of Illinois.  We received word he would not take part, and it is expected that tomorrow or perhaps the next day he will announce that he is forming a third party and he will be the candidate.

What do you think the effect of that will be on the election that you hope to take part in?

Ambassador Bush.

MR. BUSH:  Well, I don’t really believe after the initial flurry that it’s going to make that much difference.  I believe that they’ll be more apt to pull from Jimmy Carter because his backing and those shoving him forward and helping him on this are those that I think would be for Teddy Kennedy if they thought he was going to be in there and have a shot; and, so, I don’t think it will be third party.  I think he will run as an independent, and I think he’ll have had the same success that others have had that have run as independents.

We are a two-party system.  Part of our stability comes from the two-party system.  I asked him in the debate in Illinois whether he was willing to support the nominee of the party.  He made very clear then that he was not prepared so to state.  And I think you are probably right, that he will do this.  But I don’t believe it’s going to amount to much.  After the initial blush and a couple of good trips around the country, I don’t see—he’s caught.  He’s caught because he doesn’t have really the true credentials of a Kennedy, and yet he seems to want to move away from the credentials that got him elected to the House.  And that dichotomy, that contradiction, is going to hurt him some; but let him do what he wants.  I mean, that’s the way I look at it.

MR. SMITH:  Do what he wants.

Governor Reagan, the polls the other day said he could get 28 percent of the votes.  I don’t know if the poll is accurate or not, but if he did, he could throw the election you hope to be in into the House of Representatives where the Democrats have a majority.  Wouldn’t that be a threat to you?

MR. REAGAN:  That would be a disaster.  I agree with George, though.  I think whatever he is going to get, he is probably going to take away from the Carter side more than from our side.  And I know that I speak for George when I say we sure do miss him tonight.  Don’t we?

MR. SMITH:  Gentlemen, let’s turn to foreign affairs.

Both of you have been unsatisfied with how the President has been handling the Iranian crises lately, and now he is apparently having some thoughts of using force which I think you’ve indicated in a general way you approve of.  Let me run some forcible options past you and see whether you approve or disapprove.

The most often quoted one is mining the oil ports of Persia, blockading the oil ports of Persia.  Is there not a danger if that were adopted that the Russians would send mine sweepers in to sweep the mines or run the blockade and we would have to either shoot or shut up?

Do you find that, Governor Reagan, a danger?

MR. REAGAN:  Well, it’s difficult to talk about what is a viable option now, as we are late in the 6th month of their captivity, because first of all is the fear of something that might endanger them further; but second is also, it you do have a good idea, something that should be done, I don’t think we should say it out loud and let the Iranians hear about it.  My criticism—I don’t mind criticizing what has been done and, frankly, I don’t think the President has done anything that he couldn’t have done five months ago or longer, and then was the time to—when all the means of diplomacy failed—then was the time to look at the options, which only the President knows that he has, as to what he thought might, with the least chance of any violence, that might exert the greatest pressure on them, and then give them a date certain and say either the hostages are released on that date or this goes into effect.

And he has used the term military force now as a possibility, but that could include what you’ve said, mining.  It could include blockade.  If we mined, and I am sure if we did it, those would be the kind of mines that are activated by radio and can be deactivated, but we would have to also prevent Russian mine sweepers from going in there and trying to take them out if they wanted to try that.  I wonder whether they are prepared for a possible escalation of conflict with us at this time.  They are aggressive against an Afghanistan and in Africa, and so forth; and, even though they have a lead on us in virtually everything, I don’t think that maybe they are prepared at this time to dare the possible—well, they don’t want the confrontation directly with the United States.

MR. SMITH:  Wouldn’t it be quite a risk to find out whether they were willing or not, Ambassador Bush, when they are operating just on the other side of the border from their supply depots and we will be operating 8,000 miles away from ours?

MR. BUSH:  No.  It would not be that big a risk in my judgment.  I have been to that part of the Gulf.  I did business in that part of the world.  In my judgment, the situation in Iraq, where you see Iraq pulling away from the Soviet Union, has a bearing on this and, in my judgment, the situation in Pakistan; where you have both China concerned and us concerned about Afghanistan for very different reasons, the Chinese with their special relationship with Pakistan, where you have Islam concerned, almost united in their concern about the Soviets; where you have a Soviet Union that it is overcommitted in Afghanistan as it is, I don’t believe your hypothesis is correct, Mr. Smith.  I don’t believe the Soviets would escalate and I believe that is an option that the President should give very serious consideration to.  And you’re not talking, when you get into a situation of mining, of having to cede it away.  Once you mine, with no matter how many mines you put in, insurance rates skyrocket.  And for all intents and purposes, commerce screeches to a halt.  And I think it should be considered.  I think it’s for the President to make the determination.

One thing I learned from my experience in foreign affairs is that there is a highly classified body of information that only a handful of people, properly, in my judgment, have access to, and that is the President and the handful of his top people.  And so if that decision is made by them, it would have my support; and I don’t believe that the risk you cite is the risk to be concerned about.  I think the risk would rather be internally in Iran when you are dealing with outrageous, reckless people who have no respect for international law.  They’ve already made a hostile act under any interpretation of international law, seizing our embassy.  And, so, I wouldn’t worry about the Soviets in this context for the reasons I have given you.

MR. SMITH:  What about the option of doing nothing at all?  Clearly, the most important fact about Iran today is it is a country that hasn’t completed its revolution.  There are probably more pro-U.S. people in Iran than we realize from watching television and seeing only anti-U.S. militants.  And if a showdown inside Iran, which may have begun already with the students fighting one another, might see our side, the side that wants to get along with us when; but if we use force, we may force Iran into Russian arms and endanger the hostages.  Wouldn’t it be worthwhile being patient awhile longer since the hostages are apparently physically in good condition?

MR. REAGAN:  I don’t think they have seen it as patience.  I think they have seen it as weakness.  And they have no respect for us.  They have humiliated us.  One of their officials that we sent back just the other day, one of the diplomats, his speech when he arrived was boasting of how they rubbed our face in the dirt all this time.

But what if the United States had, in those first hours, had used all the diplomatic things that we have done—not that commission from the U.N., because that isn’t even in the U.N. Charter, and I think it was a terrible precedent for us to set that the U.N. could do such a thing outside the Charter—but all the diplomatic efforts we could make peacefully to get them back; and then had used on of these and, let us say, hypothetically, the mining of the harbor, the blockade.  First of all, at that time they were greatly dependent on outside commerce and dependent for about 30 percent of their food.  Now they have adjusted, and for us to put sanctions on them, our trade has shrunk down to the place that is hardly going to affect them at all.  But, then, if we had done that forcefully, and in those first few days, and gotten our hostages, back, then we could have said to them, “Now, look.  We don’t want any trouble with you.  We would like to be friends with you.  We’d like to work with you, and we could be helpful to you.  And you’ve got a neighbor up north I am sure you don’t want in here.”  And I think they would have listened to us.  But now why would they listen to us when they look to themselves as stronger than we are because of the way we’ve gone on month after month letting this humiliation occur.

MR. SMITH:  How about Afghanistan?  Congressman Sam Stratten of New York, who has been to the Pakistan border of Afghanistan, says the Afghan rebels are using ancient weapons, rifles of World War I vintage, and he feels that we should send them very considerable aid since the Russians are accusing us of it anyhow.  Do you believe we should?

MR. BUSH:  Absolutely.  And I said it from the very beginning.  And, look, if you have a brutal aggression and you are not willing to help, and I think the way to do it was through Pakistan, if you are not willing to help, what possible hope do countries have that want to be free of this kind of aggression?  You’ve got to start in foreign policy with your definition of what the Soviet Union intends.

Now, I believe the evidence is overwhelming that they seek superiority, not parity; and I believe when they see us weak, say Cubans are in Africa as a stabilizing influence, they are going to go in there and use that stabilization to spread hegemony, as the Chinese would say.  And so my view is that they are, the Soviets, are aggressive; they have overstated in Afghanistan; they have bitten off more than, in my judgment, they should be allowed to digest; and I think that the best answer to it is for them to know that the United States is going to keep its commitments.  Our allies, everybody gripes about our allies; and yes, they ought to be out supporting us for what we’ve done.  But they don’t know that they can believe Jimmy Carter.  They think that he’s going to change his mind on whatever he does in the Mideast just as he did on the enhance radiation weapon in Germany.

MR. REAGAN:  It took him three years to find out that the Soviets couldn’t be trusted.

I agree completely, where people want to be free from Soviet or Cuban domination where the proxy troops are used to the Cubans, the United States should be willing to provide weapons to any men that want to fight for their freedom against those hostile forces.

MR. SMITH:  Do you believe, Governor Reagan, still that there should be a blockade of Cube, a complete blockade?

MR. REAGAN:  Well, suggested that as a hypothetical; again, and it was based on this thing that we both have said here, and that is that only the President and a few people have knowledge of all the options, but I said with regard to Afghanistan.  The President, I think, lowered the credibility of the United States when he made, in diplomatic language, what was an extremely serious warning to the Soviets not to invade Afghanistan, indeed, he even used the term that serious consequences would follow.  Now, he knew we had no way to back that up there.  There wasn’t anything we could do.  We weren’t going to put in troops and try to chase them out.  So they invaded, and the world saw us once again still standing here, just as we are still standing after he made the speech that he wouldn’t accept the Soviet brigade in Cuba.  But we accepted it.

And so my feeling is that—what I said at the time was that we ought to have a plan.  We ought to have a strategy of our own.  We ought to have contingency plans where we can look ahead and say:  Well, if they should do this or do that, this is what we can do.  And I propose that there might be pressures we could exert on the Soviet Union where the logistics are not 10,000 miles against us, but not in their backyard.  And I said let me give one hypothetical idea, and I said there may be others and better options than this—but here we have a Soviet satellite 90 miles off our shore.  And instead of threatening sanctions or threatening the Olympics or anything else, why couldn’t we blockade Cube and then say to the,, “When your troops get out of Afghanistan, we will drop the blockade around Cuba.”  And I think this could exert great pressure.

MR. BUSH:  Here we have a fundamental difference, because it wasn’t Cubans that invaded Afghanistan; it was Russians.  And we have a hemispheric problem today, it seems to me, and I believe that if you will go back and, look, blockage connotes in navel parlance, war, interdiction of shipping, interdiction of aircraft.

Kennedy didn’t use the word “blockade.”  He used the word “quarantine.”  To quarantine Cube, it would require today because of the decline in the United States Navy, according to a former chief of naval operations, the entire Atlantic fleet.  Now, I don’t believe I have a difference with Governor Reagan.   As much as I detest what Castro is doing, if Afghanistan were invaded or someplace in the Middle East were threatened when I was President, I would not respond against Cuba.  I believe that would be bad in terms of the hemisphere.  We got problems with Cuba?  One on one with those problems.  Don’t link them in in order to solve something halfway around the world.  That’s my view of foreign policy.

MR. REAGAN:  There is a disagreement in naval circles, then, too, because I have had some naval advice about the practicality of the blockade, also.  But don’t we have to realistically face up to the fact that our troubles in this hemisphere and Central America and on down in South America are being generated by Castro’s Cuba as well as in the Caribbean where they are also threatening now to choke off our lifelines, and it is a problem that has to faced one day.  But I think that Russia had enough of a presence there.  It has fighter bombers there; it has submarines there; it has a brigade we know about that holds combat maneuvers there.  Russia provides, and I guess, about a tanker a week with oil for Cuba.  I don’t think they could stand a blockade very long, and I think a little call on the hot line with this kind of a threat might get the withdrawal of the troops from Afghanistan, because it would be a pressure on them.

MR. SMITH:  Ambassador Bush, what do we do about Cuba which is, as everyone says, 90 miles off our border, is virtually a Soviet outpost, has an imitator now in the island of Grenada, has 500 advisors in Jamaica and some in Guyana, and influence is spreading all the time.  And what makes it seem ridiculous is it is a basket case of a nation, about to collapse if Russia doesn’t hold it up.

 MR. BUSH:  That is right, but when Jimmy Carter came in, he gave a great big abrasso, stop the SR-71 flights and treated Cuba with civility while knocking the hell out of some of our allies in the further part of Latin America.  And people look at us and they say, “What is going on there?”

This man has made a conscious decision, in my judgment, Castro, to export revolution, not support it.  Communist make this very interesting dialectic, this distinction between the support of revolution and the export.  They’ve made this decision, and, yes, Grenada is now having their alliance with Castro.  Guyana has been in trouble before—Grenada first.  Guyana has had their trouble before.  Jamaica, their police and security force is being trained by Cuba, but that is just the tip of the iceberg.  The rest of it is down in Central America today where I am absolutely convinced that Castro is not only fomenting but supplying the military equipment to stimulate revolution.

So what do you do about it?  You change your naïve foreign policy that considers this guy as some kind of person that is really going to live comfortably with inside that island.  And then, you certainly you would adhere to human rights.  The United States always must adhere to that.  But Jimmy Carter didn’t invent morality in foreign policy.

And so what I would do is I would keep our strategic interests in mind as I pushed for equity and change.

MR. SMITH:  Well, the next debate, I am going to ask you what you would do about Cuba.

MR. BUSH:  I just told you.

MR. SMITH:  But now we are going to have some questions from the audience.

MR. GROSSBERG:  My name is David Grossberg, and I would like to know:  Do you think the children of illegal aliens should be allowed to attend the Texas public schools free, or do you think that their parents should pay for their education?

MR. BUSH:  Who are you addressing that to?

MR. SMITH:  I think you are first in this.

MR. REAGAN:  He was looking right at you.

MR. BUSH:  I was afraid he was.

Look, I would like to see something done about the illegal alien problem that would be so sensitive and so understanding about labor needs and human needs that that problem wouldn’t come up; but today if those people are here, I would reluctantly say I think they would get whatever it is that they are, you know, what the society is giving to their neighbors.  But the problem has to be solved.  The problem has to be solved, because as we have kind of made illegal some kinds of labor that I’d like to see legal, we are doing two things:  we are creating a whole society of really honorable, decent family-loving people that are in violation of the law; and, secondly, we are exacerbating relations with Mexico.

The answer to your question is much more fundamental than whether they attend Houston schools it seems to me.  I don’t want to see a whole—if they are living here, I don’t want to see a whole—think of six and eight years old kids, being made, you know, one, totally uneducated and made to feel that they are living with outside the law.

Let’s address ourselves to the fundamentals.  These are good people, strong people.  Part of my family is a Mexican.

MR. REAGAN:  I think the time has come that the United States and our neighbors, particularly our neighbor to the South, should have a better understanding and a better relationship than we have ever had.  And I think that we haven’t been sensitive enough to our size and our power.  They have a problem with 40 to 50 percent unemployment.  Now, this cannot continue without the possibility arising with regard to that other country that we talked about, of Cuba and what it is stirring up, of the possibility of trouble below the border, and we could have a very hostile and strange neighbor on our border.  Rather than making them—we are talking about putting up a fence.  Why don’t we work out some recognition of our mutual problems, make it possible for them to come here legally with work permit, and then, while they’re working and earning here, they pay taxes here.  And when they want to go back, they can go back.  And they can cross, and open the border both ways by understanding their problems.

This is the only safety valve right now they have with that unemployment that probably keeps the lid from blowing off down there.  And I think we could have a fine relationship, and it would solve the problem you mentioned, also.

MR. SMITH:  Yes, sir?

MR. APPELL:  I’m Michael Appel.  I hope both of you gentlemen will address yourselves to this one:  Local filling stations are said to be cutting the gasoline prices so as to exhaust their currently abundant supplies on the advice of their parent companies in order that their next allocations will not be decreased.

How do you feel about this practice?

MR. BUSH:  Is that one for me, too?  I will be glad to respond, unless you want a crack at it first.  Go ahead.

MR. REAGAN:  Well, here again, this is part of what I think the great energy crisis, like inflation, is caused by government.  And part of it is from that energy agency and the allocation system.  Once upon time the allocation of that product, like any other product, was made by the marketplace, supply and demand.  Today you have a government agency that is dictating where the gasoline, where the heating oil, where the diesel oil, where it will go and trying to guess how much should go where.  For example, recently, while you are talking about too much here, down in Southern Florida, in fact, during the primary there, they were running into a shortage because the agency had decided in the winter time people drive less than they do in the summertime in South Florida all winter.  And people were driving just as much and probably even more people coming down there as tourist.

California, when we lined up at the gas stations, they started allocations on the 1972 figures.  We’ve got 4 million more automobiles in California then we had in 1972.  Let us turn the energy industry back and let the marketplace dictate things like that, and we won’t have these problems.

MR. BUSH:  The only thing I would add is that that example makes a good case against wage and price controls.  You have given a good example in the energy business, the energy department saying put the gasoline where the people aren’t, back when we had a gasoline problem.  And I oppose wage and price controls, and this is a good example of price control that has distorted supply rather than helped, in my judgment.

MR. SMITH:  Yes, ma’am?

MISS MANLEY:  Mr. Bush, Mr. Reagan, my name is Carla Manley, and I’d like to ask:  With college costs up to $6,000 per year, even at state universities, would you okay tax cuts for families with college students?

This is particularly important to students who are in middle-income families who are above financial-need scholarships, but still feel the strain of college education.

MR. BUSH:  I have supported, as a Member of the United States Congress, tuition tax credits.  How big they can be has to, in my judgment, be considered along with the entire economy.  Because I don’t want to stand here and say we are going to maximize, fund that to the fullest, when I am talking cutting back on some kinds of expenditures.  But I favor tuition tax credits; I favor the student loan program.  I don’t favor abuses in the student loan program that permit people with $100,000 income to get--families that way—to get loans at subsidized rates.

MR. REAGAN:  We are in agreement on that.  I have supported the idea of tuition tax credits, also, and the loan program.  In California we had a state scholarship program that was only $4 million when I became Governor.  It was 43 when I left.  See, I had to wash dishes in the girls’ dormitory to go to school.  That was one of the better jobs I’ve had.

But I agree with that.  But isn’t it basically again, aren’t we getting back to the first problem, that the answer is that again is a casualty of inflation.  And until we get back down to common sense, reasonable prices, we are going to have these kinds of problems.

MR. SMITH:  Yes, ma’am?

MRS. GORE:  Mr. Bush, Mr. Reagan, I am Ravina Gore.

Would you please tell us who some of the people are that you are considering as your vice Presidential running mate when you are nominated.

MR. SMITH:  I think this is Mr. Reagan’s turn to start.

 MR. REAGAN:  I thought I answered the other one first. 

Well, ma’am, I don’t know what the answer is going to be from the other end of the stage, but I can tell you this one, whether it is fear of jinxing myself or whatever it is, I have refused to allow myself or whatever it is, I have refused to allow myself to even consider that.  I think there is a wealth of talent in our party and I have refused to let myself even turn my mind to that, unless and until I am much closer to seeing the required number of delegates for the nomination.

MR. SMITH:  Mr. Bush.

MR. BUSH:  Even with my new found optimism out of Pennsylvania, I have not gotten far enough along to think about the name of the person.

Two criteria:  he or she must be able to take over, must be able to take over the minute the President was incapacitated; and secondly, a certain degree of loyalty to the President’s views.  Not ideological conformity, not total agreement on every single one of these troubling issues that face this country, but a willingness to support the President.  I will be honest with you, and I don’t agree with him on hardly any issue, Vice President Mondale has been a good Vice President in this second regard for Jimmy Carter.  Those are the two major criteria that I would look for.

MR. REAGAN:  I must say, also, it goes without saying, that I would think that anyone that you would recommend to the convention you would have to feel would carry out the programs that you had promised the people you were going to implement.  Therefore, whoever I pick would have to agree with the Kemp-Roth Tax Bill.

MR. SMITH:  Thank you gentlemen.  Now, we have about one minute for closing statements.

MR. BUSH:  Was that Mr. Roth that just came out for a 30 million tax cut?

MR. SMITH:  That’s three seconds off your closing statement.  A minute for your closing statement.

well, I am very pleased to be back in Texas.  I am looking forward to the campaign in this my home state where I have lived for 30 years.  I believe that this kind of function, and I thank the League of Women voters, is an extraordinarily good thing.  Spell out the differences.  Spell them out so the voter can best determine who can beat Jimmy Carter.

My view is this:  If we have a sensible economic policy that does not over-promise, and we couple that with a foreign policy based on experience, where the United States will keep its word, strengthen its intelligence capability and adhere to the values that have mad us strong and earned this respect, we can help people at home and we can restore the respect we’ve lost abroad.

Thank you very much.

MR. REAGAN:  In the 18th century we created here in this land, the freest, most unique society that has ever been known to man.

In the 19th century, we built the greatest industrial power that the world has ever seen.

And we spent most of the 20th century apologizing.  And I don’t know what we are apologizing for.  I think that living Americans today have fought harder, done more for the dignity of man than any people who have ever lived on this earth.

And I also share the view that Jimmy Carter must be removed from office.  If I thought someone else had a better a chance to beat him than I did, I wouldn’t be a candidate, I would be supporting that someone else.

But in these last 20 years of this century, we must make sure that the young people and the people who are going to follow us will have the same opportunity, the same glittering opportunity that has been ours through 200 years of our history.  It is all here.  It is all possible to the American people, and I want to see the American people have that chance without government crowding them down and becoming the all-powerful instrument in their lives controlling their destinies.

Thank you.

MR. SMITH:  Ladies and gentlemen, that concludes our forum for tonight.

 I want, on behalf of the League of Women Voters to thank Ambassador Bush and Governor Reagan for being with us.  They did agree on some very important things.  I hope you kept notes of that.  But they didn’t disagree as much as I wanted them to, which is very bad for show biz, but probably very good for the Republican Party.

The League of Women Voters believes that this forum series and its upcoming Presidential Debate Series is vital to the interests of our nation, especially at this time.

Thank you all and good night.