February 2, 1984
The Federal Budget
Mr. Hunt. Why don't we start, if we could, sir, with a budget question. Speaker O'Neill says that your offer of a downpayment on deficit reduction is disingenuous, because you're not willing to put either your defense budget or proposed tax increases on the table. Is that so?
The President. Well, when you invite people to come in as negotiators from both sides and with varying views, there's no restriction on what can be put on the table. And everything's subject to discussion and negotiation there. What we've thought we could do in this political season, instead of going along with the thought that election years are ruled out for any kind of progress or anything, is to see if we cannot discuss the noncontentious issues and find some agreement that will whittle at this deficit.
Mr. Hunt. Taxes and defense would probably be part of any package if you were to reach an agreement then?
The President. Well, if anyone -- as I say, no subject is ruled out for discussion. I feel very strongly, myself, with regard, for example, to taxes. We had a tax increase last year, premised on the idea that we were going to get three dollars in spending cuts for every dollar of increased revenue. We never got the three dollars in spending cuts. We think we're owed something.
Mr. Bartley. Mr. President, in drawing up the budget you've obviously made an explicit decision not to ask for very much in the way of cuts -- only $5 billion, I think. Can you tell us why you didn't do more?
The President. Yes, it's pretty much the cuts we got last year. And we discussed this at great length. We know there are more cuts, and we know we need more cuts. But rather than polarize and have no result, we've come in with about, as I say, those cuts that we didn't get.
And, again, the noncontentious ideas -- to see if we can come together in a bipartisan package for the Congress, and we think that there are more cuts than we have put in there. But we know that if we had done everything that we thought we could get, we couldn't get it. Not when the voices we were getting from the opposition were calling for more spending even than we've suggested in this budget.
Mr. Bartley. Could we look forward to what might happen in a second term? When this budget was released, Dave Stockman was talking about structural reforms and tough bullets to bite. If you're reelected, would you try to reduce the big middle-class entitlements? And if so, what would be the prime targets?
The President. Well, yes, I've read something about supposedly the middle class and their entitlements. I don't think we've aimed anything at any class or any group. This misconception that has been quite a drumbeat from -- resulted from the drumbeat from the other side, that somehow we've penalized the poor and the needy -- we are taking care of more people, better, and spending more on this than any other -- well, than any time in our previous history. And so, we don't think that any of our economic program has penalized particularly those people at the lower level.
Actually, if there are individuals who suffer from our economic program, they are people who've been dropped from various things like food stamps because they weren't morally eligible for them. Maybe some instances technically, but even, in many cases, weren't even technically eligible for those programs. We have tried to redirect the effort toward the people with the greatest need.
Mr. Bartley. But if there are more budget cuts there that haven't been proposed, they have to be in some program. What about veterans benefits, for example?
The President. About what?
Mr. Bartley. Veterans benefits? Do you think that could be cut, and maybe in a second term?
The President. I'm not going to discuss things like that and what we may do in a second term. But this is only a downpayment on what must be done at getting government back to within its means.
Now, let me just give as an example that takes you 3,000 miles away from here, is the type of thing that I think is more prevalent in government.
In California, we succeeded with the most comprehensive welfare reforms that have ever been attempted in this country. We saved there at a State level $2 billion for the taxpayers. We were able to increase the grants to the needy by 43 percent. And they hadn't had -- this was in 1971 and '2 -- they hadn't had a raise in their grant since 1958, in spite of all of the inflation.
Now, I guess what I'm saying is that everytime over the years that people have tried to curb government spending, those who defend it -- the special interest groups -- have come back and said, all right, what program do you want to do without? Well, that is a trap that no one should let themselves get pulled into.
Maybe there are some programs that government shouldn't be performing or conducting -- if so, why those should be eliminated whether there's a deficit or not simply because then there's something that's a needless expense. But, basically, government has some programs that are government's legitimate function. What those of us who have advocated savings are saying is, government can be run more efficiently and more economically than it has been run. And I think we've proved that in the cuts so far.
Mr. Bartley. A lot of people think that if you want a mandate for cutting the budget, you ought to send up the cuts now -- before the election.
The President. No, in a political season, I have some idea of what's going to happen in the politicizing the things of that kind. We had an example. It had to do with a program that needed reforming because the program was going broke in 1981, would have been broke by 1983. In 1982, because we suggested correcting that and preventing bankruptcy of the program, nothing was done. We were kicked from every side. And it became the political issue of 1982. But after the election of 1982, a bipartisan group came together and came in with a plan that restored fiscal integrity to that program.
Now, this is pretty much what we have in mind now. Let us deal now with the less contentious issues that can further reduce this present deficit as we have estimated, say, by a hundred billion dollars over the next 3 years -- knowing that that is not enough; we must go farther. On the other hand, I don't think that the score is in yet on the half of the deficit which is caused cyclically by the recession.
Our economic program and reforms, first of all, on reducing spending have been implemented less than half of what we proposed. But on the tax program -- and as I say, we compromised a year ago and gave those who demanded that, a chunk, I think, of what they were asking for -- but we haven't really felt for a long enough period the full impact of what the tax cuts that we've made have done.
Mr. Hunt. But, sir, another important element here is going to be monetary policy. Are you satisfied right now with the Federal Reserves' current monetary policy?
The President. If we're talking about the increase in the money supply, right now I am. I am not going to deny that there have been volatile changes in that in the past and that there has been a period in which they fell below even their own track, and in which the string was pulled too tightly on the money supply which, I think, had an effect on the interest rates not coming down after they had started to come down several stages.
I have to say that the monetary policy has certainly been most helpful in getting a handle on inflation, from double digits down to 3.2 for last year. But now I do know that they are in their track, that they have deemed is, and is apparently, pretty much in the context of our growth, what our requirements are.
Mr. Hunt. Let's look ahead for a minute. Some people on Wall Street worry that the Fed might ease too much, that it might rekindle a burst of inflation by the end of the year. On the other hand, some of your allies, like Congressman Jack Kemp, have said, no, that the problem is just the opposite; they're going to tighten up too much. They should focus on bringing interest rates down. Which do you think is the greatest concern if you look 6, 7 months ahead?
The President. I think either one of them is wrong. Let me point something out. If we had a chart here in front of us of the increase in the money supply between '79, 1980: the steepest increase in the money supply in the history of this country and double-digit inflation for 2 years in a row, interest rates, the prime rate at 21 1/2. At one point inflation touched 19 percent here in this country. And then, realizing -- and that chart, if we were looking at it, would have a peak going up like that.
Then, when they did pull the string at the end of 1980 and on into 1981, they came down so steeply that I feel it probably had something to do with the additional depth of the recession that took place. I know they call it two recessions, that we had one '79 and '80 and then we had reprieves and then we had one again in '81, in July when the bottom fell out. Of course, politically in this season they're saying that it was our economic program that did it in 1981, only our economic program wasn't in place until October and then only a small fraction of it. But there with the string pulled that tightly, there is no question, it had a salubrious effect on inflation. But it also kept the interest rates high. Now -- --
Mr. Hunt. Sir, I have a question, that does it worry you that the Fed may repeat that again?
The President. Well, I don't think they're going to. We have reason to believe that their policy -- and not just that great dip -- there has been a time recently, as I say, when they got below. It isn't -- --
Mr. Hunt. [Inaudible] -- happen now?
The President. It's a kind of a clumsy tool. There isn't a fine-tuning that they can always be exact. You have to take what they're doing over a little longer period of time than just month to month.
But I do know that their track is set and they're apparently in that track now. It's my understanding that they intend to stay in that range.
Nuclear Arms Reduction
Mr. Bartley. Mr. President, could we turn to foreign affairs for a moment?
The President. I'd be relieved. [Laughter]
Mr. Bartley. Your administration is obviously anxious to resume the arms negotiations with the Soviet Union.
The President. Yeah.
Mr. Bartley. And yet at the same time you're saying the Soviets are violating existing arms treaties. And we don't seem to be able to do very much about it. Do you think it might be misleading to let people believe that this kind of negotiation on this kind of a treaty is going to solve any of our problems?
The President. You're talking about our reporting to the Congress on supposed violations or apparent violations. That is required of us by an act of Congress. We didn't just go running out and say, ``Hey, let's blow the whistle on the Soviets if they're doing something.'' They demanded that. And we gave them as exactly as we could the evidence that we had as to whether there were things that were actually apparent violations of an agreement. There were some that were ambiguous and that gave the appearance of that. And we presented that evidence, their evaluation, whatever they wanted to evaluate. But we also said -- --
Mr. Bartley. [Inaudible] -- about it?
The President. Yes, we said that this only strengthens our position of insisting that a major part of any future treaties must be verification, the ability to verify whether the treaties are being kept.
Mr. Bartley. But after you've decided they aren't being kept, as you have in some cases here, what do you do then?
The President. Well, we call them to the attention -- and have -- to the Soviet Union. But, as I say, I think that in the negotiations that we hope will resume, that this is our evidence as to why we're justified in seeking full verification.
Mr. Bartley. You've proposed a big research program for what everyone calls a Star Wars missile defense. Do you agree that actually deploying that kind of a system would require the renunciation of the SALT I treaty? And are you ready to do that, if you have to?
The President. My ambition, or my dream, for -- if there is a defensive weapon -- you see, here's a new weapon in the world and for the first time it is a weapon that has no defense against it, except deterrence, that we each have it. It's like two fellows with a gun pointed at each other, both of them cocked and both with their fingers on the trigger, and we're going to stand, spend the rest of our life doing that.
My dream was that if we could find a weapon that offered a defense against those, we could then immediately take the next step and say, ``Now, doesn't common sense dictate that we eliminate these weapons?'' And that would include our own. If we had the defensive weapon and no one else had it, but we also had the missiles, wouldn't it be the proof of our sincerity if we said, ``Look, we've got it made. We've got both now. And we tell you we will eliminate ours, along with everyone else.''
Dwight Eisenhower wrote a letter to a publisher in his closing days in office, and he said, ``We are coming to a point at which for the first time in history we have weapons that render obsolete any of the previous notions we've ever had about victory or defeat in war, that there can be with these weapons no defeat or victory as we have known it, only the destruction of mankind.'' Now, he said, ``Reaching that point, isn't it time that we sat down together and figured out a better way to settle disputes than by war?''
Well, I feel that way very definitely. And I think that the -- my hope is that if we can continue, resume the negotiations with regard to nuclear weapons -- we are going to; the date is set for the MBFR negotiations -- but the others, that starting down that road, everyone will see the wisdom of total elimination.
Mr. Hunt. Mr. President, let me just try one more arms control question. I remember being with you time and time again in 1980, in which you basically argued that the reason we had to build up our defenses was to persuade the Soviets that it was futile for them to think that they could outdo us in this area and that if we built up our defenses, that sooner or later the Soviets would realize this and out of self-interest they would become more reasonable.
The President. Yes.
Mr. Hunt. Now, we've certainly built up our defenses. Do you see signs that the Soviets have become more reasonable?
The President. Well, I think that what we're seeing is a part of negotiations. And I think that what we've accomplished here is what I had talked about. And I said then, also in that campaign over and over again, that I would stay at a table -- well, meaning our country, our negotiators stay at a table as long as was necessary to bring about a reduction in arms.
The SALT treaties -- and the reason I've never been enthusiastic about them, they were simply trying to set caps on how many more you could have. And I was shocked when a knowledgeable person in that field told me shortly after I arrived in this office, that had we ratified SALT II, under the terms of that treaty, the Soviet Union would have been able to add the equivalent of the megatonnage that we dropped on Hiroshima -- every 11 minutes since the treaty was ratified.
Now, the reason for negotiating, I feel, must be to reduce the weapons. Now, you're asking about -- I think that it is too early to say this. We do know this. We know that they are pretty much at their maximum of output and have been for a long time. We also know that we have been unilaterally disarming over a period of years.
They didn't have to demand that we eliminate a B - 1 bomber. Even without going to a negotiating table we canceled it. And we were doing this with weapons. We were reducing our Navy. We were unilaterally disarming. Now, it seemed to me that the only way that we were going to convince them that common sense called for reduction of arms was to build our own defenses to where we had a deterrent capacity, but to make it evident that we were going to maintain a deterrent policy. They would then have to look and say, how much would they have to build to try and get a sufficient advantage over us, and I don't think they can. And I think then they know that. They know the industrial might of this nation.
Mr. Hunt. Let me turn you to Lebanon, if I may, sir. As you know, House Speaker O'Neill provided the crucial support for the bipartisan consensus on the war powers resolution 3 months ago. He now says that your policy in Lebanon is a failure. The House next week is expected to pass a resolution which would call on you to bring the marines home. How are you going to respond to that?
The President. Well, I'm going to respond that he may be ready to surrender, but I'm not. As long as there is a chance for peace, the mission remains the same. And the very fact that since, along about last August, for the first year that they were there -- and it's not just the marines; there is a multinational force -- we have three allied powers who feel as strongly as we do who are in there.
The multinational force was sent in at a time when Lebanon, after years of civil war, literally in which there virtually was no government -- certainly they did not have authority over their own territory -- the Israelis, because of the threats to their northern border and the actual assaults on their northern border, had finally advanced and gone all the way to the edge of Beirut. The PLO, with its terrorist bands, was widespread throughout the country. They were less refugees than they were an occupying force. The Syrians had moved in for their own purposes. Beirut was the battlefield. The casualties were mainly civilian.
The idea was, and I had proposed, that we take up where Camp David left off and try to bring about overall peace through negotiations between the Arab nations and Israel. You couldn't do that as long as this situation prevailed in Lebanon. The idea was that if the other international forces or the other countries could be made to withdraw, then the Lebanese Government would have to have the authority and then have the military capability of taking over the areas previously occupied by these other forces, but which now would be in the hands of the same militant Lebanese forces who had been in a state of civil war -- and that the multinational force would be a stabilizing force while Lebanon strengthened itself and then moved out to do this.
When we went in, the understanding was that both Israel and Syria had agreed that they would withdraw, both saying, when the other -- we will withdraw together. The PLO had been taken out, removed from the country. Great progress was made. With the removal of the PLO, the Israelis signed an agreement and have already made phased withdrawals back toward their own border, Syria, for whatever reason of their own, reneged and has now said they won't withdraw. This is a stumbling block, and this is -- --
Mr. Hunt. President Assad yesterday was quoted as saying you have two choices. He said, you either have to increase, you have to escalate the number of troops over there, or you have to get them out. Is that pretty much the size of the dilemma, do you think?
The President. Well, what he was really admitting was the fact that they reneged because Syria is bent on territorial conquest. It wants Lebanon, or a large part thereof, to be Syria. They are an occupying force, in violation of what they had previously agreed to.
But we look at the progress that had been made. We look now that there is a Government of Lebanon, and due to our own training of their military force -- we have an army unit; everyone's so busy talking about the marines, they don't notice this -- that the army has been in there training. We have been equipping them. They are, really, a first rate military force. They don't have the numbers yet. By April, however, there'll be double the number of brigades that they presently have. Of course, Syria's got some 57,000 armed -- or military -- on Lebanese soil. But as long as there is a chance for victory, for peace, I don't know of any of the multinational forces that are in there, the four nations in there, that are desirous of leaving.
We are not just sitting here with our fingers crossed. We are studying and planning on where we can be more effective and where we can resist, because -- as I started to say a moment ago about last August -- the terrorist attacks that are being leveled against the multinational forces are being leveled because of the success of this plan. And now they want to drive us out because they can't recognize their territorial ambitions as long as we're there.
Now, can the United States, in the face of this, can the United States suddenly up and -- regardless of our allies in the multinational force or anything else -- say, "Well, we're going to get out''? And if we get out, that means the end of Lebanon. And if we get out, it also means the end of any ability on our part to bring about an overall peace in the Middle East. And I would have to say that it means a pretty disastrous result for us worldwide.
Mr. Hunt. You mentioned the terrorist attacks, sir. You said after the Beirut attack last October -- your administration said bascially that it appeared to be the fault of the Iranians, abetted by the Syrians, and that -- I believe you used the term, or the administration used the term -- those who directed this atrocity must be dealt justice, and they will be. My question is, why haven't you retaliated? And do you plan to?
The President. Well, you have seen us retaliate in the event of when we've had artillery targets to fire back at.
Mr. Hunt. Is that justice? Is that dealing them justice?
The President. No, but let me say this also with regard to that. Enough civilians have been the targets in this war. It is true that these terrorist groups and the Syrians and others and the Druze make use of civilians and launch their assaults by rocket or artillery or whatever from civilian enclaves and residential areas where to fire back you are a threat to civilian targets.
On the matter of the terrible tragedy and the terrorist group, we set out with the best ability we had of reconnaissance and intelligence to make sure that we could locate the perpetrators, their stronghold, so that we would not just be killing somebody without knowing who in revenge, you might say, whether they had anything to do with the dastardly deed or not. And we had some feelings that we had located, but there was additional information we wanted that the people involved were still there. And someone else evidently knew more than we did or was not as careful as we were and took that target out before we could get to it. It was as simple as that.
Mr. Bartley. So, you don't expect to do anything more about that pledge on the marines?
The President. Well, unless we continue trying to the best of our ability intelligence-wise to get evidence on the locale of these-type terrorists and where they might be. And we have, as I said the other night in my speech, we are contacting our own allies and friends worldwide as to how we can together combat this new kind of warfare.
I don't think any country, modern times has ever been prepared for this kind of assault. And you don't fight it the way you take a Grenada, for example.
Mr. Bartley. If we could shift to another hotspot -- --
Mr. Speakes. [Larry M. Speakes, Principal Deputy Press Secretary to the President.] We'll have to make this the last question, because the President has someone at 2:50 in here -- [inaudible].
Mr. Bartley. [Inaudible] -- going to have an election next month in El Salvador, and one of the leading candidates is Roberto D'Aubuisson who -- recently the State Department wouldn't give him a visa even to visit the United States. And I'm wondering, if he's elected down there, whether you'll be able to support his government.
The President. Well, that's going to depend a lot on what kind of a government and what kind of policies he follows. We are determined -- and I think George Shultz and, before him, Vice President Bush, who brought a letter from me down there expressing my views, and then expressed his own and very forcefully and appropriately, that made it plain, we have very definite feelings about the violence and the violation of human rights, whether from the left or right.
I think the thing that we have to recognize, though, is that the left and the right are literally together on their goals. The guerrillas -- we know what they're after, the destruction of a democratic government, the first such government that, I think, that country's had in 400 years. But those from the right who are opposed to the democratic principles and policies that this government is implementing, they have the same goal as the left. They're trying to destroy that same democratic government.
Now -- --
Mr. Hunt. Mr. President, I would never ignore Larry Speakes, I promise you. But before we go, I just want to ask you quickly one, somewhat different question. And that is about women. We're all sort of products of our environment. And occasionally when you have made references to ``gals'' or something like that, it's tended to offend women, particularly younger women. Has that surprised you?
The President. I think to the extent that things that we've had and that actually are even affectionate terms, and that are not meant in any derogatory manner, are suddenly seized upon by, let's say, certain factions as being violations now of what they believe must be the new acceptance. Well, I always have accepted women, frankly.
When I was assailed by that one woman in the businesswomen's meeting over there for my story about us and what we might do, I wasn't joking. I really meant it. I think they have and are a magnificent civilizing influence. But I also think you can't look around the world and -- their belief that women can be entrusted with certain professions and jobs that they have never or not often had before does not surprise me.
I had the greatest esteem for a Golda Meir; I have, too, for a Margaret Thatcher. But I also think that if England wants to look back in its history, they did pretty well with Queen Victoria. And we forget -- --
Mr. Hunt. Does your daughter ever give you a hard time about those remarks?
The President. What?
Mr. Hunt. Does your daughter Maureen ever give you a hard time about those remarks?
The President. No, because she knows how I feel. But, really, this is -- I think, it's like lacking a sense of balance or humor for some people to get so imbued with something that they set standards that are a little extreme.
I certainly, as I said, had never meant anything derogatory. I spoke with great admiration when I've sometimes used the term -- I'm a little more careful now, because if they're going to offend someone, I don't want to do that. But I don't know whether I should tell this story or not -- --
Mr. Hunt. Oh, go ahead.
Mr. Baker. Mr. President, you're due in the East Room in 6 minutes, and you've got another group in here before that, so -- --
The President. Oh.
Mr. Hunt. Can't you just tell that one story? [Laughter]
The President. Oh, well, I'll tell you, if they'll shut off the tape.
Mr. Hunt. Okay.
The President. I'll tell it off the record, because it might not be diplomatic.
Mr. Hunt. Okay.
Note: The interview began at 2:23 p.m. in the Oval Office at the White House. Those attending the interview were Warren H. Phillips, chairman and chief executive, Peter R. Kann, vice president/associate publisher, Norman Pearlstine, managing editor, Robert L. Bartley, editor, and Albert R. Hunt and Rich Jaroslovsky, staff reporters.
James A. Baker III is Assistant to the President and Chief of Staff.
The transcript of the interview was released by the Office of the Press Secretary on February 3.