Question-and-Answer Session With Reporters on Domestic and Foreign Policy Issues

March 12, 1982

Q. Mr. President, what did you tell President Mitterrand about El Salvador?

The President. What are you asking me?

Q. I said what did you tell President Mitterrand about El Salvador?

The President. What's your question?

Q. About the economy, are deficits delaying the recovery?

The President. About El Salvador, I just explained our position in the Caribbean plan in which he's very interested and seems to be very approving of -- what it was that we were trying to accomplish and -- --

Q. Didn't you complain that they were selling arms?

The President. What?

Q. Didn't you complain that they were selling arms to the rebels?

The President. We discussed all facets of it, but it was a private conversation.

Q. Are deficits delaying the recovery as the businessmen told us they told you?

The President. What they were talking about is that the thought of those deficits hanging over us is what's keeping the money market -- they're keeping the interest up because of their reluctance to lend money in fear of possible return to inflation. And incidentally, we received word this morning that the producer's cost index, for the first time in I don't know how many years, is not only down, it is negative. It's below an inflation rate. Prices are going down.

But the thing is, we recognize that, that that is a problem that has to be met, because it is the interest rates that I think are causing our recession, yes.

Q. Recovery will not be delayed by this fear?

The President. Well, I'm an optimist, and I happen to believe we're going to see some signs of improvement. But there's no question about the recession that we're in.

Q. When will the recovery be?

The President. I won't give you a specific date, but I think the fact that interest rates came down the other day a little bit is an encouraging sign. The fact that inflation seems to continue to be falling is also an encouraging sign.

But I'm not underestimating it. And, sorry to say, unemployment will, of course, be the last thing that recovers.

Q. Mr. President, what about their suggestions on taxes?

The President. I've got a plan in there, and I believe the fundamentals of our plan will bring about a recovery. I think it's the first time in all the eight recessions since World War II that there's been a plan in place. But I certainly am willing to hear any suggestions anyone can make that might be an improvement.

Q. Including taxes?

The President. No, I said I'm sticking with the fundamentals of our plan.

Q. Thank you, sir.

Note: The question-and-answer session began at 3:50 p.m. on the South Lawn as the President was departing the White House for a weekend stay at Camp David, Md.