Remarks and a Question-and-Answer Session With a Group of Out-of-Town Editors

October 5, 1981

The President. Well, thank you all very much, and welcome. And believe me, it is a pleasure to welcome you to the White House and the opportunity to meet -- we call both these buildings the White House -- and talk with you in these special briefings. This is something that all of us in the administration have looked forward to.

And you don't need me to tell you the tremendous influence that you of the press and the media have on public opinion. I think that you are the first to agree that diversity of interpretation and opinion is very important to your work and to our robust tradition of press freedom.

This diversity, as you know, has been threatened recently with the sad demise of several important institutions in the newspaper field. This came home to us here in Washington recently, when the Washington Star closed up shop after more than a century of publication.

So, we do look forward to this opportunity to talk with you. You all know the fresh perspective that a new reporter can bring to an old beat, and that's why we hope these briefings will lead to some new insights and perspectives for both of us, and that the ultimate beneficiaries will be the members -- or the readers, the listeners, and the viewers in your hometowns.

Administration's Policies and Programs

This last month has been a rather busy one. It's also been a very satisfying one. We think we've brought about a sea-change in national policy. You may detect a feeling of zest and buoyancy around the Capitol, and certainly around this area on Pennsylvania Avenue where the White House is.

For all of us, this has been an exciting, invigorating and -- I think that just about sums up these 9 months -- satisfying could also go in there.

In the last month, there was a radio address to the Nation on Labor Day, a TV address on the economy, a news conference that covered the waterfront of issues. I've had an opportunity to do some traveling, to talk to union members in Chicago about the housing industry, to help get Westway started in New York City, assist at the dedication of President Ford's museum in Grand Rapids, Michigan, and to talk to the Republican women leaders in Denver about Wall Street and Main Street. Last week in New Orleans, I announced some major initiatives on crime and also spoke to the World Bank conference about our new development policy. And when I leave you -- and I regret that I have to be here so briefly -- I'm going to be speaking to the National Alliance of Business about mobilizing the private sector to assist the underprivileged.

Now, during all of this, we've had the usual round of White House activities, ranging from a luncheon for black college leaders to some very fruitful diplomatic discussions, including a visit from Prime Minister Begin of Israel. Now, I think that's pretty good for a fellow that only works 2 or 3 hours a day. [Laughter]

We've made economic recovery, as you know, a first priority, but the approach of this administration is hardly one-dimensional. We've been moving systematically to deal with that broad range of problems we promised to do something about in the campaign last year.

There's a good bit of discussion now about our plans to sell the AWACS system to Saudi Arabia. This issue is not simply a question of balancing the interests of two nations in the Middle East; it has to be seen in the larger context of the strategic importance of the Persian Gulf area. I think this message is beginning to get through to Members of the Congress. The truth is, we intend to stand by an old and trusted ally, and we mean that for all our allies. But we also intend to look for new and dramatic ways to protect and solidify the security and peace of the Middle East.

In our recent decision to rebuild our strategic force, we've also attempted to show some balance and flexibility. Our plans for the MX and the B - 1 have these advantages: we can afford them; we keep our options open so that we can respond adequately and in time to any new Soviet buildup; and we send to the Soviets that signal that Winston Churchill once said was critical for any successful negotiations with the Soviet Union -- strength of purpose and strength of resolve.

In the area of the economy, we're now pressing for the additional budget cuts needed to keep our promise of a balanced budget. I think we've managed to take the social security problem out of partisan politics with the appointment of a bipartisan commission that is charged with one task -- finding a solution to social security's deep financial problems.

These two initiatives should be seen in the context of what else we've done in the last 9 months. When we entered office, the Federal budget was growing by some 14 percent a year. That growth has been cut in half. Federal tax revenues were scheduled to increase by more than $300 billion over the next 3 years. We've now passed the largest tax rate cut in history and almost entirely thwarted this increase. We've also indexed taxation to the rate of inflation, another historic reform.

On the regulatory front, more than 180 Federal regulations have been modified or canceled, with an estimated savings of more than $15 billion. The flow of new regulations has been cut in half. And we've also worked hard to assure a stable monetary policy.

It's been an exciting time, and I admit that sometimes a painful and a difficult one. This came home to me when I was discussing our belt-tightening measures with President Ford, while we were also talking about his new library and museum in Michigan. I found myself feeling very envious of him. So I came back, and with an eye on the future, I spoke to Dave Stockman about that subject. He tells me he's been pricing bookmobiles. [Laughter]

Well, I hope that you'll find your day here a useful and productive one, and I hope you will also relax and enjoy yourselves. Don't relax too much -- as you know, my staff is rather reluctant about waking people up. [Laughter]

But now I have a little bit of time left here, and I'll take the easy questions first, and then I'm going to turn you over to Don Regan and Dave Stockman for the tough ones.

U.S. Immigration Policy

Q. Mr. President, we in Florida are having a tremendous problem with the influx of illegal immigrants. Do you see any way that the White House or the Congress, the administration, can spread the influx throughout the rest of the 50 States, rather than this -- [inaudible]?

The President. So that we can spread the immigrants, do you mean, throughout the States?

Well, I think that our immigration policy is perhaps going to give us a better handle on that and put us back in a position of being able to control our own borders. You know that we've issued orders with regard to the interception of some who are not truly refugees, in the sense that we take those people who are fearing persecution and death in their own lands. We have been trying to diversify and spread the people that do come in, and that we take in to other areas of the country. But I believe that basically, the problem -- that we'll get a handle on it with the new immigration program if the Congress will support us on that.

User Fees

Q. Mr. President, part of your economic recovery program calls for user fees, including user fees for dredging and -- [inaudible] -- rivers and canals. My town -- and once your town -- Sacramento, is among the hundred or so American port cities that would be seriously -- [inaudible] -- by the charge, by the canceling of this program.

My question, sir, is that since back about 1787, the Federal Government took from the States the privilege of collecting customs duties; and since the Federal Government now collects around $8 million a year in customs duties, in return for a variety of services, isn't it fair, sir, is it not a possibility that the Federal Government intended to provide those services to American ports?

The President. You slipped the question in that I wish you'd waited for Dave Stockman. [Laughter] No, I believe -- and I don't believe that what we have in mind is going to be onerous or going to be destructive to anyone that's involved in that. But the basic principle of good tax policy, and one we've departed too far from in the past, is that wherever possible, assess a charge or assess a tax basically to those who are receiving the service or the benefit of the government service.

The gasoline tax, for example, at the State level -- I know, in California -- is a good example of this. The people who are out on the highways and driving on the streets and so forth are the ones who are paying for it. And they've got that ability to make a direct connection -- are they getting their money's worth or not? Is the highway system up to par? Are the streets kept repaired, and so forth? And again, as I say, in a little while you can try again with this, and I think get some more specific ideas to what we have in mind. But I think it is just one of, again, shifting a burden from the general public that may not be particularly benefiting from that, to those that are getting the benefit of the service.

Tax Reductions

Q. Mr. President, what percentage of the tax cut do you assume will go to savings and investment? And will not the -- [inaudible] -- if it doesn't go to savings and investment -- be, in your clearly delightfully simple phrase, ``more money chasing the same amount of goods'' and, therefore inflationary, until the results of this investment allow business and industry to increase production?

The President. Well, I think there are two answers to that. First of all, the polls that we have seen indicate that below $15,000 of income, yes, most people, the majority of people answer that there are things they need that they would buy with the increased money, although there is a percentage, a pretty good percentage that says no, they would save. Above $15,000 it shifts dramatically -- the majority of people saying they would use that money for savings and investment.

The other part of the answer to that is that at the same time in our tax policy, the business taxes and the changes there -- we have indications already of corporate expansion and modernization and so forth. The Iron and Steel Institute is a classic example that is going to be spending -- they have already announced -- more than $5 billion. And they claim this is the largest modernization and expansion plan in the history of that industry in the limited period of time. They're going forward, and they've announced that it is basically on the basis of our plan.

So, maybe we're going to increase the goods that that money will be chasing.

Steel Industry Lay-Offs

Q. People in Pittsburgh are concerned about the increasing numbers of the lay-offs that are not only caused by the economy but by foreign imports. Is there anything you can do to help us?

The President. Well, we have the triggering device with regard to the dumping of steel. We don't think that that has been exercised in recent years the way it should. And this is where someone comes in and dumps on our market a steel at a less-than-production cost, because their government is subsidizing them in order to get that market.

We intend to enforce that. But again, as I say, it is the iron and steel industry -- yes, right now they're suffering and have been suffering over the last year or more -- beyond that, to be honest. But again, they are in the forefront of the ones that were optimistic about what our policy is going to do and are announcing this great expansion, which after some temporary pain and suffering due to this, should result in an increase and in the return of those idle workers to their jobs.

Block Grants for the State of New Hampshire

Q. Mr. President, last week the New Hampshire legislature met and acted on only two of the seven block grants that will be coming in under the new Federal program. And there was some concern that by not acting on the five others, that the State of New Hampshire would stand to lose money from the Federal Government on those other five programs. Is that so?

The President. Well now, I don't know. I wasn't aware of what you were just saying, what actions some of the States have taken already on that. Are you aware of that, Dave? He'll take care of that one when he gets up.

The President's Programs and Voluntarism

Q. Mr. President, I hope I'm not breaking the tradition by not asking a question. But after confirming my visit here, last Thursday and Friday I went knocking on doors in our circulation area to ask our readers what they might say to you if they had the opportunity to talk with you face to face. There were three things that came through, and I thought I'd like to share them with you, from our readers.

They're encouraged that there seem to be signs in Washington that there is someone here who's finally doing something about the economy. They're not sure yet whether it's working or going to work, but they're pleased that there is movement.

Number two, they feel comfortable with your style, but there's still a healthy amount of skepticism about where your administration is going and where it will wind up.

And number three, I thought was a poignant remark from a woman who said that in deciding where to make budget cuts, that you think of all of us as a family, and make the decisions as a loving father. And almost universally, they wish you the very best in a very tough job.

The President. Well, thank you very much. As to that lady, I'd like to fulfill her request, and we are trying to do it in that way.

There is something in the group that I told you I was speaking to in a little while, the national business association. We are starting -- in addition to our economic program and the cuts that we feel have to be made, we believe that we have got to reduce the percentage that government is taking from the private sector, reduce the share of cost. When you stop to think that today, the biggest single cost item in the average American family budget is government, that it amounts to more than food, shelter, and clothing, all put together. Now government, I don't think, was ever intended to have that -- to be that proportionate. There is the intervention by government that has moved not only just from attempting to control business and industry but right into the lives of every one of us by way of regulations. We want to bring those things back in hand.

But, to this group that I am going to be speaking, the gist of my speech is -- and they have already taken up this matter, I might add, in their meetings before I get there -- and that is to appeal to the business and industrial community of America, and to the private sector in general, to go back to an America that we had where we didn't automatically say, ``Well, government should do something about that,'' but where we the people do something about that. And I have to tell you that I'm going to tell them that Bill Verity, chairman of Armco, has accepted the chairmanship of what will be a nationwide task force to go into communities, go into industrial and business groups, and find the areas where the private sector can pick up slack and do things that it once did.

How many of us have forgotten that when this country went in the all-out great rescue effort to Japan back in the early thirties [twenties] at the time of the great earthquake. That wasn't government; that wasn't a foreign aid program; the people did that. ``Bundles for Britain,'' the famine in India -- the people of this country used to come together. I remember when I was a sports announcer -- the floods in Ohio -- and we held an all-night radio program for people to volunteer help for the people in Ohio.

We think that that spirit of voluntarism is still out there among the American people. And we believe there's a place for government -- to help coalesce this and to help point out where need is and those functions that could properly belong to the private sector. And maybe that's what a loving father would do, also.

Social Security

Q. Mr. President, it seems that some of the -- [inaudible] -- even within your own party, have convinced the administration to stray away from the unpopular cuts in social security at this time. With 60 percent of the Federal budget over the next couple of years tied up with the debt interest and defense and social security, is it just a matter of time before the administration has to make deep cuts in the elderly's benefits if you're going to satisfy your budget-balancing requirements by 1984? Are the elderly in real trouble when it comes to social security?

The President. Yes, social security has been in a state of actuarial imbalance for more -- well, back more than a couple of decades, and we knew it then. I remember making a speech in 1964, in the Presidential campaign, pointing out that at that time, actuarially, the program was some $300 billion out of balance. In this last campaign, I pointed out that it was $4 trillion out of actuarial balance. Nothing has been done.

Over the years, Congresses have yielded to politics and increased benefits and spread them and so forth, and at the same time they have increased taxes. We now have and are under the ongoing biggest single tax increase ever passed in our Nation's history. It is scheduled for further tax increases, the payroll tax -- one is in January, and then in '85 and '86 -- no, in '85, '87, I believe it is, and `90. And by this time, instead of that 2 percent of $3,000 of earnings, by the time these are all in place, it'll be over 15 percent of more than $60,000 in earnings. And it still -- when this tax increase passed in '77, we were told that this squared social security until the year 2015. We will be out of money in 1982 if something isn't done.

Now, we introduced a plan that did not penalize in anything that was really measurable, anyone who's presently collecting the program. The only thing that changed for them was, once, making the cost of living adjustment go 15 months instead of 12. And yet, with what we had proposed -- and really clearing up some things on the periphery, such as people getting disability in social security that weren't entitled -- doesn't it sort of strike you strange that Son of Sam, serving that 75-year sentence up there for all his murders, is getting $350 a month from disability, social security, because they say he's incapable of holding a job? And this is going on all over the country. We have people in California that I know of, in mental institutions for the criminally insane, who are drawing regular payments because, due to their mental illness, they had been judged incapable of holding jobs. But now, we're paying their room, board, medical care, and laundry, housing, and yet they're getting that payment.

These are the things that need correcting. When we introduced our plan, we felt -- because it was the majority party that had asked us to get our plan up there because they wanted to start working on this problem. We introduced the plan, and all we got was an attack and never one offer of cooperation. And we resubmitted now, after the recess, and again were informed that there was going to be no bipartisan approach to this problem.

And this is why the other night in my speech, I have withdrawn the plan and said -- it doesn't mean that I don't believe in it, but all right, if this will bring a bipartisan approach, will they join us then in appointing a bipartisan task force? And we can get by 1982 if we borrow, inter-fund borrowing of the three basic funds of social security, because two of the funds, disability and the hospital benefits, Medicare, are not in the same trouble that the basic fund is, and to do that temporarily, simply while the task force comes back to us with something that we can, in a bipartisan way, get done, because there's no way we can do it without the bipartisan help.

The Prime Rate

[Turning to Secretary Regan] Do you want to give that line to me?

Secretary Regan [laughing]. Why not?

The President. Gee, Don, thank you. That's pretty generous.

[Speaking to the editors] Chase Manhattan has just cut its prime rate to 19 percent. And the Secretary of the Treasury says this is just a sign of what's coming.

MX Missile System

Q. Mr. President -- [inaudible] -- hearings, Defense Secretary Weinberger said the MX missile system clearly would not work unless it were in fact mobile. How do you square that position with your position, sir, that it can now be stationary?

The President. The first 36 that are produced are going to be put, as we've said, in the Minuteman and the Titan silos which are going to be hardened. Now, this does not render them invulnerable in perpetuity. But it does buy us some time in which the Soviet Union would have to increase its ability at targeting, and its power, in order to overcome this hardening. But by that time, we will have continued with our program. And during this time that we're installing the 36, we are studying the different modes, including airborne, seaborne.

There is one thing that we have to remember -- unless technology improves, and possibly it will in these few years, the time that we're buying -- and that is that you lose some accuracy when they are airborne or seaborne that you have when they're land-based.

Now, all right, except I've got to take one more, because a lady stood up, and there hadn't been one before.

Block Grants

Q. Mr. President, I've talked to several local and municipal officials before coming here, also, and I asked them what they would ask you. Most of them said that they would like to know how -- [inaudible] -- realistically meet their responsibilities with so little money coming from Washington?

The President. You mean local and State governments feel that way? Well, I don't think it's going to be easy. You could ask the same question about us, but I believe we can. And having been Governor of the largest State in the Union -- or the most populous State in the Union, I've had some experience with Federal grant programs. And basically, what we're trying to do is eliminate the administrative overhead that was occasioned by unnecessary redtape and regulations. This is what's back of the block grant concept. And as I showed the other day in the press conference, when we could take that thick packet of paper that were the regulations that surrounded some 57 categorical grant programs, and by putting them into the nine block grant programs, reduce it to six pages of regulations, we think that they will find that they've got more flexibility with assessing priorities and with their method of delivering the aid, and that this -- in other words, this will leave, we think, more of the money available for those that it is supposed to help.

The trouble with the Federal Government programs in recent years has been that, believe me, much more than half of this money, in many of the programs, goes simply to administer the program and not to the people it's intended to help.

Let me cite one job training program of a few years ago that graduated some 5,500 young people from the job training program at an average cost of $55,000 per graduate. I got a little trouble with the bureaucracy as Governor, when I vetoed a program that sounded on the face of it great. It was going to take some people from welfare, able-bodied people, and put them to work in the parks in this particular area of California. I vetoed it, which a Governor could do, and if his veto wasn't overridden in 60 days, it stuck. Mine wasn't overridden, because I was able to go before the people and tell the people the reason for the veto, and that is that it was going to put 11 people to work in the parks, with 17 people handling the administrative functions of this program to see that they all got to work on time.

I've just been told that my time's up. I've got to get to the national business alliance. I want to thank you very much. And I don't know which of you gentlemen here is scheduled first, but, Don Regan, Secretary of Treasury Don Regan, will take your questions and speak to you, and then Dave Stockman.

Thank you very much. Now you can ask the hard questions.

Note: The President spoke at approximately 9:30 a.m. in the Treaty Room at the Old Executive Office Building. The transcript of the interview was released by the Office of the Press Secretary on October 6.