Interview With the President

December 23, 1981

The President. Knowing that after you get asking your questions I might not feel as good as I feel now, let me, while I feel good, say that this being a kind of a year-end roundup, I have a very good feeling about the year past and, thus, a hope for the year to come.

I think we have had a most successful year and a lot of it due to the fact that we did put together a working, bipartisan coalition to cope with the problems of spending and taxes and so forth. And I think the accomplishments that have us with, domestically, an economic program now in place to deal with the crisis, makes me feel good, and I'm optimistic about that.

Also, on the world scene, I think that with all the troubles that we have, we have a relationship with our neighbors here in the Western Hemisphere and with our allies abroad that -- we've made progress toward easing the strain in some of the troublespots of the world. Poland, of course, was an emergency situation that we couldn't have planned for very far in advance, but I mean such things as Middle East peace, the Caribbean and Central America, and so forth. And all in all, I think we have made some good progress.

So, now, go ahead and make me feel bad. [Laughter]

Tax Program

Q. Mr. President, the question of taxes. So many of your advisers now are suggesting that you have to go through some sort of a tax increase. Where do you stand at this point?

The President. Well, there certainly will be no change in taxes in 1982, I guarantee you. We have put a program in place that I believe will increase government's revenues simply by broadening the base of the economy, stimulating increase in productivity, offering incentives that the program does offer.

I learned a long time ago that putting your feet in concrete was dangerous, because I have among my mementoes a round cement block with a pair of shoes imbedded in it that was given me by the Capitol Press Corps in Sacramento after I had put my feet in concrete and then, one day, had to stand before them and say the sound you hear is the sound of concrete breaking around my feet. So, they gave me that, but I would like to see what happens with this program.

Of course, there is the one thing with regard to taxes, that from the very first I did always speak of, and that was we continue the review of where there are places where people are getting undeserved tax breaks, the so-called closing of loopholes. Now, in that I do not include as loopholes the legitimate deductions that -- without which the whole program would have failed a long time ago -- but actual loopholes where, as I say, there is an unjust break. This we continue to review, and I am not opposed to that. But I think that until we see this program in operation -- and then, what other circumstances can arise.

For example, we, as everyone else -- we were all caught by surprise with the recession. We knew the economy was not going to be healthy for a while, but a recession, which I think was precipitated by the over-long continuation of high interest rates, brought that on. And when you just add one percentage point to the unemployment, you add $25 billion to the deficit. And until we see what begins to happen with this program, because, by the same token, you can reduce a projected deficit by $25 billion if you lower the unemployment rate.

Q. At what point will you expect to make a decision?

The President. With --

Q. On taxes -- what point do you expect to make a decision?

The President. After I see what happens. You can't -- the tax reform or reduction has only been in existence now for about 12 weeks, since October 1st, and that's only the smallest part. Next July we're slated for another 10-percent reduction, and I think you have to wait until you see the -- what this program is going to bring about -- what changes. And I am optimistic about it, myself.

Q. Mr. President -- --

Q. Can I follow that, on taxes? You flatly ruled out, you said, absolutely no tax increase in 1982, except for loophole closing, which leaves open the possibility that you might accept tax increases in 1983. And the second part of that -- or do you want to address that first? What about '83?

The President. Well, let me say here that in no way will I -- do I look kindly upon anything that is contrary to the stimulative part of our tax program, that was designed to improve productivity. No, what I was trying to say with my story about the cement block was that with the unexpected things that can happen, I just feel that I'm in no position to comment on those ideas. My leaning would be against a tax increase, but again, I don't want another block of concrete.

Q. Even in '82 you don't want another block of concrete as far as taxes are concerned?

The President. No, I believe in '82, I think that we can see far enough ahead to know, and I want to see this program and what its results will be.

Q. Mr. President, you said that you -- and Dave Gergen [Assistant to the President for Communications] told us much the same thing -- that you don't want anything that would be contrary to the stimulative part of that program?

The President. That's right, yes.

Q. Would an increase in excise taxes on tobacco, alcohol, or gasoline be in such conflict? Or might they be acceptable, if you find it necessary to increase revenue in 1983?

The President. Well, let me just say that things of that kind, and excise taxes, are not as contrary, granted that all taxes are paid by the people. But I don't think that consumption taxes are in direct opposition to the tax program that we've instituted.

Q. So that you would look a little bit more kindly on consumption taxes rather than a windfall profits tax?

The President. Let me just say, if necessity could convince me that they had to be put into effect, I'd be more tolerant of those. I would not look kindly on any tax increase.

Economic Recovery Program

Q. Let me ask another part of that. You said your feet are not in concrete, and you've also said that the problem with tax increases at this time is that it would aggravate a recession. With the skepticism that you're well aware of about supply-side economics and the economic program, at what point, Mr. President, if the unemployment rate continues to go up, do you begin to rethink this, the supply-side economics, which seems to get such skepticism on the outside?

The President. Well, but you see, I never had heard the term before, you know, ``supply-side,'' but I had long been a believer in this idea of reducing the share, the percentage that government takes from the private sector. My own degree was in economics, and I remember back in those days, on those dark Depression days, that one of the things that you learned was that around the turn of the century the classical economists theorized that business ups and downs, the recurrent business cycles and so forth, that invariably the business or the economic slowdown was accompanied by government going beyond a certain point with regard to the money that it took out of the private sector -- in other words, that government can be a drag on the economy.

And if you look at what has happened in this century, the last being the Kennedy tax cuts, economists by and large opposed him on that and said, oh, this was a terrible thing. I think their figure averaged out that he would lose $83 billion in tax revenue. Well, he went ahead with that tax cut, and the government didn't lose 83, it got 54 billion extra.

Now, we look at every time that there has been a reduction or an increase in the capital gains tax, an increase in that tax, the government winds up getting less money at the higher rate. And by the reverse thing, every time that they have reduced that tax, in the very first year the government gets additional revenue at the lower rate. So, I happen to believe this.

In California, when we began giving back the surpluses to the people in the form of a one-time tax rebate, like a bonus to employees or something, gave it back, California's economy showed a reaction to that. We were -- normally we had a higher unemployment rate than the national average and a higher inflation rate. In both instances that changed, and we had lower rates.

Q. But, Mr. President, those were soaring times in the sixties, and with California. The economy was in great shape for reasons other than the government action. For the first time, this recession, you're cutting back on budget, which also has in some degree a recessionary effect. And what I'm trying to find out is, if unemployment goes to 10 percent and seems to not be abating, would you then consider the possibility of some change in direction of the economic program?

The President. I see our economic program as the best hope we've got for solving the unemployment problem. Nothing that's been done in the past has any long-range effect. If you will look at government spending its way out of, say, a recessionary cycle, the artificial stimulation of the money supplies, government spending. This was done, oh, along about, before the '68 campaign -- sometimes that stimulated spending is timed to meet an election year -- and in '70 we had a recession, and we elected a Republican administration in '68. But in '70 the repercussion was so bad, because up went inflation and up went unemployment at the same time. Then, for the '72 election, the same thing had happened, the stimulating of the economy artificially instead of working our way out. Then in '74 we had a deeper recession, where unemployment was greater, inflation was greater.

Now, the same thing has gone on. We now have, with one difference -- and I think due to the policies, even though the program is actually not gone into effect until now -- but even with the reductions, the several billions of dollars that we've managed to cut out of the budget that was already -- well, I almost said, in existence, but it wasn't, because we haven't had a budget since quite some time ago -- but we cut several billion dollars out of the '81 spending. But today -- and this, now, is one of our factors -- inflation has not accompanied the increase in unemployment. Inflation is going down.

And, incidentally, that has caused another reduction in tax revenues that we hadn't counted on. We didn't think we were going to be as successful so quickly in lowering inflation. But inflation is a tax, and when it went down faster than we'd planned, our estimates of revenues were thrown off.

But I believe that what we're aimed at is the answer to unemployment, is not a quick fix with some gerry-built programs that government programs and government spending that increases the size and the power of government. What is needed is a stimulant to the private sector, which provides the bulk of the jobs, the employment.

Q. And if private sector doesn't provide, by some chance?

The President. What?

Q. And if the private sector doesn't provide, by some chance?

The President. Well, then you find out what more you can do that will stimulate that private sector.

Views on the Presidency

Q. Considering some of the problems with the economy as well as the problems in Poland, has this year taught you anything about the limits of what a President can do?

The President. About the -- --

Q. Limits of what a President can do?

The President. The limits, yes. Well, I must say, it was not too much of a surprise after 8 years, Governor of California. I was aware that things don't instantly change and that the wheels of government grind slowly -- and perhaps by good intent, that government is prevented from doing things too hastily.

But, yes, there are limitations. There are probably more because of the events of the last few years.

Q. Particularly in Poland.

The President. Well, no, there are actions, and there are actions that I will be talking about tonight on television that we can take, are taking, and additional things that will be taken.

Now, I won't go into specific detail, let me warn you, on those, because I've never believed that you can do that without tipping your hand and showing the other fellow your cards.

Q. If I could follow up on that question. You came to office with a more well-formed viewpoint of the Presidency and what you wanted to do in the Presidency than many of your predecessors. And yet, as you pointed out, with Poland, with the high interest rates, with the unanticipated recession, much of your time is really spent in what might be called ``crisis management.''

The President. Yes.

Q. Do you have any ideas for next year on how you can reimpose, if you will, the Reagan agenda on top of all of the intrusions from outside so that your Presidency has some stamp of your own ideas, rather than reacting to what the world is doing?

The President. It looks to me as if we will be building on what we have already done. We have a 1983 budget that must be presented in January, even before a 1982 budget is approved. And so, we've been working on that, because at the same time that we got our billions of dollars of reductions -- the biggest single reduction in the increase in government -- we've cut the rate of increase in government spending in half. It had averaged 14 percent or better the preceding 3 years. It's down to about 7\1/2\ percent now. But at the same time, we said there will be additional savings that must be made in '83, '84. So, now we'll be coming in, they won't be as easy to get, because we made a pretty good slice there the first time around. But we're going to be asking for additional cuts. We're going to go forward faster with what I talked about for so long as federalism. We're working on the program of how to transfer back to other levels of government programs and revenue sources to pay for them. We'll be going forward with that.

We have the commission finally appointed which will be -- --

Q. The '83 budget? Excuse me. You'll do that in the '83 budget?

The President. Well, not entirely. This is going to take some phase-in to transfer -- --

Q. Right, I'm sorry. Excuse me for interrupting.

The President. -- -- on that. Then we've got the commission to come in with a plan to restore social security in spite of the efforts that made that a political football -- and disgracefully so -- this past year.

We still, all of us in government, have to meet the problem that is imposed by social security's fiscal situation. It is actuarily out of balance and must be corrected. And, at the same time, that does not mean, as they've charged, nor have we ever suggested taking benefits away from those people now dependent on them. We're not going to do that.

On the world scene, we'll be going forward with our Caribbean plan, which includes, of course, Central America, also. We'll be continuing in the process that started at Cancun on how to help the lesser developing nations, pursuing the peace process in the Middle East, and, of course, working to do what we can with this present unanticipated situation in Poland. And yet, that in a way is a part of the whole East-West problem, because Poland didn't bring this on itself. The Soviet Union had a very large hand in there.

But in connection with that, we'll also be pursuing the thing I talked about earlier, arms reductions with the Soviet Union -- not arms limitations that allow both sides to go on adding to their arsenals, but to see if we cannot get an actual cutback, particularly in the strategic nuclear weapons.

The Middle East

Q. Back to the world scene. One of the earlier things you mentioned here, pursuing a peace process in the Middle East, is the latest incident with Israel over the Golan Heights and our reaction to that part of an overall reassessment of our Middle East policy in which we intend to take a stronger line with Israel?

The President. No, it's just friends sometimes have some arguments, and I guess this is one of them. We had no -- --

Q. Do you object to the language of those arguments of the past few days?

The President. Well, I think maybe more of that will be temperate now. There was a little harsh tone to that. But, no, we're still committed as we've always been to our relationship with Israel, to the assurance, the obligation that I think this country feels that Israel shall exist as a nation and, we hope, in peace with its neighbors.

And maybe part of the, oh, the momentary distractions that have occurred are because we believe that in striving for peace we have to make the Arab states there understand and realize that we want a just and a fair peace, and we're not just intervening as the ally of one country, even though we are allied and have been in this moral obligation to Israel which we'll continue to be. But we want them to know that we want fairness for them, also, and here's where I think we've made great progress.

Q. Do you think we'll see the reinstitution of the strategic agreement or do you consider it canceled? Do you think it will be -- --

The President. No, it isn't canceled. We just held it up here until -- no, I don't believe it's canceled. We don't consider it so.

Q. Do you believe that it will be reinstituted?

The President. Yes.

Q. At what point? Do you have any idea?

The President. Well, let me say I hope sooner rather than later.

Formulation of U.S. Policy and Programs

Q. One of the problems, I suppose, that I gather from Prime Minister Begin, is -- and several of us have come across this on other occasions -- and that is there seems to be differences of opinion between you and your staff on some basic issues -- and I'll use Israel as an example. I think that in Prime Minister Begin there's a suspicion that there may be a difference of opinion as to the commitment to Israel between, say, you and your feelings and those of, say, your, many have used the expression, ``more pragmatic,'' let us say, advisers.

The President. No. Let me say I can assure you that is not so, and I can address myself to that appearance in just a second. But remember that some of the things -- for example, the Iraqi incident: We were bound by law. The law in delivering American weapons says for defensive purposes only, and they cannot be used in any other way. And without warning here was, apparently, an attack on a neighboring country using the weapons that we had provided. And the law was very specific. There had to be an investigation of this.

Now, Israel's defense was that it had information that led it to believe that this was a defensive move, a preemptive strike in their own defense.

Q. Suggested it came from you, too.

The President. What?

Q. Begin suggested it came from you, the information.

The President. Well, it didn't. [Laughter] As a matter of fact, I understand why now, too. We had never known that there was any talk with regard to the supplying of material to that nuclear reactor in the files or that any had ever taken place involving the previous administration. Now, I'm quite sure that he probably felt that once we were in we must have had access to that information. We didn't. No one had ever mentioned it. So, we were surprised to learn that.

But the thing about differences appearing, I think, is perhaps because it's the first time that there has really been in operation what I call Cabinet government. I did this in California and was so satisfied with the result that we instituted it here.

Now, what do we mean by that? There's always been a Cabinet, but usually the Cabinet heads or Secretaries in the perfunctory Cabinet meetings which would be held, it was a case of each one kind of reporting a little bit on his own situation. My idea of Cabinet government was that you recognize that there are very few problems that don't really overlap in a lot of areas, and I'm the fellow who has to make the decision. So, we meet.

We've met 29 times so far as a full Cabinet, and the issues that come up and are put out on the table -- there is debate entered into by everyone present, like a board of directors would debate something. The only difference between that and a board of directors meeting is, we don't take a vote. When I've heard enough to make a decision, I know that I have to make the decision.

But the result is, when you have that kind of meeting -- yes, you're going to have different views presented, and it finally has to come down to options that, well, this way, that way -- then I make the decision, and there's been no animus in any of this. There's been total acceptance of the final decisions. But I think that this is so unusual in Washington, this method of doing this, that this has led to the assumption on the part of some that there's somehow some disarray or friction going on. The very contrary is true.

I am more than pleased with the team that we've brought here and the way they have functioned. And we're going to continue that system of government.

Richard V. Allen

Q. Speaking of that team, now that the Justice Department has cleared Richard Allen, will you accept him back as the national security adviser?

The President. Well, I can't comment yet on that. I'm delighted that they found there was no need for a special prosecutor -- delighted, not surprised -- but at the same time, there is a review procedure, internal in the White House, with regard to ethical standards and so forth. And that review is in process, so -- --

Q. How long is that going to last?

The President. I don't think that'll take long, so -- --

Q. Have you asked for a quick decision?

The President. Everybody understands that, yes, but -- --

Q. A couple of days? A week? The first of the year?

The President. Well, never having done it before, I can't tell you, but Dick Hauser, the deputy in Fielding's [Fred F.Fielding, Counsel to the President] office, is going to be in charge of that.

Mrs. Reagan

Q. Mr. President, your own popularity has held up quite well during this first year, but polls indicate that Mrs. Reagan has aroused a higher rate of disapproval than other Presidents' wives, mainly because of a perception that she likes expensive things -- clothes and mink coats and jewelry and costly china. Does she, in fact, have expensive taste? Is that bad? What are your thoughts on this?

The President. No, and let me tell you that in regard to that, I think she's taken a lot of abuse that she did not in any way and in the slightest deserve. First of all, she is a very conservative and saving soul, and I kid her that she's even still got the middy blouses she had in gym class at school. Sometimes some of these attacks are leveled, and she's wearing a dress that's 10 or 12 years old -- and I don't know how many ladies do that. But she likes quality and good things, as I think we all do.

But she's not extravagant. She's not dedicated to that. She is very dedicated to the causes that interest her -- the Foster Grandparents Program, the drug programs. Some people have even indicated that somehow there isn't a sincerity in that. Well, there is. And it was her interest in that program, which really got started in California, that spread -- it not only spread it nationally but when we were sent on a mission to Australia once for a preceding President -- not the preceding President, but another President, while I was Governor -- before we left Australia, the Foster Grandparents Program was given birth there, thanks to her.

But all of this talk, all of these things that she has done -- we found -- and it probably could have been true if anyone else was here -- that there was a lot of long-delayed maintenance due in the house. Coupled with that was something that was best expressed, I think, by Jackie Kennedy when she was President -- Mrs. Onassis. She said at the time that this is the house that belongs to all of America. Therefore, it should be the prettiest house. And she, as you know, set out herself -- and people through the years have contributed wonderful pieces and furniture and antiques and so forth to the White House.

We found many of those were moldering away in a warehouse -- Nancy found. And learning from the staff and the people who were there the things that the White House actually possessed and weren't there, she went, and many of them had deteriorated badly. The warehouse people were delighted that she -- they said, ``We can't take care of them. They don't belong here.'' But there were people then who volunteered and helped refinish them, refurbish them.

The dishes? She didn't buy any dishes. An entire set of dishes was contributed to the White House. Now, I think Margaret Truman has expressed herself on that and said that even that far back, you couldn't set a dinner in the State Dining Room without a mixture of dishes, because there's a certain thing called breakage that takes place over the years.

Q. You seem to be warming to the subject, Mr. President. [Laughter]

The President. I am. I think the people that have been doing this really have been aiming at me, and maybe found it easier to do it by getting -- --

Q. Has anything made you more angry -- --

The President. What?

Q. Has anything made you more angry in this past year than -- --

The President. Not very much.

Q. Could you regard her as an adviser, as a, perhaps, a silent member, silent partner of that Cabinet government?

The President. No, she does not attend Cabinet meetings, and she does not project herself that way. But for all of you who might be married -- we've been married almost 30 years now, and certainly we talk about things, and she has a viewpoint. But never has she tried to play a role in government. And many times I respect her woman's intuition.

But in regard to unpopularity, I just heard earlier today -- and maybe Larry can tell me if this is true -- I just heard that some poll or something has revealed that she's the most popular woman in the world.

Deputy Press Secretary Speakes. I haven't seen that, Mr. President. I'll have to get it. [Laughter]

The President. I tell you, if it isn't true, it should be. I'm on her side.

Employment Programs

Q. I hate to leave the subject, because it's a good one, but let me ask on behalf of some papers I have in the Midwest and Detroit, where things are really tough economically, and it looks like they're going to get tougher. This is going to be a very tough winter for a lot of people in the part of the country that you came from, and it's going to be a while, as you say, before the economic program takes hold. Are there any plans at all to help, aid some of these people in some of these areas in this coming winter, in this next, very tough 6 months or so?

The President. Well, this is a subject of much of our discussion because we get -- you know, people look at the national figures, unemployment rate such and such and so forth. We forget that unemployment is not spread evenly across the country, that what we call a recession in some areas is actually what I said it was in the campaign, a depression. You can have some areas with an 18- , 15-percent unemployment rate, and this is true. It is that spotted. We also have some other parts of the country where there isn't even a recession at the moment.

And yes, we think -- for example, we're discussing this whole program of enterprise zones, and we're looking at this from the standpoint of, could those be -- it's an experimental program -- could those be launched more in the heart of those areas where they're having problems, in those cities such as you've named, where the steel industry and the automobile industry is so much a part of their economy, and it is down so low.

Q. But you expect a recovery in the economy by next spring. Won't it take a long time to launch something like an enterprise zone?

The President. That's again one of those frustrations you asked about, that you can think of something good that doesn't happen all at once. But we've -- that, and I know that now and then, with regard to the defense program, where defense has got to be the first priority -- what is the best way to arm the country -- at the same time, now and then there is a situation where a decision can be made with regard to that defense program that will not reduce the quality in any way, but can be directed toward some place in the country where the economic situation could be benefited by it.

Anything, everything that we can do, we want to do in helping that. The programs in the past that have been -- well, like job training programs and so forth -- not that we're doing away with those. There's certainly a need for them. But to use those as a substitute for legitimate employment when the very fact of those programs and their cost was slowing down the reinvigoration of the economy, we're not going to do it.

Q. Then you would see some special programs or adjustments or other methods used in this kind of winter -- --

The President. Whatever we can legitimately do to help in that regard. There's nothing that's going to benefit us more, and benefit them, than getting those industries back on their feet, the steel industry -- and there we've met with them. And I just met with the heads of the automobile companies on what can government do for those industries. And there have been a number of suggestions and things that we're looking at that can help them with their problems.

The steel industry, as you know, has now a program for modernization of plant equipment. This has been one of the big factors that has made us become noncompetitive with other countries that we helped rebuild in the Marshall plan and who now have more modern facilities than we do. I think our workers are the best in the world, but we've got to give them the tools to match those other workers.

And so, we are seeking every way that we can to get those industries rolling again.

Q. Mr. President? Oh, I'm sorry, go ahead.

Mr. Speakes. We ought to let Ben and Loye get one in here since our time is running out.

U.S. - Soviet Relations

Q. I want to take you back to foreign affairs. When the Soviet Union rolled into Afghanistan, President Carter said he was shocked that the Soviets would behave as they did. Prior to the crackdown in Poland, you made it quite clear to Moscow how you viewed the situation and what your wishes were for their behavior. And yet, as you stated last week at the press conference, Moscow is clearly behind what has happened in Poland. Does this demonstrate to you, to use Ann's phrase, ``the limits'' of the American Presidency to shape events in certain parts of the world?

The President. Well, let me answer that, as best I can, is that at 9 o'clock tonight I will be talking on that particular subject and about some of the actions that we have already taken and that there are other actions that we can take. This is both with regard to Poland and the Soviet Union.

Q. Were you surprised that despite communication with the Soviet Union, both public and private, prior to December 12, that this has occurred in Poland?

The President. Well, surprised to the extent that we knew that there were plans laid for this. We knew that it was a very risky situation with the Polish Government wanting to be able to handle the situation themselves with the knowledge that if they didn't, the Soviet Union could very conceivably come in, as it's done before in Hungary and in Czechoslovakia. That we wanted least of all.

I suppose the actual timing of this, yes, we had no warning of the actual timing, and I think that probably it was precipitated by the proposal of Solidarity to let the Polish people vote on whether they wanted the kind of government they have. And if ever -- and I appeal to the media on this -- if ever there was an example of the moral bankruptcy of communism, it was that this could happen, people could be imprisoned, people could be killed, violence could take place as has, martial law declared, simply over whether the people have a right to vote on the kind of government they want. And apparently, as I'm sure we all knew down inside but we just don't give it much thought in our day-to-day lives, communism doesn't dare let the people vote, because they know -- --

Q. Are you suggesting that Solidarity went too far in asking for such a vote?

The President. Well, I'm not going to say that. I'd defend the right of the people to vote. I am going to say that maybe they should have realized that they were asking the one thing that a Communist government cannot allow.

Q. On that score, you've talked in more conciliatory terms about the possibility of a summit with the Russian leader, Premier Brezhnev -- President Brezhnev. Has this changed thinking about the possibility that -- --

The President. No, no. I still feel that sometime in the coming year, properly prepared for -- and I noticed that Mr. Brezhnev the other day, in answer to a question, said that there would have to be careful planning for such a meeting -- but yes, and I think a meeting is likely.

Q. Have you changed your opinion, then, of what you said in your first press conference, that the Russians, that, really, their article of faith is the reserving unto themselves the right to commit any crime, to lie, to cheat in order to obtain that and that is moral and not immoral. That was pretty strong talk from you at the beginning of -- --

The President. Well, it was an answer to a question. Someone asked me something about whether or not I thought they were lying or telling the truth on some -- I can't remember what incident it was -- and I just pointed out what is a part of Communist dogma going all the way back to Marx, and that is that if you look at their dogma, they say that the only moral -- that morality is anything that furthers the spread of socialism and the cause of socialism and that the only immorality is anything that counters that or works against that.

Well, we should always remember from the very beginning that that is their philosophy, it's their religion. And as long as they adhere to that, we're fools if we do not negotiate, recognizing that they claim that right for themselves.

Q. Well, that and some other statements and, specifically, on the subject of the summit, if not from you, from some of your top advisers, were -- until very recently the summit seemed to be ruled out or put far, far away. And yet, in the present situation when, in your own words, the Soviets have committed more offenses in relation to the Polish thing than at any time in your administration, you're talking more reasonably about a summit within the foreseeable future, within possibly the next year or so, which is -- --

The President. Yes, I think we're in the world together, and this doesn't mean that you can't talk and try to resolve your differences. But I think you go at it with some realism. So, I have no objection to talking.

Q. I take it, though, Mr. President, that if you were a candidate right about now or a private citizen right about now, I think you probably would take a different view. Your stand against communism -- and it's well known -- is tough and has always been tough. But I gather that since you've become President, you've sort of run into the new realism of, ``We're in this world together.''

The President. No, not at all. I had my earliest experience with communism, and it is pretty much the same.

I know that it sounds kind of foolish maybe to link Hollywood, an experience there, to the world situation, and yet, the tactics seemed to be pretty much the same. But that much rewritten history of Hollywood and distorted history has hidden from many people what actually took place back there in the late forties after World War II. It was a Communist attempt to gain control of the motion picture industry, because at that time the Hollywood motion picture industry provided the film for 75 percent of the playing time in all the theaters of the world. It was the greatest propaganda device, if someone wanted to use it for that, that's ever been known.

And they used the device of the jurisdictional strike. And I found myself not a bystander; I was right in the middle of it as president of the Screen Actors Guild. We were the one union that, if they could persuade us to participate in that strike -- and you know, there's no way in a jurisdictional strike -- it isn't like someone striking for better conditions or wages. This is an argument between two, in this instance, it was two groups of unions -- all of them, by the way, aligned in the AFL - CIO at the time, some 43 unions and guilds in the picture business all told. But this was the device that was being used.

Where we were, the key is that as long as one side could keep enough people in to keep the cameras turning, they'd turn as long as there were actors in front of the cameras. So, the whole key was to try and prevent the actors from going in because then the business would be closed. And we met for 7 months, virtually daily and many times twice daily, with both factions, because being in the spot we were in, it was decided that we would invite both factions and management to sit at a table with us, and we, as the noninvolved, would ensure fairness in the discussion, but to try and find a method that would keep the business open and not throw 30,000 people out of jobs. And this was how we got into it.

This is how I know it from the inside, and I think I learned a lot there. And the funny thing is, I didn't start with a bias. As a matter of fact, I started the other way, because I'd also been in Hollywood at the time that Browne and Bioff were turned up in the opposite side as being extortionists and so forth, in labor. But I learned the hard way, at that table, in all those months, who was really to blame and what the purpose of the strike was.

No, I don't think that I talked more harshly than I do now. And at the same time, I've always recognized that ultimately there's got to be a settlement, a solution. The other way, if you don't believe that, then you're going to find yourself trapped in the back of your mind, the inevitability of a conflict some day. So, that kind of conflict is going to end the world.

So, I believe, yes, in talking, but talk with some knowledge of what the other fellow's aims are and what his tactics are and what you're going to do. As a matter of fact, I have met Brezhnev. I met him 10 years ago. And lying in the hospital last April, after March 30, I wrote a handwritten letter recalling that meeting to Mr. Brezhnev, and sent it to him, because, as I say, no, we must find a solution.

Assessment of Administration

Q. Mr. President, if we could very quickly transport you back to January 20th, what would you do that you haven't done? What mistakes had you made in the last 10 or 12 months?

The President. I suppose maybe there were some mistakes someplace along the line. On the other hand, as I said in my opening remarks, I feel very good about the seven great victories that we had. The defense program has been put in place, interest rates coming down -- the things that we've accomplished.

But I would have to say, probably the one thing that we were induced to do was present our program for straightening out the fiscal situation with social security. And it was a leader in the majority party in the House who just told us that if we did not submit our proposal, they were going to go ahead with hearings and have a proposal of their own. Well, we had not wanted to submit it at the time, because we were working hard for those budget cuts. We didn't want any confusion that somehow social security's financial problem was a part of the budget-balancing process, because it isn't. And yet that's what was done.

With their challenge we had reason to believe then that there would be a bipartisan getting-together on this problem, with whoever submitted a proposal. And instead, it was used as a demagogic attack with distortions and outright falsehood as to what was in our program and what we were trying to do -- and not one single move made toward trying to come to a meeting of the minds on how we solve the problem. And I regret now that we didn't just brazen it out and tell them, ``Well, okay, if you want to go ahead, you go ahead, but we're not going to tie social security into this other situation.'' And now we have a commission formed, with a year to try and work it out.

Mr. Speakes. We're going to have to quit, because we've got to go over and -- --

Reporters. Thank you very much.

The President. I wanted to say one last thing on that question that, when I was talking earlier about Nancy and I said it was maintenance, you'd be surprised how much of what went on up there was restoring of the floors, the beautiful mahogany doors which looked just like a flat, solid, dirty black instead of a beauty of the wood -- all of those things refurbished. Drapes that were tattered, with holes in them, probably from the sunlight coming in. And painting -- there had been no painting, internal painting, for 20 years or more.

Q. So, that money that was donated, you're saying was used primarily for that rather than for things like china and the -- --

The President. Oh, the china itself was donated, not the money for it.

Q. No, I understand that.

The President. They donated a set of china and -- --

Q. Have you eaten off of it, Mr. President?

The President. No, it hasn't come yet. [Laughter] We're still using the mixed dishes.

Q. The other thing you said you wouldn't have done last year was go to the Washington Hilton. [Laughter]

The President. Yeah, if a fellow could know what he knows now. But anyway -- oh, I should also tell you, the plumbing. [Laughter]

The plumbing was actually so old that if something went wrong, you could no longer get parts. And there was a fellow in town who would hand-forge, at quite some expense, the parts that you needed. Also, there was a danger that one day we might find ourselves wading. [Laughter] So, a part of all of that was the plumbing.

Q. It's not as good as the Pacific, I'll bet.

The President. What?

Q. The surf here would not be as good as the Pacific.

The President. No, I'm quite sure of that.

Reporters. Thank you very much. Thank you and a Merry Christmas.

The President. Thank you. The same to all of you. Merry Christmas.

Note: The President spoke at 2 p.m. in the Oval Office at the White House. Participating in the interview were Andrew J. Glass of Cox Newspapers, Benjamin Shore of Copley News Service, Ann Devroy of Gannett News Service, Robert E. Thompson of Hearst Newspapers, Saul Friedman of Knight-Ridder Newspapers, Loye W. Miller, Jr., of Newhouse News Service, and Ted Knap of Scripps-Howard News Service.

The transcript of the interview was released by the Office of the Press Secretary on December 27.