Ms. Small. [Karna Small Stringer, Deputy Assistant to the President and Director of Media Relations and Planning] That's quite all right. We're happy to have you, sir.

The President. -- -- when I said you were all familiar faces, you are. I'm glad, however, that when I'm watching you, you can't be watching me, because I'm usually in my dressing room upstairs changing clothes either to go to the Exercise Room or coming from it.

But I'm happy to have you here at the White House and I do watch, as I say, your newscasts. And I'm well aware that across the country more people depend on local news than they do on the national news and get their news from local news broadcasts.

Now, I know you've been briefed or were being briefed by Dave Stockman and Buck Chapoton, and you'll be hearing from Bud McFarlane and Cap Weinberger [Director of the Office of Management and Budget, Assistant Secretary of the Treasury (Tax Policy), Deputy Assistant to the President for National Security Affairs, and Secretary of Defense, respectively] a bit later.

The Nation's Economy

But just let me say that since economic recovery has been the lead story on most programs lately, it's awfully good to see -- we've been seeing more signs that the economy is on the mend. And if I could just mention a couple of them.

You know, of course, that inflation rate for '82 was down to 3.9. But not too much attention has been paid to the fact that for the last 3 months of 1982, it was down to an annualized rate of 1.1. And if that could continue for 12 months, instead of 3. The index of leading indicators -- up 8 of the last 9 months. Real wages have gone up in the last 3 months. They'd been going down for the last 4 years.

Housing starts are up. Housing permits are up, and sales of new homes has grown by 75 percent since last April. The auto industry is picking up. We all know General Motors has announced they're going to call back more than 21,000 people in the next few months. Initial claims for unemployment insurance -- down. And, of course, I think we must have all been pleased to see at least the slight turnaround there, the four-tenths of a percentage point turnaround on the average.

And more than that, if you take the new method of counting, which I always thought should be the only method -- I don't know how we've been able to ignore almost 2 million people that are fully employed in the military. And yet, at the same time, I don't know whether you're aware that every time one of them left the military and didn't get a job, he was counted as unemployed. But he or she were not counted as employed when they had those jobs. I think it's a more sensible way of counting.

We've tried to be cautious with our projections, but I think it's interesting that the Congressional Budget Office, which is usually more pessimistic than ourselves, is now sounding more optimistic that we can have a better recovery. Alice Rivlin has just become so attractive to me. [Laughter] But we intend to work with the Congress, as I'm sure you've been told, to see that this stays on track.

And now, I know we only have a few minutes, but you being -- --

Administration Policymaking

Q. Mr. President, what do you think about all of these stories that you're really not in control of the budget data and you flunked David Stockman's multiple-choice questionnaire and -- --

The President. I've got a doll in my desk I stick pins into when I read them.

I don't know what that -- well, I suppose I shouldn't have been too surprised. I think it happens to more than one person. I recall attempts of that kind when I was in Sacramento as Governor. Then they called it the Palace Guard. But, no, and I think anyone that's in our administration will tell you that -- that has anything to do with policymaking -- that I make the decisions.

Maybe part of it has come about because of a change that we've made in the Cabinet system. As nearly as I've been able to find out, previous administrations back through the years have sort of used the Cabinet as maybe they'd come once a month and go around the table with each Cabinet head and give him a little brief verbal report of what his agency was doing. Well, I started something in California, with the Cabinet, that I brought here. And that was that it's a kind of a board of directors operation.

We sit around the Cabinet table, as we're sitting here, and instead of just the one person, if he thinks that -- well, it's his agency problem and he's the only one can speak on that. No. Everybody has a pitch-in. And we sit there, and we discuss and sometimes argue. And it goes around the table and around. And when I've finally heard enough to finalize my own decision, I make the decision, and that ends the discussion on that. If I haven't, if it's something that's so tough that there's so much right on both sides, send them away to come back the next day, and we'll take it up again. And maybe that has led to this.

I've noticed that it's always from those unidentified White House informants that this talk, this conversation comes. But I would turn my back and let any of the Cabinet members answer, and I think you'd find the answer was, I make the decision.

Administration Policy Toward Black Americans

Q. Mr. President, are you at all concerned about an apparent continuing perception among a number of black leaders that the White House continues to be, if not hostile, at least not welcome to black viewpoints, and that administration policies are working to widen the income gap between blacks and whites, and also increase black unemployment?

The President. I'm aware of all of that. And it's very disturbing to me, because anyone who knows my life story, knows that long before there was even a thing called the civil rights movement, I was busy on that side.

As a sports announcer I didn't have any Willie Mays or Reggie Jacksons to talk about when I was broadcasting major league baseball. The opening line of the Spaulding Baseball Guide said, ``Baseball is a game for Caucasian gentlemen.'' And as a sports announcer I was one of a very small fraternity that used that job to editorialize against that ridiculous blocking of so many fine athletes and so many fine Americans from participating in what was called the great American game.

I was raised that way. God bless them, my father and mother, both long gone now -- but I can remember when I was only that high, and one of the alltime great motion picture classics, ``Birth of a Nation,'' came to our town. In our household my father simply announced that no member of our family would see that picture, because it was based on the Ku Klux Klan. And to this day I have never seen that great motion picture classic.

Yes, it's very frustrating. But none of it -- and I wonder sometimes if some of those leaders aren't -- maybe they don't even realize it -- but aren't more interested in maintaining a kind of difference, in spite of -- because that's their position and their line of work.

But the truth is, none of it is true in this administration. I can cite you the figures on what we have done with regard to civil rights violations. I can cite you what we have done for the Negro colleges and their fundraising effort. As for what we've done with regard to unemployment or trying to make a difference: I know this thing about supposedly our tax program is for the rich; I've never been able to figure that out. We have a progressive tax system. You move as you get more income into higher brackets.

In recent years, with inflation, you've moved whether you got higher income, but just if you got a pay raise that simply let you supposedly break even, you didn't break even, because the Government put you up in a higher percentage bracket. But when we gave our tax cut, 25 percent across the board -- yes, if you want to use the number of dollars, a fellow that's paying a hundred dollars income tax is not going to get as many dollars in relief as the fellow that's paying a thousand or on up, ten thousand or a hundred thousand. But proportionately, they are.

And if we had staggered our tax cut instead of level across the board, we would have, in effect, legislated an increase in the progressivity, which as we know, goes from a quite lower percent on up now to 50, but it once upon a time went to -- well, when I was getting some of that ``if-money'' in Hollywood, it was 94 percent. And it used to curtail your picture-making efforts, because there came a point every year when somebody submitted a script. And you said, ``Not me; I'm not going to work for 6 cents on the dollar.''

But I think that anyone would find -- and with regard to unemployment, there's no question that this has been and it's one of the things that I think for years we've been trying to correct -- that when unemployment comes -- and there have been seven spells of this since World War II before this one, and always the same thing was true -- that it seemed that black employees suffered more in a higher rate of unemployment.

I have tried to convince many black leaders and labor leaders that, with regard to the minimum tax for youngsters, for teenagers, for kids that want summer jobs, we should have a two-stage tax, because before there was a minimum wage -- I said ``minimum tax,'' didn't I? -- minimum wage. Before there was a minimum wage, young teenage blacks had a far lower rate of unemployment than teenage whites. And as the minimum wage was put into effect and began to increase, this reversed. And I think that it's, of course, affected all teenagers.

But I think that, for youngsters beginning to go into the work force, they're not going to take any adult's job away from him. They never did. They're learning a job. They're getting a skill. They're performing tasks that, at a proper price, an employer will hire them. But, if you make the price too high, they're tasks that the employer feels he can do without. And so no one is hired to take those jobs.

1984 Presidential Election

Q. Mr. President, you just celebrated your birthday. Happy birthday.

The President. Thank you. I just reached par. [Laughter]

Q. And the week before that, the footrace began toward New Hampshire and Illinois -- the caucus in Illinois and the New Hampshire primary. When are you going to announce your intentions about running again?

The President. [Laughing] Well, I think -- and if you look back over history -- that is a ticklish thing for a President in his first term. If he makes an early decision one way, he becomes a lameduck. If he makes it the other way, he's then accused of everything he does is political campaigning. So, I think that, if you wait -- and I have not made a decision, by the way, because I also believe that the people let you know what the decision should be.

Q. Does all this start too early?

The President. Hmm?

Q. Does all this start too early?

The President. Oh, I think this -- --

Q. The political process toward the primaries.

The President. Oh, on the other side, I can understand that. Look at it 4 years ago -- when it was -- or no, now, 6 years ago, when it was the Republicans' turn for scrambling against a Democratic incumbent. And it was just much the same picture. We had a dozen or so out there.

Q. You were out there for 2 years, I think.

The President. What?

Q. You were out there for 2\1/2\ years before the first primary election.

The President. No. As a matter of fact, I refused to make a decision on that for quite some time. Maybe you're confused. There was a group that started in the country. And believe it or not -- --

Q. Draft Reagan?

The President. -- -- I didn't have anything to do with them.

Q. Okay.

The President. There was a move that started at that time.

Q. Would you be reelected if the election were held today, Mr. President, in your view?

The President. Well, this'd be the headline if I answered it. [Laughter]

I have to say this. I'm confused by some of the polls. I know a little about polls anymore, and I know a lot of it depends on how the question is asked. But I get around the country enough, make enough appearances that somehow I don't seem to run into many of those people.

As a matter of fact, we have a kind of a standing thing in our family. Nancy's very critical of me, because when you go out and the streets are lined with people and when you're away from Washington and so forth -- and I know that much of that's simply because of the institution itself, the Presidency -- but the reaction of those people. But Nancy's annoyance is, she says that I always somehow manage to see the one person in the whole crowd who is doing like this or making a vulgar sign or something at me. And it is true. I do.

Q. Are you watching the economy as one guideline as to whether you want to subject yourself to another campaign?

The President. Well, I think that that undoubtedly is the issue on most people's minds. When we started, the issue was inflation -- more than 80 percent -- and all the polls showed that as the number one problem. Well now, that's no longer the number one problem, because we've reduced it. But now it is unemployment and the economy. And I could expect that. And I'm very concerned about unemployment myself, and tragically it's usually the last thing that comes back when you come out of a recession.

But, yes, I would think that that would be -- if there is no recovery, obviously that'd be a sign.

Federal Employees

Q. Mr. President, in our area we're particularly concerned with the large number of Federal employees, of course. They're our local viewers. And how does the administration justify or explain to them the freeze and the cutbacks and the reduction in the long term -- in the pension plans, which are so much better than private plans are generally?

The President. Well, for one thing, we have not affected the people that are presently employees, except there has been a change -- that there's had to be an increase. Their pension plan is such that today many retirees are getting more money in retirement than the person is getting in wages who is doing the job they retired from. And so, it was out of balance, and it was only fairness to ask, with the built-in increases in those pensions, that they contribute a little larger share.

Now, we have also added -- we are covering them now for Medicare. They do not have such coverage. And with all the talk about whether medicare is being increased in cost or not, or participation -- which it is in our proposed budget -- no one has added that we are adding to that, for the first time, catastrophic care; that these people will now be protected against that catastrophic illness or injury that now and then totally devastates a family because there's no way that any individual could meet the cost.

With regard to whether it's fair or not to ask them to take a freeze: First of all, the freeze in COLA's is not as significant as it was back when under the previous administration, the inflation rate was 12.4 percent -- or even 14 percent at one point. It isn't that big a sacrifice. But in the condition that we're in, and in an effort to help this economy, we're asking that of everyone.

And I was impressed -- I don't know which one of your stations it was -- but I was impressed enough to make a phone call to that young enlisted man over at Ft. Myer that someone interviewed as to how he felt about having the military pay froze. If anyone has a right to complain, they do, because up till recently they were far behind anyone with regard to pay that was commensurate with the work they were doing at all.

Ms. Small. Could we have just one more question. He has another -- --

The Middle East

Q. Mr. President, on the Middle East -- --

Q. Can I ask you about your relationship with Mr. Begin?

The President. Well, then, we'll have to have two more questions. [Laughter]

Q. There is settlements proceeding apace on the West Bank. There's tension between our forces and Israeli forces in Beirut. And I'm wondering if the Reagan plan is falling on totally deaf ears as far as Mr. Begin is concerned. Is your relationship -- has your relationship improved at all?

The President. Well, I don't think that it is as strange as some would have you believe. I think that we've established quite a personal bond on his visits here.

It's true we disagree on this particular issue about getting out of Lebanon, because we know that in our efforts to try and bring the Arab States around to the position that Egypt once took so that they can make peace with Israel, we have to be careful. And one of the big contentions is the withdrawal of all foreign forces from Lebanon. And Israel is delaying, we believe, unnecessarily in that. So, Phil Habib [The President's Special Representative for the Middle East] has gone back again and -- with a proposal and a plan -- and we're hopeful that they finally will, because the Arab nations are holding back and are reluctant unless they see this kind of gesture of good will.

( Also, I think that there's a certain moral point that we think the Israelis are neglecting and not observing. And that is, the new Government of Lebanon, after all these years of revolution and upheaval, has asked all the foreign forces to leave. For them not to leave now puts them technically in the position of an occupying force, that they are there by force in this country that has said to them, ``We now want you to depart.''

So, we're going to continue trying to bring this peace movement on. But we don't believe that we can move to the actual peace negotiations in the Middle East until the Lebanon situation is cleared. And I personally have believed that if this requires even an increase in the multinational forces for further stability that we should be willing to do that.

Federal Employees

And to finish answering your question before I take yours: We thought that asking Government employees, all across the board, to take a freeze in the increase in pay was not too much when you stop to think the sacrifice that's being made out there in the private sector -- those that are unemployed, but also those many employees that have taken voluntary cuts in benefits and programs and in salaries in order to help their employers -- that we could do the same thing.

Employment Programs

Q. Mr. President, we are all concerned about perhaps the misuse or misinterpretation of the use of words and phrases. One of those happens to be -- and this ties back to David Stockman -- the phrase, ``We will not have make-work programs.'' Whereas we understand it and Congress understands it, sometimes many of our viewers do not understand, and they think it's hard-hearted Ronald Reagan saying that we will not have any solution to the unemployment program. And I just wonder if you would expand on that for us as to what you mean when you say you are not for make-work programs.

The President. Well, many of the jobs programs -- in the past recessions, there was always a tendency, the one thing that was politically unacceptable was unemployment. So, the Government would rush in with a lot of artificial stimulants, government spending and so forth, and large parts of that would be job programs where the Government would suddenly go out, provide funds, hire people.

I was Governor when some of those took place in our own State. And I saw local communities and local governments dream up things that they didn't need because the money was available. But those programs then are supposed to be temporary, and at the same time you were adding to the cause of your recession, increasing the deficit spending. And no one was paying any attention as to whether that increased deficit spending was taking away unemployment over here in the private sector. But the worst feature was that many of those programs, the smallest percentage of the money actually went in to paying the workers. The Federal Government had a very high overhead and quite a carrying charge for those.

Now, there is a difference -- and Tip O'Neill and I have discussed this -- that it isn't make-work if you simply stimulate or move up or accelerate a program of necessary public works. Now, this is what we did with the gasoline tax.

Everyone, I know, said, well, I had said I would not, you know, it would take a palace coup before I would ever accept such a gasoline tax. The framework in which I said that at a press conference was when it was being proposed as just a tax for general revenues to increase taxes -- tax gasoline more. But more than a year before, Drew Lewis had come to me with the rundown on our highway system and the bridges and even the real great risk and danger -- well, just the other day, we saw a bridge collapse with several deaths. And a year before, when he had come with that, proposed a users fee, a gas tax to simply finance that kind of construction, I had to ask him at that time, could he wait a year. And he did.

And when he came back this latter time, the report was even more dangerous, more threatening. The numbers of school buses in the country, that in their zones where there are bridges, come to the bridge, and stop, and the students have to get out and walk across, and then the driver stays in and drives the empty bus across and picks them up again because they're afraid of an accident with all those children in the school bus. So, this time, having told him to wait a year, I said, ``Yes, we'll go for it.''

Now, this is legitimate. This is work that has to be done. The jobs are already going not to individuals that are suddenly given a job, whether they fit it or not. These are people -- construction workers and construction companies. A delegation from the roadbuilding industry in Illinois presented me with a hard hat when I was out there because of the jobs. In Missouri they've already started on their program of rebuilding and even building new ones.

Now, we have asked -- and it won't change the budget a bit -- that every agency and department that has got building maintenance work that is in need of doing and that has not been done and so forth, to accelerate it. It's in the budget already. Don't schedule it for a year from now or 6 months from now, if you can move it up and do it now. That will be legitimate work.

The make-work jobs -- I can give you one example of one that I vetoed when I was Governor. It came from Washington, and a Governor could veto, and if it wasn't overridden in 60 days with the Federal Government, why, it stayed permanent. This was a program to put 17 able-bodied welfare recipients to work in a county park, cleaning up the park and keeping it cleaned up and everything. Why would I veto such a thing as that? Well, because more than 50 percent of the budget was going to go to 11 administrators to make sure that the 17 got to work on time. And I thought the percentages were a little wrong.

Ms. Small. Thank you, Mr. President, you have another meeting so -- --

The President. I know I do.

The President's Birthday

Q. Could you tell us how you celebrated your birthday yesterday?

The President. What's that?

Q. How you celebrated your birthday last night?

The President. Well, yesterday we had to come down early from Camp David so we wouldn't get snowed in. And then we just had a few people for a dinner that we'd been planning for some time, and that's when the birthday was.

I have just received a very heartwarming set of unusual gifts in the other room from some people from Monroe, Louisiana. And among them, though, was a framed picture -- I'll take this as the celebration -- a framed picture of the billboards that they put up all over Monroe, regular billboards saying happy birthday to me and thanking me for coming down in the flood. And another one was a fascimile of a check that the Goodfellows of Monroe contributed for flood relief of 83,600-and-some dollars. Their normal annual contribution is around $370. And so, that was enough of a celebration.

You really don't celebrate when you get to this age; you just say, ``Thanks.'' [Laughter]

Ms. Small. Mr. President, his daughter has sent you a birthday card -- [inaudible].

The President. Oh.

Ms. Small. You can take that along with you. She made it for you.

The President. Well, for heaven's sake, she's a doodler, too. [Laughter] Well, you tell Brooke I'm very grateful.

Q. Thank you.

Q. Are you still rolling on your wheel every day?

The President. No, I gave that up. I've got a -- there's a gym up there, and I'm doing different sets of exercises.

Q. Oh, higher class exercises.

The President. No, I tell you. I gave it up because I'd been doing it about 15 years, and I began -- my belt seemed to be as tight as ever. [Laughter] I was hard, and finally a man knowledgeable in that field told me that that was -- yes, it was, but it was also stretching the muscles. And since those muscles -- there was no place else for them to go but to bulge. So, I quit. And I've got another set of exercises.

Q. What's your favorite exercise?

The President. What?

Q. What's your favorite exercise?

The President. Well, it's a whole variety of them aimed at different muscles. And this same gentleman gave me a schedule of two for alternate days. There's a little Nautilus machine up there with the weights and the pulleys and so forth. And I didn't think at my age you could grow muscle, but I'm having to have some coats let out, but not down here. [Laughter]

Note: The exchange began at 11:50 a.m. in the Roosevelt Room at the White House.