Mr. Cannon. Mr. President, as you may know, we're preparing a story for this Sunday's Post on the third anniversary -- right after the third anniversary of your inauguration, that's going to try to look at what's been accomplished and what might lie ahead.

We'd like to ask you, what is it you feel that you've achieved as President -- as a central achievement? What do you think there's -- do you still think there's left to do? And assuming on our part that you intend to seek a second term -- we're not going to step on your announcement, but if that should happen, why is it you would want to run again? What would you want to accomplish in that second term?

The President. Well, let's start out with the situation as of 3 years ago: skyrocketing interest rates, higher than they've been in a hundred years; inflation in double digits; a continued decline in business; and a continued increase in unemployment. And today we're in the midst of a recovery. While the interest rates are still too high, they're only about half of what they were. We have returned to economic growth without inflation. In fact, we've brought inflation down to about a fourth or so of what it was. It's 3.2 for the year. Personal earnings, after taxes, increased last year about 5 percent -- real income, about 5 percent.

All of this turnaround, this economic turnaround, I think, is one of the great accomplishments, because a great many economists are suggesting that it not only is a recovery from the recession but that it is the beginning of growth and expansion. Prior to this time, we were told that we might -- you'll remember, voices were saying that we might have to give up the idea that there's any future growth in America, that it would be a no-growth society. Voices were saying that inflation was institutionalized and it would take a decade at least of great effort before it could ever be brought under control.

We have about 4 million more people working today than we had working a year ago at this time, and that's one of the biggest increases -- or decreases, I should say, in unemployment in a great many years.

Mr. Cannon. What do you still think there's left to do, then? You seem to have done so much.

The President. Well, no, there is much to do. But, on the other hand, there were other things.

I said repeatedly -- and long before I was ever a candidate for this job -- in recent years there's been a growing hunger in our land for what I called a spiritual revival. A feeling again of people with a belief in themselves and in our country, a belief in our institutions.

We know that, in the defense field, that our national security had been badly eroded. We know that we didn't have the approval or respect of many of our neighbors and allies and certainly of our adversaries. All of this has changed also.

But now, you just say, why? Well now, without saying what I'm going to say on the 29th, one way or the other, no, the job isn't finished. Not with those deficits out there that have to be brought under control. We haven't gotten all of the economic improvements that we asked for. And no one ever wants to walk away from a job unfinished.

Mr. Cannon. If there was to be a second Reagan administration, a second term, what would be your central purpose in it? What would you want most to accomplish in that second term?

The President. To continue on the same economic path to where we did have not only just a recovery but a return to a growth economy in this country. To continue what I think we have started, and that is a real, viable search for peace, particularly by way of disarmament. And that is the goal above all that -- must meet.

I remember as a small boy the war to end all wars, World War I. But I also remember coming out of World War II and coming out of uniform with the firm conviction, this must never happen again. And I still have that conviction.

We've only begun in the area of trying to better international relations and bring about reduction of armaments, and particularly a reduction of nuclear weapons, and, hopefully, one day, the total elimination of them. All that remains to be done.

There are other things on the social side here in our own system, apart from the economic things, legislative matters. There are things like reforms in our budgetary system, the adoption of constitutional amendments to require a balanced budget as so many of our States do, line-item veto power for a President to help curb spending and keep it under control. But then, in the social area, restoration of prayer in schools, treatment of the problems of abortion. There are things of that kind that I haven't fallen back from or retreated from and we still haven't made much progress with.

Mr. Cannon. When you took office, some of those things that you mentioned were items like the line-item veto, which you have in Sacramento. And there were people in your administration who described Washington kind of as a big Sacramento and said that you could deal with the problems here much the way you did there. Has that turned out to be true, and has there been anything that you've learned from being here in the White House specifically that you didn't bring when you came from Sacramento?

The President. Well, of course, there is one phase and one facet of this job that no one has at the State level, and that is foreign policy. I think I was surprised at how much a part of the job that is, how much, what percentage of your time and effort and thinking is devoted to the international situation.

But with regard to domestic policies -- and I never referred to it as just a big Sacramento -- but the same situation -- it's a very funny thing -- prevailed. When I became Governor of California, California was in a desperate economic strait. It was spending a million dollars a day more than we were taking in. I know the figures are a little different at the State level than they are at the Federal level. California is about 10 percent of the population of the Nation. But we had to deal with that, and there we had a time consideration in dealing with it, because California does have a constitutional provision that you cannot have a deficit. And you come into office in the middle of the fiscal year. So, a deficit had already been piled up, and we only had 6 months to treat with that problem.

But that and the other part of the situation is I had a legislature the majority of which belonged to the other party, in that case, in both houses. Here, at least, we have a majority in one House. So, it'd be difficult for there to be too many surprises. I was kind of geared -- the only experience I'd had was dealing with that kind of a situation.

Foreign Policy

Mr. Cannon. When you entered office here you were preoccupied, as you said, with the problems of the economy -- --

The President. Yes.

Mr. Cannon. -- -- and 3 months into your term you're the target of an assassination attempt and are wounded. Looking back on it, do you think that in the first year you left, perhaps of necessity, foreign policy issues too much to your subordinates, or how do you feel about that period now?

The President. Oh, no. No, from the very first, as a matter of fact, lying in that hospital bed after that assassination attempt, I wrote a letter to Leonid Brezhnev on our relationship and sent it to him in longhand as I had written it.

No, you can't be here very long without realizing that that is very much an important part of this job. When I expressed earlier my surprise, I guess it was just that, as I say, I hadn't anticipated that it was that much of a daily problem.

From my own experience in California, it is true I came here with my attention fixed on the great economic problems that faced us. At the same time, I had declared over and over again that I was going to see if we couldn't embark on a refurbishing of our defensive capability, which had been allowed to decline so much. It didn't take me long, as I say, to find out that the international situation was very much a part of the daily schedule.

Mr. Cannon. How much does the President -- you, any President -- control this international situation? I mean, as a President do you feel you can effect control of these foreign situations from the Oval Office, or are you pretty well governed by events over which neither you nor anybody else has any control?

The President. Well, with a great big wide world out there, there are always going to be events and surprises. But you have to deal with those, and you have to deal very definitely with the problem of your relations with the friendly nations of the world, as well as the adversarial ones. And you'd better start right in doing that, which I did.

Let me, just if I could, illustrate a surprise, a real physical surprise that came to me. Getting in the helicopter on the South Lawn to go someplace across -- out of the District -- about a half-an-hour flight -- to a luncheon invitation. And that was my first awareness, leaving the White House just that distance, to discover that now, wherever a President of the United States goes, phones have been installed, all the communication equipment and so forth, that keeps you in touch with every corner of the world. And I was. I was overwhelmed to discover that, that I couldn't do something of that kind without having that kind of preparation take place.

Mr. Cannon. This just a few days after you became President?

The President. Yes. And it brought home to you that -- and when you stop to think about it, I had to say to myself, I understand the necessity for this. This isn't something in which I could say, ``Well, this is foolish. Isn't this excessive?'' No. It isn't excessive. And you know that there's one person, yourself, who must be available for instant communication worldwide.

U.S.-Soviet Relations

Mr. Cannon. You said in a recent interview that you would not use the phrase now ``focus of evil'' to apply to the Soviet Union. Your language today in this speech was obviously very careful. Do you think that some of your own rhetoric, phrases like ``evil empire'' and so forth have -- whether or not those are accurate descriptions, do you think those phrases have contributed to the difficulty of negotiating, dealing with the Soviets?

The President. No. And really, I think they have been overplayed and overexaggerated in much of the talk about the present international situation. We are not in greater danger. We are not closer to a war than we were a few years ago. The rhetoric -- and all you have to do is look back at the pattern of Soviet rhetoric, no matter who is in the White House, and what has been going on for years, that we're ``imperialists,'' we're ``aggressors,'' we're all of these things that they've been saying about us. No, I'm not repeating some of those things simply because I said them, and what I felt was necessary was for the Soviet Union to know that we were facing reality and that there was some realism on our part with regard to them and their style.

Lou, let me take advantage of this to straighten something out, that ever since the first press conference, there has been a distortion of an answer of mine to a question there that has become just accepted, and that is that I called the Soviets a lot of names, gave an answer to a question about dealing with the Soviets. And everyone seems to have forgotten that I was quoting them with regard to lying, cheating, and so forth. I didn't say that, that that was my opinion of them. I made it very plain that they themselves, in their writing and speaking over the years, have said that anything of this kind that furthers socialism is moral. They do not view it as immoral if it furthers their cause. Lenin's famous line that ``Treaties are like pie crusts. They're made to be broken.'' So -- --

Mr. Cannon. Well, even if they said it, do you think it was wise of you to bring it up?

The President. Yes. I thought that it was necessary that they know. Now, I did not volunteer that as a statement. It was an answer to a question. But I think it was necessary for them to know that we were looking at them realistically from here. There was an end to what, I think, maybe has been prevalent in some dealings for several years, and that is the idea that, well, they were just a mirror image of ourselves, and you could shake hands on someone's word and walk away confident that a deal had been made. That, no, we were aware of the differences between our two societies in our approach to things, and we intended to deal with that realism.

Mr. Cannon. You said -- you touched on this today in your speech -- and you said today that we're safer than we were when, I think, when you took office.

The President. Yes.

Mr. Cannon. With the negotiations broken off and a pretty good stream of rhetoric from the other side, what's the evidence that we're safer and that this defense buildup which you advocated and achieved has made this country safer than it was?

The President. Because -- with realism on their part -- we have a deterrent capacity we didn't have 3 years ago. Now, you are in danger if a possible adversary thinks that an action of his would not lead to unacceptable punishment. And I think the very fact that we have proceeded on this path would require them, with their realism, to say, this, it would be unacceptable, the damage to ourselves.

Mr. Williams. Excuse me, can I just interject here to ask you if you think that the American people haven't heard that message from you, and do you really think that they feel safer today than they did when you were elected?

The President. I have to say that, from all the reports that I'm getting, and from all the contact that I, myself, have -- whether it's through mail or personal meetings or meeting new people, as well as old friends -- that, yes, there is a new feeling on the part of the American people. They have a confidence that they didn't have just a short time ago when they knew that the Soviet Union had engaged in this massive arms buildup and they saw evidences that we hadn't.

Not only the decline in quality, as well as in quantity, the restiveness of our NATO allies about whether we were dependable as an ally -- I think there's a great change in the feeling of our people now. I think a little evidence of that -- granted, this wasn't any great military operation, but I think the reaction of our people to the success of our rescue mission in Grenada was an indication.

Lebanon

Mr. Hoffman. Mr. President, speaking of Grenada, and turning to another foreign policy issue, when we sent American forces to Grenada, they were welcomed. When you sent American forces to Lebanon, they've been shot at. What, in your mind, accounts for the difference in that reception?

The President. Oh, well, let me put two things out. For one thing, there was no question that we rescued some people that -- not just Americans. The Grenadians, themselves, made it plain that they were not happy with the form of government that they saw being imposed on themselves.

But let's go back to when we first sent the marines to Beirut. And remember, they went in answer to a request from the Lebanese Government. But Beirut was a battlefield. Thousands and thousands of civilians were being killed, were being wounded and maimed because a battle -- a war was being fought right within the streets of the city.

We arrived and were well received by the people there. As a matter of fact, our American marines in a typical American military fashion, pretty soon were organizing helpful things for kids, teaching them to play ball, and all the sort of things of this kind in the city. I have mail that indicates that the people felt that finally they had a chance to live relatively normal lives.

Now, granted, that very much divided society is a place where you're never quite sure that there isn't going to be a sniper in the street, some terrorism of some account. But all this went on, and a great deal of progress was made: the agreement between Lebanon and Israel, Israel's withdrawal, the beginning of communications between some of the internal factions and the Lebanese Government; the progress in the Lebanese -- in building their own military, in which we were very much a part. Our training, our provision of weapons built that army up to about 35,000, as it is right now, and it's continuing to build up. And it has conducted itself well in the battles that it has been engaged in. It's proven that it is a capable military.

Now, all of this -- I have a letter from a young man -- actually, he's Greek, but his job and his life is in Lebanon. And this letter didn't come to me; it was sent to his girlfriend, who doesn't live in Lebanon. And she thought I would like to see this letter. And he was telling her of the experiences and what the marines meant, and telling her what the slaughter would have been if it was not for the presence of marines.

But now, a few months ago, this started, the thing that you've mentioned -- this attack not only on our marines but on the others of the multinational force. And it started, I think, for one reason, and it's very obvious, one reason only. There are terrorist elements who know that they cannot succeed in their cause while the multinational force is there. And they are trying to take advantage of what they see as criticism here, lack of public support in the hope that public opinion will force the withdrawal of the multinational force. And it would be disaster if they succeeded.

But what we should see is that the very fact they're doing that is proof of the fact that the multinational force was being successful in its purpose.

Mr. Hoffman. Given that these terrorist attacks began, do you agree with the Long commission that the mission of the marines changed while they were there and that they were unwisely deployed, specifically at the Beirut Airport?

The President. Well, I've read that report very carefully. And, frankly, I thought it was a fine report. I thought they had great understanding in everything that they were criticizing there. I don't interpret their suggesting a change in the mission as meaning that they had one purpose when they went there and now, suddenly, they've changed and have a different purpose.

The only incident that could be interpreted as them participating in a military action, say, in alliance with the Lebanese forces had to do with one in which the decision was very carefully considered and before it was made, and that is at Suq al-Gharb, the little village of Suq al-Gharb, which looks down the throat of our forces there, as well as others. It's about the situation of Capitol Hill with regard to the White House, geographically. It's that much proximity. And the Lebanese Armed Forces were in an engagement, and this was at a period before they were as well built-up as they are now, to retake and preserve Suq al-Gharb from being possessed by the same forces that are creating the terror and so forth.

Well, we believed that if we were going to have the marines at the airport there, that we had a stake in their security and safety. And so, we joined in during that engagement with naval offshore artillery, in support of the Lebanese Armed Force.

Now, I don't think that that makes us as presently changing our purpose or our mission. The decision was made based on the fact that our marines would be in an untenable position if that area in the hills looking down on them fell into those hostile hands. So, we helped in the preservation of it as a neutral territory.

No, the mission is still what it was, and that is that -- remember that the main goal was the departure from Lebanon of foreign forces. We helped in the evacuation of the PLO, which was definitely one of the hostile foreign forces. Granted, many of them then came back in by way of Syria and other places, but that was out.

We had had the word previously that both Israel and Syria would withdraw when the Lebanese Government was able to take over the policing of its own territory. The multinational force was to be there, you might say, behind the Lebanese Army, helping preserve order in that divided land while they went out and restored sovereignty. Well, Israel withdrew to much closer to their own borders. They're not fully withdrawn, but because Syria then balked and said no, they would not withdraw. And so, the mission still remains to enable the Lebanese Armed Forces and the Lebanese Government to resume control over their own sovereignty, their own territory.

Mr. Hoffman. That remains the mission, but, Mr. President, you're well known for your optimism. Do you think, in retrospect, you were just too optimistic in believing that sending the marines there could bring about a prompt diplomatic solution, given what's happened in the past year?

The President. No, I never set any timetable on it, never thought it was something that was going to happen in 48 hours. We had -- remember, with Phil Habib, the long time and before any marines were ever, anything of that kind ever sent there -- his shuttle diplomacy and the successes that he had. Incidentally, this was at a time when Israel had invaded, and all the way into Beirut, and was battling the PLO in Beirut. If you look at what has been achieved, and if you look at the difference in spite of the still ongoing fire and fighting that's going on, there has been great progress made.

No, I don't think we were over-optimistic. This was part of our whole, overall peace plan for the Middle East. We did not feel since a fair, legitimate settlement of the PLO problem -- the Palestinian problem must be a part of the peace proposal that I made a year ago September -- that it could not go forward while you had that war going on in Lebanon. So, Lebanon, which is not really, you might say, the primary part of what we're trying to achieve, which is finally a peace between the Arab nations and Israel. To date, other than Lebanon, the only peace treaty that we have is between Egypt and Israel.

What we're aspiring to are more Egypts, more Arab nations that will drop that claim that Israel has no right to exist, will recognize their right to exist, will come into peace negotiations with them. But it seemed that you could not move on that until you settled this Lebanon issue and then proceeded on. And we still think there is movement. Maybe now it has reached a point that we can begin to proceed with the broader peace initiatives. All of this is part of the diplomatic exchanges that are going on.

Mr. Cannon. We have two questions. Could we ask them both? Do you have time? We'll make it quick. You go first and -- --

Mr. Speakes. [Larry M. Speakes, Principal Deputy Press Secretary to the President.] Does it have something to do with the article on Sunday?

Mr. Cannon. Yes. They both do.

The Federal Budget

Mr. Hoffman. Mr. President, in 1980 you -- is this not the one -- --

Mr. Cannon. Yeah -- No, that's fine.

Mr. Hoffman. In 1980 you expressed a lot of confidence that you could balance the budget, build up the defense budget, and cut taxes, and you could accomplish all three of these. In retrospect -- and one of your officials said last week that it was good that you accomplished two out of the three -- do you think you promised too much in terms of reducing the deficit?

The President. No, but, again, with all of this having to project economic situations 5 years ahead and so forth, which I don't believe in -- I think the best of economists aren't very much good beyond the first year, and most of them will privately admit it to you. The thing was no one -- there had been no prediction of the sudden deepening of the recession. That caught everyone by surprise. And that has had a lot to do with the fact that only two out of three so far. We have not balanced the budget.

Fifty percent of the deficit is occasioned by the recession, the fact that people, instead of being employed and paying taxes, suddenly became dependents, you might say, of government because they were no longer working and paying taxes -- the great increase in unemployment that took place. That was one.

There was one other thing that none of us could foresee, and again it comes down to projections. None of us ever dreamed that we could be as successful in lowering inflation as we were. And you must realize that inflation accounts for some of your tax revenue -- the bracket-squeeze that takes place on people. And our tax revenues dropped below what had been projected by us because of the effect of the reduced inflation. So, we had to readjust our projections based on how far down we had brought inflation. So, we did not foresee that.

I still believe that, in spite of this setback, that we can -- and with the cooperation of Congress, proceeding on the same lines involving both further spending, getting the spending measures or the cuts that we asked for and have not yet gotten. Remember, our deficits would be considerably smaller if Congress had given us all the cuts in spending that we asked for. They didn't. But we're going to continue on that path.

And we're going to continue looking at the longer range on planning and reviewing those things that you might say are structural changes in government that have not been dealt with as yet, so that you don't have a built-in increase in spending that is -- well, as Congress itself refers to it -- as ``uncontrollable.'' You know, if you pass something that guarantees a constant increase in spending, and you've passed the measure, and then you never have to lay hands on it again, it just automatically keeps increasing. That is uncontrollable only to the sense that you and Congress and the government are not willing to deal with it and change what you did that was wrong.

Mr. Cannon. Juan, do you want to take the last question?

Mr. Williams. Yeah.

Mr. Cannon. I guess we overstayed our time. Thank you, Larry, for your patience here.

Civil Rights

Mr. Williams. Martin Luther King's birthday was Sunday. And many people celebrate that because of the efforts he put into bringing about changes in the laws in the country -- put in civil rights laws so that blacks and whites would have equal treatment under the law. Do you think there's anything more to be done now by the government, by anyone, to bring about equality between the races?

The President. Oh, yes, although I do think that -- you know, you can't, I guess, ever totally erase anyplace in the world among human beings, bigotry and prejudice, one way or the other. Hatreds go both ways.

But, having lived longer than anybody in this room, I have firsthand memories of the situation as it was, and I sometimes wonder if some of you who are younger realize how far we have come, how totally different this country is than what it was then. But that doesn't mean that you quit. No, there are heritages left over from that time. Occupations, let's say, and jobs and so forth that were once denied to a segment of our society and now are open to them, but they don't have a past history and tradition going way back in them. So that, you have to be alert, and you have to continue making sure that we don't fall back into any of the other patterns.

Mr. Williams. Well, as a followup to that, if you were a young -- let's say that Ronald Reagan was a young black woman in Dixon, Illinois, today, trying to make it in America, and Ronald Reagan was the President, do you think that that young black woman would prosper?

The President. Yes. And I think that much of what we've done in our economic recovery has been more beneficial at the bottom of the economic ladder. And we have to admit that because of past practices, that a disproportionate number of blacks and other minorities are in that segment of the population, at the bottom of the ladder. But there are also a great many whites that are in that too. But the things that we have done in the economic recovery benefited them first and most of all.

Let's take someone who only had an income of $5,000, which is way below the poverty line, as we know, at the beginning of 1979. By the end of 1980, in just those 2 years, that $5,000 had lost 20 percent in purchasing power. It would only buy $4,000 worth of food and shelter and clothing.

Now, the very fact of inflation alone, look what it has done for those same people. Today, the person at the -- the average family, the median income has $3,300 more in purchasing power than they would have had if we had stayed at the same tax and inflation rates of 1980.

The very fact that now the -- even with the unemployment -- the fact that there are more people working than have ever worked before in our history, and not just more in numbers, that you could say, ``Well, it's accounted for by the growth in our population.'' No, a higher percentage of all the people between 16 and 65, which is taken as the work force in -- the potential work force; a higher percentage of those people are actually employed today, even with our continued, above-normal unemployment, than at any time in our previous history. And the truth is that for both women and for minorities, the percentage of decline in unemployment is greater for both women and minorities than it has been for the adult male -- or white male.

So, I think we have done those things. I'm going to be referring to this young lady in a speech. She was on the air the other night; a story of -- she didn't come from Dixon, Illinois, but 90 miles away -- Chicago, out of a ghetto. Raised by a grandmother. And today runs a tremendously successful, multimillion-dollar advertising agency in the city of Chicago.

Mr. Williams. That's wonderful.

The President. And she happens to be black. And she's the sole head and proprietor of this successful operation.

Mr. Williams. And it's not the case that that person would get the breaks only because of tax breaks given to the rich or something like that?

The President. No. As a matter of fact, that again -- that, too, is a distortion, that our tax program gave the breaks to the rich. Let me just draw a contrast with numbers so I won't have to try and convince you by rhetoric.

John F. Kennedy had a tax reduction program somewhat similar to ours back in the early sixties. Some of his own party opposed him very much on this, but he went forward with it and said it will stimulate the economy. It'll actually increase, eventually, revenues, more than decrease them. And it did.

Now, 29 percent of his tax relief went to business; only 23 percent of ours did. And he gave greater cuts to the top five tax brackets than we did with ours; our greater percentage of ours is below the top brackets in this 25 percent across the board that we put in. But in addition to that, we put in some other things, like giving working mothers more tax credit or deduction for child care that they might have to provide; like giving the working wives -- there's a tax penalty on them in the income tax. We reduced that very sizably. Now most two-earner families are two earners because they are at the lower end of the earning scale. We did a number of things which has benefited at the lower level more than at the upper level.

Yes, I think there's a greater opportunity for young people today in this country than there's been for a long, long time. And, well, when I was a sports announcer after I got out of college -- just let's look at one difference. You push that button and you look at pro football and you look at pro baseball, you look at pro basketball. Well, when I was a sports announcer, blacks were not allowed to play in any of those games -- organized games. And there were a lot of us at that time that editorialized like hell against that and said that was wrong. And it was wrong, and it's all been changed.

Messrs. Cannon, Hoffman, and Williams. Thank you, Mr. President.

Note: The interview began at 2:37 p.m. in the Oval Office at the White House.

The transcript of the interview was released by the Office of the Press Secretary on January 22.