The President. Our defense policy is based on a simple premise -- I stated it the other night -- that we do not start wars. We maintain our strength to deter aggression and preserve peace. Since the dawn of the nuclear age, we've sought to reduce the risk of war by maintaining a strong deterrent and by seeking genuine arms control. And after close bipartisan coordination with the Congress, the Scowcroft Commission on Strategic Forces last year reaffirmed that we must continue the Peacekeeper program as part of an overall strategic modernization program that includes ambitious arms control negotiations.

There is no more compelling priority on my agenda, and that is why we've been working so hard to convince the Soviet Union to join us in a spirit of genuine cooperation to achieve real and equitable reductions in the levels of nuclear arms. And that's why the United States is continuing to carry out its own obligations and commitments under previous agreements as we call upon the Soviet Union to demonstrate equal restraint.

It's important to remember that since the December 1979 NATO decision on longer range, intermediate nuclear forces, the United States has already withdrawn over 1,000 nuclear weapons from Europe. We will continue to withdraw one additional nuclear weapon for each Pershing II and ground-launched cruise missile deployed. We and our allies have also announced plans to withdraw an additional 1,400 nuclear weapons from Europe. In sum, the United States will withdraw five times as many nuclear weapons as are planned for deployment in the ground-launch cruise missiles and Pershing II programs.

In five rounds of START, the United States has been flexible in exploring all avenues to achieve verifiable arms reductions. The U.S. position was adjusted to reflect the Scowcroft Commission's recommendations to incorporate a proposed mutual guaranteed build-down, and to include trade-offs between the interests and advantages of each side. Negotiations on mutual balanced force reductions resumed March 16th. We tabled a new initiative to break the deadlock with the Soviets over existing force levels. And in the Conference on Disarmament, we're pressing for a total ban on chemical weapons.

Despite all our initiatives, the Soviet Union walked out of the Intermediate Nuclear Force talks and has still failed to agree to resume the START talks. We regret this Soviet action, and we remain prepared to resume negotiations immediately, without preconditions. We must not cast doubt on U.S. and allied reserve [resolve] nor reward the Soviets for their current belligerent behavior towards arms control.

In the early 1970's, the United States expected to field a modernized ICBM system by the end of the seventies. We didn't make it. The Peacekeeper will not be deployed, in even limited numbers, until late 1986. The Soviet Union, however, deployed over 800 SS - 17's, SS - 18's, and SS - 19's, missiles that are similar to or even larger than the MX. Also, the Soviet Union is now flight-testing two new ICBM's -- the MIRVed SS - X24 and the SS - X25 -- and have others under development.

The U.S.S.R. has a comprehensive program to strengthen their strategic force. We cannot afford to delay any longer. Without Peacekeeper, the MX, the incentive for the Soviets to return to the negotiating table is greatly reduced. The Soviets hope that, once again, our modernization efforts will be curtailed. To falter now would only encourage the Soviet Union to ignore our arms control efforts. For our own security and the cause of world peace, we must support the bipartisan national program that we approved last year.

Yeah, Bill [Bill Plante, CBS News].

U.S.-Soviet Relations

Q. Mr. President, why would you expect the Soviets to come back to the arms talks after the way you talked about them over in China? What incentive do they have, sir?

The President. What did I actually talk about over in China? I have thought back on the remarks that were supposedly -- or were censored out or at least, removed. What I said about them was I was contrasting what we have -- we obviously differ in many ways from the Chinese, but I was saying we have many things in common. And I pointed out that on our own behalf, we didn't have any troops massed on their border. We were not pursuing an expansionist policy. We were not invading another country, such as Afghanistan or doing what they're doing in Kampuchea. Now, is that harsh rhetoric, or is that telling the simple truth?

Q. Mr. President, relations between the U.S. and U.S.S.R. have really hit a new low, almost cold war dimensions in the eyes of some experts. What is the real reason for this? What are you going to do about it? Do you think that your rhetoric -- you say no now -- and/or your actions have contributed to this? Or is it all their fault? What are they up to?

The President. Well, Helen [Helen Thomas, United Press International], sometimes I wonder why we don't ask those questions of them. Why is it that it's almost a pattern that the United States is possibly doing something that might cause the threat of war or that -- what should we -- we didn't walk away from the table. In fact, we made some efforts to bring them back to the table by showing them how flexible we were willing to be in these discussions. And they didn't come back. It was my -- there were people who said that my rhetoric wasn't harsh enough after they shot down a civilian airliner with 269 innocent people aboard.

Soviet Boycott of the Olympics

Q. Well, what's the reason for the boycott?

The President. What?

Q. The real reason for the boycott?

The President. Again, you'd have to ask them. The reasons they have given are absolutely false -- and we've been able to prove it -- the reasons that there might not be sufficient security for their visitors, their athletes, and so forth. And we were able to prove no one in the history of the Olympics has ever done as much as we're doing to ensure that.

Andrea [Andrea Mitchell, NBC News]? And then I'll come across -- --

Q. Mr. President, you have said in the past -- in 1980 you said that you supported the boycott. This year, you're saying that politics have no place in an Olympic boycott. Why have you changed your position?

The President. Well, let's remember the different situation. The Soviets have now announced that they are not going to come because they don't believe that we can offer protection to their athletes. And, as I say, we have been given -- we've given them chapter and verse on what we have done, and there had never been anything like it.

Now, in 1980, the reason for the boycott that was given by the then administration was because the Soviets had invaded -- openly invaded with their own forces -- a neighboring country, Afghanistan, that hadn't done any thing to them or lifted a finger against them.

I think this was a completely different situation. It is true, however, that I went through several stages of thinking then. It wasn't just an automatic accepting of the politicizing of that. I was as angry as anyone, I'm sure, as we all were, and as disapproving of the invasion of Afghanistan -- and still am. But at the time, I did voice a question as to -- I questioned our government setting a precedent of denying the right of our own citizens to leave our borders and go someplace else.

I then thought in terms of shouldn't this decision be made by the free American citizens, the Olympic Committee, the athletes themselves? I went through a stage of thinking in which I said it wasn't so much of their not participating as, I said, shouldn't we -- since the Olympics traditionally were born in and exist on the basis of trying to provide peace between nations -- they, the host nation, having done what they did, should we not consider removing the Olympics from that country and staging them someplace else? And from that I went to exploring what so many have and are exploring now: possibly having the Olympics from now on be in the home of their origin, Greece, and not have them move around the world.

Q. But, sir, your final decision, your final statement back in 1981, that you supported the boycott -- now Jesse Jackson and some others have said that you should personally intervene and try to intercede with the Soviets. The government position has been that it's not a government-to-government problem; it should be handled by the Olympic Committee. Would you consider taking some action to intervene?

The President. I don't think there's any action that I could take that would be prudent. I would -- naturally, I would do anything if I thought it could have a result, and I have encouraged citizens groups and our people to do this. It is not a government relation problem.

El Salvador Election

Q. Mr. President, to switch the subject for a moment, Senator Helms has said that the United States bought the election in El Salvador. Could you tell us, please, exactly what was the financial involvement of the CIA and other Government agencies?

The President. I don't think that there was any attempt by any agency of the United States Government to participate in a partisan fashion in that election. There has been overtly, not covertly, aid given to labor unions, to trade associations, within the very framework of the program that I announced before the British Parliament a couple of years ago, and that is the idea of trying to help democracy by strengthening those organizations within a country that lead toward democracy, such as free labor unions, and so forth. And we have helped finance those.

Now, it's possible that some of those groups then, just as our own do, decide to take a partisan stand in support of someone in an election. But that had nothing to do with the helping to fund those organizations, nor do we intervene with what they may want to do.

Q. Have you talked to Senator Helms about his remarks?

The President. No, I've had no conversation with him.

Q. Mr. President, so you're saying that the reports or allegations that the CIA covertly gave money to some of the parties or are involved is untrue?

The President. What I'm saying is that I'm not going to discuss intelligence matters of that kind or what an agency like the CIA may do. But I'm here to tell you that I am assured that we have not tried to participate as a government in any way in the elections in El Salvador.

And I'd like to call to your attention that the group that just went down there to observe this election -- and we've done this every election -- but this last group, completely bipartisan and with some people who admittedly went down there with a different idea, came back and reported to me -- and you can check with any of them -- that they made every effort to view this from the standpoint of eligibility to vote right on up to the counting. And they were totally enthused and convinced that this election was fair, that the people were enthusiastically in support of it, and that they found no evidence of anything, even judging to the point of the suspected thing of the military may be influencing people. They saw only the military in protection of the right of the people to vote. They reported that they were very courteous about answering questions or directing people to where they needed to go and so forth.

They found not a thing wrong or any hint of any dishonesty or fraud in the election.

U.S.-Soviet Relations

Q. Mr. President, many observers think the Soviets have boycotted the Olympics to make a political point -- the point being that they can't do business with you, that you are a dangerous man, and thus, apparently try to hurt your reelection chances. Do you think that's their motive?

The President. I don't know. You'd have to ask them about that. But, Sam [Sam Donaldson, ABC News], I have to tell you -- a little thing with you. The other day, I had in my possession a kind of a scholarly type magazine -- I can't even give you the name of it now -- that had been given to me, dated April 1980. And on the plane over in China, I gave it to George Shultz, because I thought he would be interested. It was one of those where there are a whole series of essays in the magazine on various national and international topics. And I gave it to him, because one of the essays was on Soviet-American relations.

And there hasn't been an adjective used or a word spoken with regard to our relations now that I did not see in that article -- where the relations were at the lowest ebb they had ever been. They were frozen tight, and the President -- the then President of the United States, according to the essay, was to blame for this terrible relationship.

What have we done to the Soviets that can compare with any of the things that they are presently doing except tell them that we're not going to let them get so powerful that they can impose nuclear blackmail on us and that we are willing to meet them in arms reductions to the point of total disarmament, if they would be willing to meet in that?

Q. But, sir, if they are trying to influence our election, do you think it would backfire?

The President. I don't know how to assess that. I don't know. It might.

Q. Say, yes. [Laughter]

Q. Mr. President -- --

Mr. Speakes. [Larry M. Speakes, Principal Deputy Press Secretary to the President] That's all we have time for, Mike [Michael Gelb, Reuters].

I'm sorry. Ten minutes is up.

Q. He wants to go on.

Q. You can -- you can take the question.

Q. This is a very important question.

Mr. Speakes. How do you know?

Federal Reserve Board

Q. Mr. President, could you tell us if you think the Federal Reserve Board is responsible for the rise in interest rates and what sort of policies the Fed should be following?

The President. I've got to answer that one, Larry. And that's it then. I was -- I was going to walk out on it, but you've just asked a touchy one.

Q. [Inaudible] -- preview of the Michael Jackson -- Michael Jackson album that -- preview of that? It's a new album that's yet to be released.

The President. No. The question on the Fed is -- I think that one of the reasons for the interest rates is still a lack of confidence out there that we do have inflation under control. What we want from the Fed is for the -- we want the money supply to be increased at a range that is commensurate with the increase in the growth in the economy and that will thus make possible the continued growth of the economy without a return to inflation. So, therefore, we want no great big upsurges, nor do we want any string-tightening down to the point that there is not enough money supply in the economy.

Now, I have to say also, in behalf of the Fed, we must recognize these tools are not all that accurate that they have to work with. It is possible for there to be for limited times an inadvertent upsurge or an inadvertent decline that the Fed doesn't have anything to do with. They do as well as they can in trying to keep this projected growth.

Q. Well, are you backing off of the criticism by Secretary Regan?

The President. I think that that was what Secretary Regan was also trying to say. There was a downsurge recently. And that slump could have been -- what I say -- inadvertent. But as far as we know, they are within the two brackets. They have an upper line and a lower line, and they try to keep the increase within those lines.

Q. That was his hidden message.

Q. Are you sorry you appointed Volcker -- reappointed him?

Q. How about a glove? Have you considered a glove?

Q. Special Prosecutor, Mr. President? What about the Special Prosecutor in the Carter briefing papers?

Mr. Speakes. That's all we've got -- --

The President. Just lead off with all of your articles and reporting that the Congress should approve the funding for MX, and I'll be happy.

Q. As Michael Jackson would say, beat it. [Laughter]

Note: The President spoke at 1:01 p.m. in the Briefing Room at the White House.