Ms. Devroy. Well, we really want to do something sort of -- a little reflective, as you prepare to be -- for your second term here.

The President. All right.

Ms. Devroy. And we're going to start with some domestic things.

There seem to be some signs that you intend to stay on the sidelines and let Congress wrestle with a lot of the touchy things like the budget, Social Security COLA's, and that sort of thing, at least in the beginning of this second term. Is that your intent?

The President. No, and how that story has been concocted or what it's based on, I don't know. We're been putting in long and bloody hours on this budget matter, and in a few weeks, we will be ready. But we've keeping our people up there in the Congress posted on this, keeping them as well informed as we can of where we are, the type of things that we're talking about doing. And in a short time, as I say, in just a matter of a few weeks, we will be delivering to Congress our proposal, and we think it'll be on target with what we're trying to do for 1986.

Ms. Devroy. Well, you seem content to have the Senate Republicans write a budget, which is very different from the way you acted your first year.

The President. Well, except that those same leaders have been -- we've been in touch with them. They know what we're talking about, and, frankly, we're glad to have that as a -- and if they've got any ideas that we haven't had. But this is their version, but it's based on what we've been doing.

Ms. Neuman. And you don't feel in any sense that you have abdicated your leadership responsibility?

The President. Oh, no, no. All these lines as if, well, when the election was over I sat back and disappeared or something -- I disappeared into the Cabinet Room, where we've been having these meetings for endless hours. There wasn't anything to go out and wave a flag about until we have it put together. And then after you have it put together, you've got to allow your Cabinet officers and department heads to come in on their own and present their views as to whether we can do better or whether we've done too much.

Federal Budget and the Economy

Ms. Devroy. Despite the work that you've been doing on the budget, it seems likely from what David Stockman has said and others have said that you will go out of office as a President who presided over the biggest deficits in history. Are you resigned to that?

The President. Well, I almost have to be, although if I also go out of office with having put us for the first time in 50 years on a declining deficit pattern to where we can target a date certain that the budget will be balanced and have put us on a program that is of a permanent nature, so that that's the end of deficit spending.

You have to realize how much this has been built in. This increase is not anything that we created. This was the built-in pattern. From 1965 to 1980, this was when the War on Poverty and the Great Society really got under way and came into effect. Well, in those 15 years, the budget increased to almost 5 times what it was 15 years before. But the deficit increased to 38 times what it was before.

Nineteen seventy-four -- the Congress came up with a whole new budget plan. They were going to -- they had a new procedure. And since they did that, I don't think we've had a budget. All they do is tear apart the budget that you send up. But in those several years, from 1974 on up to past 1980, there were more than $500 billion in deficits. The pattern was set.

Ms. Devroy. Back to the first part of your -- you said if you go out of office with a date certain when the budget will be balanced, that would mitigate somewhat against all the red ink.

The President. Yes.

Ms. Devroy. What is that date? My understanding is it doesn't show up in any of the documents I've seen, not 1989 and -- --

The President. Well, what we're aiming at right now is a program in which we can project -- in other words, a 3-year program, '86 through '88, which is about all that I can be responsible for. And as I say, you can't be too certain about projections. As a matter of fact, most of the projections that we inherited were far more pessimistic than they turned out to be. We've -- --

Ms. Devroy. You are no fan of economic projections, I know.

The President. No, not at all.

Ms. Neuman. Well, in this struggle to balance or reduce the deficit, how much are you thinking about your role in history?

The President. Actually -- I know I get that question an awful lot, as if you sit over here and that's all you think about is what are they going to write in the history books. You know, the truth of the matter is, I don't think about it at all. I think about trying to get the job done. And I came here with an idea in mind of what I felt should be done, that it was time that something should be done, both on the international scene but also domestically. I'd been out on the mashed-potato circuit talking about it for three or four decades.

And so, we started in with the plan. And, as you know, the only thing that has remained constant are the pessimists. They're still around. They said the plan wouldn't work. And now that it's working, they say it won't last. Well, they were wrong the first time, and they're wrong the second time.

This is the first recovery in eight recessions since World War II that has been a real recovery based on solid principles in which unemployment has come down at the same time inflation has come down, the same time the interest rates have come down. If you'll look back in the history of previous recessions, you'll find that usually they brought about what they said was a recovery artificially. And you'd have -- well, if unemployment came down some, inflation went up. This is a recovery based on solid principles, where all these things are happening.

There were 3 years before we got here of double-digit inflation. We've now had, the last 3 years of inflation, down in the 4-percent range. The interest rate, prime rate, was 21 percent. It's now 10\1/2\. So, we're down to half of what that was. And I think we're going to see it continue to go lower. Unemployment -- 3.3 million people got jobs just in the last year. There are more people, close to 108 million people, working, more people employed than ever in the history of our country.

So, all of these, I think, are solid gains that show that what we came into office to do has been accomplished, except that it takes time. It'll have to continue.

Ms. Devroy. In referring to those, those are -- a lot of your legislative success in the beginnings of those kind of successes occurred early in your first term and then picked up, particularly the legislative area. Historically, second terms for Presidents have not been roaring successes; they sort of trickle off. What are your expectations? Do you expect to be as successful legislatively as you were the first term?

The President. I think there's a very good chance of it, because I think that the very thing you were talking about, the size of the deficits, has finally caught everybody's attention. And I think that there's a possibility that we'll see one of those moments when we forget we're Democrats and Republicans and realize that we're citizens of this country and we've got a job to do. But in other words, it's of crisis proportions. And it is based on built-in spending increases that must be altered and altered permanently.

Black Americans

Ms. Neuman. Mr. President, some people say that recovery has benefited primarily white people, that the ``We the People Inaugural'' we are about to witness is a ``We the White People Inaugural.'' Given your meeting this week with some black representatives, do you have any thoughts about how to reach out to the majority of blacks, who were not in your column?

The President. Well, I know that there are a number of leaders of various organizations that are coming forth all the time with reports that build this idea, that somehow we've relegated the black community to a second-class status. Well, that's not our intent, and that's not our practice.

First of all, of the people, since we came here, who got jobs, more than a million of them are blacks who have left the unemployment ranks. It's true, they've got farther to go. There was no question of that, that based on some of our past history and all, they're on an upward climb, but, as I say, they have further to go.

What we have done -- we have some things before the Congress that we haven't gotten yet that would be further of benefit to them. The enterprise zones program would benefit them disproportionately to others. It's been there 3 years, and we haven't been able to get it through the House. The very fact of reducing inflation has been of benefit to people who are in the lower earning scale, because it means a lot more to them. In education the number of blacks who are now getting college and university educations is far higher than it has ever been in our history.

There must be specific things. This is what we talked about with this group of very fine people who came in -- these black leaders from every kind of calling you can imagine. We have done more than has ever been done with regard to stimulating, in the small business community, entrepreneurship, businesses that are black owned. We have -- in aiding that -- we have made sure that government contracts definitely are aimed to make sure that minority-owned businesses get a fair crack at those.

Now, all of this is aimed at a problem that has been ignored by too many people in the various ethnic communities in our country -- and we have them, as you know, the Irish in south Boston and so forth. You find that their standard of living, their prosperity is based on how many times a dollar that comes in to that community by way of pay. The individual goes out to work and brings home his paycheck -- how many times that dollar turns over before it gets back out into the general economy, out of that community.

Now, in most communities, that can be up seven or eight times. And that means that's the equivalent of seven or eight dollars in the economy that it produces. In the black communities, it has been barely one. In other words, they have, in the past, been behind with having professionals and businesses that are owned and performed by blacks within their own community. When they go down to buy groceries in their own neighborhood, they're buying them from -- have been buying them from a white-owned business. Well, that is changing. And that's what we're aiming at, is to get them into this same framework -- --

Ms. Devroy. They don't seem to -- --

The President. -- -- of being able to turn the dollars over.

Ms. Devroy. They don't seem to, in general -- --

The President. They what?

Ms. Devroy. They don't seem, in general, to accept the idea that you're aiming at helping them at all.

The President. I know.

Ms. Devroy. Your -- in terms of the election, 9 out of 10, I think, black voters voted for your opposition.

The President. Mm-hmm, well -- --

Ms. Devroy. Do you think -- how would you rate that in terms of disappointments? You had said during the end of the first term that you were going to make a major effort to reach out to black voters and all voters, and it didn't seem to work.

The President. Well, maybe because they weren't told very much by some of those leaders we're talking about of what we've accomplished and what we have done.

I don't think that the rank-and-file know about minority-owned businesses and how far we've gone with that. I don't think they know about legislation that we have sent up to the Hill -- like the enterprise zones -- that has not been passed. Legislation that -- in other areas that has to do with improving their status. I don't think they know about the fair-housing proposals that we have sent up there and that, again, a Democratic majority has not dealt with.

Ms. Devroy. Have you, in recent times, or plan to sit down with some of the black leaders -- not like the ones you've been talking to -- and say, ``Why can't we communicate better? Why don't you like my policies? Why won't blacks vote Republican? What is the problem here?''

The President. I tried that in the very beginning, and I found out, very frankly, that they are so committed politically to the opposite party that they don't want to hear. And I have to come to the conclusion that maybe some of those leaders are protecting some rather good positions that they have, and they can protect them better if they can keep their constituency aggrieved and believing that they have a legitimate complaint. If they ever become aware of the opportunities that are improving, they might wonder whether they need some of those organizations.

Presidential Advisers and the Second Term

Ms. Devroy. On a personal level, as you start another 4 years with the distinction of being the oldest President in history -- --

The President. Yeah.

Ms. Devroy. -- -- are you getting tired of this job? Are you getting weary of it? Is the excitement gone?

The President. No, not at all.

Ms. Devroy. Well, it seems it is to most of your chief staff, who are all sort of going off and being replaced. The old gang is leaving -- --

The President. Oh, no, I can understand that. I can understand when you come into government, it's a little different than the private sector. Someone gives up a great deal to take an appointment in government, whether it's a Cabinet position or whatever it is. And, unlike a business, where there's the continued challenge of the profit motive and growth and so forth, yes, after a time, I can see where some of the excitement is gone in that particular job. But what we've found out here is that it doesn't mean that it's just -- that it's gone for being -- continuing to work in government or they wouldn't be taking other jobs.

When you start listing the people that are leaving, yes, a few have left, and for legitimate reasons that they -- they knew when they came that they were not going to stay endlessly. And I said in appointing them, from the very first, I said, ``If these people that I've selected and want to come to government, if they can only come for a year or two, fine, I'll take them and then get someone else if they have to return to their private lives.''

But when you have someone that goes from one position to another -- we found that out in California when I was Governor, even with some of the permanent staff of government, that we took people that had been 20 years in jobs, and we did switch them with other people. And you'd be surprised. The first protest was, ``I'm -- this is my -- I've been doing this for 20 years. What do you mean I've got to go over here?'' You'd be surprised: Before the next 6 months was over, after those changes, you never saw happier people in your life, more excited, where they'd found a new challenge. They were asking questions in the new position, of saying, ``Well, why are you doing it this way?'' And when someone -- ``Well, we've always done -- '' Well, they say, ``Well, why don't we do it this way?'' Well, the same thing happens with these appointees.

Ms. Neuman. But, Mr. President, the question is -- --

Ms. Devroy. But that's not going to happen with you.

Ms. Neuman. -- -- are you still excited?

Ms. Devroy. I don't think they're going to let you switch with George Bush, for example, and I don't think you want to. So -- --

The President. No, not as long as I stay healthy. [Laughter]

Ms. Devroy. And you expect to, I presume.

The President. Yes. No, I think the difference is in here, as I say, I had a reason that compelled me to do this. And as long as the challenge is still there -- and it still is -- as I said earlier, the job isn't finished. So, no, I'm just -- --

Ms. Devroy. You must have a different feeling starting a second term, though, compared to the excitement of the first one. You brought a Republican Senate with you. There were all these signs of major changes. During the second campaign, it was, ``I'm going to keep doing what I'm doing.'' and that -- --

The President. Yeah.

Ms. Devroy. Can that be as exciting?

The President. Yes, it is, because, as I say, we've got a great start. If you really look at the whole tone of government today and what was being debated in government up until 4 years ago, about cost -- or programs, and this new program, and let's spend money over here in doing this -- the whole debate now has turned around to how much should the rate of cutting be and what should we cut. No one's talking about new programs and spending more money by government. No one's talking about more authority in the Federal Government. We're adjusting and giving back to local government and to State governments authority that the Federal Government should never have taken from them in the first place.

And then I have an experience, a previous experience that makes this exciting. As Governor of California, most of our great accomplishments came in the second term. The great welfare reform that was different than anything that's ever been accomplished in this Nation took place in the second term.

Ms. Neuman. But having conquered the agenda, you don't feel a little of the thrill of the chase is gone?

The President. Oh, no, no, because, as I say, it's -- no, if you walked away now and someone else came in with a different view, all of this could be unraveled. The idea is to get it clinched and in place, that we can then have an amendment to the Constitution that says hereafter the Federal Government cannot borrow money, it must stay within its means, have an economic recovery that is based on sound principles to where the people have accepted that if the government takes too much money from the private sector, you have these recessions that we've been having for 50 years.

Ms. Devroy. Let me jump to foreign policy quick before -- --

Principal Deputy Press Secretary Speakes. Yes, let's make this -- one more because -- --

Ms. Devroy. Oh.

Mr. Speakes. -- -- we've got the Vice President coming in, Mr. President, to join you for lunch.

The President. Oh.

Strategic Defense Initiative

Ms. Devroy. Quick on foreign policy, then. At this point are you so committed to the Star Wars defense or the -- I'm sorry, the SDI initiative, that you'd be willing to go out of office not having achieved any arms control if the Soviets won't move on the other two?

The President. Well, I don't think -- I don't look at it as that -- that that is a possibility. I think when they actually see this -- and the very fact that at Geneva we successfully put it there as one of the things that's going to be negotiated -- you see, when they're talking space wars and so forth, they're talking about some things where they're even ahead of us, and that is having nuclear weapons in space that can shoot down at us. We're not talking about anything of that kind.

We're talking about research to see if there is not a defense that can be built that doesn't kill people, kills weapons, that can keep the weapons from coming to your shores, if there is such a thing. And I would hope that they would work on such a thing. If you can have that, then the very thing that they themselves have said they want, an elimination of these weapons, becomes more than just possible.

Ms. Devroy. How important is actually signing an arms control agreement with the Soviets to you, in the sense of an accomplishment, a record-book accomplishment?

The President. I don't believe, since research is contained in the ABM treaty today, I don't think that this is going to cause a walk-away from the table. And if it is, then they never meant to come to the table to begin with.

But let me point out something that they'd have to consider. Suppose we could succeed in getting down to the point of elimination of nuclear weapons. But we know how to make nuclear weapons, and if down someplace in the future there should come a time of strain and stress, who would know if somebody -- they would have to think maybe we were doing -- we could think that they were doing -- somebody say, ``Hey, maybe let's get a few of these things ready for use,'' and who would know that they were doing it? But, if in the meantime, our technology has made it plain that there is a defense against such things, then you have guarded against that ever happening in the future.

It's the same thing, in other words, as when at Geneva, after World War I, we outlawed chemical weapons, gas, poison gas, but our soldiers on both sides -- all sides -- were also still equipped with gas masks. And we find today -- because why? Because people have, knowing how to make it, have continued to make it or started in to make it again. Well, the same thing with the nuclear weapons.

You see, the point is, all we're asking for is the research. And we have said to them that if such a weapon -- if that research is fruitful and if such a weapon is developed, we're not going to keep it a secret. And we'd be very happy, then, to sit down with them and say, ``Hey, now let's look at the situation here.''

Mrs. Reagan

Ms. Neuman. Mr. President, I wanted to ask you a quick question about -- --

Mr. Speakes. Mr. President -- --

Ms. Neuman. -- -- the influence -- --

The President. Yes.

Ms. Neuman. -- -- of your wife on your policies.

Ms. Devroy. You've got to answer Nancy questions. [Laughter]

The President. The influence that I think any wife has on a husband, if you've got a happy marriage, and we do have one. This whole thing as if -- you know, that's one thing -- may I just say -- may I voice a frustration?

Ms. Neuman. Please.

The President. It's not only my wife, it's everyone -- this picture that is being created that I sit at the desk and wait to see who's going to grab this arm and pull me this way or grab this one and pull me that way. You know something?

Ms. Neuman. What?

The President. I'm too old and stubborn to put up with that. I make up my mind, and I do -- I listen for counsel and advice. I want to get expertise from people that are expert in various fields. But I haven't changed my views since I've been here.

And with Nancy, yes, we've been married for 30-odd years, and of course we talk, and of course she has opinions. And I listen to her opinions. And sometimes we argue about them, and I don't listen. But sometimes -- well, as I say, we get along, and I find myself going home and, I think like every other happy husband, telling them what the day was like and what we did and all.

Ms. Neuman. What'd you last fight about? [Laughter]

The President. No, not ``fight.''

Ms. Neuman. Argue, I mean.

The President. Argue. Maybe I should have put that, ``discuss and debate.'' [Laughter]

Ms. Neuman. Okay.

The President. I just want to point that we, you know, like any other human beings, we don't always see eye to eye on something of that kind. But it doesn't make any dents in the marriage.

Ms. Neuman. Thank you, Mr. President.

Ms. Devroy. So they're going to let Reagan be Reagan this second term?

The President. They've never done -- --

Ms. Devroy. You must be tired of that phrase.

The President. Yes. They've never done anything else.

Ms. Devroy. Thank you for spending the time with us, Mr. President.

Ms. Neuman. It was a pleasure.

The President. I think part of that is that I don't think there's ever been a Cabinet system here like we have. I may be wrong, but my impression of previous Cabinets is that they'd meet periodically in regular meetings, and they would report to the President what they were doing in their departments. Well, in California, I decided to -- [inaudible] -- system and brought it here. They're like a board of directors meeting, and they don't have to keep their mouths shut about somebody else's area or agency's department.

The only difference between them and a board of directors is you don't take a vote. When I've heard on all sides the discussion and debate, I make the decision.

Note: The interview began at 11:31 a.m. in the Oval Office at the White House. The interview was released by the Office of the Press Secretary on January 18.