The President's News
Conference
The President. Well, it just seems
like yesterday. [Laughter] Well, please be seated.
And
I would like to start with a statement here. I'll start by saying it sure is
good news to have
Stock
Market Decline
Over
the past several days, though, we Americans have watched the stock market toss
and turn. It's important that we understand what is happening and that a calm,
sound response be the course we follow. While there were a couple days of gains
after several days of losses, we shouldn't assume that the stock market's
excess volatility is over. However, it does appear the system is working. So,
while there remains cause for concern, there is also cause for action. And
tonight I plan to take the following steps to meet this challenge.
First,
I will meet with the bipartisan leaders of Congress to arrange a procedure for
deficit reduction discussions that will be productive and constructive. I'm
appointing my Chief of Staff, Howard Baker, and my Treasury Secretary, Jim
Baker, together with my OMB Director, Jim Miller, to lead the White House team.
And I urge Speaker Jim Wright, Senate Majority Leader Robert Byrd, Senate
Minority Leader Bob Dole, and House Minority Leader Bob Michel to appoint their
representatives so this process can begin immediately.
Second,
I'm putting everything on the table with the exception of Social Security, with
no other preconditions, and I call on the leaders of Congress to do the same.
This situation requires that all sides make a contribution to the process if it
is to succeed and that a package be developed that keeps taxes and spending as
low as possible. I'm able to announce tonight the final deficit figures for fiscal
year 1987, which show a reduction from $221 billion in fiscal year '86, to $148
billion this year, or a deficit reduction of $73 billion. This change occurred
not only because of a one-time improvement in revenues but because of reduction
in spending.
Third,
I'm calling on the Members of Congress to join with me in sending a strong
signal to our economic partners that trade markets should remain open, not
closed, and that
And
fourth, I'm creating a task force that over the next 30 to 60 days will examine
the stock market procedures and make recommendations on any necessary changes.
Heading up this three-person team will be former Senator Nick Brady.
When
we faced challenges before, this country has resolved them by pulling together,
and now is the time for all of us to take a good hard
look at where we stand as a country and as individuals. Adjustments can and
will continue to be made to keep this country on the path to fiscal prudence
and continued economic strength. And now, Terence [Terence
Hunt, Associated Press]?
Q.
Mr. President, the stock market plunge demonstrates that there is a crisis of
confidence about economic stability and the leadership of our government. Are
those fears warranted, and how serious is the threat of a recession or
something worse?
The President. Well, first of all, the
indices, the index that is used for judging whether we're sound economically
and so forth, has been up and increasing 10 of the last 11 months. And with the
great employment that we have, with the fact that we have reduced that
double-digit inflation, and the prosperity that is ours out there, the one
thing out of such a happening as the stock market that could possibly bring
about a recession would be if enough people, without understanding the
situation, panicked and decided to put off buying things that normally they
would be buying, postponing purchases and so forth. That could bring on
something of a recession. It's happened before.
But
I don't think that there's any real reason for that. I think that this was a
long-overdue correction, and what factors led to its kind of getting into the
panic stage, I don't know. But we'll be watching it very closely. I approve
very much of what the exchange is going to do with regard to the next 3 days
that trading is going on, and quitting 2 hours early to give them a chance to
catch up with their paperwork, which is the reason for that. But this is I
think purely a stock market thing and that there are no indicators out there of
recession or hard times at all.
Deficit
Reduction and Taxes
Q.
Let me ask you sir, also, why did you change your tune on tax increases from
``over my dead body'' to ``keeping any increase as low as possible''?
The President. Well, I am going to
meet with the leaders of the Senate, because it is high time, after about
6\1/2\ years of trying -- on my part, I know -- to bring down the deficit and
get us on a path which the Gramm-Rudman-Hollings bill was supposed to do for us
toward a balanced budget. And if that was any factor in shaping peoples'
confidence, I'm going to meet with them. Now, they will have an agenda. They
will have their program. But I have mine.
Now,
I submitted a budget program early in the year, and as they've done every year
I've been here, they've simply put it on the shelf and have refused to even
consider it. But my program had $22 billion of additional revenues in it. I've
said additional revenues. There are other things you can do that are not a
deterrent to the economy, such as taxes can be. But what I've said was, all
right, I'll listen to them and what they have in mind as an answer to this
problem, but I expect them to listen to what I have in mind. And the bulk of
these $22 billion have nothing to do with taxes. As a matter of fact, I could
claim that we have about $5\1/2\ billion of that $22 billion already. And the
Congress has said I can't use it for lowering the deficit -- that is the sale
of assets and debts that we have accomplished just in recent weeks.
Q.
Mr. President, your
The President. Helen [Helen Thomas,
United Press International], I don't think that we miscalculated anything at
all. We're not there to start a war. And we're there to protect neutral nations'
shipping in international waters that under international law are supposed to
be open to all traffic.
They,
on the other hand -- the irrationality of the Iranians -- they have taken to
attacking, as they did with this most recent incident -- that was Kuwait and an
oil loading platform offshore, which they fired, evidently, a Silkworm missile
at and caused damage to it. We've said that if attacked why, we're going to
defend ourselves. And we're certainly going to continue this task. And we've
now been joined by a number of other nations in keeping the sealanes
open. But I don't see it as leading to a war or anything else. And I don't
think there's anything to panic about. I think we've done very well.
War
Powers Act
Q.
Mr. President, you've said you don't think the War Powers Act is
constitutional. But do you think that you have the right to obey the laws that
you pick and choose?
The President. Well, other Presidents
have thought so, too. As a matter of fact, we are complying with a part of that
act, although we do not call it that, but we have been consulting with the
Congress, reporting to them, and telling them what we're doing -- and in
advance, as we did with this latest strike. But they have other things in there
that we think would interfere so much with our rights and our strategy and so
forth.
Let
me point out that since 1798 there have been a few more than 200 military
actions by the
Yes?
Deficit
Reduction and Taxes
Q.
Mr. President, despite your earlier answer, it's been made clear by you and
your aides that new taxes are a possibility as you go into these negotiations
on the Hill. And many of us are wondering. In 1984 you promised not to raise
taxes, and you may recall that same year Walter Mondale said that it was time
to level with the American people. He said Mr. Reagan and I will both raise
taxes, but the difference he said was that you wouldn't tell anybody. Now,
aren't you going against your own campaign pledge if you're about to negotiate
some new taxes?
The President. No. And you have me in
a spot in which I don't feel that I can continue discussing these things or
future actions. Because for about a quarter of a century I was doing some
negotiating for a union against the employers, and you don't talk in advance
about strategy or about what you will or won't do, or there's no point in
having negotiations.
So,
I just want to tell you that when we negotiate I'm going -- as I say, on my
side, I've got $22 billion. Now, $23 billion is all we're looking for in a
reduction. And most of mine, as I say, are revenues that are not taxes and all.
But let me also point something out that I think all of us ought to understand:
why I feel so strongly about the tax situation, and
resorting to taxes to curb a deficit when they'll do nothing of the kind.
In
all these years, of these 59 months of expansion, our tax revenues -- now I
believe that this expansion we are having is largely due to the tax cuts that
we implemented early in our administration -- but for all this period of time
the percentage of revenues is about -- well, it's about 19 percent every year
of the gross national product. Now, the gross national product has been
increasing in size quite sizably. So that if we are getting revenues that are
still 19 percent of that larger gross national product than the smaller, it
would indicate that the revenues are sufficient. But the problem is that the
deficit is -- or I should say, wait a minute, the spending I should say of
gross national product -- forgive me -- the spending is roughly 23 percent to
24 percent, so that it is what is increasing while revenues are staying
proportionately the same and what would be the proper amount that we should be
taking from the private sector. And I think that this is something we have to consider
if we are going to maintain prosperity.
I
will say this with regard to taxes and our sources of revenue: They must not be
something that has an adverse effect on the economy.
Q.
To follow up on that, Mr. President, do you consider some taxes perhaps less
harmful than others? Perhaps sin taxes -- alcohol, tobacco? Are they less
harmful to the economy than perhaps an income tax increase?
The President. Well, let me just say
that there are some taxes, such as the income tax, that have a more definite
effect on the economy than some other taxes; but I am not going to discuss
anymore of what we are going to do in this.
Q.
Mr. President, let's stay on this if we can. On Monday you said despite the
plunge in the stock market that the economy was sound. On Wednesday you said it
had turned around. Now, today you are ready to meet with the Congress. What has
caused this transformation after months of refusing a budget summit?
The President. No, I haven't been
refusing. I submitted, as I have to every year under the law, a budget. And a
budget that provided for revenues, as I pointed out here. And the Congress
wouldn't even look at it. And the manner in which we arrive at our budget is so
much different than anything the Congress does.
We,
with the men and the women who have to run the programs -- that are the heads
of the Departments and the Cabinet members -- we spend weeks and hours every
day, for a long period of time, with them and their expertise in running them,
deciding how much money they require to perform the task that the Congress has
imposed on us with that program. Then we send that up to the Hill. And those
Congressmen -- who don't have any idea about running those programs, they just
voted to pass a program to do a certain thing -- they turn around and say oh,
no, you need millions of dollars more to achieve the objective than you've
asked for.
Well,
I think it's kind of a stupid setup. And this is what we've been trying to do
for a long time -- is arrive at the ways in which we can reduce spending and so
forth. But now, with the Gramm-Rudman-Hollings program, with the sequestering
provision that has been passed, we have to get together and make a decision.
Q.
If I could follow, sir, I'm wondering if it took a crisis to bring you to the
point where you were willing to meet with Congress and whether, if you had met
before, you might not have in some way averted the market crisis this week.
The President. No, I think it's been a
crisis ever since I presented a budget and that they never will even look at
them. If they had looked at our budgets, last year the cumulative deficit would
have been $207 billion less than it turned out to be.
Trude [Trude Feldman,
Trans-Features]?
Q.
Back to the Gulf, Mr. President.
The President. Yes.
Soviet
Role in the
Q.
What kind of cooperation are you getting from the Soviets in restoring some
stability to the Gulf and in ending the Iran-Iraq war?
The President. Well, the
But
they have been cooperative, and they did go along on the resolution.
Q.
May I follow up? Are you finished?
The President. Yep.
Q.
And what are the prospects for a peace conference under joint U.S-Soviet
sponsorship?
The President. Oh, well, we had
thought, in going along for a long time with the others that believed that the
Arab nations were still technically in a state of war with
Q.
Meaning Mr. Shultz.
The President. Yes.
Q.
Mr. President, earlier this week, the
The President. Well, the Ayatollah is
in a war, and if he's going to go on with provocative acts against us or anyone
else, then he's running a great risk, because we're going to respond. We're not
going to sit there. And we have to feel that, on the basis of everything he
said and everything he's done, that if we did not retaliate as we did recently
he still would have done again what he did the first time. We're going to try
to point out to him that it's a little too expensive if he's to keep that up.
Q.
Mr. President, if I could follow up: When this whole operation started, the
The President. No, I can't tell you
how long that will, but I can tell you that I believe we're just the same as --
we have a fleet in the
The
Nation's Economy
Q.
To restore public confidence in the economy, do you think it would be a good
idea for you to urge more banks to lower their interest rates, as a couple have
done this week?
The President. Well, I think they have
done that on their own, and I think it was a very wise thing to do.
Q.
What about business? Do you think that businesses should lower some of their
prices and take a little bit less a profit to encourage more sales --
[laughter] -- to keep this economy going?
The President. I'm not going to make
suggestions like that to them. I think that's up to them. And as I say, there
are no signs of deteriorating economy out there in the economy. We have the
highest percentage of the potential work force at work -- employed today --
than we've had in the entire history of the
All
right, Sam [Sam Donaldson, ABC News].
Deficit
Reduction and Taxes
Q.
Mr. President, I've listened to what you've had to say tonight, and it's still
not clear to me that you will accept and agree to a budget compromise package
that contains higher taxes. Will you?
The President. Sam, as I've told you,
I can't discuss in advance what I will or won't do, but I'm going to tell you I
have not changed my opinion about ever accepting a tax that will have a
deleterious effect on the economy. And most tax increases do.
Taxing
is not the policy with -- or the problem with the deficit. The deficit is due
to too much spending. Every dollar of increased revenue since 1980 -- and that
means including our tax cuts -- every dollar of increased revenue has been
matched by $1.25 of increased spending.
Q.
Sir, you feel very strongly about this, obviously.
The President. Yes.
Q.
You've been one of the leading proponents of supply-side economics. What went
wrong?
The President. What went wrong with
what? Supply-side economics?
Q.
Why are we in the economic mess that we are in today?
The President. Because
for more than half a century that was dominated entirely by the Congress of --
both Houses of the Congress by one party. They have followed, beginning
with what they call the Keynesian Theory, deficit spending -- openly deficit spending
on the basis that they claimed that it was necessary to maintain prosperity,
that you had to do it, and it wasn't hurtful, because we owed it to ourselves.
And some of us said year after year that this would keep on to the point that
it would get out of control. And it has, just as we said it would. And they've
got to give up that belief in that. I think I'd like to point out to them that
Maynard Keynes didn't even have a degree in economics.
Q.
The Democrats -- --
The President. What?
Q.
It's the Democrats who did it?
The President. Well, you can look up
and see who dominated both Houses of the Congress for the last 50 years.
Q.
Mr. President, you've taken great delight, in your appearances over the last 6
months or year, in saying that there will absolutely be a veto of any tax
increase that reaches my desk. You've said that in a number of different ways.
Now, in light of the crisis on Wall Street this week, are you going to stop
saying that, sir?
The President. You're all trying to
get me into saying what am I going to do when I sit down at the table with the
other fellows. And I'm going to tell you that I'm going to do what I think is absolutely necessary for the economy of the
Q.
Sir, but it sounds like you're still basically opposed to any increased
taxation, whether you call it revenue increases or tax increases.
The President. No, there are many
sources that we've pointed out. I'm in favor of a number of pay for services --
that there are some things that government does for, say, a particular group of
people, a service that's performed. I don't think that the taxpayer should pay
for that service when it is limited to one particular group. They should pay a
fee for that service.
Q.
Are you still against tax increases?
The President. They'll find out when I
sit down there.
Q.
Mr. President, while your budget talk has been conciliatory over the past few
days and a bit this evening, earlier this week you flatly blamed Congress
again, out on the South Lawn, for the deficit. Doesn't the White House equally
share in this mess?
The President. Well, just a minute.
The President of the
No,
the Congress is the one that's in command, and we have to persuade them that
what we've asked for is enough to support the programs as determined by the
people who work those programs and who run them. And every budget that I've
sent up there has been put on a shelf, and I've been told that it's dead on
arrival. And then we are faced, someplace after the first of the fiscal year,
with a continuing resolution containing 13 or so appropriation bills. And I
think that I was perfectly justified in saying that a President is not
responsible for this. You can go back all the way to 1931; we've been running
deficits.
Q.
Mr. President?
The President. Yes, wait just a -- --
AIDS
Commission
Q.
There's been dissension and disarray on your AIDS panel. Even Cardinal
O'Connor, one of the most prominent members, has said that he thinks perhaps
his time should be better spent working against this plague on the local
levels. What are you going to do about this?
The President. Well, a couple who've
quit -- we're going to replace them. We've appointed a new Chairman of the
Commission. We think that it has to have a variety of skills, because it's a
very complex problem. So, we have as much representation as we can get from the
business community, from medicine, from education, and so forth. And we have
two vacancies to fill. And I'm still hopeful that we'll learn something and
find out if there are more things and better things that we can do with regard
to this terrible plague.
We
have spent more money every year -- increased -- on AIDS. And next year --
well, in the present fiscal year, now that October 1 has passed, we'll be
spending over $1 billion on AIDS. And I think we need a Commission, someone to
help and advise us on how best we can spend that money.
Q.
Do you believe, sir, that the panel will be able to finish its report on
schedule?
The President. I'm hoping that they
can and have to assume they can.
Now,
this gentleman here, I --
--
Canada-U.S.
Free Trade Agreement
Q.
Yes, Mr. President, back on the economy and trade: Your comments tonight on trade:
Many economists think that one quick, sure-fire way to give the economy a big
boost would be to create, in effect, a Common Market for
The President. Oh, you bet that I'm
behind it. The problem is right now there's a Parliament in
Q.
Well, sir, to follow up: Would you be willing to go back to
The President. I'm not sure that I
could do any better with foreign legislators than I'm doing with our own.
[Laughter]
Andrea [Andrea Mitchell, NBC News]?
Strategic
Defense Initiative
Q. Mr. President, now that an INF deal is all
but wrapped up, the next step would be strategic weapons. The Soviets have said
that they are willing to give you the big cuts in those missiles that you've
always wanted if you would agree to some limits on strategic defense testing.
Now, a lot of experts have said that that would not require slowing down the
program for the foreseeable future. Why have you told your negotiators that
they cannot even discuss this issue with the Soviets?
The President. Because
if you put it on the table as a bargaining chip, then it becomes a bargaining
chip. And we have said that this, a real defense against nuclear
weapons, can be the biggest factor in hopefully one day making those weapons
obsolete, because I heard my own words come back to me the other day from Mr.
[Soviet Foreign Minister] Shevardnadze, when he said to me what I've said a
dozen times in some of the parliaments and legislatures of the world: A nuclear
war can never be won and must never be fought. And the best way to ever bring
that about is to perfect this plan, which we think can be perfected, and then
be able to say to the world here is a defense against nuclear missiles. And
we'll make it available to the world in return for the world giving up nuclear
weapons.
Soviet-U.S.
Q.
Well, with the likelihood, then, at least of a summit here in the
The President. Oh, Andrea -- --
Q. -- -- that would affect superpower relations?
The President. Andrea, we don't have a
word yet or a date yet as to whether he's coming. We have a belief that this is
going to take place, and I want it to take place very much. But also I hope
that when it does that -- he's never been to this country before -- that he
would have time to see a great deal of America. And I think it would be good
for him to see this and to see things that he couldn't accuse us of staging
them for him. Let him see it.
Now,
yes, I've thought about -- knowing something about the quarters that they have
for beach homes in the summer and so forth -- I've thought it would be kind of
nice to invite him up to our 1,500-foot adobe shack that was built in 1872 and
let him see how a capitalist spends his holidays.
Robert
H. Bork
Q.
Well, comment on the Bork confirmation. You said, ``If they reject him, I'll
give them someone they will dislike just as much.'' That seems a defiant
statement. Both you and the Senate have fulfilled your constitutional duty. The
people exercise their democratic privileges by expressing their opinion. The majority of the Senators rejected Judge Bork, and according to
the polls, the majority of the American people. So, while it appears
your defiance was aimed at the Senate, weren't you, in reality, defying the
working of democracy in
The President. I think that this
selection of a judge -- and what you were referring to as democracy -- I think
was totally out of line with what the procedure should be. We were not electing
a political figure that could then be turned out of office by someone's votes
-- and for the first time in history, to go out and have private interest
groups of various kinds pressuring individuals to vote a certain way on this.
What I meant was that I will try to find, if he is turned down when they vote
-- and we have had the testimony of some of the greatest minds in the field of
law in the United States, and including the former Justice and all as to his qualifications
-- I will try to find somebody that is as qualified in the same way that he is.
I
think that this thing was politicized, and I think that Judge Bork was one of
the first ones that said, regardless of what happens to him now, we must all
make sure that never again does this process that has been so dignified as a
confirmation by the Senate of an appointee of the President turned into a
political contest, as if people were voting on it. And I think if you would
compare the qualities of the people who testified for him -- and their
qualifications, I should say, not quality -- I think they were far superior
than most of the people who were against him.
Q.
You said it was politicized. It wasn't politicized from the beginning because
of the fact that I remember about 2 years ago when Senator Paul Trible asked the Black Bar Association of Virginia to
recommend a black person for a Federal judge. And I quote from Senator Paul Trible's letter; he said: ``Recommend someone who shares
the conservative philosophy of President Reagan.'' And it's pretty hard to find
a black -- you know -- [laughter] -- who shares it. [Laughter] And so, and then
you said again that you had pressure interest groups. Isn't that what happens
in
The President. Well, if it was to be that
way, then we would have early on decided you would elect judges by public vote.
And they decided that that was probably not the way to get those with the best
qualifications.
But
on the racial question, I realize that there are some who believe that somehow
I have a prejudice in that way and am a racist. And that is one of the most
frustrating things to me, because I was on the other side in that fight long
before it became a fight. And I would like to point out that the head of CORE,
the Committee on [Congress of] Racial Equality, was one of the witnesses
testifying on behalf of Judge Bork.
Note: The President's
42d news conference began at