President Reagan's opening statement and excerpts from his news conference yesterday:
[From] the day our administration took office, our top priority has been to rescue this economy from years of government mismanagement. We inherited the highest interest rates since the Civil War, the first back-to-back years of double-digit inflation since World War I, rising budget deficits and a national debt ready to break through the trillion-dollar barrier.
For years, government spending and taxation have grown faster than the underlying economy. The American people elected us to reverse that trend and that's what we've begun to do. Our program has only been in effect for some 40 days. And you can't cure 40 years of problems in that short time.
But we believe we've laid a firm foundation for economic recovery in 1982. We said we would cut taxes, and we've enacted the biggest tax reductions in history. And let's remember those reductions will barely offset the built-in tax increases already scheduled between now and 1984 that were adopted in 1977.
We slowed the growth of federal spending. We cut the growth of regulations by a third. Interest rates and inflation are both heading down. Our reforms can stimulate new savings, new investments, new jobs and a new America.
But one condition must still be met. This government must stiffen its spine and not throw in the towel on our fight to get federal spending under control.
The budget savings, despite all the talk of austerity, have been accomplished without sacrificing necessary government functions and services. Even with the $35 billion cut so far, federal spending is still rising far too rapidly. The federal budget has doubled since 1975, tripled since 1970.
Who can honestly look Americans in the eye and tell them spending is under control? Fiscal '82 is already five weeks old, but I have not received a single regular appropriations bill. Most of the bills pending are over budget.
It is imperative that the Congress meet its own spending target and move quickly to pass appropriation bills or a second continuing resolution that fits our Sept. 24 request.
I stand ready to veto any bill that abuses the limited resources of the taxpayers. It's ironic that those who would have us assume blame for this economic mess are the ones who created it. They just can't accept that their discredited policies of tax and tax, spend and spend, are at the root of our current problems.
We will not go back to business as usual. Our plan for economic recovery is sound. It was designed to correct the problems we face.
I am determined to stick with it, stay on course, and I will not be deterred by temporary economic changes or short-term political expediency.
Q. You have issued statements on limited nuclear war. State Department memos, interviews have all hinted at possible intervention against Qaddafi, Castro. A high state of belligerency seems to personify your foreign policy, and people say it's in disarray. My question is were you misunderstood on the question of nuclear war? Are we going to intervene in the Caribbean or anywhere else? Are we going to provide a military shield for Egypt if it goes into Libya?
A. I would be just as disturbed as you are and just as confused by some of the things that I've been reading about our supposed foreign policy. Let me say that that statement that started the whole thing with regard to the possibility of the spread of nuclear war, I can't say that it was misunderstood.
I don't think it was misunderstood by the editors who were in the room . . . . I made a statement that I've made a number of times . . . . it was an explanation of the whole strategic concept and then, evidently, hearing it secondhand because it wasn't written by anyone . . . in that room to my knowledge, it appeared in an entirely different context.
And we could go back and get the transcript of what was actually said, and I would stand by that.
We have no plans for putting Americans in combat any place in the world and our goal is peace. It has always been and, at the end of this month, we will go into negotiations with the Soviet Union on what I hope will be reduction of the theater nuclear weapons in Europe to the lowest point possible.
Q. Are you repudiating those memos . . . publicized in connection with Libya and the Caribbean?
A. We are interested . . . in the Caribbean. This is why we've been helping El Salvador because we believe that revolution has been exported to that area and with design.
Again, as I say, our economic help to El Salvador is three times the military assistance we're giving, and that military assistance is not in the nature of combat forces of ours, nor do we have any plans to make it that way. But, yes, we continue our interest in preserving the Americas from this kind of exported revolution, this expansionist policy that is coming by way of, I think the Soviet and the Cubans.
Q. With the budget deficit continuing to grow, have you decided are you going to try to raise taxes in some way in '82, '83 or '84, or are you going to seek further budget cuts? And, also, now having said that your promise of a balanced budget by '84 can't be met, when do you expect to see a balanced budget, and what assurances do we have that this time it can be met?
A. With the uncertainty of when we can bring ourselves out of this recession which, I think, will take place in the first half of '82, I would hesitate to try and make a specific--set a date or an amount with regard to budget deficits or when a balanced budget would take place.
That is still our goal. That has to be our goal. Government has to return to staying within its revenues. Our goal remains the same . . .
I don't think, however, that just the balancing of a budget could justify any means to attain it. You could always balance a budget if you put it on the backs of the people with tax increases.
I don't favor that at all, because every time you do that you find that it's like getting addicted to a drug, because of the very fact that those tax increases then reduce the prosperity and the productivity of the nation further, and you find that you need more of the same and more of the same.
You'll reach a point of no return. The reduction of government spending is the answer . . .
Q. You mentioned El Salvador and its importance . . . to the United States and this region. Yet the El Salvador government is rapidly losing ground, and guerrillas already control almost one-fourth of the land there. How far will the United States go to keep the Duarte government in power?
A. Well, first of all, let me say that there's some disagreement, a great deal of disagreement, about who is mostly in power or what the guerrillas might control. We have been urging and hopefully cooperating with a solution that would lead to an election and settle this dispute by peaceful means.
It is true the guerrillas have switched their tactics now. Unable to win a military victory, they have switched them to hit-and-run tactics against the infrastructure of industry and the economy, trying to bring down the government by destroying the economy. But I don't believe that we could accept without question that they are--there may be something of a stalemate in the inability to bring about a quick military solution to this, but we would prefer the other.
How far are we prepared to go? As I've said, we're giving economic aid. I think we should continue to do that. I don't believe this requires in any way, nor have we considered, aid of the kind of actual military intervention on our part.
But we are hopeful, still, that with the help of some of the other neighbors in Central America who feel as we do that we can bring about the idea of an election and a peaceful settlement.
It is true about one thing, it cannot be denied--the guerillas, with their terrorists tactics in El Salvador, have failed miserably in an attempt to bring the population over on their side . . .
Q. In your exchange with the editors, I happen to have the transcript. I'd like to read you what you said. You said, "I could see," you said, "where you could have the exchange of tactical weapons against troops in the field without it bringing either one of the major powers pushing the button."
Then, Secretary Haig last week talked of the possibility of a nuclear warning shot as part of NATO's contingency plan.
I would like to ask you, first, if you endorse still what you said to the editors and, second, if you believe that the nuclear warning shot should be a part of NATO's plan.
A. I have not been a party to the contingency planning of NATO that has gone on now for approximately 30 years and which, I think, has proven itself a deterrent to military action in Europe and for all this period of time.
What you've just quoted that I said there, the discussion was in the area of and, I suppose, it's hypothetical where you're talking about is it possible to ever use a nuclear weapon without this spreading automatically to the exchange of the strategic weapons from nation to nation.
I gave as what I thought was something that was possible that the great difference between theater nuclear weapons, the artillery shells and so forth that both sides have, but I could see where both sides could still be deterred from . . . exchange of strategic weapons if there had been battlefield weapons, troop-to-troop exchange there.
I think it's--there's high risk, there's no question of that.
I think the thing we have to recognize and why our goal must be to seek peace is what someone said the other day, "If war comes, is any nation--would the opponents, faced with inevitable defeat, take that defeat without turning to the ultimate weapon." And this is part of the danger and why we're going to pursue arms reductions as much as we can and do what we can to insure peace.
And I still believe that the only real insurance we have with that is deterrent power.
Q. Could there be a nuclear warning shot? And I take it that you do endorse what you said in the context that you said it.
A. I endorse only that I said it was offered as a possibility, and I think you'd have to still say that that possibility could take place. You could have a pessimistic outlook on it or an optimistic. I always tend to be optimistic. Your other question?
Q. Nuclear warning shot?
A. . . . There seems to be some confusion as to whether that is still a part of NATO strategy or not, and so far I've had no answer to that.
Q. I wonder if there's any portion of the Saudi eight-point peace plan that could be incorporated in the American peace initiative or that could be added on to the Camp David accords?
A. . . . I know that there's also some dispute about what I'm going to say between the parties concerned, but I believe and I have stated previously that I believe that it's implicit in the offering of that plan recognition of Israel's right to exist as a nation. And this has been one of the sticking points so far, with the Arab world refusing to make that acknowledgement.
This is why I have referred to it as a hopeful sign, that here was an offer of a plan, whether you agreed with it or not, but indicated a willingness to negotiate, which it does imply.
The other point in the plan is that one of the eight points calls for all of the states of the region living together in peace, and I think we all endorse that . . .
Q. While you have made no decisions yet on your entitlement cuts for 1983 and '84, what is your feeling in principle about the cuts that have been proposed to reduce Medicaid and Medicare benefits and to also force welfare mothers to go out and seek jobs? Does that mean that the social safety net is really in tatters?
A. No, it isn't. And the main goal of any of these reductions is still aimed at correcting those abuses that come about through the interpretation of regulations to allow people who do not have real need that justifies their imposing on their fellow citizens for sustenance, for them to still be able to take advantage of these programs.
The person with real need we still want to help.
At the same time, when you say to force someone to go out and seek work, I think that the whole target of some of our social reforms like welfare always should have been to find a way to salvage those people and make them self-sustaining instead of perpetuating them unto the third and fourth generation as wards of the government. And let me just give an example here of the type of thing that goes on that has to be corrected.
We just recently received word of a little girl who has spent most of her life in a hospital. The doctors are of the opinion that if she could be sent home and receive her care at home, it would be better for her since spending most of her life there and away from the home atmosphere is detrimental to her.
Now, it would cost $1,000 a month for her particular ailment to send her home. Her parents have no way that they can afford that, and the regulations are such that Medicaid now cannot pay for that if she goes home.
The alternative is, Medicaid continues to pay $6,000 a month to keep her in a hospital when the doctors say she would receive better treatment and be better off at home, but her parents can't afford to have her taken off Medicaid.
Now, by what sense do we have a regulation in government that says we'll pay $6,000 a month to keep someone in a hospital that we believe would be better off at home but the family cannot afford one-sixth of that amount to keep them at home?
Q. Do you endorse the Schweiker proposals? . . .
A. I have to tell you that those again are going to be presented as options which will be considered in an upcoming Cabinet meeting, so I can't give you an answer on that yet.
Q. How do you feel about them?
A. I feel that we have to look at these programs, have to see what we can do, but, as I say, these will be presented as options that we have yet to go over and consider and see, make sure that they're not going to unnecessarily hurt people that we don't intend to hurt . . .
Q. What adjustments are you planning in your foreign policy structure or in your staff to avoid situations such as that last week when your secretaries of defense and state were making conflicting statements on nuclear policy and which made it necessary for you to call your secretary of state and your national security adviser into the Oval Office for a private meeting?
A. I called them in, actually, to find out and to urge that they, with their staffs, just as I have with my own, insure that we're a little more careful. There seems to be too much just loose talk going around.
But it has been exaggerated out of all reality. There is no . . . personal animus . . . no bickering or backstabbing going on. We're a very happy group. Laughter.
The picture that has been given of chaos and disarray is a disservice to the country and to other countries and allies as well. We are not in disarray with regard to foreign policy. I think our accomplishments have been rather astounding.
I have had 70 meetings with bilateral and multilateral with heads of state, foreign secretaries, ranging from Southeast Asia to Asia to Europe, Africa and certainly here within the Americas.
We have a better rapport established now between the three North American countries than I believe we've ever had . . . . I don't think we've ever had a stronger relationship than we have . . . in Europe.
We were supposed to be destroyed at the Ottawa summit, and suddenly you decided by some fluke we weren't, and then came Cancun and I was not burnt at the stake. Laughter. Everything turned out just fine, and I had bilateral meetings there with 17 individual heads of state that were there. They were very pleased with the presentation we made about how to meet some of their problems.
. . . I think that we've made great Middle East progress and rectified some things . . . giving the country problems for a time, and tied with this is our economic plan and our defense program to refurbish our defenses. So that I am greatly encouraged.
Our meetings here with heads of state in every instance have--they have responded with statements to the effect that they have better relations than they've ever had before with our country--better understanding of where we stand with relation to each other, and I think that Al Haig has done a remarkable job as secretary of state.
He is trusted and approved of, and every country that we do business with, and the only thing that seems to be going wrong is . . . I think sometimes that the District of Columbia is one gigantic ear. Laughter.
Q. You've criticized the press for circulating what you call reports of disarray. I'm wondering if you think that Mr. Haig's behavior may have been at play in these reports also?
A. All that I meant by that, I must say, there had been times when we'd been checked on "Is this story correct?" and we have been able to refute that the story is not correct and then seen it still appear and be made public.
But all I would ask is--I know you've got a job to do and you're trying to do a job--but all I ask is all of us I think it behooves all of us to recognize that every word that is uttered here in Washington winds up by way of ambassadors and embassies in all the other countries of the world....