Exchange With Reporters Following a Meeting With Small Business Leaders

Inflation

Q. Mr. President, could you respond to the inflation numbers out today?

The President. Well, you know, I've looked at them over the last couple of years, and I think we have to watch it closely. But there is, at the present time, no cause for long-term concern. I want to watch it, and we will be watching it. But it could be just a blip. There are lots of things that could have produced it. We'll just have to see. We'll wait for a month or so and see what's going on. Unless there's some underlying change in the economy, it's difficult to imagine how we could have a significant upsurge in inflation.

Deficit Reduction and Taxes

Q. Do you think your deficit reduction trust fund will be able to win support on the Hill despite Domenici and Dole and the other Senators criticizing it as a gimmick?

The President. The people that I'm concerned about are the people who were prepared to vote for responsible deficit reduction all along, the moderate to conservative Democrats who are willing to vote for tax increases as long as they know they're going to go to reduce the deficit. Bill Bradley called for the deficit reduction trust fund also, I noted yesterday. And a whole range of House Members from Charles Schumer to Charles Stenholm did. And I think it will help to—more importantly, I think that in the public mind out there in the country, people will see that it's a double guarantee that the money will go where we say it will go. So I still think it's a very good thing to do.

I didn't expect it to move any of the votes of people who say that they won't vote for a tax increase no matter what. But I must say, the most encouraging thing on that is the interview that David Stockman, who was President Reagan's Budget Director, did in a magazine called the New Politics Quarterly this month where he basically owns up to the fact that the biggest problem with the deficit is that they cut 6 percent of the national income out of the tax base in 1981 in a bidding war. That was twice the size of the tax cut that President Reagan originally intended to offer to stimulate the economy. And he says the impact of that has never been overcome. So all we're going to try to do is redress that with some tough spending cuts. And I think the public mood will be far more supportive.

Q. Will you go along with a 35 percent corporate tax rate?

The President. If that's what comes out of the Congress. I don't know if the Senate will vote for that. We'll have to see. But the changes made by the House Ways and Means Committee don't reduce the overall contribution from the business sector. They just shift the way it comes. And I think that's okay.

Bosnia

Q. Mr. President, do you hold out any hope that the referendum in Bosnia this weekend might result in some sort of face-saving way to get out of this mess?

The President. The issue is not face saving. The issue is life saving. Face saving has got nothing to do with it. The issue is whether the Bosnian Serbs are ready to have a serious peace process that will save lives, recognize that all those people have some right and some way to live in the piece of land we now know as Bosnia-Herzegovina, and confine the conflict so that it doesn't spill over and cause much more, much more serious political consequences for everybody. And that's what I hope. You know, I wouldn't say I ever have given up hope, but I'm skeptical about it. But it might produce something.