Remarks and a Question-and-Answer Session With Editorial Page Writers on Domestic Issues

The President. I caught you again. [Laughter]

Mr. Stockman. ¹ Same answers as yesterday; different questions. [Laughter]

¹ David A. Stockman, Director of the Office of Management and Budget.

The President. This is the second day in a row I've walked in on him. [Laughter] If you had a tag line, you should have not looked at me. [Laughter] Please sit down.

I know by now you must all know everything about the budget and all the fiscal affairs. But I wanted to come in for a few minutes, at least, and welcome you to the White House. I know many of you have been here before, but we're always glad to have you back.

We're well aware of the impact an editorial has not only on the folks at home but on some people up on the Hill. An editorial from the hometown paper can very often mean much more than any call from a lobbyist or even a call from the White House.

Economic Recovery

There's a news story I'd like to emphasize today that you've been hearing about, and that is how all the signs that we're now seeing point toward an economic recovery. Or have you two covered that very well? You wouldn't—

Secretary of the Treasury Regan. Go ahead.

The President. I wouldn't be going counter to you if I said that—

Secretary Regan. As long as you say the recovery is here.

The President. Well, that's what I want to make sure you agree on, because that's what I'm going to say. [Laughter]

A lot of attention has been paid to the 1982 inflation rate, but I think even more significant—and everyone seems to have overlooked—is that while it was 3.9 percent for the year, for the last 3 months of 1982 it was running on an annualized basis at 1.1 percent. And I think the fact that it had come down to that and left that other lower average is something that we can focus on as offering a little hope here.

We know, of course, that the unemployment rate went down last Friday. I'm hopeful that one of these days, now that they've changed the method, that they will stick with the changed method instead of giving us two sets of figures. It was only a few months ago that I found out that they were not including the military in the unemployment figures. Well, there's almost 2 million Americans that are fully employed. But what really triggered my reaction was when I found out that when one of them left the service and didn't have a job, he was considered unemployed. But he wasn't considered employed when he had one.

And I'm sure you noticed that the set of figures—this was the first time, January, using them—the set of figures, if you include the military, went from a 10.7 rate, then, of unemployment, to a 10.2. The old-fashioned way, it's still 10.4, down from 10.8.

But there are other figures. And one of the most significant was that actual employment rose by 350,000 in January, which means that businesses are hiring and rehiring workers. We've all seen the announcement of General Motors that it's going to take back more than 21,000 over the next few months of—those were indefinite layoffs. The average work week went up an hour in January, which brought it almost to the full 40-hour figure.

Housing is coming back. Housing starts are up, permits are up, new home sales are up 75 percent since April of last year. Also supporting the recovery idea is the fact that there's been nearly a 12-percent increase in new orders for durable goods. And, of course, as you've probably been told, the leading indicators have been up 8 out of the last 9 months.

Now, if some of you are suspicious that my emphasizing all of this, on top of what you've been hearing, is in the hopes that you might take this as the message to take back home, your suspicions are absolutely correct. That's what I had in mind. I'm optimistic. I'm going to do all that I can, all of us here in the administration are, to work with the Congress to make sure this recovery stays on track.

But now, that's enough monolog. I know you've been conducting a dialog so far, and you can continue with that if someone has a question.

Employment Program

Q. Mr. President, I come from Baltimore, which is a city that in the past week has lost 2,300 jobs at Western Electric and about 950 jobs at the Sparrows Point plant of Bethlehem Steel. One of our big concerns is what happens to a steelworker who has been on this job for 25 years and suddenly his job is gone. How do you feel about retraining? How can this country retrain its work force, and in what directions?

The President. Well, we know that there has to be retraining because, as you've probably been told already, part of this unemployment problem is structural. For example, over a 2-year period, when we first came in here, 3 million new people entered the work force for the first time. And the new jobs, because of the recession, were not being created to put those people to work.

There will be changes. I don't know whether—and maybe it has gotten to the point of someone with that much seniority laid off. I was in an automobile plant the other day, as you know, out in St. Louis, and in that plant, those people still employed-the ones with the least seniority were 16 years there, because the layoffs come designated by seniority or lack of it.

But the one job training plan that we've gotten passed, that we introduced and has already been legislated into law, is designed, we think, better than many of the previous programs. First of all, where some of those job training plans only about 18 cents out of every dollar went to actual training, this one, better than 70 cents out of every dollar will go to training.

But we're going to direct that training in cooperation with local officials and business and industrial leaders in the communities to train people for those jobs that are vacant there in that area. And you all know from your own papers that on any representative Sunday, you have quite a package of help wanted ads. Now, I mentioned that once in a press conference and immediately got challenged that I was indicating that people were lazy and wouldn't go to work. I wasn't doing anything of the kind. We didn't have this job training program in place at the time. And what I was pointing out—or trying to—was that if you read those ads, and I've done so in many of the papers-the last time I was in Los Angeles, there were 45 1/2 pages in the Sunday L.A. Times—but you saw that they called for skills. And here, to me, was the greatest indication of the structural unemployment-that with 12 million unemployed in the country, we could have that many pages of help-wanted ads in an area which was around the national average or above. It indicated that there were job openings, and there must be a lack of people with the training to fill them.

So, we're doing more of this. And in the present budget, we have made proposals about using unemployment funds, in cooperation with the States that have their own unemployment funds, for training, for relocation, and so forth. I think it can be done, but that's the direction we must go instead of giving someone an imitation job temporarily.

Q. Mr. President, there have been some reports in the news recently that you may be leaning toward recommending or endorsing some kind of jobs program. Could you tell us exactly how you feel about this?

The President. The thing that we have talked about and that is, again, provided for already in the budget, is that where there are legitimate—and we got this idea from the gas tax program. And incidentally, for all this talk that I had once said that it would take a palace coup to make me accept the 5-cent gas tax, that was when they were talking about it as just general revenue, a tax increase.

But Drew Lewis, Secretary of Transportation, had come to us over a year ago with a complete report on the state of our highways and bridges in the country and the desperate need and the almost emergency situation then. At that time, I asked him if he could hang on for a year and come back a year later, which he did. So, that really was a users fee. The gas tax was passed to get this necessary work that needs to be done, get it in work.

Now, what we have said to all of our agencies and departments is that—in the budgets for all of them there are maintenance work, construction, things of that kind that are called for—and what we've said, "Expedite it. Accelerate it. Don't wait if you've got it on schedule some place down the line. It's already in the budget. It won't add anything to the deficit to do it. Go to work on it and start doing it to help in the recovery."

Defense Spending

Q. Mr. President, are you prepared to accept compromise reductions in the $239 billion defense budget?

The President. No. I think the only political mistake that we've made there with the defense budget is that in the old-fashioned way that has persisted so long in government, where you pad the budget a little bit and then go up on the Hill and let the Congress cut it where you already knew it could be cut—we didn't do that. Under Secretary Weinberger, we've been trying to find the cuts ourselves and where we can promote savings. And so a considerable amount of money was actually found by us when inflation went down faster than we thought, fuel costs and everything going down, management changes that were put into effect.

And from the original 5-year proposal of 1981 that we came in with, we've reduced that about $41 billion ourselves. Then Congress added another chunk to that in the '83 budget and in this one. When our people up on the Hill said, "If there's any way, anything we can find"—and I must say, Cap was cooperative. There were some things we hated, but I insisted that we stay with—whatever we found must not delay or reduce our effectiveness, our ability to redress the military situation that had been allowed to deteriorate so badly.

And we came up with 11.3 billion. Now, maybe we should have been smart and left the $11.3 in and let the Congress find it. But the minute we went up there with that cut in place, then they seemed to think that, "Well, that must mean there's room for more." I think if there was, we would have found it.

Defense and the MX Missile

Q. Mr. President, what would happen if your MX Commission comes out with a recommendation contradictory to Secretary Weinberger's recommendation?

The President. Well, that's the purpose of the Commission. We'll study that and find out what it is they recommend. And I realize that I'm the one that finally has to decide what we'll take up to the Hill as a recommendation to Congress. But I'm hopeful that the Commission can come up with something that will be acceptable but, at the same time, will meet the need for correcting this imbalance that exists.

I must say to all of you that are here, the drumbeat that has gone on consistently about the defense spending and all—all during the campaign this question was thrown at me by audiences every place. I was amazed how many. The American people were aware that something wrong had taken place with regard to our military. I would get the question, "Well, if in trying to balance the budget it comes down to a choice of rebuilding the defenses or balancing the budget, which would you do?" And every single time, I said I would come down on the side of national defense. And I never made that remark to an audience that I did not get—in many cases, a standing ovation—but at any rate, an ovation.

And I think this steady drumbeat and this criticism from up on the Hill has created a false belief among too many people in this country that maybe in 1 or 2 years we've solved the problem. But we've got a long way to go before we really can say that we are able to meet the first, prime responsibility of the National Government, which is to be able to guarantee the safety and security of this nation and our people.

And the truth of the matter is—everyone seems to overlook—that as a percentage of gross national product, the defense spending is a smaller share of that than it has been at almost any time in the past, except for the preceding few years when it was allowed to deteriorate so badly. And even the outgoing administration had recognized that, because they had submitted a plan for a 5-year buildup of the military. And we, now, are adding only about $3 billion a year to what their plan was. And frankly, part of that is because they could not have bought, for the money figure they put in, all the things that they had put in as required weapons systems and improvements.

Report on the Massacres in Beirut

Q. Mr. President, we have to ask you about the big news of the day, which is the Israeli commission's report on Sabra and Shatila. There's a recommendation that General Sharon resign, and there may be some change in the Israeli Government. I imagine you've studied it by now. Do you have any comment?

The President. Well, this is a very easy one. That's a strong democracy over there, and that's an internal problem. And I just don't think that we should be commenting or injecting ourselves into that internal problem.

Ms. Small. Thank you, Mr. President.