Remarks on Signing the Economic Recovery Tax Act of 1981 and the Omnibus Budget Reconciliation Act of 1981, and a Question-and-Answer Session With Reporters

The President. Good morning.

Q. Typical California weather.

The President. Yes, since this is the first day of this kind of weather, of fog, since we've been here, I shall refrain from saying that you're all responsible— [laughter] —for bringing it up with you. The Sun has been shining brightly here.

These bills that I'm about to sign—not every page—this is the budget bill, and this is the tax program—but I think they represent a turnaround of almost a half a century of a course this country's been on and mark an end to the excessive growth in government bureaucracy, government spending, government taxing.

And we're indebted for all of this—I can't speak too highly of the leadership, Republican leadership in the Congress and of those Democrats who so courageously joined in and made both of these truly bipartisan programs. But I think in reality, the real credit goes to the people of the United States who finally made it plain that they wanted a change and made it clear in Congress and spoke with a more authoritative voice than some of the special interest groups that they wanted these changes in government.

This represents $130 billion in savings over the next 3 years. This represents $750 billion in tax cuts over the next 5 years. And this is only the beginning, because from here on now we are going to have to implement all of these, and it's going to be a job to make this whole turnaround work. It's going to be the number one priority—or continue to be the number one priority of our administration.

And again, I express my gratitude to the Congress, the 97th Congress, and to the administration, the people who worked so hard to make these come about.

And, Joe,¹ I guess it is traditional that I have to use a lot of pens in these signatures.

[At this point, the President began signing H.R. 4242.]

Oops, one letter too many. I'll have to catch up here someplace.

Q. One letter a pen, Mr. President?

The President. That's the way it works out. There's a number that we have to have. Just think, if my name had had three more letters in it, we'd

Q. Who gets the pens?

The President. Some of those people that helped.

There. That is the tax program.

[The President began signing H.R. 3982.]

I figured how to do it, Joe, on this one to come out even—on the "n"—I'll make one part of the "n," and then the other part.

They are signed, and now all we have to do is implement them.

If you have any questions, perhaps, on any of the features of this, fire away.

Q. How about another subject, Mr. President? [Laughter]

The President. You mean in the face of all of this, you want to change the subject? Does someone have a question on the subject, first?

The Nation's Economy

Q. Yeah, I do. Mr. President, the Wall Street Journal carried a story yesterday that the revenue projections which you will be getting are going to be lower than your administration previously thought, and that means we're headed for a more severe economic downturn with higher interest rates. Are you ready to revise your own projections about the economy downward? Are we headed for a recession?

The President. I don't know whether you'd call it a recession or not, but they're not saying anything that we haven't said over and over again. Our own projections have been that for the next several months this soft and soggy economy is going to continue and that we shouldn't be fooled by these last couple of months of seeming upturn, that this means a continued climb. We think that we are in a soggy economy and it's going to go on.

Remember that it won't be until October that any of this will begin to be implemented. This is the budget that begins for the year in October. The tax programs, of course, won't be into effect until then either. And what we're counting on is when these, and these begin to take effect, that we will see the results when people begin to have the more money in their pockets from their earnings and when the lowered expenditures of government begin taking effect.
But, no, we're not differing that. We've said, ourselves, to watch for a sagging economy for the next few months.

Air Traffic Controllers

Q. Mr. President, on the air controllers strike, the International Association of Air Controllers has called on you to negotiate with PATCO. Why do you continue to believe that you should not negotiate with them?
The President. Well, now, this has changed the subject already, but—Sam [Sam Donaldson, ABC News], you'll be next, since you wanted to change the subject.

On that, there is no strike. There is a law that Federal unions cannot strike against their employers, their employers being the people of the United States. There was in addition to that an oath that is taken by each employee that he or she will not strike, and we warned in advance in the negotiations—there were 7 months of negotiations. They resulted on June 22d in a settlement that was deemed satisfactory to the union negotiators. Then they came back several weeks later with demands that were—said that this was not suitable and with demands that increased by 17 times what had been agreed to in June. It would have amounted to a $40,000 increase per year per controller. But we warned, under the threat of a strike, that there could not be a strike against the law, that this would be breaking the law, and that there, therefore, could be no negotiations.

Now, in effect, what they did was terminate their own employment by quitting. And our obligation now—or to the several thousand who are keeping this system working and who did abide by their oath—

Q. Wouldn't it be worth it, Mr. President, to go ahead and rehire these 12,000 people rather than have the American people suffer the inconvenience and the damage to the economy this is going to cause?

The President. Well, how much inconvenience is there? Yesterday, flights were 80 percent of normal. And with regard to international flights, yesterday 117,000 people were carried on over-water flights, international flights.

So, we feel that we are rebuilding the system now in view of the action of those controllers who decided to violate their oath and to violate the law. And I just don't see any way that it could be expected that we could now just go back and pretend that they weren't breaking the law or breaking their oath.

Q. Are you absolutely ruling out use of Presidential pardon or amnesty?

The President. Our obligation is to those several thousand that are in there working. And I must say they have my utmost gratitude and admiration, and I think they should have of all the people for what they're doing.

Q. But you have the power of Presidential pardon and amnesty. Are you absolutely ruling that out with regard to the air traffic controllers?

The President. Yes, although we have said that those—and some have already—those who come back and can show that they were, you might say, coerced or harassed, pressured into doing what they did and it was not their will, we have taken some of those back.

U.S.-Soviet Relations

Q. Mr. President, let me ask you about the Soviet Union's commentary today that your policy is one of sheer insanity and that relations between Moscow and Washington are now at the lowest ebb that they've been in modern times, since the cold war ended. Are we now in a new cold war, and do you fear that it may lead to an actual shooting war?

The President. No, I don't fear the actual shooting war. And whatever they may want to term it, "cold war" or not, what we are in is a situation where we're being realistic about their military buildup, which has gone on unchecked in spite of all of the meetings having to do with arms control and so forth. And I can understand their anguish. They are squealing like they're sitting on a sharp nail simply because we now are showing the will that we're not going to let them get to the point of dominance, where they can someday issue to the free world an ultimatum of "surrender or die," and they don't like that.

But, no, I have made it plain—and it isn't just language—we are going to meet with them with regard to the theater nuclear weapons in Europe, but we are also going to meet, and I have asked that we meet to legitimately discuss the reduction of armaments on both sides, particularly in strategic weapons.

Neutron Warhead

Q. Mr. President, you made the decision to go ahead and manufacture the neutron weapon. Is this not an escalation on our part?

The President. No, not really. The neutron weapon—incidentally, we have information that the Soviet Union spent about a hundred million dollars in Western Europe alone a few years ago when the announcement was first made of the invention of the neutron warhead, and I don't know how much they're spending now, but they're starting the same kind of propaganda drive.

The neutron warhead is a defensive weapon. It is a deterrent to a conflict. But we didn't start manufacturing it. The previous administration had authorized its manufacture quite some time ago, and what we have been doing—they, however, did not put the actual neutron part of the warhead in the 8-inch shell of the Lance missile. And so you stored here, warehoused that and the casing that in time of need and necessity would be then put together. Well, this doesn't make very much sense.

All we've done is simply say that we're going to continue warehousing this, but we're going to put that in the casing and warehouse it as a unit instead of two separate parts.

Air Traffic Controllers

Q. Mr. President, can I go back to PATCO for one minute, please?

The President. Yes.

Q. There is a report that you are considering offering controllers a Presidential pardon or an amnesty, giving them back their jobs if they admit that they were wrong. Is there any such consideration, and would you consider amnesty if they did?

The President. No, and that goes with my answer again. No, there's never been—I don't know where that could have started, because there has been no change in our feelings about this at all.

Situation in Poland

Q. Mr. President, there's been a report today that the Soviet Union will begin war-games next month in the Baltic States and the Baltic Sea under the direct direction of the Soviet Defense Minister. Do you consider that a reaction to your neutron bomb announcement, and is that something that surprises the administration, that we didn't know about?

The President. No, because they—we're not surprised—they were preparing long before this news leaked out about the assembly of the neutron warhead. It leaked out that—or we had the information that they were preparing for these war-games, so they couldn't have been dependent on the neutron warhead at all.

Q. You don't consider those war-games any particular new threat to Poland, since they're in that area?

The President. They might be directed against that, but I would have no way of knowing what's in their mind. But apparently they're going to include amphibious landings, coastal landings, and so forth.

Neutron Warhead

Q. Mr. President, do you foresee the eventual deployment of the neutron warhead in Western Europe?

The President. No. Our intention is to simply stockpile it, warehouse it, you might say, as we do with other weapons, in the event that, heaven forbid, there ever is a necessity, a war that brings them about.

This weapon was particularly designed to offset the great superiority that the Soviet Union has on the western front against the NATO nations, a tank advantage of better than four to one, and it is purely, as I say, a defensive weapon. And maybe this is why it's so painful to the Soviet Union, to realize that this could offset their great advantage there.

But there is no question of deployment, and if ever there seemed to be a necessity for that, deployment would only follow full consultation with our NATO allies.

Weapons Sales to Israel

Q. Mr. President, what is the reason for continuing to withhold fighter planes from Israel that they have bought or are purchasing from us?

The President. Well, the decision is going to be made very soon, and it is just some last details in the review that has been going on that started with the incident in the Middle East. And then I will be announcing a decision, probably next week.

Q. It sounds as if you're moving toward a decision to go ahead and release them.

The President. Well, if I answered that then I might be announcing a decision. I'll tell you, I'll announce what the decision is next week.

Federal Spending

Q. Back on the budget, many Governors, particularly Democratic Governors, say it's a shell game, that you've got to help them on the so-called safety net more, or they're not going to be able to take up the slack.

The President. Well, some Governors did say that and yet I noticed that the whole Governors conference did support and vote for a resolution of continued cooperation with us in these packages.

Now, it is true, we were not able to get all that we wanted in the line of real block grants and autonomy for local and State government. You know, one level of government-they even have that conflict between local and State government, that each level is a little reluctant to give up autonomy and authority. We're going to continue to work with the Congress and work with the States and local government representatives to give them the autonomy they can have to make these programs work.

It is true we did not get all that we had wanted in that regard.

Q. I gather, sir, it's not autonomy so much as money that they need.

The President. Well, the difference is-and what our reductions were based on is that the block grant, giving them the flexibility at that level to use this as they saw fit, setting the priorities, really would result in a savings, and our reductions were based on those estimated savings in unnecessary administrative overhead, direction, and restrictions that caused unnecessary spending at the local level. And as a Governor I can testify that that was true, that in many of the categorical grant programs we could see how much more efficiently they could have been run without the red tape imposed by the Federal Government.

Now, there was a hand over here, and then I'll go over there.

U.S.-Soviet Relations

Q. Secretary Haig recently called on the Russians to show restraint and reciprocity if they wanted better relations with the United States. In your communications with Brezhnev, what suggestions have you made to the Soviets of ways they can improve their behavior, or how would you suggest now the Soviets could improve so that you could get back to detente and reduce this war of words?

The President. Well, I made a suggestion at one time in correspondence with Mr. Brezhnev that sometimes it seems that the governments sometimes get in the way of the people and that I think that the people of all countries have a great many things in common—a desire to raise their families, a desire to choose the occupation or profession they want to work at, to have some control over their lives. And I suggested that maybe we might sit down sometime and see what it was the people really wanted.

I doubt that the people have ever started a war. So, I made that suggestion.

Q. Would you like to meet Brezhnev soon?

The President. Well, when we are ready to come forward with a program of proposals for the—and that will take some preliminary meetings at the ministerial level before we're ready to come in and actually negotiate, as I've said, legitimate arms reductions to remove this nightmare that hangs over the world today of the strategic weapons.

Neutron Warhead

Q. Mr. President, I wonder about the neutron bomb perhaps changing nuclear doctrine. If the Soviets attacked with tanks, might we become the first to use—would we engage in first strike with that weapon?

The President. Well, this is something that seems to be overlooked in all the propaganda that's now being uttered about this weapon, and that is that the present tactical battlefield weapons stationed in Europe are nuclear weapons, far more destructive, far longer in rendering areas uninhabitable because of radioactivity, than the neutron weapon. So, those tactical nuclear weapons are there on both sides already, and this, we think, is a more moderate but more effective version.

You also have to remember that those who are crying the loudest, the Soviet Union, and many of those who under the name of pacifism in Western Europe, who are opposing things like this and opposing the theater nuclear forces and so forth, maybe some are sincere—I'm sure they are—but I think others are really carrying the propaganda ball for the Soviet Union, because there's no mention made of 200 SS-20's, strategic nuclear weapons of medium range, that are aimed at the cities of all of Europe today, and that are not being considered in any of the talk of reduction of theater forces, East and West-just as in SALT II the Soviet Union called our aging B-52 a strategic weapon but did not call their Backfire, modern bomber, a strategic weapon.

So, let's remember the SS-20's before we start worrying too much about what we're thinking about. But remember also that our present 8-inch guns and our present Lance missiles over there are tactical nuclear weapons.

Federal Deficits

Q. Mr. President, back on the budget for a minute. Given the so-called soggy conditions, it seems that you're going to have greater deficits over the next few years, less revenues, more deficits. What are those deficits now? How much more in budget cuts are you going to have to make over the next couple of years, and will you still be able to balance the budget in '84?

The President. Well, this has always been our goal and will continue to be our goal. But remember that we always said that there were further budget cuts for the coming years, for '83 and '84. These are the ones that go into effect in '82.

Q. How much more, though?

The President. Well, we know, of course, that we will have a sizable deficit for '81. There was nothing we could do about that. And, as you know, the Government has been operating in '81 without a budget, just on appropriations, and we have tried to limit once we got into management what we could, but the die was already cast as to the amount of this deficit.

Now, the possibility of increased deficits in the coming years over our previous figures are due in part to not getting totally what we had asked for in the budget cuts, but also that the tax package finally came out with additional reductions. As I say, those have possibly called for some reductions simply to recognize the realities of these two packages now, but we are going to continue to work on this and work for more budget cuts. And it just means that we're going to have to try to get more additional cuts than we might have had to get before.

I'm not sure that we might not have been, however, too conservative in our estimates on the tax program, because, remember, our tax proposals were based on the belief that the cut in tax rates would not mean a comparable cut in tax revenues, that the stimulant to the economy would be such that the Government might find itself getting additional revenues, as it did last year in the cut of the capital gains tax.

Interest rates

Q. Mr. President, are you still confident that high interest rates will come down toward the end of the year?

The President. Yes. I noticed this morning's report in the paper, about a headline that said, "Interest Rates Up." But then when you read the story, you found that that was simply in the bond market in New York and was reflecting bond buyers' competition for the limited amount of capital that was there for investment. That's part of what's in that tax program, is to make less limited that amount of money that's available for capital investment.

MX and B-1 Bomber Programs

Q. Mr. President, do you expect to make a decision on the MX and the B-1 before you return to Washington?

The President. No. As a matter of fact, not before I return to Washington, but the MX and the B-1 programs are—we've still been discussing these and the various options, and very possibly we may wait for the return of Congress.

Defense Spending

Q. Mr. President, in view of your hard line against the Soviets, are you going to be willing to make a substantial scale-down in your defense spending plans, if that's necessary?

The President. That would depend on the negotiating table and how willing they were to actually discuss arms reductions. You will recall that the previous President tried to introduce that once, and our Secretary of State was on his way home in 24 hours from Moscow, because they wouldn't even hear of a reduction. But they are the ones, with all of the talk that's going on, the Soviet Union has been engaged in the greatest military buildup in the history of man, and it cannot be described as necessary for their defense. It is plainly a buildup that is offensive in nature.

Q. Then it'll lead to war.

The President. What?

Q. You said earlier you didn't think it would lead to war, but you're describing something that inevitably has—

The President. Well, no, not if they could achieve such a superiority by conning everyone else into being quiescent, that they could then say, "Look at the difference in our relative strengths. Now, here's what we want." This is what I mean by an ultimatum, "Surrender or die." And I think maybe they see that plan losing some of its potency now with our own plans.

Secretary of the Interior

Q. Are you ever going to let Jim Watt up here? [Laughter]

The President. Yes. As a matter of fact, he would be very welcome here or anyplace else.

Jim Watt has been doing what I think is a common sense job in the face of some environmental extremism that we've suffered from. And I can assure you Jim Watt does not want to destroy the beauty of America. He just wants to recognize that people are ecology, too. We have some needs, and there has to be provision for us to live.

But if he does come up, I'd welcome his help, because we've got a woods back here that is full of downed limbs from trees, the result of a freak 8-inch snowstorm.

Q. What if he strikes oil in the corral? [Laughter]

The President. I'll cut him in. [Laughter]

Bubonic Plague

Q. Have you seen any evidence of the plague since you've been here other than the signs? [Laughter]

Q. Killer rats!

The President. No. No, I don't know where that was found—they say someplace a mile from the ranch here. But we all have to recognize that that is not something startlingly new in California, and maybe in other parts of the country, but it was only a few years ago that we had a State park just east of Los Angeles that had to be closed for a period because of bubonic plague threat, carried by ground squirrels that were littering the place with their dead. And it was only a few years ago that we had—I believe there was a petty officer in the Navy that was on a fishing trip down in the Ojai area and was brought in to the hospital desperately ill and was dead before they could diagnose that it was bubonic plague. And they went back into that area and found again the evidence that rodents had carried it, so it's—

Q. Do you really tuck your pants in your boots as a precaution?

The President. No.

Q. Let's see. [Laughter]

The President. No.

Q. That's what your Deputy Press Secretary has been telling us.

The President. No, we've been out there in the woods working very hard at cleaning up, as I say, some of that brush. I wish the fog would lift so you could see some of the brush piles around here. Lee Clearwater, who was here the night that the snowfall came, said it sounded like an artillery barrage, hearing the limbs snapping off all over in the woods. And we had it pretty parklike around here until then.

We'll be cutting for the next 10 years. If anyone wants some firewood— [laughter] -just bring a truck and a chain saw, and we'll point you to all kinds of good oak firewood that you can have.

Q. Will Mrs. Reagan be coming out to say hello?

The President. I think she's back over there with—

Q. What are you going to do for the rest of your vacation?

The President. What's that?

Q. What are you going to do for the rest of the week while you're here?

The President. Oh, the same thing we've been doing. This is the first morning we haven't ridden—decided instead that we'd come out and be ridden. [Laughter]

Q. Is it foggy like this every day?

The President. No. This is the first day. As I say, I think you brought it with you.

Q. What's the truth of this story? Does Mrs. Reagan like it up here, or does she just come up here because you want to do it? [Laughter]

The President. I don't think after 29 years she could fool me that much. I think she likes it. We ride together every morning.

Q. Women have been fooling men since Adam and Eve. [Laughter]

Deputy Press Secretary Speakes. On that note, thank you.

The President. Wait a minute. Do you want to answer for yourself?. [Referring to Mrs. Reagan]

Q. We have the best witness over there.

The President. Speak for yourself.

Q. Do you like it up here, Mrs. Reagan?

Mrs. Reagan. I love it

The President. There.

Q. Does she have a card in her hand? [Laughter]

The President. Well, that does it there.

Q. Thank you, sir.

The President. Thank you all. I'm sorry that we couldn't have given you one of the mornings that we've had up here before. It's just been absolutely beautiful.

Q. What's the name of the dog, by the way?

The President. This was Lassie—oh, Lassie. Millie! [Laughter]

Q. No, that was an old movie.

The President. Millie. Millie's her name. And if the golden retriever comes around, his name is Victory. That's the one that was given to Nancy as a little pup when we were back on the campaign trail. And he's now a big dog.

Q. May we see your boots on this side?

The President. You didn't get—excuse me. This side was cheated. They want a shot of the boot up. [Laughter]

The Cabinet

Q. Can I ask you one more question? There have been specific reports that your Secretary of State and Secretary of Defense are not getting along and that they argue in front of you. Can you comment on those reports?

The President. The whole Cabinet argues in front of me. [Laughter] That was the system that I wanted installed. Instead of the traditional Cabinet meeting with each Cabinet member making a brief report on how things were going in his agency, I wanted this operation where I have the benefit of the thinking of all of them, because most problems do overlap. There's hardly a problem that doesn't touch other Cabinet agencies and other departments of government.

And so, what we do is we have an agenda, and it goes out on the table and there have been numerous differences. And the thing is, when there's been enough discussion and enough argument and I've joined in and I've heard enough, I make the decision.

But no ill will and no feuds or turf battles of any kind have been going on. I've made it plain that I want each department to explain from that department's standpoint, such as State and Defense, what is their thinking and their reasoning as to why they take a certain position. And then I have to decide and weigh which way to go and which way is best for the national interest.

Q. Is Maureen going to run for the Senate?

The President. I hope not. [Laughter] I don't know. I know she's talked of it. I don't know how serious she is about it.

Q. How much will you take for the place?

The President. Oh, you can't sell heaven. [Laughter]

Mrs. Reagan. Where did Sam go? What ever gave you the idea that I didn't like it?

Q. Well, these reporters have been writing these stories like that. You'd be surprised what they say.

Mrs. Reagan. Oh. Well, you can straighten them all out.

Q. Well, they say, for instance, that you come up here and stay on the phone talking to your friends in Los Angeles while the President's out chopping wood and clearing grass and all of that.

Mrs. Reagan. I don't chop wood. But I don't stay on the phone all the time either

Q. Do you really like it up here?

Mrs. Reagan. I really like it up here.

The President. I've got to be honest and tell you some of those phone calls are to make it possible for me to go out and chop the brush.

Q. You only have one line, is that it? [Laughter] Well, don't cut your leg off. [Laughter]

Mrs. Reagan. "Where's the rest of me?" [Laughter]

The President. You shouldn't have mentioned it. [Laughter]

Q. Are you going to go in to Santa Barbara at all?

The President. Not on this trip, not on this particular stretch here. I think next week—I mean the week after next, I go down there.