The President. Let me just make a few opening comments, and then I'll be glad to respond to your questions. I've been talking to him, and I understand from [Secretary of Defense] Dick Cheney, who's left, and also Roger Porter [Assistant to the President for Economic and Domestic Policy], who was with me, that you've been discussing both the international situation and the domestic budget scene. And if I may, I just want to add one or two comments and then take questions. As I told the American people and the Congress on Tuesday night in that address to the Joint Session, the level of world cooperation in opposing Iraqi aggression is simply unprecedented. More than 20 nations have joined us. Now, armed forces from countries spanning four continents have taken up defensive positions at the request of King Fahd of Saudi Arabia.
Over the last several days we've seen Great Britain announce that it will send a full armored brigade -- the famous Desert Rats. And France has announced that it'll also be sending a significant ground force. Japan and Germany have also said that they will contribute billions to the cost of the multinational effort and to the related effort of easing the economic hardship of those nations that are hardest hit -- those supporting sanctions. Just this weekend the United Nations Security Council has once again strongly condemned Saddam Hussein [President of Iraq] for those outrageous break-ins at the diplomatic premises in Kuwait.
For America to maintain its responsibilities abroad, America must remain strong and vital. Again, as I said last week, our world leadership and domestic strength are mutual, and they are reinforcing. That's why I am very interested in these negotiations going on on the budget and, again, calling on the budget negotiators from the Congress and the administration to redouble their efforts to get a budget agreement. I want to see one that is oriented toward growth -- a point I made in last week's address to the Joint Session -- one which contains incentives like the capital gains tax cut, which I am absolutely convinced will create jobs. The Congress must also enact real spending cuts, not these smoke-and-mirror cuts that simply don't cut spending as advertised. Congress must ensure that the budget process reform takes place. And its 5-year plan absolutely must be enforceable.
Finally, Congress must enact a multiyear defense budget that meets the needs of this country not only in terms of the improvement of East-West relations but also our broader responsibilities in other parts of the world -- responsibilities that the crisis with Iraq has once again brought home to us.
Earlier, I asked for an up-or-down vote on a complete 0 billion deficit reduction package, with or without a budget summit agreement, by September 28th at the latest. The Nation stands only 13 days away from the drastic consequences of what's known as a mandated sequester, required if Congress is unable to get me a budget by then. We in the administration stand ready to do our part. I am confident that Congress will do its part. I've been happy to see that we've made some headway recently in budget talks, but it really is time now to get an agreement now. I think we owe that to the American people.
So, on both these fronts there's a lot going on. I wanted to get those comments on the record, and I'll be glad to take a few questions.
Persian Gulf Crisis
Q. Sir, going back to the Iraqi matter again -- the raid on the residence of the French Ambassador on Friday -- French President Mitterrand was quoted as saying, ``There is no sign coming from Iraq about avoiding an armed conflict.'' The French President seems to be saying our chances of talking our way out of a shooting war are diminishing. Could I have your comments, please?
The President. I talked to him yesterday from Camp David, had a good conversation with him. As I indicated, we are together on how we look at most aspects of this problem. We were very grateful that France took the action. I had called him a few days before to express empathy with him on what had happened to their Embassy. I must say that I didn't get the feeling that he has given up on any kind of a peaceful solution from the two contacts I've had with him personally within the last 2 weeks. But I think when you see actions like this that the French Embassy went through take place, you wonder what motivates this. France, historically, has been reasonably close to Iraq. They have never condoned the terrorism or some of the happenings in the Iran-Iraq war, even, but they've had a long relationship there. And I think the French Government and the French President wonder: Why in the world is he behaving like this? So, there's an uncertainty that perhaps he was reflecting there. But I didn't get the feeling that he feels that there is no chance for a peaceful solution.
Dismissal of the Air Force Chief of Staff
Q. Mr. President, thank you. Has General Dugan's actions put you in a difficult bargaining position in Iraq, and how much damage has that done?
The President. No, it hasn't. I'll have nothing to say about that, except I strongly support our Secretary of Defense. And he'll have more to say on the details of that in a few minutes at a press conference. But I don't think that we can possibly assess that at this juncture to give you a real answer.
Q. Just a quick followup. Are our troops in any more jeopardy now today than they have been in the past because of those remarks?
The President. Well, I wouldn't want to say that we are less able to protect our troops in Saudi Arabia. We're going to do that, and I am not -- that is not the concern I have.
Q. Sir, in New England as elsewhere around the country, thousands of people have been laid off in their defense jobs. What initiative should the Government take to help these people or help them find new work?
The President. Well, it's a very difficult situation for many families in New England. Other areas of the country have gone through similar regional downturns. I think of the Southwest, particularly in Texas not so many years ago, my hometown of Houston. I think the best thing the Federal Government can do is to get these interest rates down and to adopt growth incentives so that people will continue to create jobs. And that's the major responsibility, it seems to me, of the Federal Government -- fiscal discipline and a budget agreement that will incentivize the economies. You may recall what Alan Greenspan [Chairman of the Board of Governors of the Federal Reserve System] said recently about if you get an agreement, the Fed would then feel inclined to move quickly to significant interest rates.
So, I really think that job creation is the best thing we can do, and I think private sector job creation is the answer, not government programs in that sense.
Q. Mr. President, are you adamant about a capital gains tax reduction in the budget talks?
The President. I've indicated all along that this is something to which I am -- I really believe is necessary to stimulate the economy. And I have not changed my view on that.
Q. You have acted decisively in the Iran crisis. But many in New York City, for example, feel that efforts to control the flow of drugs and crime is not working. Why are you doing not more to meet the challenge?
The President. I think we are doing as much as we can to meet the challenge. Perhaps there's more, and I would welcome any constructive criticism. But we are doing pretty well in terms of interdiction -- --
Q. A followup.
The President. I'm not quite finished with the beginning, but then you can follow up when I finish with it. We want you to do that. [Laughter] But I'd like to see our crime bill pass. I think that would send a good message to the policemen on the streets of New York that we plan to back them up more. I favor the ultimate penalty for these drug traffickers, these major traffickers, and we've got a difference with some in New York on that one. So, we've put forward an anticrime proposal last year that, if enacted, I think would have already been of benefit. But in terms of the interdiction, I think we're getting reasonably good cooperation from abroad. It can be better. And we're working on more initiatives with those Andean countries.
What was the followup?
Q. What do you say to the folks on the street that we talk to every day who just see it getting worse? They can't walk outside without somebody getting shot by a stray bullet. What do you tell those people?
The President. I tell them that I'd like to get more anti -- in the Federal level. I don't know how the States -- let the city and the States do their job; that's their responsibility. But at the Federal level, please support me. Please get all your Congressmen to support the anticrime legislation that we have called for. And I really believe that will help. And in some of these areas where people are -- they just feel that they're up against enormous odds. And the condonation of crime that comes through soft treatment of the criminal I think sends exactly the wrong signal to those embattled citizens.
Q. Mr. President, the economy is showing some troubling signs that Americans can see with the rising gas prices and the stock market condition, the budget negotiators holed up at the Air Force base and the talk about the teetering on the brink of a recession. How would you characterize the condition of the economy? And do you think there's a financial crisis in America?
The President. I don't think there's a financial crisis. I think the economy's growth is slow. I do not think that nationally we're in a recession. I heard the Secretary of the Treasury yesterday. I agree with what he said. I agree with what the conference board says. I agree with what the Chairman of the Fed says on that. But I do think that a budget agreement is the best antidote to further economic slowdown because I think it'll result in lower interest rates and a renewed sense of confidence in investment in America, both of which are necessary to guarantee a more robust growth.
Q. Do you think that pessimism among consumers could create a snowballing effect with this -- it could get worse, people see the economy getting worse, and therefore it becomes worse?
The President. Certainly I don't want to contribute to that psychology by making a comment that goes beyond what I've just said. So, I don't want to answer it in a way that that is a concern I really have. I think all of that -- the psychology of the market -- can be turned around by a good budget agreement that has some growth incentives in it.
Persian Gulf Crisis
Q. Mr. President, do you think the American people would support the Persian Gulf policy as much as they have been if we started to take thousands and thousands of casualties, which is a likelihood if there is fighting?
The President. I don't know. But I am inclined to feel that we're off to a very good start. I think your hypothesis alluded to that. But I don't want to make a prediction as to how the American people would respond under that. I'm old enough to remember a clear-cut case -- different circumstances, different times -- World War II. Many here are too young to actually remember the effect that had on American public opinion and all of that. But there was a lot of sorrow; there was a lot of regret. Everyone identified with the families who lost loved ones. But the country stayed fairly well together. Now, at this juncture, I think the American people are magnificently united in terms of standing up against this aggression. But I think it's a little too hypothetical for me to feel comfortable going beyond that.
Q. There is the thought, too, that the American public traditionally doesn't support stalemates that last a long, long time. If this gets bogged down in a nonshooting stalemate, will that support erode?
The President. I don't know. I read lots of predictions from people that say it would, and I would hope not. But, again, it's a little hypothetical because I think you have to know what else is going on at the time. But how long is too long? How much -- I think about those questions, but I can't define it for you. I want those soldiers out as soon as possible. I want them all out. All out, period. And yet, I can't say when that will be.
What we are trying is this all-out, full-court international press on the diplomatic side. And I want to see that work. Interestingly enough, you have different interlocutors, heads of government that'll tell you in varying degrees how effective they think the sanctions will be -- some absolutely convinced that these economic sanctions not only are working but will be very, very effective in a short run; others thinking it's going to take longer. But I don't think it would be good for me to get into that debate because I'm not clear in my own mind how long this kind of support holds up.
Q. Mr. President, but we have had thousands and thousands of casualties in the AIDS crisis in the San Francisco area where we have been particularly hard hit. And there are many there who feel that the Federal Government has not done enough and you've sort of drug your feet a bit on this issue. I'd like to know first of all what you think when you see in the papers every day the escalating number of casualties, and secondly, what you could say to the people of the bay area who are fighting AIDS?
The President. Breaks my heart when I see it. And I think of the families. I think of the loved ones. I think of the personal tragedy. I also think of the fact that when you're wrestling with an enormous medical problem of this nature, it is very difficult to have a snappy answer that will allay the fears of all the people. I also think of the fact that we are spending a considerable amount of money, through NIH [National Institutes of Health] and other ways, to beat this dreaded disease.
I think some groups do not give proper credit to the fact that a lot of people are laboring night and day doing just that. And a lot of people are -- I think of some of the nurses and doctors, particularly -- really giving of themselves around the clock to take care of these people. So, I wish there was some quick and easy cure. I wish somebody could convince me that if you could only spend a quarter of a billion dollars more, we would have the answer. I have been listening to what I think are the finest research people and doctors in the country, and I think they feel that we've done pretty well in funding levels at the Federal level. And then there's an awful lot going on across private hospitals and private research labs all across the country.
So, I can understand the agony. I must say some of the excesses of those groups does not help the cause. When Secretary Sullivan, a dedicated doctor and the head of HHS, goes to California and isn't even permitted the courtesy to get his message out because of people shouting throughout it, I don't think that helps the so-called activists in the movement. And I had a lot of mail saying people were quite embarrassed by that. But, again, I have to say I feel very sad and can identify with those families whose kids are suffering or older people who are afflicted by this disease. And I just hope we have a breakthrough.
Q. But, meanwhile, while we're waiting for a cure, the hospitals are overcrowded. Is there anything that you could suggest for people who are not getting the proper care?
The President. No, not anything beyond what Secretary Sullivan suggested out there, which was pretty good.
Persian Gulf Crisis
Q. Not long ago, the Wall Street Journal reported that as recently as the day before the Iraqi invasion of Kuwait, members of your administration were quietly lobbying against a bill by Representative Howard Berman that would have essentially slapped Kuwait [Iraq] on the knuckles -- proposed sanctions for their increasingly aggressive behavior. That bill and other examples of administration support for Iraq -- do you now regret those things in light of the invasion?
The President. Absolutely, in light of the invasion. However, there was some reason to believe that perhaps improved relations with the West would modify the behavior. But given the invasion, absolutely. I think if everybody had the benefit of total hindsight, why, you'd go back and say, hey, this didn't make much sense. I'm not sure, having said that, that that would have changed Saddam Hussein's intention to take over Kuwait.
Q. Where was the miscalculation in U.S. policy?
The President. I don't think this is caused by miscalculation in the United States policy. I think it's caused by a miscalculation by Saddam Hussein. And I think the American people understand that to a fare-thee-well.
Q. Mr. President, if Saddam Hussein is a loose cannon, is he going to respond to any logic or rational -- in any logical or rational way to this -- to the embargo?
The President. That's a good question. And I don't know how one responds to it, because what he has done is clearly irrational if he felt it would bring down the wrath of the United States and 20 other countries and, indeed, the entire world at the United Nations.
But I am convinced that the sanctions are working to some degree. I can't tell you definitively how effective they are at this minute. But they are working. And what we want to do is tighten them up every way we can, joining other countries in doing that, to give that approach the maximum attempt at success, and then we'll see. But it may be beyond his control because nobody wants to see their whole economy screech to a total halt. And you got to remember, 90 percent of his funds from abroad came from oil, and that is tightened way down. In fact, I don't think there are any exceptions to that at all.
Q. Mr. President, do you -- --
The President. Coming over.
Q. Do you think that perhaps an air embargo might encourage Saddam Hussein to react more rationally to the sanctions?
The President. I can't certify to you how much is going in by air. What we want to do is tighten up the United Nations sanctions so nothing is going in. And that's hard to do in terms of overflights and some countries that seem to be more willing than others to avoid the sanctions. But I know that Francois Mitterrand has talked to this point, and I understand it. And I would be prepared to work with anybody to tie that additional knot in the sanctions.
Q. I have a followup. Do you think that your message to the Iraqi people had any impact on public opinion there? I think there was a report that said that the cartoon ratings did a little better.
The President. It got a good exercise for the demonstrators who had been notified to demonstrate before they even heard what I had to say. So, it kept them hustling around, jumping up and down, screaming about the United States. And if that helped them vent their frustrations, fine. [Laughter]
What I do think it will do is to send a word, very objectively, to other Arab countries that it isn't Saddam Hussein and the rest of the Arab world against the United States, but it's something quite different. And if two Iraqi citizens heard that, it would be worth the effort. And who knows? Those things -- the truth is a good thing. It's a good thing to put into Iraq -- getting very little of it now. And so, I think it was worthwhile. And I'm told that the response in other areas has been pretty good. So, we'll have to -- I think it's a little early to evaluate it all. But I think they must have been a little concerned about it because the demonstrators with their signs already printed -- at least from one report I read -- were already heading to the demonstration point before they knew what I said. How did they know what I was going to say?
Q. Mr. President, on this, the 25th anniversary of Medicare, we have the budget coming down to the wire again, and again Medicare is taking it on the chin, very hard. It seems to be getting worse every year. The providers are complaining. Hospitals are closing. Certainly, the elderly are complaining, and their organizations are getting very vocal. What do you have to say to these people? Why Medicare?
The President. I'm saying that no decisions have been made. And I've tried to avoid discussing details of this budget agreement while these details are being hammered out. I think the American people are very much concerned about the escalating costs of hospital care. There's no question about that. That shows up as something that's very much on their minds. But beyond that I don't feel like going at this point because there's some negotiations going on. But I'm not sure that I've seen anything in print that accurately reflects a consensus out there at Andrews.
Persian Gulf Crisis
Q. Mr. President, with regard to the question of national unity in response to the Gulf crisis, do you have any worries that the political battles over the economic summit -- some of the things that have been said -- are tearing away at that?
The President. No. And that's a very important point. And I don't see any evidence of that whatsoever. And I think that's very good. And it transcends liberal, conservative, Republican, Democrat. The support is there, and I have seen no evidence that any of the deliberations about the summit, at the summit or outside of the summit meetings, have eroded support in Congress, for example, or amongst the American people. But I think it's important that that not happen.
Q. Mr. President, what are your concerns about Iran's apparently warming relations with Iraq and how that might affect the equation in the Gulf crisis?
The President. Iran got almost everything they wanted from Iraq. This has not enhanced Saddam Hussein's standing in Iraq. Hundreds of thousands of lives were lost on both sides. And now, the victory has been handed to Saddam Hussein. We have had indirect assurances from Iran that they want to see these sanctions complied with and enacted. Until I am shown that Iran is violating the sanctions, I'm not going to buy into the argument that they've made some secret deal to violate the sanctions.
Q. Even with the statements by the Iranian clergy, the fundamentalist clergy, that this is time for a holy war against the United States?
The President. Nobody has suggested that out of this there's going to be a harmony and sweetness between some of those factions in Iran and the United States. But read carefully what he said. I'm told by some experts that he did not call for a jihad. But you've got to analyze it very carefully. But there will be factions inside Iran that will continue to resist any improvement in relations between Iran and the United States, and we understand that.
But the main thing is, I think the important thing is right now is that Iran do what Iran has publicly said it would do, and that is to comply with the international sanctions. And they have said that publicly.
Q. You've been reporting with some pleasure on the fact that our allies and friends around the world have been joining us in the Gulf, and even those countries that are constitutionally restrained, like Germany and Japan, from sending troops have been sending money. At the same time as this is happening, the cost estimates for our presence there have been jumping just as much as the troop counts have, and earlier Secretary Cheney mentioned that the deployment isn't even finished. Should we be concerned as taxpayers that the Persian Gulf crisis has been written a blank check for the duration?
The President. You know what I think about that one? I think the American people want me to do exactly what we ought to do to fulfill our four objectives over there. And if that means that we have to ask others to support certain aspects of this in a burden-sharing way, we're going to continue to do that. But I believe that the American people have confidence in the decisions that we've taken, and I don't think they would want to shortchange the effort, no matter how serious the budget complications are right now.
Q. Does this scotch any hope for -- big-city mayors, for instance, have talked about a peace dividend. It may have been a phantom all along.
The President. I've always felt that that was a phantom because I don't think you can declare a dividend when you're operating at a loss. And we're operating at a tremendous deficit. So, I hope that they have been disabused of the fact that there would be enormous money to spread around. But I think a big-city mayor would stand right up next to me, no matter how serious the problems in his or her city, and would say, we don't want to shortchange the military effort. If we're going to have those people over there, we ought to do what is necessary to give them full support. I think that's the way they'd all react.
Q. Mr. President, at the beginning of the crisis, there were some calls for you to use the strategic petroleum reserve to hold down gas prices. What do you consider a proper use of the strategic petroleum reserve, and are you satisfied with the level at which it is right now?
The President. I think that when you have a real shortage of a product or you see an external event that is going to guarantee that there be shortage, then would be the time when you most certainly should use the SPR. It is my judgment that there isn't such a shortage at this time. There is some feeling that a demonstrative, albeit not large, drawdown would calm a fluctuating market. We'd say, now, wait a minute, you speculators that are speculating on the price of oil out into October sometime do so at your own risk. You could make a case -- and I'm listening to those in the administration and on the Hill that make the case -- that such a drawdown of a small amount perhaps at the beginning might argue against or guarantee against speculation in the futures market. That's an intellectual and economic argument that has some appeal.
But the reason we haven't drawn down the SPR is, in my judgment, I have not felt that there was a shortage. Fortunately, if this had to occur, it occurred at a time when there was reasonable amounts of stock. So, you're seeing the fluctuation driven not by market forces, not by supply and demand today, but by speculation as to what it might be in the future, and I just don't think that that would entirely be offset by a SPR drawdown.
So, there are other circumstances under which you would clearly have to draw down. I mean, if we had left Saudi Arabia undefended and if, when Saddam Hussein sent the tanks and the armor south from Kuwait City down to the border, they had gone across, cut off Dhahran or something like that, then you would have had a situation where you might have short-range stocks overhanging the market that would last for a few days, but clearly you would have had an emergency. You would have had something that any President would have, I think, instantly called for a drawdown of the SPR.
Q. Mr. President, can you address the question down the road about the tradeoffs in environmental concerns with regard to the current oil situation, and in particular if you could address what's going on in California right now? You banned offshore oil drilling for 10 years. But there are a lot of environmentalists in California who are afraid that you're going to go back on your word.
The President. I have no plans to revisit the decisions I have taken. But what I do want to do -- and I may run into conflict with some groups -- is to more vigorously go forward with incentives for domestic drilling. I mentioned Alaska, I mentioned tax incentives that I proposed a year ago -- over a year ago -- and I want to press for those.
When I met with the California delegation, I said to them: We simply cannot have it prevail that we don't want any drilling here, and she doesn't want any drilling there, and he doesn't want any drilling there. Everybody do some drilling, but do it in somebody else's area. That is not good enough. And I said someday we're going to realize that we are becoming too dependent on foreign oil. You can ask the California delegation with whom I met just prior to my decision. I don't believe that the supply situation is such that I have to revisit the decisions I did make that affect Florida and affect those certain areas in California.
Q. A followup. You're going to be going to California tomorrow to do some campaigning for Senator Wilson. He is currently opposed to an initiative in California that would ban offshore oil drilling. Will you be saying anything about that when you are there?
The President. I doubt it. I've got enough problems right here in Washington without going out and commenting on a provision out there. [Laughter] But if the question is put to me at a press conference, ``Do you want to ban offshore drilling?'' the answer will be no. If the question is put to me as you put it, ``Do you feel you need to change the decisions you've already made?'' I'll say no, I don't think I need to do that. I'm not familiar with that proposition, but this is the point: I mean, I don't think these regions can have it. Some never want a refinery. Some never want a drilling rig anywhere near their place. And yet, they see clearly the adverse economic effect on their citizens that comes from a dislocation of this nature.
The bottom line is: It's going to have to be conservation. It's going to have to be alternative sources. It's going to have to be more hydrocarbon drilling. I think we can accomplish those objectives through incentives and through sounder practice and through new technology and -- for example, clean coal technology -- without having to do damage to the highly sensitive environmental areas.
I've got time -- 28:40 -- and I said to answer questions for 30 -- so I don't want to get in trouble with Kristen [Kristen Taylor, Director of Media Relations at the White House]. But it's 28:47.
Q. Mr. President, you won't hear many people in Houston or in Texas saying, ``We don't want drilling here.''
The President. No, I haven't heard that.
Q. What are your Houston oil men and women friends telling you they want by incentives? And what are you telling them?
The President. I haven't been in personal touch with the Houston oil people, though [Secretary of Commerce] Bob Mosbacher, unrecused now from giving advice to the President, feels that the incentives that we put forward last year should be vigorously pushed to stimulate domestic drilling. There are also things that we had in there that would give an exemption -- you'd understand -- maybe not all of us here today -- on secondary oil, a break to permit some of this secondary -- these stripper-well productions from going offstream. The oil is there, but -- produce so little, the option is, do I get some incentive to do this, or do I shut the well down?
So, I think there are things we can do in that. I think there are things we can do in R D in terms of tertiary production that would be of benefit. But the major incentive would be to give a tax incentive to domestic drillers for future drilling. It won't detract from current income, current revenues in the tax situation. I think that is the place where we'd push hard. Now, there's all kind -- you're hearing other ideas around that would have an effect on the constituency that you ask about: import fees or taxes on petroleum products or whatever. And I just don't want to comment on those as long as this summit is going on.
I've got time for the last one. Here it is, right in the middle.
Persian Gulf Crisis
Q. Mr. President, who makes the decision on how troops from foreign nations are deployed in Saudi Arabia -- where the Syrians are deployed, the Egyptians, French, the British? And is there going to be an overall command?
The President. Because of the overall magnitude of the United States force there, there is an active consultation with General Schwarzkopf, our CINC, our commander in chief, in the area. And we have not forsworn the right of that general officer to control American troops, nor have the French -- who aren't quite there yet in force -- or the Brits, or others, done that. But it is a matter of close coordination, particularly with the host country.
But I don't want to diminish the importance of General Schwarzkopf in the deployment of forces. Clearly, he can't order the Desert Rats to a certain deployment. But in working very closely with his counterpart in the British forces, or the one that controls the British forces, those matters have all been worked out through really fundamental consultation and in accordance with an overall plan that we've worked on with the various -- the commanders that have forces in the area. So, it's a coordinated effort. And I have no hesitancy at all to say to the parents of the kids over there, or families: Should something happen that required combat, the command structure will function very, very smoothly. And we're not going to have to stand around waiting for someone else to decide if there is some provocation, either.
Thank you all very, very much.
Note: The President spoke at 2:02 p.m. in Room 450 of the Old Executive Office Building.