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that would be somewhat less controversial Tax Revenue Increases than this approach has been.

Q. Mr. President, you're a great student Q. Mr. President, if it were so comforting

of the American electorate. Have you conand good for the country, why didn't you cluded that the American public is more do it a year ago? The President. Because we've got a prob- deal with the deficit?

willing to consider and accept new taxes to lem, that of far greater magnitude today,

The President. Not particularly. If you say because we've had a much slower economy

to a guy, Do you want to pay more taxes—I than anybody predicted. And that has

haven't found anybody that would say that. meant revenue shortfalls, and that means

But I think if we do our job properly and bigger budget deficits, and that means

they understand the magnitude of the probmore burden for future generations of

lem at hand in terms of this deficit and Americans and unacceptably high interest

then we make a proposal that is fair on the rates. And so that is why I

revenue side, on the spending side, and Q. Are you saying the economy is in some

then on the reform side so that we don't kind of trouble now that these prob

get in this mess again—and I'm going to lems The President. I'm saying the economy is

restrain myself from putting the blame on

Congress-(laughter because it's hard to sluggish. And I think a deficit package that is seen to be a real one will have an amelio

constrain spending, so we need some re

forms—then I think if they see all three of rating effect on that and, hopefully, will

these things and they see it's fair that result in lower interest rates and thus have

people will support this. a more vibrant, a more robust economy.

Q. Would you, under any circumstances, NATO Summit

consider increasing income tax rates? Q. You talked about the next NATO

The President. I've said and told the leadsummit as a milestone. Next Friday, what

ers that I'm not going to go into the details. are we going to see? Are we going to see a They are not going into the details of what totally different NATO? How different will they will or won't accept. And the only way it be?

to accomplish a negotiation is to keep faith The President. No, but we're going to see

with that approach. And they are doing a NATO that makes very clear to the world, that, Republicans as well as Democrats, so one, that it's purely defensive and, two, it I'm not going to go into the details. has a broadened agenda beside just mili- Q. Income taxes are on the table, too? tary-building on article II of the NATO The President. I'm not saying what's on document, the founding document. That's or off. I've made my statements on that, what you'll see. I can't help you with the and I'm just going to go forward. I've got details because we obviously haven't even preferences, strongly held preferences that met yet.

people are familiar with, but I'm not going Q. Will there be any American proposals to reiterate them because more important there at NATO—something entirely new? than my posturing or protecting from

The President. I was asked the other day arrows coming from one direction is getting at a meeting with some foreign journalists a deal that's fair and good for the American whether there would be I don't know that people. they used the word "bombshells," but big Yes, Maureen (Maureen Dowd, New York surprises. I don't anticipate that, but let's Times). Then we'll go to the back. The wait and see what happens when we get

middle-sorry. there. The NATO goal at this juncture Q. Mr. President, I wonder if you can try should be to convince President Gorbachev to explain today why you made the no-newthat a reconstituted NATO with Germany taxes promise in the first place? At the as a full member is not a threat to the time, the deficit was absolutely horrendous, Soviet Union, but rather provides stability the savings and loan situation was absolutefor Europe and thus will guarantee the con- ly horrendous, and most people greeted tinuance of the longest peace that Europe your promise with a fair amount of cynihas had in its history.

cism, saying taxes were eventually going to be needed to bring down the deficit. Can Taxes and Economic Growth you sort of blame people for now looking

Q. Well, can you just say-do you believe back

that taxes kill economic growth, or do you The President. No, I don't want to blame believe that higher taxesanybody.

The President. 1 think taxes wrongly apQ. No, I'm just saying can you blame plied can kill economic growth. And, yes, I people for looking back and saying, Well

, do think that. So, I think we've got to be maybe he didn't really mean it the whole very careful as to how we get this formula time?

to see that we don't kill off economic The President. I can understand people growth. You've got to look at the overall saying that. I think it's wrong, but I can gross national product when you talk about understand it. I'm presented with new that, too. facts. I'm doing like Lincoln did: think Q. Why didn't you say that during the anew. And I'm thinking anew. I've still got campaign, Mr. President? the principles that underline my political

The President. Well, I don't think anyphilosophy. It hasn't changed my view body did such a good, penetrating job of about whether-you know, taxes. But we've questioning, and because the problem is difgot a major problem facing this country. I ferent. The problem is quite different, have the responsibility, leading the execu

Owen (Owen Ullmann, Knight-Ridder tive branch, to get things moving, to get a

Newspapers), today than it was then. solution.

Tom (Tom DeFrank, Newsweek] and The budget deficit is bigger, far bigger. I John (John Mashek, Boston Globe). Patience

is what it is. had thought I could do a better job on getting spending down and perhaps getting Federal Budget Negotiations the reforms of the budget process that I also talked about. So, we're not talking members of your own staff are saying that

Q. Some Members of Congress and some about just in the campaign talking about

your three able negotiators, as you just deone aspect. I was talking about reform, I

scribed them, have signaled one important was talking about spending constraints and possible deal. And that is, if the Democrats not having everything go exactly my way. will give you your capital gains tax cut, Now we've got to address ourselves to a you're prepared to go along with eliminatworse problem, Maureen, than any of us ing the bubble on the high end of the tax visualized back then.

rates scale.

The President. We're going to leave Federal Budget Negotiations

allQ. Mr. President, throughout the '88

Q. Is that a fair campaign, you kept saying—and this was a

The President. No, it's not a fair-I'm not quote

“The surest way to kill economic sure your dope is correct, either. But I just growth in this country is to raise taxes."

don't want to violate this concept of confiNow you're telling us that the reason you're dentiality while we're in the negotiating thinking anew about raising taxes is to

stage, and so I can't respond to it. But I make sure that you sustain economic

wouldn't put too much trust in that one. growth. And yet you also told us that you're Tax Revenue Increases not changing your views about taxes. Exact

Q. Mr. President, if your statement here ly what are your views about taxes?

this morning represents your latest thinkThe President. Wait until you see the

ing, why is it that a whole flock of conservaagreement that comes out. That will be my tive Republicans have already disavowed view as what has to happen, hopefully, your position, considering it a tacit request within a month of 1990. That will be my that taxes will be increased? views, faced with a problem very different The President. For the same reason that than the problem facing the Presidency in that same response occurred in 1982, John. the end of 1988.

We have people who feel very strongly on this question, and I'm one of them. But I've Foreign Minister), and I had a chance to got to make the case for the broader ad- touch on it with President Gorbachev. dressing, ourselves, of this problem here. You see, it is hard for the American But I can understand that.

people to say, Why put X billions of dollars Q. It doesn't give you any pause that this of money into the Soviet economy when it's fall you're going to be out campaigning for not reformed, when they're spending 18 Republican candidates who disagree with

percent of their gross national product on you on taxes

military, and when they're spending an estiThe President. No.

mated $5 billion in Cuba? Some of our allies Q. —as well as abortion and perhaps might not be as concerned about that last other issues?

point as we are. I'm very concerned about The President. No. We've always had dif

it. ferences with me on all those issues, one

So, we want to try to be of assistance in way or another, one side or another. But we

reform. We can do a lot in terms of helping also have a matrix of a party that is opposed institutionally. The EBRD (European Bank to tax and spend, who wants to constrain

for Reconstruction and Development), in spending and who wants reform. I still feel a fundamental part of that, even though place some facility for future lending. But I

which we are a participant, now has in we're talking now about an agreement that

don't want to misrepresent this to our allies will hopefully cover all three aspects of that. If it doesn't, there won't be an agree

nor to the Soviets. And that's why I say

we've got difficulties with this that perhaps ment, I guess.

transcend the difficulties that others have. Q. Mr. Secretary-(laughter)–Mr. President.

Q. And you will not oppose the allies The President. Do you have a message for giving direct aid, though?

The President. I want to talk to them me? (Laughter] This is going to work out. This is going to work out, don't worry about

about it, but I don't think we should tell it. (Laughter]

Mr. Kohl (Chancellor of the Federal Repub

lic of Germany) what his lending policy or Economic Assistance for the Soviet Union finance policy should be. It's understand

Q. Yesterday, the Secretary of State, Mr. able. He's a neighbor. They've got quite Baker, seemed to duck a question that en

different problems with the Soviet Union compassed two of your dilemmas. One is than we do. But normally, it's best to have the specter of taxes, but the other is the

the alliance act in concert. And I expect pressure from the allies, which you'll see in we'll be talking about this not only at HousNATO and then again at Houston, to help ton but perhaps at the summit at NATO. the Soviet Union, to give them actually Q. Mr. President, do you believe that we more than technical aid. Have you changed reporters are being somewhat naive when your thinking? Are you moving toward we suggest in our stories that some sort of agreement with the allies?

The President. Yes, because I didn't recThe President. We have some differences ognize you. I recognized him. (Laughter] in the alliance on this question. Are you I'll come back to it, Frank (Frank Murray, talking about just strictly the aid to the Washington Times). Soviet Union? I've tried to be very frank and up-front not only with the allies but

Tax Revenue Increases with the Soviets on the difficulties we have Q. A senior economic adviser in the last at this juncture, because there has got to be administration was fond of telling us that economic reform there, market reform, and economic expansions don't die, bad policies all kinds of changes that I believe Gorba- kill them. Now that you're admitting that chev wants to see take place. But they have the economy is growing sluggish enough to be in place for the United States to go that tax revenue increases are needed, what forward. Then we have a political agenda policies went wrong? Why do we need this that we've tried to be very frank about. budget agreement so badly now? Secretary Baker has presented it in consid- The President. In theory I'm not sure I erable detail to Mr. Shevardnadze (Soviet disagree with that. In practice, provided everything is kept in proper perspective in suggest that all politicians are cynical. Certerms of the total GNP, revenue increase tainly when I was making comments of that would not kill off economic growth. You've nature, I was convinced that I could stay got to see what the size of it is, what form it the course, and we did for a long time, and takes, whether it's accompanied by incen

we may now, but let's see where we go on tives for growth-something I'm very much this negotiation. Because more important interested in. So, you can't look at one

than how people look at what I've said is piece of the package at this point, as we're

what happens to the economy, what haptalking about solving a major deficit prob

pens to jobs, what happens to economic lem. And you also have to consider the total

growth. size of the deficit as it relate to our econo

So, when you make a change that people my. Q. Well, sir, what I was asking is what

see as a dramatic shift, you've got to batten

down the hatches and take the heat. But I went wrong? Why is it necessary now? Is this

really am not trying to misrepresent my The President. Yes. I think we got slower position. I feel comfortable about that beeconomic growth than had been anticipated

cause I've gone back and done a little reand, thus, fewer revenues, thus, a bigger

search and seen these firestorms come and deficit. We have a law requiring us to get go-people who feel just as strongly on one the deficit down to certain levels, and so

side or another of an issue as I do and you've got a combination: the discipline haven't gotten their way exactly. That's the that the Gramm-Rudman-Hollings causes

American system, and I've got to work with and economic growth not being as robust as it. Congress can—they can go out, everywe predicted. And that is why we've got to body up there can go out and take a posido something right now.

tion, but it's only the President that has the Frank, yes.

responsibility for the whole executive Q. Mr. President, in your research of branch approach to it. what's happened to others, have you con- Couple more and then I'm going. cluded that we're naive to suggest that the Q. Mr. President, how do you explain to public takes campaign promises seriously? the country why you're treating this as es

The President. No. I think people are sentially a Washington insider's game right smarter than a lot of us think they are,

now? Why not explain to the public what including me, and I think they're fair. And I

your list of priorities are within the spendgo back to the experiences of previous

ing and tax issues? Are there no longer any people that have been in this office who say

lines to be drawn in the sand based on your one thing in a campaign; come in and keep

convictions on these areas? that pledge, if you're talking about taxes,

The President. Yes, and they will be for quite a while; and then see that there's an enormous problem facing the Nation

drawn in the negotiations. And then I'm that requires a bipartisan answer. And if I

going to do exactly what you're talking had control of this Congress, both Houses,

about. I'm going to tell the American we might not even be talking about this

people why this bipartisan agreement, today. But there's a different feeling here,

which I'm still hopeful we'll get, is essential and I've got to see the country go forward.

to the national interest. And I've got to take the heat that comes

Q. The Republicans have gotten a lot of from certain quarters, political and other, mileage in the last several elections out of and I'm prepared to do that because I think

what the Democrats think has been shameI'm on the right track and I think in the less demagoguery on the tax issue. By asfinal analysis the American people will un

suming that you get this bipartisan agreederstand that

ment, haven't you basically undercut that Q. And you think the public understands argument for your party? Hasn't your party this and takes this into account when they now lost that issue? hear campaign pledges?

The President. Some will say so, but not if The President. Well, I've seen polling fig. I go out and do my part and if I remind ures that indicate that. But I don't want to them of history. Take a look at the reaction

never

in 1982, and it didn't have that kind of an The President. Only in that broad parenadverse effect.

tal way. But making clear and he would Sarah (Sarah McClendon, McClendon be the last to ask me, in any way, to get News Service]? Sarah, you thought I'd involved in any side or the other. I do think

that those that allege misconduct ought to U.S. Support of NATO Allies

speak up and say what it is. But it's not

been easy for him. He's probably the most Q. Here's a way, sir, I think you can solve sensitive of our four boys, maybe second your problems. (Laughter] Research

most sensitive—I can't quantify this for you shows-you're going to NATO, and you're with all four of them but he's a good kid. going to try to reform it-research shows

And it's not easy. He's held his head up. He, that you could save a $150 billion to $160 too, has taken a few shots on this. But he's billion by cutting out the support that we had some good defenders from both sides of give to other foreign countries by paying the aisle. And the system is going to work, for their defense of Europe. Now, why, in whether it's the President's son or somethe name of God, don't you cut down the body else. And to suggest that it doesn't spending that you're putting on NATO undermines the basic integrity of the Amerwhen we're really paying this for other ican process, the American system. But it's countries that are going to the summit with

not easy for him, but he'll do okay. you? The President. Because I believe that a

Mayor Marion Barry of the District of strong NATO is in the national security in

Columbia terest of the United States. I think it is in Q. Mr. President, have you seen the our interest that Europe has kept the peace Marion Barry tape, and what's your reacfor 40-some years, that it is going more and tion? more the democratic route. And we have a The President. I thought I'd get asked stake in it. Every taxpayer in the United that, and I am simply not going to get into States has a stake in world peace. And that's that matter. It is not appropriate. It's a why I feel as I do about it.

matter for in the courts. Please forgive me Last one.

for not commenting on that one. Neil Bush

Thank

you
all very

much. Q. Mr. President, going back to the S&L

Note: The President's 52d news conference scandal, your son Neil has been involved in

began at 9:32 a.m. in the Briefing Room at one of those failed S&L's in Colorado. And

the White House. I'm wondering if you've discussed this issue with him. Are you convinced that he is not guilty of any wrongdoing? And are you convinced, also, that a government that you head will be able to fairly investigate his Proclamation 6152—To Modify Dutyrole?

Free Treatment Under the Generalized The President. Yes, to your last question. System of Preferences and for Other And I have—what dad wouldn't-full confi- Purposes dence in the integrity and honor of my son. June 29, 1990 And I will stay out of anything to do with the investigation, but this is a fine young By the President of the United States man. Everyone that knows him and saw

of America him testify feels he's a fine young man. But

A Proclamation yet the system's got to go forward, and I'm convinced that if he has done something 1. Pursuant to Title V of the Trade Act of wrong the system will so state. And if he 1974, as amended (the 1974 Act) (19 U.S.C. hasn't, I hope it's fair enough to say, Hey, 2461 et seq.), the President may designate the boy did nothing wrong.

specified articles provided for in the HarQ. Have you discussed this issue with monized Tariff Schedule of the United him?

States (HTS) as eligible for preferential tariff

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