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I do not want to imply that there is anything unsavory about it, but it is just that the operation, I think, really needs to be streamlined and reformed in order to inspire confidence in all the member nations. As you know, both our-the last two Congresses, one was a Democratic Congress and this Republican Congress, expressed varying levels of opposition to some of the U.N. operations. But the last Congress was far more focused on getting the U.N. to work right, not having America walk away from its responsibilities and became more isolationist. But I will also say back to my fellow Americans and to the Congress that we should continue to support the United Nations, that they do a lot of work in the world that the United States might have to do alone or might eventually be pulled into doing, because they keep problems from becoming as bad as they would otherwise be. ENTITY, given the difficulties, the highly publicized difficulties, of course, with the U.N. peacekeeping forces in Bosnia and other U.N. difficulties, does not it make it more difficult for you to try to sell this to Americans, and do not you run some political risk in trying to do so? Well, I suppose there is -in a time like this, when a lot of people are bewildered almost by all the things that are going on in the world and the apparent conflicts of all the good forces and the troubling forces rising up at once, there is some political risk in everything. I think the-I think it is important not to define the-first of all, I think it is important not to define the U.N. solely in terms of Bosnia. I mean, there was also-I'd ask the United States to remember that we went into Haiti with a multinational force that restored the Aristide government and democracy, but we were able to hand it off to a U.N. force with even more nations involved, where there were more countries paying for it. I think most Americans know that there are going to be problems all around the world that affect United States interests and that can affect United States citizens, and it is better to have a larger number of nations working on those problems and a larger number of nations paying for the solutions to those problems. Bosnia is a unique circumstance because it is in the heart of Europe, but there is a war that is been going on there for 4 years.

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But if you look at it, the people in Northern Ireland fought for 25 years, the people in the Middle East fought for more than four decades before there was any peace progress there. And for all the frustration people in our country have with the problems in Bosnia, the casualty rates have gone way, way down since the U.N. forces went on the ground there and since the United States began to support them with massive humanitarian airlifts and with our operation to keep the war from going into the air. That is what Captain O'Grady was doing when he was shot down; he was enforcing the no-fly zone. And I think it is important never to forget that. Before the United Nations became involved and before we became as aggressive as we were in trying to provide air help, in 1992, there were about 130,000 people killed in that civil war. In 1994, the death rate was down to under-about 3,500. So I think that it is important, even in Bosnia, to keep this in perspective. The United Nations did not succeed in ending the war in Bosnia. The United Nations did not go in there to militarily defeat the Bosnian Serbs, and they are not capable of doing that, and that was never what they were established- that is not what they were sent there to do. But the war has become less violent and has been at least contained to Bosnia and has not spread beyond its borders. So with all of our frustrations, I think it is important to remember that. You will be doing a number of things in your speech on Monday, which has been, I think, widely anticipated around the world. And certainly, the patron saint of the U.N. 50 celebration, Walter Shorenstein, says that it is a real opportunity for you to give a world-class speech. Having said that, and you having said that you are going to outline your hope for the U.N. given the changing circumstances of the world, what part of your speech-what will you say in your speech to address some of the criticisms, particularly by key Republicans, of the United States' involvement in 1995 in the U.N.? Well, I will-consider the alternatives.

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I mean, here the United States is, the world's only superpower militarily, with other countries becoming increasingly wealthy, where there are other countries willing to put their troops on the ground in their own trouble spots and not asking us to do it, like Bosnia, and willing to pay an increasingly large share of running the United Nations. And now we have people in our country and, most importantly, people in our Congress, who want to walk away from our global responsibilities and walk away from the opportunity to cooperate with people in ways that permit others to carry some share of the load. You know, sometimes I get the feeling that some of the critics of our cooperation with other countries want it both ways. They want to be able to run the world and tell everybody exactly how to behave, and then not have to cooperate with anybody when they have a slight difference of opinion from us or even if they are willing to put their troops on the ground and put their money up. That is the case in Bosnia, where the Europeans said, We will take the lead. We will put our troops on the ground. This will be paid for through the United Nations, so you will not have to pay for any more than your regular assessment. We ask you for your air power and the support of the NATO, but we are going to follow the prescribed United Nations policy. We are not going to let the U.S. dictate policy, especially when it is our troops and our lives that are at risk. And I think we cannot have it both ways. We cannot become an isolationist country, and we cannot dictate every other country's course. And it is better for us to be a leader within the framework of the United Nations, which means that from time to time we will have to cooperate with people and agree on a policy that may reflect more of a consensus than our absolute best desires. But that is what the United Nations was set up to do. The U.S. is still clearly the dominant country in the United Nations. We still are able to do the things we need to do to be-for example, to keep a firm hand with Serbia; we have been able to keep other countries from lifting the sanctions off Iraq; we have been able to get a tougher line-in many ways, we were able to have our policy in Haiti prevail.

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But the United Nations is about working with other countries and shared sacrifice, shared contribution, shared decisionmaking, where the U.S. leads but cannot control everything. And so in your speech on Monday, despite the criticism of the U.S. involvement in the U.N., you will not be backing away from the U.N., but at the same time, you will also be offering suggestions for reforming it? But I do intend to say that this is going to be a 21st century organization, that it is more than a debating forum and-that involves a collective decision by the community of free nations to deploy people all across the world, not just in military situations, like peacekeeping, but in other ways, where it is going to have to be run very well and it is going to have to be able to inspire the confidence of taxpaying citizens not only in the United States but throughout the world. But I think-I still think the fundamental fact is that the end of the cold war permits the U.N. to live up to its full potential; that we ought to become-we ought to stay involved, we ought to pay our fair share, and we ought to be very grateful that there are other countries that are willing to spend their money and actually put their people at risk in places where either we would not do it or we do not now have to do it all, we do not have to carry the whole load; and that we ought to be willing to lead in an atmosphere in which we also have to cooperate from time to time, especially when others are making a greater sacrifice and when the problem's in their backyard. And that is- that is the sort of future we ought to want. And we also ought to be mature enough to recognize that as long as human beings are alive on the Earth, bad things will happen, problems will exist, and that there will never be a complete and easy solution to all the problems in the world. But far better this course into the future than either having the nuclear cloud hang over the world, as it did in the cold war, or having the U.S. become an isolationist power, as we did between the wars, and run the risk of other terrible things happening all around the world which would drag us back into another war in the future.

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In other words, the course that I advocate is not problem-free because as long as there are people and as long as bad people can get political power in various places, there will always be problems in the world. But it is far better than the alternative, better than what we went through in the cold war and better than having an American isolationism. Sir, one question away from the U.N., and that is the subject of military bases. One of your political allies, Senator Boxer, has asked you to consider sparing some of the bases in California slated to be closed. At the same time, one of your political opponents, Pete Wilson, plans to attack the administration in a speech this evening in New Hampshire for what he says are artificially low target levels that OMB has given the Department of Defense, which has resulted in a need to close more military bases than necessary to meet the budget targets. I am wondering first, on the political ally side, if there is any chance that you would spare any of the bases in California, and on the political opponent side, what you would say to that criticism by Governor Wilson? Well, first of all, let us deal with the base issue. The way the base closings works is-the way the base closing process works is that the commission votes on which bases to close. Then they send it to me in a package, which they will do on July 1st. I can accept it, in which case it goes to Congress, and unless Congress rejects it, it goes into law; the second option is I can reject it out of hand, in which case there are no base closings; the third option is that I can send it back to the commission with recommended changes. And I have to tell you that with regard to California, as you know, the McClellan Air Base was not on our list. And it was not on our list, basically-it was not on the Pentagon list for two reasons, both of which I thought were good reasons. One was that California had about 20 percent of the defense investment for the country, but it sustained 40 percent of the base cuts in the first two rounds. The other is that the Pentagon thought that a better way to deal with the problem of over-capacity in what is done at McClellan and down at Kelly Air Force Base in Texas was to shave some of the capacity off all five of the sites around the country and presented a plan to do that.

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So I am concerned specifically-I am concerned about the decision made by the Base Closing Commission there, but I have to be careful about further comment until they send them all to me. Now secondly, Governor Wilson is just wrong about what he said about defense. Basically, my defense numbers have been about the same as the Republicans of Congress have recommended and what the Pentagon has asked for. And the truth is that the ENTITY people-all the military people but particularly the ENTITY-will tell you that we have brought the force structure down, we have reduced defense in real dollar terms about 40 percent since 1987 and we have reduced the size of the military by about 40 percent, and we have reduced our base structure, oh, about less than half that, considerably less than half that. So most of the military experts will tell you that the reduction of base structure in the United States and throughout the world has lagged far behind the reduction in numbers of people in the military. And I have tried to be very sensitive since I have been in office to the economic impact of this, to trying to give these bases a chance to do alternative things like help to develop a civilian mission as well as a military mission, and a lot of that work is being done at McClellan and in some other places as well in California and throughout the country. But it is just not true to say that inadequate budgets have led to the closing of more bases than were necessary. We have, in fact, tried to keep more open than the strict, harsh numbers would dictate, given how much the size of our forces have been reduced. I am sure it is good politics for him to say that in New Hampshire or wherever else, but it is simply not true. I was just going to ask the ENTITY if Governor Wilson really is the candidate he fears most and if there is any chance that McClellan will or may not open? Well, first of all, let me just say those two questions are totally independent of one another. From the day I became ENTITY I worked hard to help California, and I think the people of California know that. We have given aid because of the earthquakes and the fires on more generous terms than had previously been the case. Thirty-three percent of our defense conversion money to develop new technologies from old defense technologies in the commercial sector have gone into California, a disproportionate amount.

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ENTITY, you are coming to Egypt next week, and you are meeting with ENTITY Mubarak and a number of other Arab leaders. What are you going to tell them? What role do you see the Arab countries playing in the coming stage? First, I want to thank ENTITY Mubarak for his hospitality. He has been telling me about the beauty of Sharm el-Sheikh for a long time, and now I am going to get to see it firsthand. You will love it. I am looking forward to it. The first thing I want to do is to make it very clear to the leaders in the neighborhood that I am intent upon working toward a two-state solution in the Middle East two states, Israel and Palestine, living side by side in peace. In other words, I want them to look me in the eye so they can see that I am determined to work to make this happen. I am also going to remind them the United States cannot do this alone. We obviously need Israeli support. We obviously need the new Prime Minister of the Palestinian Authority's work and help. And we need countries like Egypt and Saudi Arabia and Jordan and others to work together to cut off funding for terrorist groups, to prevent the killers from moving around, to help provide security, and as a Palestinian state emerges, to support Prime Minister Abbas' regime with not only advice but, when necessary, development aid so an economy can start to grow in a Palestinian state. ENTITY, let me follow up on that. You said you are determined to bring peace, you are committed, personally committed to the roadmap, and you are personally involved in the roadmap. That has sort of a different approach from the approach that the administration had adopted at the beginning, which was a hands-off approach, the peace process. Well, first of all, I think it is not a fair characterization to say we were hands-offquite the contrary. I took an assessment of what was possible and realized that it was impossible to achieve peace with Chairman Arafat. He is failed the Palestinian people in the past. My predecessor tried hard, and I watched very carefully what was tried at Camp David. Now, having said that, I also was working with the parties to try to set the conditions necessary for the emergence of a Palestinian government with whom we could work, so we would not waste time, so that actually some progress could be made. So the people have got to know when I say something, I mean it.

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Hopefully by now people have learned that, that when George W. commits America to a project, we mean that, we do not have idle chit-chat, that we are serious about our intentions. So the Arabs, or the people in the region should not really be worrying about voices within your administration who are opposed to serious efforts by the United States Yes, they do not have to worry about that, because I am going to put the effort forward. So you do not listen to them? Well, it sounds like they do not listen to me, because when I say something, I mean it. And I think ENTITY Mubarak knows that. And I am going to refresh their memories about the kind of administration I try to run. When I say something, we actually go do it. And when I say that I am going to be involved in the peace process, I mean I am going to be involved in the peace process. And I want to work toward achieving two states, so that the Palestinian suffering and humiliation ends. And ENTITY, how do you see the future of the Egyptian-American relations, the strategical relations that binded those two countries over the past two decades? Listen, we have counted on Egypt, and Egypt counts on America. Throughout my Government, people deal with the Egyptian authorities, and I think it is in our interests, our national interest to keep a strong relationship with Egypt, and I intend to do so. We are looking forward to seeing you, ENTITY, in Sharm el-Sheikh. It is going to be an exciting trip, and I look forward to the hospitality of the Egyptian people. And I want to assure the people of Egypt that the relationship is an important relationship between Egypt and the United States. And I want to assure your listeners that when I come to the region, I come with peace in mind and the possibilities of peace between the Palestinians and the Israelis is real in my mind, and I am going to work toward that objective.

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So we are here with you, already four years since the recession officially ended. And as your speech sort of laid out, you still have a situation where growth remains slow, income's is unequal, and a lot of American -- unemployment high -- and a lot of Americans start to worry that this is the new normal. Your intentions aside like you stated them out there in the speech, why should not we expect that you are going to leave behind an economy that is fragile, continued income inequality, and a weakened middle class? Well, obviously, what Congress does matters. As I said in the speech, the economy is far stronger now than it was four and a half years ago. Most economists believe that growth will actually pick up next quarter and the second half of the year. And the one thing that could really screw things up would be if you have a manufactured crisis and Republicans choose to play brinksmanship all over again. And I am glad to see that there are folks in the Senate who I think have already indicated that that is not good policy. We can have debates about fiscal issues without precipitating a crisis. Certainly the idea that we would not pay our bills and plunge not just the United States but potentially the world into another financial crisis makes absolutely no sense. But what I also said out there is true that if we stand pat, if we do not do anything, then growth will be slower than it should be. Wages, incomes, savings rates for middle-class families will continue to be relatively flat. And that is not a future that we should accept. So the entire intention of the speech is to make sure that we are focused on the right thing. It does not mean that I expect Republicans to agree with all my prescriptions, but it is to say that the central problem we face and the one that we faced now that the immediate crisis is over is how do we build a broad-based prosperity. And I want to make sure that all of us in Washington are investing as much time, as much energy, as much debate on how we grow the economy and grow the middle class as we have spent over the last two to three years arguing about how we reduce the deficits.

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But do you worry, ENTITY, that that description of that sort of standing pat, what happens if you stand pat and the sort of slower than expected -- do you worry that that could end up being your legacy simply because of the obstruction that -- and the gridlock that does not seem to end? Well, let us separate it from me for a second, because I think if I am arguing for entirely different policies and Congress ends up pursuing policies that I think do not make sense and we get a bad result, it is hard to argue that'd be my legacy. And so I will worry about my legacy later or I will let historians worry about my legacy. I do worry about what is happening to ordinary families here is Galesburg and all across the country. When we know that rebuilding our infrastructure right now would put people back to work and it is never been cheaper for us to do so, and this is all deferred maintenance that we are going to have to do at some point anyway, I worry that we are not moving faster to seize the moment. When we know that families are getting killed by college costs, for us not to take bold action -- which means that young people are graduating with massive debt, they cannot buy a home as soon as they want, they cannot start that business that they have got a great idea for -- that worries me. So as I suggested in the speech, what I want to make sure everybody in Washington is obsessed with is how are we growing the economy, how are we increasing middle-class incomes and middle-class wages, and increasing middle-class security. And if we are not talking about that, then we are talking about the wrong thing. And if our debates around the budget do not have that in mind, then we have got the wrong focus. Well, you said it yourself in the speech that Washington has taken its eye off the ball. Do you have any -- are you culpable at all in that? Do you wish you were giving a speech like this earlier and done it more often? If you look over the last six months, we right away delivered on the promise to make sure that our tax code was more reflective of our values; that middle-class families locked in relief that they needed; folks like me, at the very top, paid a little bit more. That, by the way, was a fundamental shift that was a decade in the making.

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Immediately after that, obviously, we had the tragedy in Newtown and the need for a response. And my wish and hope had been that that was a quicker piece of business and that we had gone ahead and moved forward on that. Immigration reform actually squarely fits into what I am discussing right now. And the Senate's done the right thing by passing a strong bipartisan bill. So what I will absolutely admit to is that I have been here - I have been in Washington long enough now to know that if once a week I am not talking about jobs, the economy, and the middle class, then all manner of distraction fills the void. Is there any part of your agenda moving forward that you think you are willing to move to the backburner so that you can spend more time on the economy? Well, immigration reform we have got to get done, and that right now is just a matter of the House Republicans recognizing that both the American people, businesses, labor, evangelicals -- there is a broad consensus to go ahead and pass that bill, and if that bill was on the floor tomorrow it would pass. Beyond that, though, we are working on a range of other issues -- from climate change to reforming government to reducing the backlog in the VA. So there is a bunch of stuff we are going to be doing. I will be spending my time over the next several weeks talking about the issues in more detail that I discussed today so that by the time Congress gets back in the fall, I want to make sure that the American people are paying attention and asking themselves, are we doing everything we can to boost middle-class incomes, ladders of opportunity, and middle-class security. And if we are doing that, then ultimately I think that we will not get everything done that I want to see done, but we will have shifted away from what I think has been a bad - a damaging framework in Washington, which is to constantly think about is there more we can do to cut the deficit without asking are we making the right cuts, the smart cuts that actually help people in their own lives and help us grow over the long term. Well, in contrast with the jobs plan that is now what you are reflecting today, it is almost two years old now, and which would measurably add to employment the studies show. Right, because of the sequester.

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that you and Congress agreed to -- right -- and some of the laws -- the payroll tax cut, and the increase in upper-end taxes to some extent -- but all of those things are by any economist's measure a drag on the economy. There is not a day goes by I do not get some analyst saying that -- and that the Fed is pursuing expansionary policies to offset that. How can you -- how are you going to -- what exactly can you do between now and the end of the year to overcome the Republicans' opposition and change that, to end sequester? First of all, as the economy got stronger during the course of my presidency, I had always committed to a responsible reduction in the deficit. I think that was the smart thing to do, the right thing to do, and good for our growth. And if we are growing faster, if businesses and the markets have more confidence, then ultimately that benefits middle-class families as well. So I make no apologies for putting forward budgets consistently that, as I had promised, would gradually reduce the deficit. Now, the sequester I did not want to be in place. When you say I agreed to it, what happened, as you will recall, in 2011 is, is that we had the prospect of either default or a willingness on the part of Republicans and Democrats to spend a year and a half trying to come up with a sensible way to reduce the deficit. The sequester was supposed to be something that was so damaging to the economy that both parties would want to avoid it. The fact that Republicans embraced the sequester as what they consider a win during the course of this year, despite all the damage that they said they wanted to avoid, for example, to our military, is different from me agreeing to the sequester. Point number two, every economist will tell you that if we are being smart about growth and we are thinking about jobs and we are thinking about the middle class, but we are also thinking about fiscal responsibility, then what we should be doing is making sure that the drop-off in government spending on vital things like education and infrastructure do not go down too fast, and that rather we look at what the real problem is, which is long-term health care costs. Because of the Affordable Care Act and a lot of changes that are taking place out there among providers, we are starting to see health care costs slow.

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If we can build on that, then we can capture the same amount of savings that we are capturing through the sequester and use those to make sure that we are not cutting vital investments that I talked about today, and we can help middle-class families. Now, I think there are probably going to be 15 different ways for you guys to ask me the same question, which is, But there is Congress. More specifically, There is the House Republicans, and what are you going to do about that? Who are still embracing sequestration and who are still willing to use the debt limit to go to the mat Well, this is what they say. On the other hand, we also have a number of very thoughtful and sensible Republicans over in the Senate who have said that we should not play brinksmanship, that we should come up with a long-term plan. I met with a couple of House Republicans over the last several weeks who would like to see that happen. They are not the loudest voices in the room at the moment. And part of what I'd like to see over the next several weeks is, if we are having a conversation that is framed as how are we growing the economy, how are we strengthening the middle class, how are we putting people back to work, how are we making college more affordable, how are we bringing manufacturing back -- the answer to those questions I think force a different result than if we are constantly asking ourselves how can we cut the deficit more, faster, sooner. Have you yielded anything from your outreach to Republicans? And do you still have hope for a 10-year deal by the end of the year? There are certainly Republicans who are deeply concerned about the effects of sequester. It is been interesting -- I have talked to a number of them who are from deeply red states, consider themselves very conservative, who say it does not make sense for us to cut discretionary spending more; it does not make sense for us to cut education further -- because they are seeing the impacts in their districts. Certainly there are a bunch of Republicans who say for us to hollow out our military as steeply, drastically as we are doing if sequester stays in place for next year makes no sense.

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So if the American people have confidence that there is a path that will grow the economy faster, put more people back to work, that does not involve massive new federal spending programs, but instead just make sure that we are investing in the right things, and if we are being attentive to debt and deficits over a 20, 30-year time horizon, then potentially some of those Republicans start giving voice to their concerns a little more loudly than they are doing right now. But one of the challenges, as I said in the speech, is that there is almost a kneejerk habit right now that if I am for it, then they have got to be against it. And I think there are a lot of Republicans who are frustrated by that, because they want to be for something, not just against something. But they have got to work through that pattern that is developed over the last couple of years. On the economy, the Fed is obviously an important player. You have got a big decision ahead of yourself in terms of the chairman. What are you looking for in a chairman? And there were reports yesterday that you are very close to naming Larry Summers as the new Fed chairman. I have not made a final decision. I have narrowed it down to some extraordinarily qualified candidates. And what I am looking for is somebody who understands the Fed has a dual mandate, that that is not just lip service; that it is very important to keep inflation in check, to keep our dollar sound, and to ensure stability in the markets. But the idea is not just to promote those things in the abstract. The idea is to promote those things in service of the lives of ordinary Americans getting better. And when unemployment is still too high, and long-term unemployment is still too high, and there is still weak demand in a lot of industries, I want a Fed chairman that can step back and look at that objectively and say, let us make sure that we are growing the economy, but let us also keep an eye on inflation, and if it starts heating up, if the markets start frothing up, let us make sure that we are not creating new bubbles. And do you have a timeline in mind for announcing that? I think you can anticipate that over the next several months, an announcement will be made. Ben Bernanke, by the way, has done a fine job as Fed chairman.

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And when you look at Ben Bernanke's testimony, not just last week but over the last couple of years, what he is consistently said is right now, our priority needs to be growing the economy faster and strengthening incomes for ordinary Americans. If we do that, our deficits come down because we are bringing in more revenue. If we do that, it becomes easier for us to handle the long-term fiscal challenges. And one of the interesting things that we do not talk about enough is the contrast between what is happened in the United States and what is happened in a lot of other developing countries, Europe in particular. It is pretty rare where we have the chance to look at two policy approaches and follow them over several years and see which one worked. And the fact is there are a lot of European countries who followed the prescription that the House Republicans are calling for right now, and not only have they lagged well below where we have gone in terms of growth, in many cases their debt and their deficits have actually gone up because their economy is still effectively in recession. And although we have not been growing as fast as we would like, we have consistently outperformed those countries that followed the recipe that the House Republicans are offering right now. Now, I am more sympathetic to those European countries because they, in some cases, did not have a choice. They do not have the dominant world currency. They do not have people who want to invest in their countries the way folks around the world still want to invest in ours. But in some ways, we have got evidence here. And if we grow our economy, and middle-class families are doing better, and housing prices are stronger, and young people are starting families of their own and they are jobs at good wages, that is the thing that will bring deficits down the fastest. Republicans especially talk about that as a big job creator. You have said that you would approve it only if you could be assured it would not significantly exacerbate the problem of carbon in the atmosphere. Is there anything that Canada could do or the oil companies could do to offset that as a way of helping you to reach that decision? Well, first of all, ENTITY, Republicans have said that this would be a big jobs generator.

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And my hope would be that any reporter who is looking at the facts would take the time to confirm that the most realistic estimates are this might create maybe 2,000 jobs during the construction of the pipeline -- which might take a year or two -- and then after that we are talking about somewhere between 50 and 100 jobs in a economy of 150 million working people. Yet there are a number of unions who want you to approve this. Well, look, they might like to see 2,000 jobs initially. But that is a blip relative to the need. So what we also know is, is that that oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States. In fact, it might actually cause some gas prices in the Midwest to go up where currently they cannot ship some of that oil to world markets. Now, having said that, there is a potential benefit for us integrating further with a reliable ally to the north our energy supplies. But I meant what I said; I am going to evaluate this based on whether or not this is going to significantly contribute to carbon in our atmosphere. And there is no doubt that Canada at the source in those tar sands could potentially be doing more to mitigate carbon release. And if they did, could that offset the concerns about the pipeline itself? We have not seen specific ideas or plans. But all of that will go into the mix in terms of John Kerry's decision or recommendation on this issue. And then -- I will let Jackie go -- but on the employer mandate, I do not think you have been asked the question directly why you made the decision to delay it, and whether, given your criticism of President Bush over the years for potentially exceeding his executive authority, there is been a lot of folks out there on the Republican side who claim that somehow you have exceeded your authority on this. Well, this was a very practical decision that actually does not go to the heart of us implementing the Affordable Care Act. The majority of employers in this country provide health insurance to their employees. And the number of employers who are potentially subject to the employer mandate is relatively small.

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The way the law was originally written, it did not take into account the fact that we do not necessarily need to load up the vast majority of companies that are already doing the right thing with a bunch of additional paperwork; are there simpler ways for us to allow them to certify that they are providing health insurance? And if they do that, then the purpose, the spirit of the law is met, and we can concentrate on the few bad actors who are unwilling to provide health insurance to their employees even though they can afford it, and they are relatively large employers. And businesses came to us and said, listen, we were supportive of providing health insurance to employees, in fact, we provide health insurance to our employees; we understand you want to get at the bad actors here, but are there ways to provide us some administrative relief? And what we said was, given that that is not critical to standing up the marketplaces where people are going to actually be able to buy lower-cost, high-quality insurance and get the tax credits that make it affordable for them, we thought it made sense to give another year not only for companies to prepare, but also for us to work with Treasury and others to see if there are just ways we can make this a little bit simpler for companies who are already doing the right thing. This is the kind of routine modifications or tweaks to a large program that is starting off that in normal times in a normal political atmosphere would draw a yawn from everybody. The fact that something like this generates a frenzy on Republicans is consistent with the fact that they have voted to repeal this thing 38 times without offering a alternative that is plausible. And from what I understand, based on recent reporting, they have just given up on offering an alternative. So essentially -- their central economic plan that they are currently presenting involves making sure that 50 million Americans cannot get health insurance; that people with preexisting conditions are potentially locked out of the market; that the rebates that people have received from insurance companies are sent back; that young people who are right now on their parents' plan because they are 26 or under, that they suddenly do not have health insurance. I do not understand the argument that that somehow grows the economy or strengthens the middle class. Are there going to be some complaints from employers who are still trying to figure it out and may not know what subsidies are available to them?

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Are there some folks who may say, we are going to try to figure out ways not to provide health insurance to our employees? But that is a small proportion of our overall economy, and the principle that everybody should be able to get health insurance is one that the vast majority of Americans agree with. People questioned your legal and constitutional authority to do that unilaterally -- to delay the employer mandate. Did you consult with your lawyer? No, but specifically - -- but where Congress is unwilling to act, I will take whatever administrative steps that I can in order to do right by the American people. And if Congress thinks that what I have done is inappropriate or wrong in some fashion, they are free to make that case. But there is not an action that I take that you do not have some folks in Congress who say that I am usurping my authority. Some of those folks think I usurp my authority by having the gall to win the presidency. But ultimately, I am not concerned about their opinions -- very few of them, by the way, are lawyers, much less constitutional lawyers. I am concerned about the folks who I spoke to today who are working really hard, are trying to figure out how they can send their kids to college, are trying to make sure that they can save for their retirement. And if I can take steps on their behalf, then I am going to do so. And I would hope that more and more of Congress will say, you know what, since that is our primary focus, we are willing to work with you to advance those ideals. But I am not just going to sit back if the only message from some of these folks is no on everything, and sit around and twiddle my thumbs for the next 1,200 days. Polls this week have shown your health care law has lost support. What are you going to be doing to build support? We are going to implement it. Are you going to be getting out on the road? Here is what will build support, given that we have been outspent four to one from the other side with all kinds of distortions about health care. Here is what we are going to do to beat back that misinformation. On October 1st, people are going to be able to start signing up.

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And if right now they are buying insurance on the individual market, they are going to get on those computers or they are going to make a phone call to one of these call centers and they are going to find out that they can save 20 percent, 30 percent, or 50 percent on their premiums. And people who have not been able to get insurance before are going to be able to finally get insurance. And people who lose their jobs in the interim and find out that they have got a preexisting condition, it is hard for them to get insurance or they cannot afford COBRA, they are going to have a place to go. And over the course of six months to a year, as people sign up, and it works, and lo and behold, the people who already have health insurance are not being impacted at all other than the fact that their insurance is more secure and they are getting free preventive care, and all the nightmare scenarios and the train wrecks and the sky is falling predictions that come from the other side do not happen, then health care will become more popular. But until then, when we are getting outspent four to one and people are just uncertain about what all this means for them, we are going to continue to have some polls like that. And me just making more speeches explaining it in and of itself will not do it. The test of this is going to be is it working. March on Washington coming up soon. Are you going to do anything to mark it? Are you planning on being a part of the 50th anniversary? It is obviously a historic, seminal event in the country. It is part of my generation's formative memory and it is a good time for us to do some reflection. Obviously, after the Trayvon Martin case, a lot of people have been thinking about race, but I always remind people -- and, in fact, I have a copy of the original program in my office, framed -- that that was a march for jobs and justice; that there was a massive economic component to that. When you think about the coalition that brought about civil rights, it was not just folks who believed in racial equality; it was people who believed in working folks having a fair shot. It was Walter Reuther and the UAW coming down here because they understood that if there are some workers who are not getting a fair deal then ultimately that is going to undercut their ability to get a fair deal.

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And if there is one thing that I wanted to try to emphasize today in this speech, it is that America has always worked better when everybody has a chance to succeed. I had a conversation a couple of weeks back with a guy named Robert Putnam, who I have known for a long time. He was my professor actually at Harvard. I actually knew Bob when I was a state senator and he had put together this seminar to just talk about some of the themes that he had written about in Bowling Alone, the weakening of the community fabric and the impact it is having on people. And the work he is doing right now has to do with this issue of inequality. And it applies to a city like Galesburg, where 30 years ago, anybody in this town who wanted to find a job, they could go get a job. They could go get it at the Maytag plant. They could go get it with the railroad. It might be hard work, it might be tough work, but they could buy a house with it. The kids here all went to the same school -- the banker's kid and the guy working at the Maytag plant's going to the same school. They have got the same social support. College is affordable for all of them. They do not have to take out $100,000 of debt to do it. And there was a sense of not upward mobility in the abstract; it was part and parcel of who we were as Americans. And that is what is been eroding over the last 20, 30 years, well before the financial crisis. And so I had to spend the first four years in my presidency getting us back to ground level. We had to make sure that we put people back to work short term and boosted demand until the markets got going and consumers got more confident and housing started to recover. And so here we are, having dealt with this massive crisis, but those trends -- that erosion of what a Galesburg or a Clinton, Ohio, where Bob Putnam lived -- those trends have continued. And that is what people sense. I am doing okay right now, but what I have seen over the last 20 years and what I learned profoundly during this crisis is that the ground under my feet just is not as secure, and that the work I am doing may not be rewarded. And everything that I am proposing and everything I will be proposing over the next three years goes right at that issue.

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We are going through a very tough time in North Carolina. Multiple death, destruction in ways we have not seen in years. The governor said this morning she is grateful for FEMA's insistence on being there quickly, but the state needs a lot of help, a lot of money. Well look, I spoke to governor Purdue yesterday. Obviously we are all heart broken by the loss of life, and I expressed to her heartfelt condolences from Michelle and myself for all the families that have been affected. Obviously, those who lost a loved one are feeling this most severely, but if you have lost a home or a business, it is pretty tough as well. What I have assured her is that we are going to do everything we can to help rebuild. FEMA's already on the ground, it is making its assessments. There is strong state/federal coordination and you know, there is a reason why we budget for these kinds of national disasters. We are going to have to help folks rebuild and it is going to take a little bit of time but the people in North Carolina are very resilient and we are confident that they are gonna make it happen. Well, as I said, you know there are certain things that we do not cut corners on and one of those is making sure that the American family comes together in the face of natural disaster like this one. Speaking of money, your fiscal policy, what your vision is now for the country, ideology and priorities seem to find their way into budgets no matter who is writing the budget. So a question becomes if you had to choose between getting through Congress the kind of changes you believe this country needs or reelection, how do you make that choice? Well I think you-you always start with good policy, and my assumption is that good politics then follows from that. So last week I laid out my vision for the future. Look, we have got a very serious debt and deficit problem, most of it was a result of the last 10 years us not paying for things that we needed to pay for. Big tax cuts, two wars, prescription drug plan none of which were paid for. And then we had the worst recession in 50 years, and I had to step up and make sure that we were helping states so they did not have to lay off teachers and police officers and firefighters and that all cost money. And we provided tax cuts to every American to help them get through the recession.

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So you know, right now we need to make sure that we are living within our means both medium and long term. And there is a way of doing that where we cut about 2 trillion dollars worth of spending, that we raise about a trillion dollars worth of revenue, mainly from folks like myself who can afford to pay a little bit more, closing loopholes and making the tax system fair. And that saves us about a trillion dollars in interest costs. So we can save about 4 trillion dollars. Now, we are also gonna have to make sure that we continue to drive down health care costs in medicare and medicaid, and that is part of what healthcare reform was all about last year. And you know, the Republicans in the house voted last week a system that would voucherize the medicare program so that basically seniors could not count on medicare being there, they would get a certain amount of money and if insurance companies said you know what, that is not enough to buy you converge, you'd be out of luck. I think we can make changes to the healthcare system that is smarter and works better without changing medicare in a fundamental way. They are also talking about cutting things like eduction by 25% and support for energy research and medical research. All the things that are important to put people back to work, including in North Carolina. I mean, I have seen some of the work that is been done in some of the campuses in the triangle down there, and that is the future. So we have to invest in that and cut back on the things we do not need, while making the changes that we do. I have talked to several people last week, and one theme continued to come up ENTITY. People are really still struggling, to those people what word of encouragement do you have? Well, here is what I'd say. When I came into office, we were going through the worst economy that we have seen since the Great Depression. Since then, we have been able to stabilize the economy, get it growing again, and now over the last year, year and a half we have seen two million private sector jobs created. You are starting to see businesses are starting to reinvest, they are making a lot of profit. And so- and this December what we did was we passed a payroll tax cut and a business investment tax cut that is helping to spur the economy further. But we were in a deep hole, and it takes some time to dig out.

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And so what I say to families, and I get 10 letters a day from families who are talking about struggles without a job, losing their homes, you know gas prices, I say to them, Every day I wake up understanding how many folks are struggling out there. And we are just going to keep on making steady progress until we have come all the way back. And I am not going to rest, I am not going to be satisfied until everyone who wants a job is able to find a job. But it is going to take a little time. Military presence in North Carolina is huge. You have a lot of people deployed, second, third, fourth, fifth, deployments. Foreclosure rates are up, people are really concerned in that community. I know the first lady was just in campus union just last week. To those in the military who are really struggling, maybe more than some the others, is there a light at the end of their tunnel? Well first of all, we have tried to be very protective in terms of military pay, military benefits. And as you just pointed out, the first lady is leading the charge when it comes to support for military families. And now I have every agency federal department, all of them, not just the Defense Department, not just Veterns Affairs, but every department thinking about how are we help military families on things like daycare, on spousal spinning jobs when they get stationed to a new location. So we are going to keep on working on those things -veterans benefits, things like the post 9/11 GI Bill, to make sure that people can go back to school. But there are areas where military families are still having a tough time. And you identified one of them, which is ironically, the financial system. Credit card companies, mortgage brokers, a lot of those folks have taken advantage of military families just-more than just about anyone else. This is part of what our Wall street reform was actually all about, we have put in place a consumer finance protection bureau that is specifically working with the Department of Defense and others so that military families have good information so that they do not get suckered into a bad mortgage that they cannot pay back, so that they are not ending up taking out loans that end up having huge interest rate spikes later down the road. This is part of the reason why financial reform was so important is to make sure that we are providing consumers the information they need to make good choices on their own.

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You have made speeches, you have addressed the joint session of Congress, you have done interviews, but the polling continues to show that people are still skeptical about your health reform plans. Orrin Hatch, the Republican senator from Utah -- who is done a lot of work on health care over the years, summed it up this way, these are his words, he said, If anyone believes that Washington can do a plan that will cost close to a trillion dollars, cover all Americans, not raise taxes on anyone, not increase the deficit, not reduce benefits or choices for our families and seniors, then I have a bridge to sell you. Have you promised too much, ENTITY? No, I do not think I have promised too much at all. Look, first of all, everybody acknowledges this is a problem -- everybody -- acknowledges that the current path we are on is unsustainable, not just for the people who do not have health insurance but for those who do. We just had a study come out this week showing that premiums for families went up 130 percent over the last decade. Those costs probably went up even higher for the average employer. And that is part of the reason why you are seeing, each successive year, fewer Americans having health insurance from their employers than they previously did. Health care inflation went up 5.5 percent this past year when inflation was actually negative, because of this extraordinary recession. Now, what I have said is that we can make sure that people who do not have health insurance can buy into an insurance pool that gives them better bargaining power. For people who have health insurance, we can provide health insurance reforms that make the insurance they have more secure. And we can do that mostly by using money that every expert agrees is being wasted and is currently in the existing health care system. So, in fact, what we have got right now is about 80 percent consensus on how we would accomplish that. Now, let me be honest, with a piece of legislation this complicated, and a sector the economy that is about one-sixth of our economy, there is a reason why, for the last 40 years, people have been talking about this and it has not gotten done. It is hard ---- and there are a lot of moving parts. And so I appreciate the fact that the American people are really cautious about this, because it is important to them, and the majority of people still have health insurance.

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If we do not do anything, a lot of Americans are going to be much worse off, and, over time, the federal budget just cannot sustain it. Let me just ask you, the main concern that people seem to have is that this plan is somehow going to mean a tax on middle-class Americans. Now, you promised during the campaign that that was not going to happen -- no tax increase on people who made under $250,000, no payroll tax, no capital gains, no tax of any kind on Americans. Can you still make that promise to people today? I can still keep that promise, because, as I said, about two-thirds of what we have proposed would be from money that is already in the health care system but just being spent badly. And, as I said before, this is not me making wild assertions. You know, you always hear about waste and abuse in Washington , and usually it does not mean much because nobody ever finds where that waste and abuse is. This is money that has been directly identified, that the Congressional Budget Office, that Republican and Democratic experts agree is there, that is not improving the quality of our health. So the lion's share of money to pay for this will come from money that is already in the system. Now, we are going to have to find some additional sources of revenue for the other third or so of the health care plan. And what I -- and I have provided a long list of approaches that would not have an impact on middle-class Americans. They are not going to be forced to pay for this. subsidies from folks. I mean, that is what, you know, the Chamber of Commerce is saying. They are starting a big ad campaign right now. They say, you are going to put these taxes on the these insurance companies, on people that make things like x-rays, and lab tests, and all of that, and they are just going to turn right around and pass it right on to the consumer. They are passing on those costs to the consumers anyway. The difference is that they are making huge profits on it, Bob. I mean, let us take the Medicare HMO programs that are being run by insurance companies. It is estimated by everybody that they are overcharging by about 14 percent. This amounts to about $177 billion over 10 years, about $17 billion a year, $18 billion a year that is just going to pad their profits.

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And, in fact, because those huge subsidies are going to insurance companies, Medicare recipients are not getting a good deal. Now, if we are enforcing what should be the rules around Medicare, and making sure that people are getting a bang for the buck, it is not going to be possible for insurance companies to simply pass on those costs to Medicare recipients, because ultimately it is Uncle Sam that is paying for those services anyway. When you have got special interests that are making billions of dollars, absolutely they are going to want to keep as much of the profits that they are making as possible. And, by the way, those insurance companies, even during these down years, have been making terrific profits. We do not mind them making profits, we just want them to be accountable to their customers. Let me ask you a little bit about the tenor of this debate. It seems to me that there is a sort of meanness that is settled over our political dialogue. It started this summer at these town-hall meetings. We saw this outbreak when you spoke on the -- to the joint session. Absolutely. What do you think it is all about? Well, look, what I think we have to remember is that, at various periods in American history, people get pretty rambunctious when ---- it comes to our democratic debate. And every president who is tried to bring about big changes, I think, elicits the most passionate responses. I mean, if you hear what people had to say about Abraham Lincoln, or what they had to say about FDR, or what they had to say about Ronald Reagan when he first came in and was trying to change our approach to government -- that elicited huge responses. Now, I think that what is driving passions right now is that health care has become a proxy for a broader set of issues about how much government should be involved in our economy, particularly coming off a huge economic crisis. Number one, I have no interest in increasing the size of government. I just want to make sure we have got a smart government that is regulating, for example, the financial institutions smartly, so I do not have to engage in any kind of bank bailouts -- that is point number one.

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And point number two, even though we are having a passionate disagreement here, we can be civil to each other, and we can try to express ourselves, acknowledging that we are all patriots, we are all Americans, and not assume the absolute worst in people's motives. And I have to -- one last point I have got to make, Bob, and that is, I do think part of what is different today is that the 24-hour news cycle, and cable television, and blogs, and all this, they focus on the most extreme elements on both sides. They cannot get enough of conflict. It is catnip to the media right now. And so the easiest way to get 15 minutes of fame is to be rude to somebody. In that environment, I think it makes it more difficult for us to solve the problems that the American people sent us here to solve. ENTITY, seven former directors of the CIA have sent you a letter today asking you to reverse the decision of the attorney general to reopen the criminal investigation of CIA interrogations that took place after the attacks on September 11th. Would you consider that? Well, first of all, I have the utmost respect for the CIA. I have said consistently that I want to look forward, and not backward, when it comes to some of the problems that occurred under the previous administration when it came to interrogations. I do not want witch hunts taking place. I have also said, though, that the attorney general has the job to uphold the law. He is got to make a judgment, in terms of what is going -- what has occurred. My understanding is, it is not a criminal investigation at this point. They are simply investigating what took place. And I appreciate the former CIA directors wanting to look out for an institution that they helped to build. But I continue to believe that nobody's above the law, and I want to make sure that, as president of the United States , that I am not asserting, in some way, that my decisions overrule the decisions of prosecutors who are there to uphold the law. We keep hearing that General McChrystal is about to ask you for tens of thousands of new Americans troops to go to Afghanistan -- our David Martin has reported that. Are you considering something of that nature -- sending that large a force to Afghanistan ? I am not considering at that point, because I have not received the request. But I just want to remind people how we got here.

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You know, when I came in Afghanistan was adrift, because we, frankly, had not focused on it. I immediately ordered a top-to-bottom review. Part of that review was, when General McChrystal got to Afghanistan , for him to do his own assessment. In the meantime, I sent 21,000 troops to make sure that we could secure the election that was going to take place in the early fall. General McChrystal has completed his assessment. Well, if he asked you -- -- to kill Americans. for that many troops, you are going to have a hard time saying no, are you not? What we doing to protect the American people and the American homeland? Afghanistan and Pakistan are critical elements in that process. But the only reason I send a -- single -- young man or woman in uniform anywhere in the world is because I think it is necessary to keep us safe. And so whatever decisions I make are going to based first on a strategy to keep us safe, then we will figure out how to resource it. We are not going to put the cart before the horse, and just think But -- -- automatically going to make Americans safe. Did not you say on March 27th that you had announced the comprehensive new strategy for Afghanistan ? I thought you already had a strategy. But what I also said was that we were going to review that every six months, because, you know, this is a very complicated terrain; we had just started getting our troops in -- in fact, the 21,000 that I already ordered in are just now getting in place. And what I did not want is a situation in which we are just continually sending more and more troops, or putting more and more resources, without having looked at how the whole thing fits together; making sure that our efforts, in terms of building Afghan capacity is in place, that our civilian and diplomatic efforts are in place. So what we are going to do is continue to reassess, review what is taking place, and make sure that our strategy and resources fit together for the aim of making sure that al Qaeda is not able to attack the United States . You announced yesterday a major change in American strategic strategy when you said that we would not go forward with the missile defense system that would be there on the border of Russia. The Russians saw that as a poke in the eye from the very beginning. But even people who agree that that missile system is out of place are asking questions.

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On behalf of all my colleagues present here and of the truly nationwide audience, I would like to thank you, first of all, for having agreed to do this interview. I understand that you have prepared a statement for the Japanese people that perhaps you would like to make right now. And may I say how delighted Nancy and I are to be back in Japan. The last time we visited Japan was 1978 at the invitation of one of your Diet Members, Shintaro Ishihara. I was also here in 1971, when I had the pleasure of seeing Kyoto, your beautiful, ancient capital city. There is so much in Japan's history and culture that impresses us. Americans are full of admiration for the Japanese people, the warmth of your ways, your spirit of initiative and teamwork, and your strong traditions of devotion to family, education, and progress. You have brought great development and prosperity to your country. We know that the struggle for better living was often difficult in earlier days. But endurance, tenacity, and sheer hard work-qualities which I understand are beautifully portrayed in your popular TV drama, Oshin -have brought your nation great economic success. Recently I received a letter from Masayasu Okumura, principal of the Nishisawa School in Akita Prefecture, which I understand is very far from Tokyo. Okumura invited Nancy and me to visit his country school and his 27 students. Okumura, I wanted to drop in on your school and talk with your students, but our stay in Japan this week has been too short. We wish we had time to meet more people and see more of your beautiful country, including such places as Kyoto, Hokkaido, Hiroshima, Nara, and Nagasaki. As I have said to the Diet today, we may live thousands of miles apart, but we are neighbors, friends, and partners, bound by a community of interests and shared values. Japan and America, all the same heart. Our countries enjoy great prosperity. We live in free and open societies. But much of the world lives in poverty, dominated by dictators unwilling to let people live in peace and freedom. Japan and America shoulder global responsibilities, but with every responsibility comes opportunity. We can share with the world our secrets of economic growth and human progress. We can offer the sunlight of democracy to people everywhere who dream of escaping the darkness of tyranny to decide their own destinies.

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Japan and America are nations of the future, builders of tomorrow, and together we can build a brighter tomorrow. I know with all my heart that if we have faith to believe in each other, to trust in the talent and goodness of the hard-working people in our great cities and small towns, then, yes, we will make our partnership grow, and together there is nothing Japan and America cannot do. And now, I'd be delighted to answer some questions that you may have for me. ENTITY, listening to your statement, like many other people I find that you are indeed a great communicator. I say this not because you said very kind words about our famous city of drama, but because I think that your personal style on television is more relaxed and informal than that of many other politicians. That is why, with your approval, Mr. ENTITY, I would like to conduct this interview in a very informal way so that the Japanese people can get a clearer view of your personality. Since your arrival, Mr. ENTITY, Japanese people have been following very closely your visit. And yesterday we saw that you enjoyed a lot about our demonstration of Yabusame at Meiji Shrine. What did you think of that typical traditional Japanese sport? And if I may ask, apart from horse riding, what are your personal hobbies, Mr. ENTITY? Well, horseback riding is certainly one, and all the things that go with having a ranch. I do a lot of the work whenever I have the opportunity to get there that has to be done around a ranch. As a matter of fact, just this summer we had a number of days at the ranch, and I managed to build, with the help of two friends, build about 400 more feet of fence that we built out of telephone poles. And it can get a little back breaking, but I enjoy that. Someone once asked me when I was ever going to have the ranch finished, and I said I hope never, because I enjoy that. I enjoy athletics of other kinds. And now, thanks to the generosity of your Prime Minister since his last visit there-while I do not get to play golf very often, I will now be playing it with a brand new set of golf clubs which he presented to me. Well, you have now completed almost all the events of your very full schedule for Japan. Yesterday you gave us your official view of the visit, but I wonder if you could give us now a more personal view of this visit?

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Well, yes, I am very pleased with what has taken place here. First of all the warmth of the reception from all your people, and I mean not just the people of diplomacy and government that I had dealings with, but your people there on the streets and their showing of hospitality and friendship has been very heartwarming. But I have always believed that we only get in trouble when we are talking about each other instead of to each other. And since we have had an opportunity here to not only speak with your Diet but then to meet with your Prime Minister and others-and, of course, I have been greatly honored to have been received by His Imperial Majesty, your Emperor-I think that we have established a human kind of bond, not just one that is framed in diplomacy, but an understanding of each other as people. And I think that the world needs more of this. ENTITY, I would like you to know, in the first place, that many of my compatriots will be surprised and very happily so at the inclusion of Hiroshima and Nagasaki on the list of the places that you'd like to visit or you wish you could visit. And to this end, of course, you will have to be a young sagacious man so that you will be able to fulfill your and our common desire in this regard. This is too dangerous a world to just be careless with words or deeds. And if ever there was a need for the world to work toward peace and to work out of the dangerous situation that we are in, that time is now. On a more, a little more serious note, Mr. ENTITY, my question is exactly related to this point. And that is, because of the experience that we in Japan went through, we are very genuine in hoping even for a very minimum, limited progress in the arms control talks which are currently underway. And just as it took another Republican ENTITY with very conservative credentials to effect a rapprochement very successfully with China, there are Japanese who hope that, perhaps, your hard-line policy may lead to the relaxation of East-West tensions. And in light of these hopes and expectations, Mr. ENTITY, could you comment on these talks? And, also, I would appreciate it a great deal if you would give us your assessment of the current state of and, perhaps, future prospects for U.S.-Soviet relations, particularly in the arms control area.

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Well, now, if all of your question-you prefaced it with remarks about the People's Republic of China. Yes, we are working very hard to improve relations there and establish trust and friendship. And I think we have made great progress. I know there is a question that is raised sometimes with regard to our friends on Taiwan-the Republic of China. And I have to say, there, that I have repeatedly said to the leaders of the People's Republic of China that they must understand that we will not throw over one friend in order to make another. And I would think that that would be reassuring to them, that they, then, might not be thrown over at some time in the future. But with regard to the Soviet Union-and you mentioned my hard line. I had some experience with Communists-not of the Soviet kind, but domestic, in our own country, some years ago when I was ENTITY of a labor union there. And I feel that we have to be realistic with the Soviet Union. It is not good for us, as some in the past have, to think, well, they are just like us and surely we can appeal to, say, their kindliness or their better nature. They have some aggressive and expansionist aims in the world. And I believe that, yes, you can negotiate with them; yes, you can talk to them. But it must be on the basis of recognizing them as the way they are and then presenting the proposals in such a way that they can see that it is to their advantage to be less hostile in the world and to try and get along with the rest of the nations of the world. But it is important because of, also, your opening remarks with reference to the great nuclear forces in the world. We are going to stay at that negotiating table. We will not walk away from it. We are going to stay there trying, not as we have in the past to set some limits or ceilings on how many more missiles would be built, how much more growth they could take in those weapons, we want a reduction in the numbers. But really and practically, when we start down that road, and if we can get cooperation from them in reducing them, we should then continue down that road to their total elimination. Many years ago, after he became ENTITY, Dwight Eisenhower, as ENTITY, wrote a letter to a noted publisher in our country.

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And he said in that letter that we had to face the fact that weapons were being developed in which we could no longer see a war that would end in victory or defeat as we had always known it. But the weapons were such that it would end in the destruction of human kind. And, as he said, when we reach that moment, then let us have the intelligence to sit down at a table and negotiate our problems before we destroy the world. I see it also in another way that he did not mention. Once upon a time, we had rules of warfare. War is an ugly thing, but we had rules in which we made sure that soldiers fought soldiers, but they did not victimize civilians. Today we have lost something of civilization in that the very weapons we are talking about are designed to destroy civilians by the millions. And let us at least get back to where we once were-that if we talk war at all, we talk it in a way in which there could be victory or defeat and in which civilians have some measure of protection. ENTITY, you referred to the current situation as being very dangerous. And in recent months we have witnessed one act of violence after another-the assassination of Mr. Aquino in the Philippines, and the shooting down of the Korean Airlines passenger jet, the terrorist bombing in Rangoon, and again in the bombing in Lebanon, Beirut, and the regional conflicts that persist at many different parts of the world, including the Middle East and the Caribbean. I think we certainly live in a very dangerous world, and your administration has advocated very strongly for building more effective defense capabilities of the United States and of its allies. Now my question is, Mr. ENTITY, my question is that the kind of danger that the world faces today would be minimized if the United States and its partners, including Japan, become stronger militarily? Yes, and this is part of that realism that I meant. I once did a lot of negotiating across a table as a labor leader on behalf of a union, and I think I know and understand the give and take of negotiations. But for a number of years now, recently, we have sat at the table in meetings with the Soviet leaders who have engaged in the biggest military buildup in the history of mankind. And they sat on their side of the table looking at us and knowing that unilaterally we were disarming without getting anything in return. They did not have to give up anything.

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They saw themselves get stronger in relation to all of us as we, ourselves, made ourselves weaker. I think realistically to negotiate arms reductions they have to see that there is a choice. Either they join in those arms reductions, or they then have to face the fact that we are going to turn our industrial might to building the strength that would be needed to deter them from ever starting a war. Wars do not start because a nation is-they do not start them when they are weak; they start them when they think they are stronger than someone else. And it is very dangerous to let them see that they have a great margin of superiority over the rest of us. Now, if they know that they cannot match us-and when I say us, I mean our allies and Japan and the United States-they cannot match us if we are determined to build up our defenses. So they then face the fact that as we build them up, they might then find themselves weaker than we are. It was all summed up in a cartoon in one of our papers. This was before the death of Leonid Brezhnev. Brezhnev was portrayed talking to a Russian general, and he was saying to the general, I liked the arms race better when we were the only ones in it. Let me just follow up my question. Some of the dangers that I refer to do not take place only in the context of the confrontation between the United States and the Soviet Union. I think some of the regional conflicts have indigenous roots for that. And I just wonder if we are not having the kind of crises and dangers that do not lend themselves to the military solutions, which might call for some other approach to solving these problems and thereby reducing the tension in the world as a whole. Well, if I understand your question correctly, what we are talking about is-you mentioned the Middle East. Once upon a time, nations like our own with oceans around us, we could have a defensive army on our own land, we could have coastal artillery batteries, and we knew that if a war came to us, it would come to our shores and we would defend our shores. Could the allies, Western Europe, could Japan stand by and see the Middle East come into the hands of someone who would deny the oil of the Middle East to the industrialized world? Could we see that energy supply shut off without knowing that it would bring absolute ruin to our countries?

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More than half of the minerals that the United States needs for its own industries comes from spots all over the world. Well, an aggressor nation, a nation that maybe has designs on other nations, recognizes that also. We have to look and see where are those strategic spots which we cannot afford to let fall. With the problem of Cuba in the Mediterranean-in the Caribbean, we have to recognize that more than half of all of our shipping of those necessities we must have come through the Caribbean. It was not an accident that back in the First World War that the German submarine packs took up their places there. We know that the strategic waterways of the world-the Soviet Union has now built up the greatest navy in the world, and the biggest part of that navy is here in the Pacific, in the vicinity of your own country. But they know, as anyone must know in world strategy, that there are a limited number of choke points, sea passages that are essential to your livelihood and to ours. You can start with the Panama Canal and the Suez Canal, but then the Straits of Gibraltar, but then right here in the passages that lead to your own island, the Malacca and the Makassar Straits. And a nation that could dominate those narrow passages and shut them off to our shipping could secure victory without firing a shot at any of us. Let us turn to an economic issue. Could you tell us what you believe will happen to the American domestic economy in the coming year and whether the improvement of the American economy, domestic economy will help to resolve remaining trade problems between the United States and Japan? This recession that we have just been going through is the eighth that we have known in the last 40 or so years. And each time in the past our government has resorted to what I call a quick fix. It has artificially stimulated the money supply; it has stimulated government spending, increased taxes on the people which reduced their incentive to produce. And yes, there would be seeming recovery from the recession which would last about 2 or 3 years because it was artificial, and then we would be into another recession. And each time the recession was deeper and worse than the one before. Well, we embarked on an economic program that was based on reducing government spending to leave a greater share of the earnings of the people in the hands of the people. We not only reduced the spending, we reduced taxes. When we started in 1981 our recession was about-roughly 121/2 percent.

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People were saying that it could not be eliminated in less than 10 years. Our program, once put into effect, and as the tax cuts did have the effect we hoped they would have on the ability of people to purchase but also the incentive of their being allowed to keep more of the money they earned-the inflation for the last year has been running at about 2 1/2 percent or so, down from the 12.4. We have a long way to go. But even there, last month our unemployment dropped to a rate that in our own optimistic predictions we had said would not happen until the end of 1984. And here it is in 1983, down to what we'd predicted that far ahead. We have come down from a very high unemployment rate to 8.7 percent. And I think that we are on the road to a solid recovery. I will tell you, when our political opponents were claiming that our plan would not work, they named it Reaganomics. And lately, they have not been calling it Reaganomics anymore. But what it will do for the rest of the world and our own relationship, I think that our country-I think your country, largely-certainly between the two of us, we do affect the world's economy. The world has been in recession. And I think that the United States and Japan and, certainly, with us together, we can help bring back and bring out of recession the rest of the industrial world. ENTITY, you said that-in the National Diet this morning-that you have vigorously opposed the quick fix of protectionism in America. And in regard to this, what do you think of the steps which Japan has been taking to further open up its own markets? And one of the things that we have been discussing are some of the points of difference that still remain between our two marketplaces. And I have pointed to the danger of those in our Congress who, because of the unemployment, think the answer could be protectionism. Well, I think that protectionism destroys everything we want. I believe in free trade and fair trade. And yet, the pressure on them as legislators to adopt these bills, these measures-I am opposed to them-and yet, as I say, I know they are under that pressure. And they are talking of this. There probably have been 40 bills that have been brought up and proposed, all of which would have some elements in them of protectionism.

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