I'd like to have to meet our teacher, Ari, right here. Jennifer, hello. And we've had witness, the very favored, great students of St. Peter's School. President Reagan, very, very pleased to have you with us. We are our students. Well, I'm pleased to see all of you. Is this sign, I don't know if I want to use it. Well, I'm very pleased, and I understand someone wants to have a civics class. That's where you study what you read in the paper the day before, but I know better than that, having been in civics classes myself. We don't have very much time here together. So I think better than me trying to make any kind of a speech to you on what we should do to get to a dialogue back and forth, I just came from speaking to a great meeting of teachers and educators there in Chicago and told them about our proposal in Washington for tuition tax credit for parents of children going to schools like this. That's my civic contribution for the day. So why don't you ask me any questions you might have? Don't be bashful. Yeah, I have questions. Raise your hand. How soon will the tuition tax credit benefit us? How much seat? How soon? Yeah, how soon? Are the benefit of the tax credit? Well, we're going to phase it in. It would start if, of course, the Congress passes the legislation we're presenting. It would start being phased in 1983, that's next year, and be completed by 85. We have to take it easy to start with because of our budget deficits and the problem we're trying to solve on that. If the tax deduction is passed, what can influence will the government have on private schools? If the tax deduction is passed, what can influence will the government have on private schools? Well, there won't be. This will not allow any government interference in any way in education because the aid is going directly to the parents of children who are going to the schools. So this will not lead to any government direction interference in any way in education. If that was the meaning of your question. Mr. President, do you think the government will ever invest entirely in the tax care traffic control? All that clicking of cameras, I'm going to have to come a little closer to here. Do you think the government will ever invest entirely in the truth of tax care traffic control? Is it the tax care traffic control? The air traffic controllers? How did the government ever hire them to do the tax care? There were some who have been taken back and were hired back because they were able to establish that they were pressured into leaving. And now, the needs are being met very rapidly in the towers with applicants and trainees who were training to become air controllers. And I don't think there'll be any further move in that direction. The law provides that anyone who is discharged from government service is ineligible. We gave a waiver that they could get jobs. I'll waver to that law so that they could get jobs in other jobs in government if they wanted. But we had to go to those who stayed in and kept the airlines flying. Well, we've already begun doing it. Inflation was 12.4% when we began our administration. And it's figured every month and then it's averaged over the year. So it ended the year of 1981 with an average of 8.9% down from 12. But the last six months, now, inflation has been running at 4.5% or less. And so the answer to it is, of course, now resolving this recession and getting people back to work and all that, I look for inflation to continue down and getting even less. And of course, the ultimate is to get it to zero. So it is very much under control. Now, do you all understand really what inflation means to your families and to all of you in purchasing power? I'll bet you do because you're in the city's class here. But inflation, really, we think about it as high prices. Actually, the high prices are just a reflection of the lowered value of the money. It means when it was 12.4% that at the end of the year the dollar would buy 12.4% less than it would buy at the beginning of the year. Well, now the dollars are only shrinking by 4.5% since other dollars will do better. Mr. President, why do you think that I'll do more jobs for people? More jobs for people. More jobs for people? The answer to that has to be making it possible for the economy to expand. And by that I mean with this great unemployment, we're down now to where many industries are only working at a fraction of their capacity to produce. And this has been, I think, because the government over the years has been taking an increasing amount out of the earnings of the people in gross natural product that reduces the ability of the private sector to expand and produce the jobs that we need for people. Now, unemployment, unfortunately, is the last thing that gets resolved when you come out of a recession. It's the last thing that catches up. But it does catch up. This was why we passed our tax program last year, that we phase in three installments of taxes. 5% last October 1st would be 10% cut in the income tax in July and another 10% cut next year. And at the same time, we cut the taxes for business with regard to their ability to modernize their plant and equipment and keep up with modern technology. Today, one of the reasons that we're not so competitive as we could be and used to be with other countries like West Germany and Japan, is because they have invested and they are producing with much more modern equipment. I have been in steel plants in Taiwan and in Japan and here in our own country, and I have seen the difference. It isn't that their workers are any better, it's that they got better tools. Now, I think that the program that we're embarking on, reducing of government spending, reducing of taxes at the same time, is going to lead and is leading now to a recovery where there will be this modernization and that's the only way to provide jobs for our people. Incidentally, in spite of the fact that the reported that March unemployment went up, the statisticians in Washington have funny ways of counting. There are, or were in March actually, 88,000 fewer people unemployed than there were in February, and there were 525,000 more people employed than there were in February. Mr. President, what actions can you take in regards to the Federal Reserve Board about lowering the high interest rates? But at this point, first of all, the Federal Reserve Board is totally autonomous. There is no administration and there's no government that can tell them do this or do that. They're absolutely independent under the law. And it's true that they have had a policy over recent years of treating recessions like this with variations of the money supply, releasing a lot of money into the market, and inflation went up as well as interest rates and so forth. I have to say right now they're holding to a very sound policy of the normal increase in the money supply to keep pace with our own natural growth. The interest rates are up now simply because of the fear on the part of the money markets that inflation won't stay down where it is. That as it's done in the past, it'll go back up again. And we're trying to convince them that isn't so, and I think pretty soon when we announce when we can announce a bipartisan agreement on what we're going to do with regard to spending and taxes and so forth in 83, that maybe they will then get the confidence to come down. Here's why inflation pushes interest rates up. If you have money to lend, and when I told you a little while ago about the dollar losing its value, if you're going to lend money, say on a mortgage over 20 years, and every year your dollar is going to lose a little of its value to where at the end of 20 years it's only worth about that much of what it was when you loaned it. You have to get enough interest to compensate for that loss and the value of the dollar, and then on top of that, get the normal rate of interest as a return on your lending the money. So when interest rates were 12.4, they had to start with charging 12.4 in the interest just to meet inflation. And then on top of that, how much more they wanted to make or earn on their money. Well now that's down to 4.5. By all rules, the interest rates should be down much lower than they are. But as I say, they're just fearful and until we can convince them that we really mean it, to stick with our program, they won't come down. Although the other day a banker in a little town in Indiana did something I recommend to a lot of bankers, to help the automobile dealers. He put $2 million of the bank's money up for loan and lowered the interest rates 4% below what the market rate is today, provided they borrowed the money to buy out of appeals. And people are flocking there to get those loans of lower interest rates than buy out of appeals. Mr. President, do you please explain Reaganomics to us, to us, and do you please explain Reaganomics? Reaganomics. I didn't give it that name. I think some of the people around the room here helped create that name. No, it's basically a theory. I, my degree in college was in economics and I remember studying how the classic economist back at the turn of the century always believed that these cycles of recession and hard times and so forth came when government took too much out of the private sector. Well, now government has been doing that, as I said before. What we are doing is trying to reduce government spending to where we stop having the constant deficits that are just built into our system. When the federal government has to go into the money market and borrow a lot of money to pay the deficit that it's spending more than it takes in, then that helps push interest rates up just from supply and demand. There are more people out there wanting to borrow than there is money to borrow when the government is taking the biggest share of it. So the other thing was to provide incentive again so that people would be willing to invest, to, businesses get money to expand and to grow by selling stock or by borrowing in the market. And so we have cut the individual tax rates to give the individual an incentive to be willing to work overtime if he's asked to. When the tax rates are too high, there's no incentive for people to do that. A person says I'd rather go fishing because if I were to earn that extra dollar, I have to give so much of it to the government. I saw an example of that very often in Hollywood in the old days when there were income tax rates as high as 90% and you would be offered a picture and play a role in a picture and you'd already knew that your earnings had pushed you up in that 90% tax bracket so all you'd get was 10 cents on the dollar if you made the picture, so he said I'm not gonna make the picture. And so it is a combination of reducing government spending and reducing taxes on individuals and punitive taxes that were assessed against business so that business can afford to expand modernized. Mr. President, can the federal government support Catholic education or schools? Can the federal government support? Catholic education or schools? I didn't get the phrase there at the last, I heard, but I... Can the federal government support Catholic education or schools? Support Catholic education or schools? No, this is ruled to be the separation of church and state that they can't do that but this is why we're proposing a program that we think will help by getting the aid through the tax credits directly to the parents and that this will help solve the problem. I think both can benefit because in that regard there could be tuition tax increases without penalizing the parent at all because it's as many that would otherwise have gone to taxes. Mr. President, I'm trying to catch the bill, have the other one to add or some draft amendments? Oh, yes. And I'll tell you, when I was governor in California the governor had the right of what's known as line item veto and so you could veto parts of a bill or even part of the spending in a bill. The president can't do that. The president must take the bill as it comes to him and either veto the entire bill. So there's grown up in the federal government, a little device whereby they hang an amendment of something that you really wouldn't want. Someone particularly wants it, they want it. They hang it on a bill that you just cannot veto some very necessary bill and thus they get it passed. I think, frankly, of course I'm prejudiced, I think government would be far better off if the president had the right of line item veto. Mr. President, I think maybe one more question according to your time schedule, who has the best question there? Well, there were two hands one up almost identical at the time, could I take those two if I make a short course with you? Oh, all right. Mr. President, what could be done to bring the cost of education down so that the children in the middle and into the group can attend college? Well, the cost of education has, again, been a result of inflation. And as we cure inflation, that is partly resolved. But our program has been quite misunderstood of loans and grants to college students demonstrated need who could not otherwise go. And that program has in it something in the neighborhood of $12 billion. The federal government is providing some seven million loans and grants for the roughly 11 million college students that there are in the country. And all the student has to do is prove that they have, that otherwise they couldn't go. And in proving that need, it will not only depend on the family's income, but also the number of children in the family to be educated, whether there are any unusual medical problems and so forth. So there is that kind of aid, but in addition, there are all kinds of other scholarship programs and even independent loan programs. There was no such thing as a federal program when I went to school, but I had to work my way through school. In fact, I washed dishes in a girl's dormitory. And I also had to borrow before I got out, but I borrowed from a private foundation that was set up where people contribute the money to a foundation just to lend, and then you pay the money back after you get out of school. So I think that there are sizable and good aid programs and even...