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At a press conference on the White House lawn, President Clinton spoke for nearly an hour, discussing such topics as the balanced budget deal, the UPS strike, terrorism, and campaign finance reform.

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ELIZABETH FARNSWORTH: President Clinton's first solo news conference in nearly five months is our lead tonight. The President fielded questions from reporters on the White House lawn for almost an hour. Here are excerpts.

SONJA ROSS, Associated Press: Mr. President, the tax cut and budget bills that you signed yesterday were criticized by your own Treasury Secretary as "heavily laden with special interest provisions." You have the power to use the line-item veto to take out some of those special interest tax breaks. Are you planning to exercise that power?

PRESIDENT CLINTON: Well, the short answer is that I expect there will be some exercise of that. So what I've asked my staff and cabinet to do is to meet with me, first of all, make sure I am aware of the items that are subject to the veto in the tax bill and in the budget bill that I signed. And then the second thing we have to do is to make absolutely sure that none of these things that we don't think are very good were part of the agreement; that is, this was an agreement entered into in good faith. And I cannot use the line-item veto on anything that our negotiators agreed to let go through. I think that's very important. And I want to bend over backwards to make sure there's no misunderstanding on that. Allison, and then David.

ALLISON MITCHELL, New York Times: Mr. President, you say that the American people should know where every political figure in Washington stands on campaign finance. Yet, at the same time that you've called for an end to soft money, you continue to raise it for your party.

PRESIDENT CLINTON: I certainly do. And I'm proud of it.

ALLISON MITCHELL: Well, let me ask you--

PRESIDENT CLINTON: I do. I plead guilty to that. I don't believe in unilateral disarmament. And I don't think--suppose I said to you advertising is bad; your newspaper should stop advertising while everybody else does it, and trust me to tell everybody what a good newspaper you have. Just stop it. Just say no. You live in a competitive world. We live in a competitive world. And notwithstanding what the image may be constantly, and you see again in the press today, the Republicans raise more money, raise more big money, and raise more money from non-citizens than the Democrats do.

But we have to raise enough to be competitive. But the lesson that we have learned is that there is too much money in this system, but it's because of the cost of communication. It's the cost of communication that's driving this up. And so we have got to get free air time or reduced air time, and we've got to get campaign finance reform. And I hope we can, but I will not at the same time bankrupt the Democratic Party.

I just think we can't afford to just lay down our capacity to compete when what we really have to do is all agree to live under a new set of rules, which I will happily agree to live under. Yes, Wolf.

WOLF BLITZER, CNN: Mr. President, I want to ask a question about the UPS strike. But, before I do, I want to just clarify what you meant by the line-item veto, that you expect to exercise it. You mean, between and Monday you expect to exercise it, or exercise it in the fall, when there are appropriations bills?

PRESIDENT CLINTON: I mean, I expect to exercise it, and I know--I am anticipating that there will be some things between now and Monday that I would want to exercise it on, but I--I want to emphasize this--I have not had a briefing on this. I'm assuming that there will be something in there that was not agreed to by all of us in the budget agreement that it seems to me to be a good candidate for it. But I do not know of any specific thing now. As soon as I do, I will tell you. But I believe in the line-item veto. I believe it should be used, and, of course, as all of you know, it will be tested. I mean, as soon as I exercise it one time, somebody's going to file suit against it, and then we'll see what happens.

WOLF BLITZER: If I could ask on the UPS strike, there are a lot of small businesses out there that there are suffering right now as a result of this, and they see you standing by, encouraging both sides to go back to the bargaining table but not really doing anything about it. And some of your critics are saying that's because the labor unions supported you and the Democrats so overwhelmingly over these past few years. Is that a fair criticism of why you're standing aside and not getting directly involved in this strike?

PRESIDENT CLINTON: No. Let me urge you all to do one thing because I think it would be very helpful to people--to the American people generally to know this. If you compare what I did in the American Airlines strike, which is the only strike I've been involved, you know, recently, where I had some authority, the airline companies--because they take passengers--are governed by a federal law which gives the President the power to intervene if there is substantial economic danger or damage to the country.

The UPS strike with the Teamsters is not covered by that law. It is covered by the Taft-Hartley Act. If you look at the Taft-Hartley Act, there has to be a severe damage to the country. The test is very different and very high before the President can intervene.

Now, I'm very concerned about all the customers and users of UPS and what's happening to them, but I do not believe that it is a fair reading of the Taft-Hartley law, which is the law I have to act under, that this high standard of that law has been met.

This is--it's a totally different law from a law that affected the American Airlines case. And I think it's really important that the people understand that. Go ahead.

PETER MAER, NBC Radio: When this administration calls on the Palestinian Authority to take sustained action to prevent terrorism, what specific steps are you looking for. And secondly: Do you personally believe that Yasser Arafat and the Palestinian Authority have fulfilled the obligation to prevent terrorism?

PRESIDENT CLINTON: Let me answer them in order. No. 1, we expect them to resume meaning real consistent security cooperation with the Israeli authorities and the way that they do when they work best. No. 2, we expect them to act on the information that they have. You can't hold them on the information that they don't. But they have proven in the past quite effective at rounding up people and arresting them for good cause. And No. 3, we expect that if there are people there who are really serious threats to the peace and to innocent civilians that they should be kept behind bars if it is legal to do so.

So that's basically it now. In answer to your second question I would have to say that I could not say that there has been constant 100 percent effort. That does not mean that we know--by the way--that does not mean that we know for sure, we in the United States know that these bombs would not have exploded and killed these people if 100 percent effort had been made. I can't say that. I'm not close enough to the situation. But I know that it's been discouraging for the Palestinian Authority. I know they get frustrated. I know that sometimes Mr. Arafat feels like he's caught in the middle, between his own population and their discontents and frustration, and his frustrations in dealing with the Israeli government.

But none of that can be an excuse for not maintaining security. If you go back and read Oslo, they promised 100 percent effort on security, No. 1. No. 2, never mind Oslo. You can't have a civilized society if you permit terrorism. No. 3, in the end, terrorists are the enemy of moderate, constitutional government among the Palestinians.

Those people who murdered those people in the market did not want a better peace deal. They want continued impasse. They want to destroy Israel. And that is not going to happen. There must be a peace process.

ELIZABETH FARNSWORTH: The President said he hoped Congress would hope him accomplish four legislative goals after the August recess: Campaign finance reform, entitlement reform, fast track authority to negotiate new trade agreements, and a commitment to binding limits on emissions of greenhouse gases.

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