European Stars And Stripes (Newspaper) - December 7, 1986, Darmstadt, Hesse                                Inside stripes o european leaders vow to boost Unity Page 2 d Chicago prepares for Shoreline disaster Page 5 d 01 santas Swap sleighs for jeeps Page 9 �uthoii1 unofficial Quilic Tio pan tit , it Limo Roscit vol. 45, no. 233 sunday december 7, 1986 i a d 8693 a errors made Reagan admits Washington up president Reagan responding to political pressure and Public opinion admitted saturday thai the execution of his arms Deal with Iran was flawed and mistakes were  related stories on pages 3 and 6, photo on Page 28. In his weekly radio address Reagan characterized the actions of his aides As a mistake although he continued to de fend the aim or his policy to open thedoor to iranian moderates to provide a bulwark against soviet expansion in the persian Gulf and to win release of american hostages in Lebanon. I m deeply disappointed this Initia Tive has resulted in such a controversy and i regret it s caused such concern and consternation he said. But 1 pledge to you i will set things right. That s what i m doing  Reagan s Concession came slightly More than a month after news firs broke of Clandestine overtures to Tehran and 12 Days after he said he was not fully informed of the diversion of up to $30million in profits to the Contra rebels in Nicaragua. On wednesday vice president George Bush offered the first administration Concession of error in carrying out the secret arms dealings with Iran. His speech approved by Reagan beforehand was generally heralded As a positive administration move. Until saturday however Reagan has steadfastly defended the policy and has re fused to acknowledge any mistakes in the initiative. Critics and allies have been org while we Are still seeking All the facts it s obvious that the execution of these policies was flawed and mistake were made 1 the president said. Let me just say in was not my intent to do Busi Ness with iranian Leader Ayatollah Ruhollah Khomeini to Trade weapons for hostages nor to undercut our policy against  realize you must be disappointed and probably confused with All the juror of the last couple of weeks he  must be asking what were we doing in the Middle East what was our policy where was it wrong were we engaged in some kind of shenanigans that blew up in our face i can understand that these Are the questions you re asking and i d like to provide some answers Reagan in his address defended the Broad policy of approaching Iran but he conceded thai mistakes occurred in the execution of the policy. The Middle East he said is a Region of critical importance to . Security. And his aim was to end terrorism by making an approach to responsible moderates in Iran. The president reviewed Nis own item to Clear up the controversy his Call for a special prosecutor i appointment of a panel to review operations of us National Security Council staff the naming of Frank Carlucci As his new Security adviser promises of cooperation with Congress and a so Ringo speeches on the subject if illegal acts were undertaken in the implementation of our policy those who did so will be brought to Justice he said. If actions in implementing my pol icy were taken without my authorization knowledge or concurrence Thi will be exposed and appropriate corrective Steps will be implemented. "1 will continue to make All of the facts known surrounding this matter sea errors on Page 28 Cia says North lied to arrange arms shipment Washington not the Central intelligence Agency has told Congress that it. Col. Oliver l. North Ihen a National Security Council staff member persuaded the Agency to help in a 198s arms shipment Toiran by giving a Middle level employee misleading in formation about what was being sent according to people familiar with the investigation. Some investigators and members of the congressional intelligence committees were said to be sceptical about the account and suspect that the Cia could have known the shipment contained arms for Iran. The Issue is important because the Cia assisted in the arms delivery in november 1985, More than two months before president Reagan authorized the Agency s participation in Covert arms deliveries to Iran. Members of Congress have been trying to determine whether the Cia violated the Law by assisting the Cov Ert shipment without format authorization. North appears to have worked closely with a net work of former intelligence agents and arms dealers run by maj. Gen. Richard. V. Accord a retired at Force officer and his iranian business partner. According to the Cia s account North called the Agency Over a weekend with a request that it help a see North on Page 28 remembering Pearl Harbor a photo a woman tosses a Wreath into the Atlantic from the guided missile frigate Boone an Friday during a Cere Mony to Honor those killed in the japanese attack on Pearl Harbor Hawaii on dec 7, 1941. Fourteen survivors of the raid attended the ceremony off he coast of Florida. Related Story Page 2& new tax Law favors civilians Navy says by Chuck Vinch Washington Bureau Washington almost All serv ice members will get an increase in after tax income under the tax Reform act of 1986, but they will not gain As much As their civilian counterparts a Navy study shows. A comparison of the income of serv ice members and civilians shows an aver age loss of 1 percent in the value of total military pay under the new Law said the study by Navy manpower analysts. Officer and enlisted personnel in the High pay grades who have families an live on the Economy will be particularly hard hit they will get 2 percent to 3 percent less in after lax income than comparably paid civilians the study said. Those who receive Lump sum bonuses will see a similar decrease because in come averaging which allowed the tax Burden of bonuses to be spread Over Sev eral years will not be allowed under the new Taw. Since Lump sum bonuses Are Given for skills with critical shortages the Law amount to a targeted pay reduction for the people the military needs most the Siudy said. The cause of the relative drop in value of military pay s that a Large portion of a service member i pay can be made up of tax exempt allowances for housing and subsistence the study said that Means that whenever taxes Are Cut service members see larger percent age reductions in their taxes compared to civilians but they generally see smaller Dollar reductions. Tax rate reductions always give the greatest gains to those with the highest taxable incomes the study said. Mili tary personnel with Large non taxable benefits will always gain less in after tax income from a tax rate Cut and lose less from a tax rate increase than civilians with similar total income. Thus while observers might claim that military member Are better off in after tax income under the new Law we find that the relative advantages of the Law Are a Statis tical illusion.  Are clearly worse of in relative after tax income the critical retention  even though service members gain after tax income from the new Law Many Are More Likely to leave the service if their civilian counterparts gain significantly More the study  study compared two single in come military families one with a sponsor in the Grade of e-6 with eight years of service the other with a sponsor the Grade of 0-5 with 17 Yean of serv ice with civilian families who received the same after tax income under the old Law. The study assumed thai both service member bad spouses and two children and Wen drawing Basic housing and subsistence allowances and the National average ale for variable housing allowance. Under the new Law the e-6 will tee Asee tax Law on Page 28