James C. Miller III, Director of the Office of Management and Budget, defends the Reagan Administration's proposed 1988 budget for the implementation of the Anti-Drug Abuse Act of 1986. Although there have been cuts in some areas, he reports an overall increase in the amount of money proposed to combat drug trafficking and use. He notes that the first year's funding encompassed many capital equipment purchases that will not be required in 1988. He further argues that the Reagan Administration did not support Federal funding for State and local drug law enforcement, believing that these efforts should be funded primarily by State and local revenues. The representative from the State Department reports on U.S. efforts to gain the cooperation of drug source countries in eradicating cocaine production. He believes that proposed funding is sufficient to achieve the goals set for the international control of drug trafficking.