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Office of the Press Secretary

For Immediate Release May 25, 1993
                            PRESS BRIEFING
                       BY GEORGE STEPHANOPOULOS

The Briefing Room

3:12 P.M. EDT

MR. STEPHANOPOULOS: I've got a statement. I also have to inform you, we have a pool in the office over how many questions are going to be asked about the Travel Office. So don't make me lose. (Laughter.)

Q We're just delighted to have a briefing.

MR. STEPHANOPOULOS: You had two shots at the President today.

Q Where?

MR. STEPHANOPOULOS: Out at the -- two statements. First of all, a statement of Bernie Nussbaum, the White House Counsel.

By directly contacting the FBI concerning how to deal with the allegations --

Q Can you slow down.

MR. STEPHANOPOULOS: Sure. We'll hand it all out.

Q Start over.

MR. STEPHANOPOULOS: Okay. Sound like my dad. (Laughter.)

Q Is that a sound bite, George? (Laughter.)

MR. STEPHANOPOULOS: By directly contacting the FBI concerning how to deal with allegations of possible wrongdoing by employees of the White House Travel Office, the White House Counsel's Office violated no policy, procedure, or other requirement. There's presently no requirement that such contacts involving matters of internal White House security be made initially through the office of the Attorney General.

It has been the practice of the White House security officer, in this instance, William Kennedy, Associate White House Counsel, to be in direct contact with the FBI concerning internal White House security matters.

With respect to matters outside the White House, there is a policy that any initial contact with the Department of Justice concerning any pending Justice Department investigation or criminal or civil case will be made only by the White House Counsel's Office and only with the Attorney General, the Deputy Attorney General, or the Associate Attorney General. That policy has continually been reaffirmed by the White House.

The Attorney General has expressed the desire that in the future, even with regard to matters of internal White House security, to avoid any possible appearance of impropriety, the White House should inform the office of the Attorney General, the Deputy Attorney General, or the Associate Attorney General before contacting the FBI.

Since the White House shares the Attorney General's desire to avoid any such appearance of impropriety, it has assured the Attorney General that such contacts with the FBI in the future, respecting matters of internal White House security, will be made initially through the Justice Department, as she requested.

There's nothing more important to this administration that to preserve the integrity and the appearance of integrity of the Justice Department and the Federal Bureau of Investigation.

The Attorney General has reviewed the statement, is in full accord with it.

Let me also say that White House Chief of Staff Mack McLarty is going to begin an internal review of this entire matter, along with the assistance of the Director of the Office of Management and Budget Leon Panetta. The administrative leave for the five employees who did not have financial authority in the Travel Office and the ones affected by this decision will be extended, pending the completion of this review.

Q In other words, you didn't do anything wrong but you're not going to do it again.

Q Wait a minute --

Q They're not fired --

MR. STEPHANOPOULOS: Extending the administrative leave.

Q What does that mean?

Q They were fired.

Q They were never told they were on administrative leave. They were fired. You said --

Q They were fired.

MR. STEPHANOPOULOS: That's not true. They were given two weeks and then -- the two weeks is administrative leave. But we're extending the administrative leave pending the review.

Q Does that mean they will continue to be paid?

Q Supposedly they aren't fired?

MR. STEPHANOPOULOS: They'll continue to be paid, they'll continue to get the benefits pending the review.

Q Can you tell us who the people --

MR. STEPHANOPOULOS: I don't have the names. It's the two that didn't have signatory authority.

Q The five?

Q Five.

Q You mean not Billy Dale --

MR. STEPHANOPOULOS: Not Billy Dale or the deputy. Not the two people who had financial authority. We'll get you the names.

Q George, you read a policy just now. Whose policy regarding internal matters was that? Was that the Clinton White House policy? That was Nussbaum's policy?

MR. STEPHANOPOULOS: That was the Clinton White House policy. I don't know what the precedence are.

Q Why the distinction between --

MR. STEPHANOPOULOS: It's actually -- a fairly common sense distinction. I mean, the analogy would be is if you were in your business and you discovered evidence of criminal wrongdoing, you could call up the FBI and ask them to come take a look at it. In fact, in our case I would just point out that we were simply at the beginning calling the FBI for advice on how to move forward. We were not calling them in requesting an investigation of any kind. The subsequent contacts after the auditors continued --

Q If this is such a great policy, why are you now saying that in the future you won't do it this way?

MR. STEPHANOPOULOS: For precisely the reasons that the White House Counsel stated in the memo. We want to make sure that there is absolutely no appearance of impropriety. Questions were raised. We want to erase any such questions being asked.

Q But the White House lawyer said nothing was done wrong, but you're not going to do it again.

MR. STEPHANOPOULOS: I in this particular matter -- this is not an occurrence that happens an awful lot. I mean, this is internal security in the White House having to do with personnel. We want to make sure --

Q There have been other instances?

MR. STEPHANOPOULOS: There are -- matters come up every once in a while with possible criminal involvement, sure.

Q George, I note that Mr. Nussbaum does not express himself with regard to the propriety of the White House after the inquiry was launched, after the FBI had been involved, summoning an FBI official here to participate in a strategy session as to how to deal with this matter publicly, the public release of FBI material, which is for --what's called an FBI response. Does the Counsel's Office have any view of the propriety of that. And if so, may we know what it is?

MR. STEPHANOPOULOS: Again, not the Counsel's Office. Again, we were calling them in simply to make sure that everybody had their facts straight. We did it with the participation of the Counsel's Office. Obviously, in retrospect, it's something we wouldn't do again. No question about it.

Q Why are you extending the administrative leave if the reasons for doing this initially were so clear-cut and caused you to take this dramatic action at the time? Why are now changing your minds on it?

MR. STEPHANOPOULOS: Well, we want to make sure that until the White House internal review is complete that we give people full opportunity to be part of that process. And that's what we're going to do.

Q Why does that say about what happened initially?

MR. STEPHANOPOULOS: Well, it says -- I mean, we've acknowledged yesterday that, obviously, things didn't go as we would have liked them to have gone last week and we're -- that's why we're looking at it.

Q Is the review only on the Travel Office? I mean, does that apply only to this instance, but does is include all the White House staff?

MR. STEPHANOPOULOS: It's this incident.

Q George, a further question. We've been told today that the Internal Revenue Service has descended in some number on UltraAir's offices in Smyrna, Tennessee. Do you know anything about that?

MR. STEPHANOPOULOS: I'd go to the Internal Revenue Service. I don't know a thing about it.

Q Can you assure me that the White House in no way directed, suggested, instigated any IRS action?

MR. STEPHANOPOULOS: Absolutely, absolutely, absolutely.

Q George, is it possible that you're going to re-hire the five after the completion of the review?

MR. STEPHANOPOULOS: I just don't think I can get into hypotheticals like that.

Q It's not hypothetical -- you fired them, you're conducting a review. It's not hypothetical that you fired them. The question being is there the possibility that you're going to rehire them at the end of this review? Is that an option?

MR. STEPHANOPOULOS: That's isn't a hypothetical. I mean, the review is going on right now.

Q On their status --

Q George, what are the options --

Q Is that a possibility?

MR. STEPHANOPOULOS: The status is that they're on administrative leave.

Q With pay, without pay?

Q Last week, George, you said they were fired, that they would never be rehired. Has that changed?

MR. STEPHANOPOULOS: I said right now that their administrative leave is being extended.

Q? What does that mean?

Q What are the options at the end of the investigation?

Q last week the way you explained it to us, they were fired.

MR. STEPHANOPOULOS: No, actually --

Q They were paid for two weeks and they had their pension benefits and some other things for four weeks. But they were fired. And it was necessary to get rid of them once and for all because of the gross mismanagement that you found in the office. What is the reason for the change in posture today?

Q Dee Dee said on May 19th, the day you announced this, that the previous -- the staff has been dismissed. They'll be out of here by the end of the day.

MR. STEPHANOPOULOS: Again, I mean, technically, they were on --

Q Nobody has used that phrase with us until today.

Q You reversed --

MR. STEPHANOPOULOS: I grant that it wasn't used. I think it was used at certain times. And when we explained the technical terms of what they wanted --

Q We kept asking why you didn't use leave, and was there any reason why you couldn't, and David Watkins sat in your office and told us that that was not a decision that he had made, and that was not what he was going to do. So now you're telling us that it was a technical matter, that is what happened?

MR. STEPHANOPOULOS: No. I mean it was -- for the two weeks that is technically what it is. I mean, clearly, this is something we're reviewing the entire matter.

Q will they be rehired --

Q George, George --

Q What's the reason for the change in posture between they get two weeks, essentially, severance pay -- you can call it technically administrative leave, and now they are on some kind of indefinite while we look at it?

MR. STEPHANOPOULOS: The reason is -- I mean, clearly, the two people had the signatory authority that was most directly tied to the auditor's report. We believe that this entire incident, as we have said, did not go exactly as we had planned or exactly as we would have hoped, and we want to make sure that we do what we can to review everything that happened in that case and do what we can to rectify it. And we think this is the most appropriate thing to do at the time.

Q So if you're fired, you're fired, and if you're on administrative leave, you're still being paid and your status is pending -- you know, it stays the same pending the outcome of some investigation. Is that pretty much right?

MR. STEPHANOPOULOS: Yes, pending investigation, they'll be on administrative leave.

Q So if they're on administrative leave now, then they're not fired?

MR. STEPHANOPOULOS: They're on administrative leave.

Q Which means that they're not fired then, right? They've been defired? (Laughter.)

Q George, the FBI normally does not volunteer information about pending cases to avoid stigmatizing people unfairly. Yet, on Friday the FBI was pushed into -- or an FBI statement was released by the White House. Whose idea was it to solicit that statement and --

MR. STEPHANOPOULOS: Well, again, the FBI had already been acknowledging the investigation was on the way. And we've said -- I mean, simply handing out the statement, which was inadvertently -- we didn't realize it was going to be a mistake. It was an inadvertent mistake and it won't happen again.

Q What was the mistake?

Q Releasing the piece of paper was a mistake?

MR. STEPHANOPOULOS: Clearly, that was a mistake. We talked to the FBI -- I mean, that's not in accord with their normal guidelines. Usually, apparently, they answer the questions over the phone and then just give those matters out over the phone. We just wanted to make sure that everybody had the same -- was saying exactly the same thing. And we wanted to make sure that everybody had the facts straight.

Q Who is being held accountable for this?

Q If there's been a distinction between internal matters and external matters, why wasn't that brought up at the testimony of the Justice Department officials over the last few weeks?

MR. STEPHANOPOULOS: Well, one thing we've said -- I mean, this was something that hadn't come up. One thing we've said is from here on in, all matters will go through the Attorney General.

Q The Attorney General did not seem to be aware of this internal-external distinction when she complained yesterday about not being consulted. Have you cleared this -- has Mr. Nussbaum talked to her about this new position?

MR. STEPHANOPOULOS: This whole statement he talked to her about.

Q And the next question is, that statement uses internal security -- is the phrase -- several times. What is the security aspect of this case?

MR. STEPHANOPOULOS: Well, the security was the internal security of the White House. There were allegations of wrongdoing within the White House.

Q How does that affect the security of the White House? Security is the word with the meaning, and it doesn't have to do with spending money that belongs to the press corps. What's the security consideration?

MR. STEPHANOPOULOS: Security has to do with the operations of offices and possible handling of finances in offices, certainly.

Q But you can hear how broad that is -- your answer. And in fact, the concern here is over broad use of FBI powers to staunch political problems. How does this address that? What's the security aspect of it? You're holding this up as an excuse for what you did.

MR. STEPHANOPOULOS: No, no. And first of all, let's look back at the statement. We've said that from here on in all matters will go through the Attorney General or the Deputy Attorney General or the Associate Attorney General's office. We are saying that. It is clear that all further matters will go down that road.

On these matters, usually, the internal security matters, it has been kind of a gray area, that there has been some direct contact. We will not have direct contact in the future.

Q Sir, one more time. How is the security of the White House affected by the Travel Office?

MR. STEPHANOPOULOS: The security of the White House was affected by the Travel Office if -- with the questions raised. The security of the finances in the office. There is taxpayer money involved there as well, or there can be taxpayer money involved there as well.

Q The President said this morning he had nothing to do with this affair and that if questions about it remained, they should be referred to Mr. McLarty. Is he saying that Mr. McLarty was responsible for all of the decisions at the White House taken in regard to this --

MR. STEPHANOPOULOS: Mr. McLarty has said he is responsible. He is responsible. And that's why he's conducting the review.

Q When did he say that?

MR. STEPHANOPOULOS: Again, I don't know if he's --

Q He did say that?

Q But that is the White House position -- that Mack is responsible for all the decisions --

MR. STEPHANOPOULOS: As the White House Chief of Staff.

Q all the bad decisions also, which you've alluded to --

MR. STEPHANOPOULOS: And that's why he's doing the internal review, and we'll go forward.

Q Who is going to be on that review? How will that review be independent --

MR. STEPHANOPOULOS: Well, he's going to do it with the assistance of Leon Panetta and other members of the staff, I assume.

Q At the end of this investigation --

Q What are they reviewing, though? Can you be more specific?

MR. STEPHANOPOULOS: They're just reviewing all the matters surrounding the incident, how it came about, how the decisions were made.

Q From the initial decision or --

Q How does this differ from the FBI --

Q Or the behavior of the staff?

MR. STEPHANOPOULOS: The FBI is very different. Again, the FBI is an inquiry having to do with possible criminal activity. Ours is simply a review of the internal White House operations and the decisions made and --

Q How it was handled, how it was announced to the public?

MR. STEPHANOPOULOS: Exactly. Everything.

Q What do you think of Dole likening this to Watergate and asking for a Senate inquiry?

MR. STEPHANOPOULOS: Well, it's -- we've said that these things didn't go as we planned and we have said that we are going to do what we can to do better. But there is no criminal activity involved here at all.

Q George, Dole has now written a letter --

Q What?

Q What?

Q Wait a minute -- what?

Q He means --

Q to Biden, the Chairman of the Judiciary Committee, formally asking for an investigation. Would the White House be prepared to cooperate with such an inquiry?

MR. STEPHANOPOULOS: I think that Senator Biden may have already made a statement there. Mack is doing an internal review.

Q At the end of it, will somebody else be placed on administrative leave?

MR. STEPHANOPOULOS: We'll just wait and see what happens. The review is to review the White House handling of this matter, to review all of the operations surrounding this incident, to review the decisions and to see what went wrong and what went right, and what we can do better.

Q Mack is the one who has been identified as having made the final decision and approved what happened. Why is he the right person to conduct this review? Why not bring in somebody from outside to take a look dispassionately at what happened?

MR. STEPHANOPOULOS: Well, he's the White House Chief of Staff. He is responsible. He's also bringing in the Director of the Office of Management and Budget for his assistance with the review.

Q George, has the President ordered these actions that you're outlining today?

MR. STEPHANOPOULOS: Mack made the decision to go forward with the internal review. Obviously, the President agrees.

Q Can you talk about how the President is involved in this process at this point?

MR. STEPHANOPOULOS: I think Mack might have reviewed it with the President later at some point today. It was Mack's decision.

Q George, whose idea was it on Friday to solicit the statement from the FBI, the guidance?

MR. STEPHANOPOULOS: We talk to the FBI all the time. Obviously, my office -- I asked the FBI to come in and talk about the statement to make sure we had our facts straight. But, again, this was simply the guidance that they normally put out.

Q But whose decision was it to make public -- ordinarily, it's not volunteered. It's usually -- you have to call and make an inquiry.


Q And so it was faxed over here, I understand. And someone made the decision to put it back in the bins.

MR. STEPHANOPOULOS: Well, it was my decision.

Q Can I clarify how that --

Q This is the second fiasco that Mack has been involved in -- the first being the messing up of the Attorney General selection process, I believe. How many does he get -- how many chances?

MR. STEPHANOPOULOS: Again, I think that the White House Chief of Staff is responsible for the operations of the White House. Mack is taking that responsibility and Mack is moving forward on a review. I would also point out that a lot has gone right in the first 100 days. We've had successful progress with our budget plan so far, and we hope to have more this week. We've had a successful summit with the Russians, and we hope to have more in the future. We've made progress on a lot of fronts, on both domestic and foreign policy, and we expect that to continue.

Q George, the President --

Q Did the President order McLarty to review this entire situation with the travel staff?

MR. STEPHANOPOULOS: This was Mack's decision -- before he talked to the President. He talked to the President about it, but Mack informed the President he was going forward.

Q Did the order come from the President to McLarty?

MR. STEPHANOPOULOS: Mack made the decision on his own to go forward.

Q George, Dole asked Reno to have an investigation. You're saying there will be an internal investigation. Internal investigations often are questioned because you're investigating yourself. Why do you think an internal investigation is appropriate, and will Janet Reno go ahead and take Dole's suggestion and do some kind of look herself?

MR. STEPHANOPOULOS: Again, I think you can l ask her. But we think that this internal review by Mr. McLarty will cover all aspects of the affair.

Q Are you going to talk to the President about her concerns?

MR. STEPHANOPOULOS: Not to my knowledge. But I'm not positive.

Q Who has she talked to besides Nussbaum?

MR. STEPHANOPOULOS: I know she's talked to Bernie Nussbaum. I don't know that she's talked to anybody else in the White House.

Q George, are these five employees now still being investigated by the FBI, or by the fact that they're being put on administrative leave, does that mean that the FBI investigation is being confined to the two people with --

MR. STEPHANOPOULOS: You'll have to ask the FBI.

Q Back on that specific point. Those five were asked to sign resignation slips. Does this now mean that those resignation slips are being torn up?

MR. STEPHANOPOULOS: We're talking to them right now. I know that we're extending the administrative leave. I don't know what exact steps they went through, so I really can't speak to that.

Q Pending what --

MR. STEPHANOPOULOS: Completion of the review.

Q George, by extending their administrative leave, is that your way of saying that the White House jumped the gun in firing them last week?

MR. STEPHANOPOULOS: We want to avoid any questions about that, and we want to make sure that until this review is completed we take all the appropriate actions.

Q So they are not fired? Is that correct, they're not --

Q The decision to extend their administrative leave, was that made on advice of counsel, and was it made on Nussbaum's advice? And was that made after their attorneys perhaps protested their firing?

MR. STEPHANOPOULOS: No, I don't think that there were any legal matters involved in this at all. It's just Mack felt it was the right thing to do, and he made the decision.

Q Does it put these five employees under any obligations in terms of talking with you in your internal probe?

MR. STEPHANOPOULOS: Oh, I don't believe so, no.

Q Will David Watkins be participating in the review, or will he be a subject of the review?

MR. STEPHANOPOULOS: The review will be run by Mack's office.

Q David Watkins is right under him, isn't he?

MR. STEPHANOPOULOS: I'm certain that Mack will talk to David.

Q What is Catherine Cornelius's status at this point?

MR. STEPHANOPOULOS: No change at this point.

Q Did the idea for this come from Carville?

Q So David Watkins will not be one of the investigators then?


Q Did the idea for this come from Carville? Did he meet with McLarty today?

MR. STEPHANOPOULOS: You'll have to ask --

Q the target of this review must be on your office and yourself, personally. Do you have any concern for you or your people and how they will fare?


Q No?

Q George, under the category, as you mentioned earlier, of avoiding the appearance of any improprieties, is there any rethinking going on of the White House privileges extended to Harry Thomason? When you call the main White House number here and ask for Mr. Thomason, you're put right through to David Watkins's office, and they say that take his messages --

MR. STEPHANOPOULOS: I think they were doing that as a courtesy to take his messages. When he's here, he's used the phone, I believe, in the visitor's lounge in the East Wing. He does not work out of the management office.

Q Isn't that unusual for the White House to provide a message service for a private citizen?

MR. STEPHANOPOULOS: Well, it's when he's here. It's not a message service, but when he's here that where the calls have been routed and they've taken his messages as occurred --

Q Can you tell us any more about the advice he's given the President? We asked about that yesterday. Can you tell us any more about the kind of advice that he's giving the President?

MR. STEPHANOPOULOS: I think most of the work he's been doing since the inaugural is just cleaning up the loose ends from the inaugural.

Q No image advice?

MR. STEPHANOPOULOS: Well, again, I think he talks to the President periodically about a number of different things. And as you know, he had a major role to play in the convention and the campaign. But most of the work he's done since then has had to do with the inaugural and cleaning that up.

Q When the -- to switch topics slightly -- when the plane sat on the ground at LAX, any number of people were being given tours of Air Force One including, for instance, record producer Quincy Jones. Do you know who those folks were who were touring the plane as part of that delay that day?

MR. STEPHANOPOULOS: That's the first I've heard of it.

Q Could you find out?


Q George, just speaking about appearances again. You've basically said here today that Mack McLarty was responsible for the handling of this affair --

MR. STEPHANOPOULOS: He's responsible for all the operations of the WHite House.

Q and for this affair and also what went wrong with this affair. Now, you're also telling us that the man who was responsible for this affair, including the mistakes in this affair, is going to be in charge of the investigation of this affair.

MR. STEPHANOPOULOS: Review -- I mean, I think investigation --

Q Review, whatever it is. But doesn't that strike you as a little bit odd?

MR. STEPHANOPOULOS: No. I mean I think that these weren't his day-to-day decisions. A lot happened throughout the operation of the White House. He wants to take it -- do a full review of what happened. And we've also said he's doing it with the assistance of somebody from the outside -- somebody not directly involved in the White House -- Leon Panetta.

Q Your quote was --

MR. STEPHANOPOULOS: He's ultimately responsible, sure.

Q He is ultimately is responsible. So the man who is ultimately responsible is also going to be responsible for the review.

MR. STEPHANOPOULOS: Well again, just to do an analogy: I mean, I think that again, when something goes wrong in a corporation --

Q You usually bring in outside counsel and review it.

MR. STEPHANOPOULOS: Not always. I mean, they often do internal reviews and internal audits by different divisions and the CEO is ultimately responsible. And that's what's happening here.

Q George, you said that the White House takes messages for Mr. Thomason when he's here. But the White House also takes messages for him when he's on the west coast as well, is that not true? Because today, in fact, they're taking messages for him. If you call, you get put through to Mr. Watkins' office.

MR. STEPHANOPOULOS: I don't know where Harry is today, but I can take the question. I know they just take the messages for him, I believe, when he's here. I'll take it.

Q And does he not work out of Mr. Watkins' office when he's here?

MR. STEPHANOPOULOS: I don't believe so, no.

Q George, I'd like to get back to the Attorney General and no one has checked with her on this FBI consultation. Has anyone offered an apology to Janet Reno as a result of that?

MR. STEPHANOPOULOS: Not to my knowledge. I know that Bernie's had discussions with her.

Q In fact, it wasn't his decision to go straight to the FBI. The nearest I can figure it was either Watkins or yours. Has anybody talked to --


Q By calling the FBI and saying come and take a look at this. That was the act that went around Janet Reno.

MR. STEPHANOPOULOS: That's simply not true, and it's not -- doesn't go with the facts of what we've said here. The first contact with the FBI was the White House security officer -- the Associate Counsel, Bill Kennedy, who called them I believe on Thursday, May 13.

Q And so Nussbaum's statement today amounts to a response -- I don't characterize it as an apology. I assume you would not.

MR. STEPHANOPOULOS: Again, it's just -- it's a statement of the fact and policy.

Q George, did Bernie Nussbaum know that Kennedy was calling? Did he pass off on that?

MR. STEPHANOPOULOS: I don't know what he knew when, but clearly it's in his office.

Q George, on another subject -- MFN for China. How close --

Q Can we stick on this for a second?

MR. STEPHANOPOULOS: Why don't we finish here, I guess, if we have more.

Q George, you've said that pro-actively publicizing FBI involvement in this case was an inadvertent mistake. That's a genie. The stigmatism that is attached to that is a genie that's very difficult to put back in the bottle. How do you rectify that?

MR. STEPHANOPOULOS: Again, it's just -- it was an unfortunate occurrence.

Q George, to follow up on Gene's question, do you see any parallel between the FBI's announcing of this investigation as going on when we don't know what the results of the investigation will be, to the Bush administration's decision during the campaign to let the press know that the FBI was investigating then-Governor Clinton's passport files?

MR. STEPHANOPOULOS: Again, I don't know that -- the only parallel you can draw is that it does happen at times when there are high profile cases that the FBI does confirm the existence of an investigation. Obviously, in retrospect, it would have been better simply to have the FBI handle all questions on this matter.

Q George, how many other times has the White House security officer contacted the FBI directly for security matters since January 20th?

MR. STEPHANOPOULOS: I don't know, but it's more than once. It's just on -- it's on day-to-day routine question matters.

Q A dozen times?

MR. STEPHANOPOULOS: I don't think it's that many. I think it's less than a handful.

Q Could you check?

Q George, when the firings occurred, regardless of who has the ultimate responsibility, did Mack McLarty know all of this was going on? I mean, did he know about the potential firings and how it was to proceed? Did he give the green light?

MR. STEPHANOPOULOS: Mack was aware of the decision and signed off on the decision.

Q Not aware. I mean, did he --

MR. STEPHANOPOULOS: Aware and signed off.

Q Did he initiate it?

MR. STEPHANOPOULOS: Aware and signed off on the decision.

Q Somewhat following on Gene's question, one of the big concerns in this has been that by firing all seven and by suggesting criminality of all seven that there was a cloud over people who had nothing -- no control over money. Is it your belief or hope that the action of putting these five on administrative leave in any way lifts that cloud from the five?

MR. STEPHANOPOULOS: I think that -- and we're going to have the full review. We're not making any final judgments whatsoever. But clearly, two of the seven had clear financial signatory authority. And we're just -- we can't make any final judgments one way or the other, pending the review and subsequent reviews.

Q But what you said up there, their administrative --

Q Could I follow up on that, please? By only putting the five on administrative leave, haven't you then decided that the other two are guilty?

MR. STEPHANOPOULOS: No, it's not a matter of guilt. I mean, there are still management reasons to go forward. I also believe that the Director, as we have said in the past, was retiring and had wanted to retire. I would also point out, this still -- the Peat Marwick report still stands, and the Peat Marwick report shows direct problems in the office -- shoddy accounting, shoddy management practices, which people do have to be held responsible for.

Q But, George, for example, the report alleges discrepancy. Discrepancy is a term of art that does not connote any wrongdoing.

MR. STEPHANOPOULOS: No, not wrongdoing. Clearly, if you have an entire operation being run without any adequate records, that can be grounds for firing, even if it's not implying any further wrongdoing.

Q Can I clear up something about -- are they technically unfired? Now they are on administrative leave, which is the first time that any of us had heard that terminology. What is the accurate way to describe their status right now?

MR. STEPHANOPOULOS: They will be paid, pending the final review.

Q So pending the final review, they are no longer fired?

MR. STEPHANOPOULOS: They will not be working in the office, they will be on administrative leave.

Q Given the way you've set up their administrative leave, is it theoretically possible that they could be rehired if they were cleared?

MR. STEPHANOPOULOS: I don't know what the review is going to show. I can't speak to that --

Q We're trying to figure out what their status is. Is the door open to their return if they were cleared? Not the political door but the technical door.

MR. STEPHANOPOULOS: I understand what you're saying. I can't even imagine -- I don't know what the office will look like. I don't know what the structure will be. I think you could probably see that the door would be open to some sort of federal employment or some sort of employment. I cannot guarantee one way or the other.

Q But it's not a question of they're just being paid until the review is finished, and then they're no longer paid and no longer associated with you?

MR. STEPHANOPOULOS: A judgment will be made pending the review.

Q Is it conceivable that the review could clear them to the extent that they would be placed somewhere else in this building? Or is that ruled out?

MR. STEPHANOPOULOS: I suppose it's conceivable. (Laughter.) I simply don't know.

Q You're not guiding us that way, you're just saying that they're no longer fired, that they will be paid pending --

MR. STEPHANOPOULOS: On administrative leave.

Q Aren't you opening the door here to give these five jobs in other federal agencies? Is that one of the options you all are pursuing at this point?

MR. STEPHANOPOULOS: Well, I don't think that -- what we're doing now is pursuing the internal review. And we want to make sure that their situation stays in the administrative leave until that review is completed.

Q Why is that now warranted? Why is it now appropriate for them to be on administrative leave if the facts of this initial audit are as compelling as you previously --

MR. STEPHANOPOULOS: Well, I think I just spoke to that. The facts of the initial audit deal with financial record-keeping. There have been some suggestions that only two of the people in the office did actually have signatory authority.

Q So it was unfair to fire them last week?

MR. STEPHANOPOULOS: Well, I mean, one thing we're clearly saying is we could have done things better, and we're going to make sure that they're on administrative leave until the review is done.

Q Was it communicated to them sometime today, or previously that they're un-fired?

MR. STEPHANOPOULOS: They're being called.

Q By who is doing that?

MR. STEPHANOPOULOS: I think Mark Gearan.

Q Mark Gearan is calling them?


Q And what are they being told --

Q an acknowledgement that they're firing was a mistake? When you put them on administrative leave aren't you saying that it was a mistake to say that they were fired?

MR. STEPHANOPOULOS: I think one of the things we've said is that we could have handled this a lot better, and we're going to.

Q I understand, but I'm just trying to get you to acknowledge that it was a mistake if you feel it was a mistake.

MR. STEPHANOPOULOS: Well, I mean, clearly, we did not handle this as we would have liked and we're going to do better.

Q They were told -- five of them were told they were fired, were they not?

MR. STEPHANOPOULOS: They are being called today and saying that they are extending -- administrative leave is being extended.

Q Last week were they told they were fired?

MR. STEPHANOPOULOS: I believe they were. I don't know what the exact words were.

Q Oh, no --

Q What are you telling them now?

Q for any of the travel --

Q heard the words --

MR. STEPHANOPOULOS: Technically they -- I mean, it is technically an administrative leave.

Q Why isn't it technically severance pay?

MR. STEPHANOPOULOS: As far as I know the government term is administrative leave and that administrative leave is being extended.

Q George, did attorneys for any of the travel staff contact the White House about possible legal action?

Q They will now.

MR. STEPHANOPOULOS: I'm just now sure. I'll have to check with the Counsel's Office.

Q George, it's taken a week from -- nearly a week from the time when they fired to the point of un-firing them. Why is this not something that you all did on day one or day two when these very same questions were raised?

MR. STEPHANOPOULOS: I think we just -- we're doing our best to review all the facts and we just think this is appropriate now.

Q And do you think that in retrospect this should have been done earlier?

MR. STEPHANOPOULOS: Well, I think there's no question in retrospect, this whole thing could have been handled differently.

Q The issue that really raised eyebrows in the beginning was not the firing of these people, but the proactive publication of FBI involvement, which carries a loaded connotation to the American people. Now, even after that raised eyebrows initially, the White House pursued it further on Friday by putting out FBI guidance. What's the explanation for that? And what assurances do the American people have that that won't be repeated?

MR. STEPHANOPOULOS: We were simply trying to clarify the facts and state the facts as clearly as we knew them.

Q George, last week you insisted through a blizzard of questions that all seven had to go because of the horrible condition and the state of affairs within the White House Travel Office. Today you're saying, well, it may not be as bad and we're going to reconsider and review and five that we fired won't be fired. Were you wrong then, or are you backtracking now because of the political heat that you've drawn on this case?

MR. STEPHANOPOULOS: We think we are reviewing the entire decision. We believe there are serious problems in the Travel Office. We continue to believe there were serious problems in the Travel Office, as borne out by the Peat Marwick review. There is absolutely no question that the accounting practices in that office were shoddy, that it was not being managed in a professional manner, that it was not being run in accord with the professional standards of this White House or with any White House that you could find acceptable --

Q But either they deserved to be fired last week or they didn't.

MR. STEPHANOPOULOS: -- and those objective conditions, objective facts still remain. Two of the seven had direct responsibility for the finances in that office. The action taken against them -- taken with them will stand. We are completing an internal review of the entire matter of everything that went into this decision and everything subsequent to this decision. Until that review is done, these people -- the remaining five will be on administrative leave. And I can't make any final judgment of what will happen to them one way or the other.

Q What was the President's role in all of this? Did he want this to be done today?

MR. STEPHANOPOULOS: Again, this decision was made by Mack.

Q I know who made the decision, but did the President suggest that something be done?

MR. STEPHANOPOULOS: And I assume Mack discussed it with the President and the President agrees with the decision Mack has made.

Q When did Mack discuss it with the President? Can you tell us that?

MR. STEPHANOPOULOS: I don't know of the timing. I know they met this morning.

Q Today?

Q Will the review be made public when it's done?

Q What is Cornelius's status --

MR. STEPHANOPOULOS: No change in her status at this time.

Q She'll continue to work in the Travel Office?


Q Will the review be made public -- the McLarty review, when it's finished?

MR. STEPHANOPOULOS: I'm certain that Mack will make his findings available in some form.

Q Is there a time frame on it, George?

MR. STEPHANOPOULOS: No time frame at this time.

Q George, why isn't the President taking responsibility for what's happened in his White House? He keeps pointing the finger at the Chief of Staff. Why hasn't he shouldered responsibility for some of it himself?

MR. STEPHANOPOULOS: Well, the President is not in any way taking that away. Mack has come forward; he is the Chief of Staff responsible for the administrative details.

Q Is the President not responsible for what happens in his White House?

MR. STEPHANOPOULOS: Of course he is.

Q Is Mack claiming responsibility for this, or is he being assigned responsibility?

MR. STEPHANOPOULOS: Mack is claiming responsibility.

Q George, the review is totally irrelevant.

Q This is contrary -- this bungled job that you have admitted is contrary to Mack McLarty's entire professional history and his reputation. What happened to him? Could it be that he was not in the loop enough in these decisions?

MR. STEPHANOPOULOS: Mack is doing an internal review of everything that happened here, and he'll go forward.

Q Isn't this internal review going to be horribly time-consuming at a time when your economic package is facing opposition?

MR. STEPHANOPOULOS: I'm sure it can be done in an expeditious manner.

Q George, you said things weren't handled very well. Has that resulted in any offers of resignation over this issue?

MR. STEPHANOPOULOS: Not to my knowledge, no.

Q Is the President now considering entitlement caps? A congressman came out after the first morning meeting and said he was now more positive about them than negative about them.

MR. STEPHANOPOULOS: I think there has been some discussion in the House of --

Q They said the President was now more positive.

MR. STEPHANOPOULOS: Right, of a new alternative that the House leadership is working on with, I think, Congressman Spratt. And I think that we haven't seen the final details of that, but it's something that could be acceptable.

Q There is some confusion, George, over this message service that's going on for Mr. Thomason. You indicated that the White House takes message for Mr. Thomason when he's here. You made reference to the visitors lounge. Except that the messages appear to be taken by Mr. Watkins' office. Why would Mr. Watkins' office take message for somebody who is a White House visitor?

MR. STEPHANOPOULOS: Again, he was just doing it as a courtesy.

Q Are you saying that the President's now going to accept caps?

Q Excuse me, Helen, let me finish up. Why would they do it there instead of not referring the messages to someone in the visitors lounge?

MR. STEPHANOPOULOS: I don't know what the facilities are at the visitors lounge. I honestly don't know the answer. I just know that David was doing it as a courtesy.

Q for whom the White House performs this service?

MR. STEPHANOPOULOS: Not to my knowledge.

Q No one outside the White House also has his messages taken here?

MR. STEPHANOPOULOS: Not to my knowledge.

Q On the caps business, is the President --

Q He said it is acceptable -- something that will be acceptable?

MR. STEPHANOPOULOS: No, I said there's discussions going on with the House leadership and Congressman Spratt over a new, a different kind of proposal, one that doesn't include across-theboard cuts, but would give the Congress some flexibility in reaching the targets. And that is something there have been some discussions on. That is certainly far more acceptable than the other alternatives that have been discussed which the President is opposed to.

Q George, let me follow up on that. Last week the President said he would consider some sort of caps on entitlements -- Social Security or Medicaid, Medicare -- only in connection with his broader health care reform package. Are you now saying that there has been movement, he's willing to consider --

MR. STEPHANOPOULOS: This is a far different proposal from anything like the Stenholm cap or the Boren cap. It is something that the President is more receptive to. He does think, though, that we do need --

Q Is this an annual review idea, is that what this is?


Q Did the White House sign off on the Democratic political breakfast, the $15,000 breakfast, or was that done separately by the DNC?

MR. STEPHANOPOULOS: The breakfast is not happening.

Q I know that, but had the President signed off on it?

MR. STEPHANOPOULOS: Not to my knowledge, no. I think the first we heard of it, we just didn't think it was appropriate.

Q So who in the White House nixed that idea?

MR. STEPHANOPOULOS: It was Mack's decision.

Q Is the President going to make an address to the nation?

MR. STEPHANOPOULOS: I assume he will at some point.

Q This week?

Q Some House members today were talking about tonight or tomorrow night.

MR. STEPHANOPOULOS: I think it's not impossible. Nothing is scheduled finally yet, but it's something we're looking at.

Q It's not impossible for tomorrow night?

Q For tomorrow?

MR. STEPHANOPOULOS: It's something that we're looking at.

Q So you're looking at it for tomorrow night?

MR. STEPHANOPOULOS: Again, we don't have any hard schedule or hard time. I think that the President will address the nation on his economic package at some point. We don't --

Q Are you considering it before the House vote rather than before the Senate vote?

MR. STEPHANOPOULOS: We just don't have a decision on that yet.

Q Well, how soon could it be?

Q It's possible?

Q When will an announcement be made?

MR. STEPHANOPOULOS: I think it's not impossible, no.

Q George, on Monday, will the President go to the Vietnam Memorial? And if not, why not?

MR. STEPHANOPOULOS: We're going to release the President's Memorial Day schedule in the next day or two.

Q How about Friday?

Q Will he be in town?


Q George, do you know the answer to that question about the Memorial, George -- the Vietnam Veterans Memorial?

MR. STEPHANOPOULOS: I just know that the final schedule hasn't been set yet.

Q George, when will you announce the renewal of MFN to China?

MR. STEPHANOPOULOS: Before June 3rd.

Q How many of those --

Q the renewal of MFN. That's --

MR. STEPHANOPOULOS: He will have an announcement on the policy.

Q Can you confirm that he has already decided on the renewal?

MR. STEPHANOPOULOS: We're in consultation with the Congress on --

Q Is it weaker than Pelosi-Mitchell, or is it a variation on Pelosi-Mitchell?

MR. STEPHANOPOULOS: I can't discuss the alternative at all.

Q You're already briefing with Congress on something, right?

MR. STEPHANOPOULOS: We're talking to the -- we're in consultation with the Congress, and when those consultations are completed and the President has something to announce, we will.

Q George, the President in his statement this morning said that he didn't know anything about this affair except that money was saved for the press and taxpayers. So he's saying he knew something, but not everything. Can you tell us exactly which of these decisions -- when was the President brought in? What did the President know about this and what didn't he know about it?

Q What did he know and when did he know?

Q When did he know about it?

MR. STEPHANOPOULOS: Again, I think that this was generally something handled at a staff level. The President wasn't fully aware of the details. I believe he was probably informed in some fashion before the final decision was taken, but it was not extensive.

Q And what was he talking about, George, in terms of taxpayers' savings?

Q In all this furor, he reads the paper and he see the FBI is here. He's doing all the -- he doesn't say, what in the world is going on? Why is the FBI --

Q Is this Ronald Reagan?

Q Yes. What are you -- he's not even curious as to know what the FBI is doing?

MR. STEPHANOPOULOS: He's clearly concerned with what's happening in the White House, and Mack has taken responsibility for that and moving forward and doing an internal review.

Q George, what is he talking about in terms of saving taxpayers' money? I mean, is there a quantity on that?

MR. STEPHANOPOULOS: I don't know if we have the quantity, but I think that you've seen -- there have been reports in the press, for example, that in the past the White House Travel Office would not consistently, or even generally, try to get tickets at the government rate or at the lower rate and would just consistently and generally --

Q He was talking about saving the taxpayers -- you're talking about saving the press money.

MR. STEPHANOPOULOS: No, that's taxpayer money, Mick. I mean, that's White House staff travel.

Q White House staff travel, I'm sorry.

Q George, since the Travel Office workers serve at the pleasure of the President, what is the reason for returning them to administrative leave?

MR. STEPHANOPOULOS: The reason is that we want to make sure that we have a complete review before -- of the whole incident before any final decisions are taken.

Q The review has nothing to do with whether or not they continue to work. They serve at the pleasure of the President. They can be fired for no cause. You've already decided that the office was poorly run.

MR. STEPHANOPOULOS: The office was poorly run. There is no question about that.

Q You say that is manifestly clear. So is it the FBI's involvement and your hauling in the FBI and publicizing their involvement that is the reason?

MR. STEPHANOPOULOS: First of all, I reject the contention that we hauled in the FBI in any way.

Q I'm sorry, it was poorly put. Is that the reason these people have been returned to administrative leave?

MR. STEPHANOPOULOS: No. We just want to make sure we have a complete review before the absolute final decisions are made.

Q The review should have no bearing on whether or not they continue to work. You want the office closed.

MR. STEPHANOPOULOS: You don't know -- we'll see after the review what the shape of the final decisions are.

Q George, I'm not familiar with the visitors lounge. Where is that? Is that open to visitors?

MR. STEPHANOPOULOS: I don't think I am, either. It's somewhere in the East Wing.

Q He doesn't use West Wing offices?

MR. STEPHANOPOULOS: East Wing. Yes, it's in the East Wing.

Q Just to get clear, you want to make sure there's a complete review before the absolute final decisions are made, meaning that maybe these people wouldn't be fired and --

MR. STEPHANOPOULOS: Again, I don't know what the office is going to look like. I've answered this several times. I don't know what the office is going to look like pending the completion of the review. I don't know what the final shape of it will be. We're reviewing everything.

Q George, while the five are waiting, though, they will not be working, but drawing a government check, correct? So if this goes beyond two weeks, for example, into a month, what are they going to be doing?

MR. STEPHANOPOULOS: I don't know how long a review is going to take. We're going to try and get it done as quickly as we can.

Q They'll get their checks as long as the leave lasts, right?

Q Congressman Gephardt said if the President would speak to the nation about the program before the Thursday vote it would be very helpful in getting the program through. Why would the President not do it? You've only got until tomorrow night to decide to do it.

MR. STEPHANOPOULOS: Well, we can decide rather quickly. And we're talking to the Congress and the President will make a decision soon.

Q George, on the other hand, if the President does speak to the nation tomorrow night that leaves very little time for members to call their congress people which would be one of the purposes of having the President speak to the nation, would it not?

MR. STEPHANOPOULOS: Well, it would give some time. I mean, less than if it had happened earlier, clearly, but, I mean, we're just -- we'll see when the President makes a decision.

Q George, some of the House members who were urging the President to go on national TV said that they didn't think the town hall meetings, the President's trips around the country had been effective in getting the message out on the economic plan. Are you all reevaluating your communications strategy at this point?

MR. STEPHANOPOULOS: I mean, I think we try to mix together a lot of different elements. We hear a lot of people who say the town meetings actually do well as well. I think that what's important is to get the right mix.

Q Why haven't these trips had the desired effect?

MR. STEPHANOPOULOS: I think they've had some good effect and the President's had a chance to --

Q But his approval ratings are way down, according to the -- why is that?

MR. STEPHANOPOULOS: Again, I mean, the polls are going to go up and down quite often. But we're focused on getting the package through.

Q George, is it possible the public's just pretty disinterested in this economic plan? They don't love it, they don't hate it, they just don't really care about it?

Q What? (Laughter.)

MR. STEPHANOPOULOS: Well, I suppose it's possible.

Q Well, could you fill us in a little bit --

MR. STEPHANOPOULOS: No, I think -- well, what's important and what's incumbent upon us is to point out the real advantages of this plan, to point out that 75 percent of the taxes go to the wealthiest Americans. Point out that it's going to be a real deficit reduction, it has real spending controls and it's going to create jobs in the long run.

Q Can you tell us a little bit about what the President's been talking about with the members of Congress that he's met with today? What's he been offering them in the way of sweeteners perhaps to bring around to his way of thinking?

MR. STEPHANOPOULOS: I think it's -- generally, it's just been pointing up the benefits of the plan and trying to hear what they have to say about the plan and their suggestions. But these aren't negotiating sessions.

Q Meeting with more of these guys tomorrow?

MR. STEPHANOPOULOS: I would expect so. I don't know if anything final has been set up yet.

Q What about this evening?

MR. STEPHANOPOULOS: I don't think so, but I'm not positive.

Q He thinks he has the votes, doesn't he? He does believe he has the votes?

MR. STEPHANOPOULOS: We think we're going to win.

Q George, you say that there are five people who are on administrative leave now, one person who's retired. Does that mean that only one person's been fired in this deal now?

MR. STEPHANOPOULOS: I'd have to -- I think that's right but I'm not --

Q He was the one that was out of the country, wasn't he? Or one of the ones that was out of the country and wasn't interviewed before it happened.


Q Are you now saying that Billy Dale retired?

MR. STEPHANOPOULOS: Yes, we said that before.

Q And then, Gary Wright, the second person who --the only person I guess now who was fired, is he allowed to retire at all or have any credits toward retirement?

MR. STEPHANOPOULOS: I just don't know what the situation is there. I just don't know.

Q George, can you tell us any more about the Philadelphia trip? What the speech is going to be on --

MR. STEPHANOPOULOS: I expect it will be on the President's economic plan around midday.

Q Where?

MR. STEPHANOPOULOS: I don't have a place yet.

Q Is he overnighting in West Point?

THE PRESS: Thank you.

END 4:00 P.M. EDT