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Office of the Press Secretary

For Immediate Release October 27, 1994


Chief of Staff's Office

10:10 A.M. EDT

MR. PANETTA: Okay, I just had some things to talk to you about. First, we are, I think, wrapping up a very strong week for the President this week, particularly with the Middle East trip, the strong leadership that he's shown on foreign affairs; in particular, over the last two weeks, but particularly in the Middle East. And I think the -- obviously, the signing of the agreement yesterday, the historic agreement yesterday and the continuing effort to try to find peace in the Middle East.

Secondly, the economic numbers continue to indicate we're in a strong recovery. We'll have the GDP numbers tomorrow, and we expect that they'll continue to show growth in the economy. We'll get job numbers next week and expect that those will continue as well to show production of jobs in the private sector.

And, lastly, on the political front, we think that our message is clearly getting across to the public, basic message of trying to move the country forward on the economy, on jobs and education and not allowing the Republicans to take us back with their contract to Reaganomics, is a message that is resonating across the country. We've used it in our generic ads, and we're finding a lot of our candidates are using exactly the same message with their ads as well in the district.

And you saw today that the President's numbers have gone up almost 7 points. And for the first time in a while, we've seen Democrats among registered voters, that their numbers have gone up according to the CNN poll, Gallup poll. Democrats are now ahead of Republicans 46 percent, or rather 49 to 46 percent for Democrats versus Republicans.

So we're feeling very good about both what is happening in terms of the President's leadership as well as the economy and it's reflected now in the political numbers. We think we've got, certainly, some momentum going for Democrats in the races out there.

My understanding is that, today, Haley Barbour will be introducing a set of ads putting about $2 million into additional attack ads, which tells us that they're obviously worried about the same trends that I spoke to. But I think it's important that in looking at their ads some questions be asked to Haley Barbour.

One, despite the ads that he will be introducing, none of them will speak to the contract that all of the Republicans signed. One month ago, 355 Republicans signed a contract and said that they would strongly endorse it, vote for it, that it was an historic document, and now it's very difficult to find anybody defending the contract.

Q Do you think they're running away from it?

MR. PANETTA: It's pretty clear that they're running away from the contract, because it isn't working for them. But in any event, the question has to be asked: Where is this contract that they were so proud of a month ago?

Secondly, I think you have to continue to ask -- how do they, having committed themselves to this contract, how do they pay for the trillion dollars in promises without cutting Social Security or Medicare. It is virtually impossible for them to be able to achieve a balanced budget, the trillion dollars that would be involved in tax cuts, as well as balancing the budget, without cutting Social Security or Medicare.

Now, maybe there is a way, but they have not explained it. Our numbers tell us that if you exclude defense, they want to go up in defense, if you obviously don't raise revenues and if you exclude interest on the debt, 50 percent of the remaining budget is in Social Security and Medicare.

Now, if in fact they say they're not going to cut Social Security and Medicare, then you're looking at 43 percent cuts in all other areas. Now, is that what their answer is? Is that what they support? I think we need to have an answer to that question.

Thirdly, at least one of the ads is rumored to question our commitment to Social Security. Am I correct? And we would welcome taking that issue to the American people. I mean, questioning our commitment to Social Security as a party, I think, about has the same credibility as comparing Newt Gingrich to Franklin Delano Roosevelt; it doesn't work. And what, again, Haley Barbour has to answer is, does he agree with Oliver North, who says that Social Security ought to be voluntary? Does he agree with Rick Santorum, the Republican candidate is Pennsylvania who says that retirement at 65 is ridiculous? Does he agree with Dick Armey, who says that to balance the budget, Social Security has to remain on the table?

I think it's pretty clear that even -- if you look at the history, from 1935 to the present, Democrats have always been strongly committed to protecting Social Security. We're more than happy to take that record to the American people if that's what they want to challenge us on.

So in the end, we think that -- our view is that we are having a very good two weeks in beginning to turn this race around. And we think the momentum's with us. And we think that what we need to do is to continue to push the same message that we've been pushing these last two weeks.

Q Is there anything else the Democrats plan to do besides interviews and this type of thing to respond to the ads? Will there be another series of Democratic ads? You're now at the end of your $2-million campaign.

MR. PANETTA: We're obviously going to be pushing our ads into next week. And --

Q Which ad, the generic --

MR. PANETTA: -- generic ads. They're going into next week -- and, yes, they're already scheduled to go next week. We are looking at the possibility of continuing those ads because they are working, and working very effectively for us.

Q Any direct response ads to their ads?

MR. PANETTA: I'm not sure that's necessary right now because our ads are working so well.

Q They're not working for me. I don't know what they are -- the general nature of the generic ads. I live in the District --

MR. PANETTA: The ads that we've had out there basically have been attacking the contract and saying that -- there are basically pictures of the Republicans signing the contract and indicating that in signing the contract they're basically committing themselves to deep cuts in Social Security and Medicare and veterans' benefits and in the other areas that would have to be cut, if in fact you're going to be able to pay for these trillion dollars in promises.

Q Did the leak of the Alice Rivlin memo hurt you guys at all? And do you feel that the message that the Republicans have been trying to push --

MR. PANETTA: -- you know, it's always, I think, when -- if they try to use the memo to focus on Social Security, we're more than happy to deal with them on that issue. I think --the President's made pretty clear the commitment of the administration not to cut Social Security and to do Medicare savings only in the context of health care reform. And I think people understand that the memo was just that, a memo of a lot of ideas that have been suggested over the years when it came to dealing with budgets.

But it was by no means a signed contract, as the Republicans did.

Q Do you think you've convinced people of that? You think you've effectively wiped out --

MR. PANETTA: I think -- look, for Republicans to take us on on Social Security has about as much credibility as if we took them on, on whether they were for capital gains tax cuts. I mean, it just doesn't ring --

Q But just the fact that you have to make that point, and you've had to make it over and over for the last week, having the Republicans -- made some hay out of this memo.

MR. PANETTA: I think the answer has to lie with where voters are right now. And I think if you take the issue to the voter and say, do you think Democrats or Republicans are more committed to protecting Social Security, then we're very confident what the answer will be. Because the record, if you look at the record from 1935 to the present, and particularly the '80s when there were a number of efforts to cut Social Security benefits, plus the statements of their own candidates right now, and whether it's North or Santorum or Gingrich or Armey, we think we've got a very solid record on that issue. As I said, I think we're more than happy to make the race on that issue.

Q Do you know what else is going to be in these ads that their -- they're launching them today --

Q At 11:00 a.m., there's going to be a news conference.

Q they're announcing it. You said the President is committed not to cut Social Security. Maybe -- did Alice Rivlin hear those words? Because why would she even throw out the idea?

MR. PANETTA: Let's understand that -- I mean, what Alice was doing was basically listing a number of options that would be looked at by the Kerrey Commission, by others, and was not saying, you know, this -- you can look at the memo itself -- she was not saying this had to be done or that had to be done.

Q But what the memo does show is that there isn't a solution yet to keeping the federal deficit down in the out years. Isn't that the underlying point to the memo, is that something has to be done?

MR. PANETTA: Number one, in dealing with the budget, we've always been very clear about the steps that have to be taken to reduce the deficit. We had a $5-billion deficit reduction plan that very specifically laid out $255 billion in spending cuts, $250 billion in revenue increases. We brought that issue to the Congress, and we got it passed. Last year we presented a budget that laid out specifically what we had to do to stay on that path. This year we'll present the same kind of budget for the next year.

Our view is that if you want to continue the deficit reduction path, the key to that is controlling health care costs. And we've never indicated otherwise. We feel very good about the path we're on now. We just got to $203 billion, almost $100 billion cut in the deficit from what it was projected to be. Next year we hope to be at $170 billion. The deficit does begin to rise in the out years, but that's because of health care costs. So we think the key is not going at Social Security, the key is trying to control health care costs.

Q the President's trip overseas -- how much of a factor has that been in the raise in his poll ratings? Has that been more of a political boost than the economy, which has been robust for several --

MR. PANETTA: I think just generally the strong leadership on foreign affairs issues, a combination of the successes we've had in Haiti, success in Iraq in confronting Saddam Hussein, the successes in the Middle East, the agreement with the North Koreans to try to stop nonproliferation on -- proliferation of nuclear weapons -- I think those have been very important successes. But I think what's happening is people are feeling comfortable with the leadership that he's providing in that area. And I think reflects on the President's popularity. There's no question.

Q Has the President canceled plans to tour the holy sites in Jerusalem?

MR. PANETTA: I'm not aware of what the final decision is on that. I know that there were -- there were, frankly, a couple concerns. One is that it's a very long day. (Laughter.) He started off early this morning, meeting in Damascus, then going to Jerusalem, speaking to the Knesset this evening. And so there were some concerns about just the length of the day, particularly considering --

Q Was there the controversy --

MR. PANETTA: There were also some other concerns about the -- how the tours would be made and who would be present at the tours, and that was another issue that they were looking at. I don't whether they've resolved --

Q Let me follow up on this issue, it's importance -- big news today. Who was -- how firm was this in his schedule? Was it something that he just might have done if he had a chance, or --

MR. PANETTA: When we were working the schedule, he had kind of suggested an interest since he was bouncing all over the place -- and he always has an interest in those things -- of whether or not he could at least take some time to see the holy sites. But the only place you could put it in was very late in the day because of the other things that were in the --

Q But you don't know whether or not it's been canceled at this point?

MR. PANETTA: I don't know what the final decision --

Q A political question on that same topic, Gingrich is criticizing the President for going to Syria, saying -- he's comparing Assad to Cedras and other despots. Any reaction to that?

MR. PANETTA: It doesn't surprise me when Newt Gingrich makes those kinds of comments, because I think it reflects a lack of understanding by him as to what kind of steps you have to take if you want to promote peace in the Middle East.

Israel and the other countries there supported the President taking those steps. Clearly, you can't achieve Middle East -- or a peace in the Middle East without speaking to all of the parties. And that was really the President's principal goal. So I would hope that there -- at some point Newt might start putting partisan politics aside when it comes to dealing with foreign policy issues as sensitive as trying to promote peace in the Middle East.

Q Haley Barbour's announcing these ads, a $2 million campaign, why aren't the Democrats going to answer directly? I mean, generic ads, fine, but it's not going to hit the point apparently these ads are really going to hit at the Rivlin memo and Social Security, maybe tax hikes, some tax cuts in other --

MR. PANETTA: Well, I think you have to -- you know, you have to look at why it's happening. I mean, you don't -- they don't suddenly do $2 million worth of hit ads unless they're worried. And I think the polls reflect what's happening. And the key for us is to stick to our basic message and our basic strategy, which is to go right back at the Republicans on their contract.

And I think the worst thing you can do in politics is sometimes change what is a successful strategy.

Q Can I ask you one more question on the Middle East? The President said today in his news conference that there was some progress in his talks with Assad, who again linked the Golan Heights to any type of peace agreement. That's very nebulous. Do you know, what the some progress was, how big of a deal it is?

MR. PANETTA: I honestly have not had a report on the results of their discussions. It was obvious from the beginning, though -- I mean, the whole effort here would be aimed at trying to move the process forward, and we have -- the Secretary of State has indicated that there has been good progress in the discussions between Syria and Israel. There's obviously a lot of barriers here that have to be crossed. But I think everybody senses that the movement here is forward. Now, whether there was specific progress or not, I can't tell you.

Q You said -- unemployment figures come out tomorrow?

MR. PANETTA: No, next week.

Q That's what I thought.

MR. PANETTA: Tomorrow it's the GDP.

Q GDP -- expects drop, continued drop --

MR. PANETTA: We don't know yet. (Laughter.)

Q You know it's in Haley's ads. I thought maybe -- (laughter) --

Q Are you concerned that actually the numbers have been coming out and being more positive than people had thought? And have you essentially resigned yourself to another Fed increase on the 15th because the numbers do show that the economy is growing so quickly?

MR. PANETTA: I think it's a combination of factors you have to look at tomorrow. If the growth numbers are modest and it looks like inflation continues to be under control, then I would say, we're still in a very good position to keep the economy moving forward; you would hope that all of those factors would be considered by the Fed in whatever decision they would make.

Q Some in Congress are actually saying that in the fourth quarter the economy would be growing at 4 percent.

MR. PANETTA: I'm not going to begin to calculate what they will or won't do or what those numbers may or may not be. I think what is obvious to us is that the economy is in a strong recovery and we're getting a lot of jobs produced, and that's what we want.

Q to the fact that positive economic numbers are somehow bad news -- (laughter) -- covering Arkansas politics -- jump in here -- trying to figure it out.

MR. PANETTA: You have a problem with that -- (laughter) -- it always -- every time we sit down sometimes and go through these, somebody says, well, the numbers today are these; they show strong growth; everything looks fine -- more jobs; but it's bad news to the bond market or bad news to the Fed or somebody. And it's always a good news, bad news story. And I always keep saying, you know, I said, are you telling me that good news is if we go into a recession and we have high unemployment? (Laughter.) I think I'd prefer the other way around.

Q What was your answer -- assuming the numbers are going to be strong, what are your suggestions to the Fed? Maybe I missed that answer. What do you tell the Fed? What do you publicly tell the Fed? I know you can't --

MR. PANETTA: As we always say, the Fed has to make its own decisions in these areas. But I think our view is that you want to look at all factors in the economy, not just what -- where growth is, but also where is inflation, is inflation under control -- and we think inflation continues to be under control.

We don't see any push with regards to wage levels going up or any heavy inflation pressures that are at least visible at this point. Secondly, jobs are being produced, and they're 90 percent in the private sector. Durable goods are still doing well. If you look at the investment factors, productivity factors, everything looks very good in the economy right now. And I think that's what needs to be looked at.

Q And, therefore, they shouldn't raise the discount rate, the federal funds rate or what --

MR. PANETTA: I'm going to -- I can't tell you what they should or shouldn't do, but --

Q You don't want to see --

MR. PANETTA: What I want to do is to have them look at all of the factors --

Q But not to raise it -- not to raise it.

MR. PANETTA: Obviously you want to -- I would like to continue on the path we're on now with regards to the recovery.

Q Are Clinton's new numbers going to make Democrats across the country more eager to have him come campaign for him next week? And what are his plans?

MR. PANETTA: We're looking at a very big week of campaigning next week. And we've gotten a lot of requests for him to try to hit the states. So it's a very full schedule, and I can tell you at least at this point it runs from Pennsylvania, Rhode Island, Connecticut, across the country, Iowa, all the way to California, Washington, Minnesota. It's going to be a fairly heavy week.

If you guys are going along, it's going to be a heavy trip.

Q That's why I asked. (Laughter.)

MR. PANETTA: I had a feeling -- (laughter) --

Q Is this straight through or day trips packed in there?

MR. PANETTA: It looks like pretty much straight through. There's only one -- I think there's only one day where he kind of comes back here, but then he's immediately off again.

Q I've got a final softball question. On California, what do you think of Huffington hiring the illegal alien for five years?

MR. PANETTA: Well, again, part of the good news on the political side is that people like -- candidates like Kennedy, Feinstein, we've gotten Cuomo's endorsement, Carr is up now in the Michigan race. It really is moving in our direction in all of these races. And I think the Huffington story can't help but provide Feinstein with additional momentum.

Q Thank you, sir.

END10:30 A.M. EDT