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Office of the Press Secretary

For Immediate Release December 16, 1994
                            PRESS BRIEFING
                    SECRETARY OF LABOR BOB REICH,

The Briefing Room

11:18 A.M. EST

MR. PANETTA: Thank you. The purpose of this briefing is to provide everyone with greater details on the proposals that were described by the President last night, particularly the tax and training plans that are part of the Middle Class Bill of Rights.

Secretary Bentsen will discuss the President's tax proposals, and Secretaries Reich and Riley will describe the President's training and education initiatives. On Monday, the Vice President will provide greater details on the dramatic reforms that the President is proposing for major departments and agencies, not only those that are being used for paying for the tax cuts, but the broader proposals that will affect other agencies and departments.

Last night the President really did speak from the heart directly to America's working families about their concerns and about their hopes for the future. As many of you know, this was truly his speech. This was a speech that he essentially dictated into a tape himself. We used that to basically then prepare a final speech, which he then reworked for the address that he gave. So this truly was his speech, his words, and he very much wanted to communicate his convictions to the American people. And he is deeply gratified by the reaction that has come into the White House as a result of the speech.

Q What has that been?

MR. PANETTA: It's been very good, been very good.

The President has said there is more in America that unites us than divides us; we need to bring the country together and we can't let the voices of anger drown out the need for dialogue among all people. And he feels that, I think, very deeply.

The President's Middle Class Bill of Rights is targeted towards the fundamental needs and concerns of middle-income working families. We've said the biggest financial strains that face working families in this country is how do they pay for the education for children, how do they pay for raising their children, buying a first home, paying for the kind of catastrophic illness that can affect every family. Those are the real needs facing working families, and it was to those needs that the President addressed this plan.

The President has been saying for three years that the tax code is unfair to middle-income Americans and that they needed to have a tax cut to help them meet their families needs. The first step came last year, as he pointed out, with the earned income tax credit for 15 million families. That proposal was enacted as part of the economic plan. This proposal completes the fulfillment of the promise that the President has made.

These proposals are fully paid for by reducing government and cutting spending. They're targeted at middle-income working families, and frankly, the Republicans, in contrast, have yet to say how their proposals are paid for. Some of them approaching almost $300 billion in promises, and they provide enormous and unneeded benefits to those at the upper-income brackets.

The tax cut, as I said, is fully paid for by the President's effort to reinvent government by making it smaller and more effective. We've already reduced federal employment in the government by 272,000, the lowest level in 30 years.

The steps we are now taking make radical reforms in three departments and two agencies, and that is just the beginning. The President has directed the Vice President to review the other departments and agencies, as well as to find additional savings and reforms. We intend to continue that effort to reduce the deficit and make government smaller and more efficient. The savings we are using to pay for the tax cuts are specific and real.

As you know, there is $24 billion in savings from reforms in the Departments of Energy, Housing and Urban Development, and Transportation, as well as the General Services Administration and the Office of Personnel Management. In addition, by extending the hard freeze on discretionary spending for two additional years in the $500-billion deficit reduction package that we enacted, there was a freeze on discretionary spending for five years, basically holding spending at the '93 levels for '94, '95, '96, '97 and '98.

We are extending that hard freeze on discretionary spending for 1999 and the year 2000. That produces, in and of itself, $52 billion in savings. We will specify, as we have always had to specify when it comes to that kind of hard freeze, exactly how those savings will be achieved in the budget we present to the Congress. We've had to do that the last two years; we will do that with regards to the specifics here for '99 and 2000 as well.

I would urge you -- I would urge you to hold the Republican proposals to the same kind of test that we have met in the proposals that the President has presented. Are they targeted to the middle class? Are they targeted to working families in this country? Are they fully and honestly paid for so that the deficit does not increase? Fundamental tests we worked on these last two years is to reduce that deficit. We've got $700 billion in deficit reduction. It is essential that nothing be done here to increase that deficit. If they meet those tests I think we will be able to work together and we will be able to assist the middle class and keep the economy moving forward.

In the end, ladies and gentlemen, as the President said, this is about the American Dream. He feels he has lived the American Dream; he wants to make sure that others believe it again for themselves and for their children.

Let me introduce Secretary Bentsen.

SECRETARY BENTSEN: Thank you very much. Good morning. During the last two years one of my primary objectives has been to support the President in cutting that deficit, and we have cut it by $87 billion over those two years. And we're not going to spend one cent of that; we're not going to let that be turned back. I sat through those long sessions as we made the tough choices as to where we're going to make those cuts, and we cannot see a situation where we see it turn to something that is rosy scenarios. We saw that in 1981, and we saw a situation where the deficit -- if you could do away with the increase in the deficit from 1981 to 1992 and the interest we paid on that, we would have had a balanced budget and in this coming fiscal year, would have a $50 billion surplus. And I insist that we continue on that, and the President is strongly for it.

Let me say this, that in this proposal we're making we get specific in where those cuts are going to be made. As we look at what we're seeing from some of the others and some of the Republican proposals, some of those increase that deficit and increase it substantially.

The President had the right priority two years ago when he started with a deficit reduction. And because we are ahead of schedule in our progress on that, because we have been able to downsize this government and are going to continue to do that, he is now ready to fulfill his promise on a middle-income tax cut. He is also ready to fulfill the promise, the specific child tax credit, and now let the taxpayers benefit from what we've been able to accomplish.

What you heard last night were proposals that have long been Democratic proposals: IRAs -- I worked on IRAs from the day I went to the United States Senate. We passed it in 1974. In '76 we expanded it to nonworking spouses. In 1981 we increased the amount that could be contributed to $2,000. And we tried other things through the years. You look at the President's IRA proposal. It is very similar to the one in H.R. 11 that had the Bentsen-Roth IRA proposal in it. It passed both the House and the Senate with a majority supporting it -- bipartisan -- but it was vetoed by President Bush.

Or take the tax credits for children. Vice President Gore and I proposed such things in 1992, and President Bush vetoed it. President Clinton promised that in his campaign, and we have now reached the point in fiscal responsibility where we can do it and we can pay for it.

On the education proposal, let me show you a chart. Let me show you the drag on families insofar as paying for college education. In 1980, if they went to a public college, it was 11 percent of their income. If they went to a private college it was 26 percent. In 1992 it has gone up to 15 percent in a public college, and 40 percent if they're going to a private college. They just can't hump that, middle-income folks. And that's what we're providing for in assisting in this educational proposal, that you get a $10,000 deduction for expenses, as much as that, in going to college.

Let me also get into the point as to who is being helped in this regard. In the share of the tax cuts going to middle-income families, under the President's proposal, 87 percent of that goes to people making incomes under $100,000. In the Republican contract, 46 percent of it goes to that. Now, who do you think is trying to take care of middle-income families?

You've heard this, but I want to repeat it. The one thing we don't want to see done is what happened in 1981 with the overly optimistic assumptions taking place that ended up in a bidding war, a great big competition to see who could cut taxes the most and not pay for it -- the present of the Congress in '81. We cannot and we will not let that happen.

So this is where we're talking about having a responsible program, a paid-for program, and not one penny of increase in that deficit. We've learned that lesson. We've come too far in this budget deficit cutting to let the next Congress turn back and start cooking the books. The President wants to make things fair without cooking those books, and that's the way to do it.

I'd like to turn now to Secretary Reich, who is showing his great interest and his strong feeling about education and training, and what's being done in this to take care of it.

SECRETARY REICH: Well, thank you very much, Mr. Secretary. Let me just say that the Secretary has indicated two major areas of contrasts between the President's plan and what the Republicans have so far put up. That is, one, fiscal responsibility -- we're talking about how it's paid for; they aren't. And number two, who comes first. We're talking about working people coming first.

But there is a third point of contrast. It has to do with education and job training. It has to do with the way in which working people in this country can really get ahead. There's a great gap in this country right now, and it's a growing gap. You all know it; everybody knows it now. It's related to education. It's a wage gap and a benefit gap that is growing. If you have good education and good training, you're not guaranteed a good job, but you have a good shot at a good job. If you don't have adequate education and training, you're on a downward escalator.

This has been going on for 15 years. This is why the President, when he was governor of Arkansas, made education the centerpiece of his strategy as governor, took on a lot of special interests. This is why this President, when he came to office, made education and job training and human resource development the centerpiece of his campaign; wanting to do a lot, couldn't do quite as much as he wanted because of that huge debt that we inherited.

Brother Riley and I and the President have accomplished a lot over the last two years. There has been a lot of bipartisan support for education and job training. A lot of Americans don't know the things we accomplished because it was bipartisan and because bipartisanship doesn't make such a good spectator sport. But a lot was done, and a lot will be done.

Let me just refer, if I may, to this chart over here. This chart refers to the gap that I referred to a moment ago -- the growing gap in wages. When people who have college degrees and people who have less than high school -- these are men over here; these are women over here -- you can see that one of the big success stories since 1979 has been women who have college degrees, but they still have a lot to catch up with regard to men.

The point is, though, that this gap is growing wider and wider. It's one of the most important, most troubling factors behind the hollowing out of the American middle class. It is vitally important that we give every working American the tools with which to prosper in this very different economy -- based on technology, based on global trade. And that's why a major part of the President's proposals -- a major part -- is a deduction of up to $10,000 a year for families to get education and training and job training and continuous training.

It's not just education for the kid, it's continuous upgrading. Even if you don't have a child in college, you want some additional training. You want to take some time, get some additional training. You can do that on the job; up to $10,000 deduction. That's why the President emphasized the importance of taking the grab bag of federal adult job-training programs we have now and basically getting rid of them, turning them into skill grants that could be given directly to people so they can make choices, informed choices, with good information about the kind of skills they need, the kind of training they need, when and where they need it.

That's why the IRA also permits deductions for education. This is a major education and training initiative. This is not just a tax cut. This is an investment in the future prosperity of working Americans.

Now, contrast this with what the Republicans are talking about. The Republicans have not dictated -- not indicated with any specificity what they want to do to pay for all the tax cuts they are talking about. The few indications they've given -- and I'm quoting now -- few indications -- they've not talked about how they're going to pay, but a couple of things they have mentioned: they want to cut student loans by $9.56 billion. Right now, because of the student loan program -- right now, if you're going to college, or if you're getting training, you don't have to pay, you get basically an interest free loan during the time that you're in school. They want to get rid of that -- $9.56 billion they want to take away from student loans.

They want to cut job training by $7.56 billion over five years. Now, who is in favor here of helping working Americans get ahead? And I'll tell you, education and training, this is the proof of the pudding. Look at that premium that comes with education and training -- no guarantee you're going to get a great job, but if you don't have adequate education and training, you're in trouble in this technological, global economy.

The President is dedicated to doing something about this, and so is the person I'm about to introduce, my friend and partner, Secretary Dick Riley.

SECRETARY RILEY: Thank you, Bob.

Education -- education is the future of this country. I think all Americans realize that. I think that we realize it for average Americans, for middle-income Americans; it really is the foundation for their economic security. Education should be bipartisan. Support of education should be out of the partisan issue, and that's what we have tried to do since we've been here. All of our education efforts have been bipartisan.

This proposal of President Clinton gives families and their children more control and more skills to enable them to negotiate this new, complex economy. It's their way to really reach the American Dream, as the President has said. I think the President's message is clear, it's basic, it's concrete, and it is simply this -- that for average Americans, for every kid of average Americans, they are entitled to the best education possible. This proposal says that in its entirety.

From the child tax credit, all of our emphasis on families and parent involvement with children in terms of their education for average Americans -- for middle-income Americans, this tax credit for people with small children will be a tremendous help to them in terms of what they're able to do with their children in that regard.

The education tax credit is so clear; such an incentive and a help for middle-income Americans to be able to afford and to justify the savings of their expense for college.

The IRA's was discussed -- expanded to clearly make it so attractive for, again, savings for use of funds for family education for middle-class Americans.

All of these programs -- all of them, are pro-education; they're important. It is taking a major policy, a tax cut for middle America, and having it drive a very important policy: support of quality education, of advance in education and of training for middle-income Americans.

I want to ask every parent in America to sit down at the kitchen table this weekend, look through the President's proposal, think about your future, think of the complexities of the times, and think how you fit in and see exactly what it does to you as a family of a working-class family in this great country.

Q I have a question for any of you. Do you believe if the results of the elections last month had not been different, that the results of the election last month, if the Democrats had regained or retained control of both Houses, you would be here today announcing this middle class tax cut?

SECRETARY RILEY: I think we would be here announcing a strong education program and a middle class tax cut. I think all Americans expressed themselves in the election and as the President said, certainly it showed to him that a lot of those strains, those difficulties that he had been talking about and concerned about, that they were, yes, even worse. So I think it did cause the President to hone in on this issue.

SECRETARY BENTSEN: Let me further supplement that by saying the President has stated over and over that he had a four-year program, and he was going to go through these commitments and fulfill them, as we could afford them and as we made the headway in cutting that deficit. So it has been a planned progression, staying within the budget limitations.

Q Why are none of these breaks aimed at parents with teenage children who aren't in college? It sort of stops between 13 and when they go to college. Do you not feel that those families are suffering the same kinds of difficulties making ends meet?

SECRETARY BENTSEN: I'll be very candid with you: We did what we could afford, and stay within our budget limitations, and see that every cent was paid for. I would not be standing here if I had not been convinced of that.

Q Can you say why the particular departments and agencies are being targeted? And what are you going to do to protect OSHA and all the safety regulation that have protected Americans through the years? Because they seem to be very targeted these days. Are you going to let it all go down the drain?

SECRETARY REICH: Well, let me reassure you, and let me reassure every working American: We are not going to compromise the safety or the health of working people. We're going to fight. If Republicans want to take away the protections, they're going to have a major fight on their hands.

Q Secretary Bentsen, you say that the President had a four-year program. But the restructuring could have taken place before now, the extension of the hard freeze in discretionary spending could have been put into effect before now. If all this is so good, why did it take you so long to come up with this?

SECRETARY BENTSEN: Why does it take us so long when we've been able to make an $87-billion cut? We've made enormous progress, we've got you to a situation where you have the smallest number of government employees as related to the overall employment of the country that you've had in about 30 years. It is a progression that has been taking place, and a tough one. We fought that budget through and won it by one vote. We had the GATT to take care of, we had NAFTA to take care of. We have seen a creation of jobs of over five million. I think we've done pretty good.

SECRETARY REICH: If I may just add one thing. There's an irony here; let's be candid about it. The Republicans, over 12 years, went from a debt of $1.5 trillion to $4 trillion. They expanded the debt in a way that no administration, no set of administrations have ever expanded it.

Today, 28 cents of every dollar that Americans pay in personal income tax goes to paying the interest on the debt accumulated over the last two administrations. We had no chance. We have got to get our economic house in order as a first priority.

Q Some economists have suggested that a tax cut at this point would be bad for the economy. They raise fears that it could overheat the economy, raise inflation, prompt the Fed to increase rates. Other economists say the tax break is so small, the tax cut is so small, it won't have any effect on the economy one way or the other. What's your take on this, sir?

SECRETARY BENTSEN: My take on it is if we didn't pay for this, those economists that say that you would take it away from the people by an increase of interest rates are absolutely right. And that's why we fought so hard to see that it was paid for to the penny. And that has been accomplished.

Now, under the other proposal, some of those that are not paid for, it will add to that deficit. They will do just what those economists are concerned about.

Now, insofar as the individuals, you try to tell someone that if we're going to give them a 20-percent cut for a family of four -- when this is fully phased in, a family making $50,000 a year, that you're going to give them a 20-percent cut in their income tax, and try to say that is not significant? I must say that I want to compliment those people that are making so much money they don't think it's significant. But you talk to someone about a $1000 cut, and that is meaningful.

Q In order to pay for this, you will have to change the budget law, is that not correct?

SECRETARY BENTSEN: No, we will not. No, no.

Q But you're using discretionary spending --

SECRETARY BENTSEN: And we're going to do it each year. Some people have had the idea that this is done over a five-year period, and finally we get the totals. We do it each and every year.

Q But the current budget law permits you to use discretionary savings for tax cuts. Do you not have to take them out of entitlements under current law?

SECRETARY BENTSEN: No. We will go to the specifics of it, and the Vice President will get into those specifics on Monday. But we followed the budget laws and we pay for it each and every year.

Q Secretary Bentsen, capital gains did not make the cut last night. Does that mean the administration would rule out accepting some capital gains cut that might be passed by the Republican-controlled Congress?

SECRETARY BENTSEN: We do not have it in our proposal. You'd have to see how it was structured, I think. It would have to obviously be something that predominantly helped middle income, and we have not seen that kind of proposal out of them.

Q Mr. Secretary, the President said last night he challenged the Congress to pass this program without new cuts in Social Security or Medicare entitlements, but there were some cuts in '93 that are, I think, supposed to sunset around 1998 or something like that. Would he rule out continuing in force previously made cuts -- would he count those as new cuts, or would those be old cuts made new again?

SECRETARY BENTSEN: Well, I think we'll get into the specifics of that. You're talking about a continuation of some of those, and you have quite a number of them. Let me give you an example. You've got -- like R&E, for example, those types of things -- those decisions we're making, but not ready to comment on at this time.

Q Secretary Reich, would you talk about the IRAs, and aren't you using the same trick that the Republican contract does in backloading it, therefore pushing the cost out beyond the five years?

SECRETARY BENTSEN: We're doing what they are not doing. You see, they're backloading it and insisting it has to be done that way. We're doing where you can take a deduction on the front end, or you can put your money in without a deduction and take it out taxfree as you take it out. We give people the option -- one or the other. They do not do that.

Q Would you be willing to give an estimate of what the loss will be for the next five years?

SECRETARY BENTSEN: Oh, yes. At this point, no --that's where the Vice President is getting into those details. But we obviously have that estimate and figured it in.

Q Could you tell us a little bit about the job training changes in the voucher system?

SECRETARY REICH: Yes. With regard to job training, our proposal is to take all the adult job training programs and essentially get rid of them and substitute instead a school grant, so that individuals -- just like the Pell grants, modeled very closely after the very successful Pell grant program -- so individuals who have lost their job, individuals who are disadvantaged, individuals who cannot take advantage of the tax deductions because they don't have adequate income, can get the training and the education they need, when they need it. They can exercise consumer choice.

We also are going to give them good information -- onestop shopping -- good information about where the jobs are, what the jobs are, what training is required, and require that every institution that provides job training puts into this data bank information about their success at job placement, so individuals can make informed choices.

Q Why can't you give us the cost estimate, Secretary Bentsen, of the IRA program now, and what it would be fully phased in? Why aren't the American people entitled to those --understanding what those costs are?

SECRETARY BENTSEN: Well, they're going to have that, and that will be stated. I said that earlier. And that will be on Monday -- on Monday as we go into the details of where the savings are and what the costs are.

Q Do you know, sir, what they are?

SECRETARY BENTSEN: Of course, I know. Let me tell you, we went into each of these, or I wouldn't be up here supporting this.

Q What about long-term deficit reduction, sir? What about long-term deficit reduction: Your own projections show the deficit turning up as the decade progresses. Is the President still committed to getting rid of the deficit entirely, and will we ever see a package from him to get rid of the deficit entirely?

SECRETARY BENTSEN: As we progress, you'll see further things done. One of those things will be obviously in health care costs -- in health care cost containment, and you'll see additional savings coming about. And you're going to see some reduction of the deficit in addition to what we've done, and talking about educational enhancement, and talking about the IRA, and talking about the child credit; additional money above the $50-some billion that we're talking about on the cap on discretionary spending, and additional on reinventing government.

SECRETARY REICH: May I just say one thing? When the American people are asked to compare what the Republicans come up with to what this President has announced and what he is committed to -- let them consider at least three issues: One, who is fiscally honest, who's is going to actually pay for these cuts and these investments; two, who is putting working people first; and three, who cares most about giving people the education and training, and the tools to get ahead.

Q What happened to putting politics last? We've spent the last 30 minutes here arguing about what's wrong with the Republicans, and Secretary Reich, you just talked about who cares most. Isn't that putting politics ahead of economics in this case?

SECRETARY REICH: Working people in American have benefitted enormously from the progress we've made in getting the deficit down. There are more than five million new jobs, most of them good jobs. But we have to keep fighting, and keep fighting harder. One message of this election was that it is not enough -- people are hurting out there, people want more, they deserve more. We're going to raise wages, we are not going to stop fighting until working people have a better position in America and their fortunes are better in America.

THE PRESS: Thank you.

END10:52 A.M. EST