THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY DEPUTY SECRETARY LARRY SUMMERS AND PRESS SECRETARY MIKE MCCURRY
The Briefing Room
11:30 A.M. EDT
Q Are you expecting another foreign policy announcement?
MR. MCCURRY: Yes, as a matter of fact, and it should happen in about 10 minutes from now.
Q By the President?
MR. MCCURRY: No, The President won't be back, but we'll have a suitable administration official to come back.
Q On what area?
Q What's going on in Mexico?
MR. MCCURRY: It could be. Could be. But I thought I'd kill time here and we could do a truncated version of our daily briefing. Anything else you want to ask about?
Q No, let's release you. Thanks. (Laughter.)
Q Is he going to Mexico?
Q I mean, nothing personal.
MR. MCCURRY: My feelings are hurt.
Q No, you're not. I'm doing you a favor.
MR. MCCURRY: But, seriously, in lieu of any other daily briefing here, is there anything else, any other subject we need to cover?
Q The Washington Times says that GOP has floated a deal to avert a government shutdown. Does the White House have a proposal formally or informally from the GOP to reach a compromise on the budget deal?
MR. MCCURRY: The White House has a proposal which is the President's 10-year budget plan. We are anxious to have Congress move towards the President's priorities and to begin to address those things that the President says are absolutely necessary as we reach towards the goal of a balanced budget. And, obviously, we would welcome discussions that are serious in purpose.
So far, however, we have seen nothing but indications that they are holding fast to what the President feels is a failed plan. There's no alternative compromised proposal that I'm aware of, but we will continue to see if they are serious about addressing the priorities the President has laid out.
Q Have they sent you something, whether it seems to you serious or not?
MR. MCCURRY: -- quote-unquote "sent us anything."
Q Have they offered anything?
Q How about something informally? I mean, they're talking about floating the outlines of a possible --
MR. MCCURRY: Look, you're referring to an article today in The Washington Times in which they'd make it clear that the -- quote-unquote -- "idea" that they have floated is the same Republican plan that we've dealt with all along -- a balanced budget, 2002, $270 billion in Medicare cuts and a $245 billion tax cut. There's nothing new about that.
Q Well, I understand, but have they in any way put it to you somewhat recently in the guise of compromise? In other words, is the story correct or is the story not correct?
MR. MCCURRY: I don't see anything that would suggest that they have advanced a legitimate compromised proposal to the President.
Q Have they advanced anything, legitimate or not?
MR. MCCURRY: They haven't advanced anything that represents a basis for a compromise, as the article says. The article makes it clear what they've talked about; it's the same old thing.
Q So the article is not incorrect on that point, that they --
MR. MCCURRY: No, no, the article correct -- I mean, the article says they proposed a compromise. The compromise is the original Republican position. That's not a compromise.
Q How did they propose it? How did they offer it?
MR. MCCURRY: How did they propose it? Well, mostly through describing said alleged offer to The Washington Times.
Q This didn't occur in one of the conversations with Gingrich?
MR. MCCURRY: There are conversations going on all the time.
Q Was there any formal -- what we're trying to ask is was there any formal --
MR. MCCURRY: No, there was nothing formal.
Q Or informal?
MR. MCCURRY: Nothing informal.
Q Mike, are you still opposed -- is the administration still opposed to a budget summit as the way to go?
MR. MCCURRY: The President and those working with the President on budget issues have never seen much utility in the notion of a summit. And again, the problem is we want the Republican leadership in Congress to recognize the merit of what Democratic congressional leaders have been saying and what the President has been saying. We have been making the case for a balanced budget for preserving and strengthening Medicare; for protecting necessary investments in education and technology; for keeping this nation's commitment to balancing -- to protecting the environment -- in short, to achieve the goal of a balanced budget the right way, not the wrong way.
We have got to be concerned about what the Republicans are proposing across the board in appropriations bills as it comes to programs that are absolutely necessary for the American people, especially Americans in need. And so far, we've seen a total unwillingness to address the fundamental priorities that are reflected in the President's 10-year balanced budget plan. And until that happens, there's not going to be much basis for any type of dialogue.
Q Since the middle of the summer, this administration has been prepared for a Christmas budget, if that's what it takes. And you've also been holding fast to this idea of not compromising on the $450-billion figure. So if the President inevitably is going to veto this package, then don't you have to do a summit at some point, when you're this far apart?
MR. MCCURRY: That's highly speculative. The best thing would be for the Republicans to seriously offer -- I mean, my good friend, Mr. Blankley, the Speaker's press secretary, says today, we've got to move so we can get an agreement. That's right. So the Republicans ought to move and ought to move now to the President's priorities reflected in his 10-year budget plan, and then there's something reasonable to talk about.
Q But how can it be highly speculative if you are this far apart? That's when you have summits in the past --
MR. MCCURRY: Well, because the people on both sides --on the side of the Republican majority and the side of the administration -- have had some unhappy experiences with summits. I think the speculation about summit has mostly been done by members of the media.
All right, so we do have another announcement that is in the process of being prepared right now -- and we don't have a sense of time.
Q What time do you think it will be?
MR. MCCURRY: Well, if I can sit here and entertain you long enough, it could be any minute.
Q What can you tell us about the President's foreign policy address tomorrow?
MR. MCCURRY: The President is going to be making a case tomorrow that goes like this: that today we're going to see two examples of where American leadership in this world makes a clear difference -- Bosnia, and we'll see shortly, Mexico. What we need to recognize is this -- these achievements are the result of a very patient and very disciplined diplomacy that this President has pursued from the beginning of his time in office. And it is recognized that in this world we now live in, American leadership is an indispensable element in advancing the security interests of the American people; that this is not some how or other remote, disconnected business that occurs overseas, these are achievements that matter to the American people.
When they sit around the kitchen table at night, worry about how they're going to pay their bills, it matters that we have international trade agreements that are keeping people in good, productive paying jobs here in the United States. When they sit around and contemplate what type of world we live in, it matters that there are no longer Russian nuclear missiles pointed at the people of America.
And the work that goes into making those type of achievements, whether it's the Middle East peace process, whether it's Bosnia, whether it's the work we're doing in Northern Ireland, whether it's the enormous progress that we've seen in South Africa, these achievements are the result of America putting its best foot forward in the world.
He will make that case. He will talk specifically about some of the obligations of American leadership. He will restate again, as he told members of Congress recently and as he has said publicly, that America has leadership responsibilities when it comes to making peace -- because peace is not free, you can't get peace on the cheap. But peace, in fact, when you look at a place like Bosnia, is infinitely less expensive in both human terms and in financial terms than the cost of war. And he will be willing to lay out the case tomorrow why the United States will have to be involved and why, if we are able to achieve the illusive goal of peace in the Balkans, it will require U.S. participation in an implementation force that is under NATO command.
Q Will he talk about how large, how much?
MR. MCCURRY: No, he will not be able to say how large, how much because we don't have good answers to that. We can say, in general terms, it's a sizable force, it's a robust force; as Dr. Perry said the other day, a force that no one else will mess with because it's the meanest, nastiest, toughest force in that nasty part of the world. But beyond that, specifically the parameters of any deployment will have to be left until NATO planning is complete, and that cannot happen until we get the first step taken. And the first step taken will be, hopefully, the success of the proximity talks that the President just announced to you.
Q We he address foreign policy budget considerations?
MR. MCCURRY: He will. He'll talk about all that I said. These achievements of American diplomacy require preparedness. We often talk about preparedness in the context of a military budget, but it is equally true that American diplomatic presence overseas must be prepared to take the steps that prevent future conflicts. And that requires able diplomacy. It requires those who are in a position to advance American interests and the interests of the American people through negotiation.
So, at this time, when U.S. leadership is making a difference in the world, the fact that Congress would begin to think of ways to cut back on that external commitment of our values, it seems to the President to be very, very mistaken. And he will make that case. He will challenge those who are projecting this more isolationist view in the United States Congress to recognize the fundamental obligations this nation has as we lead in this new post-Cold War era.
Q What's the venue?
MR. MCCURRY: This is the Freedom House speech tomorrow that we previously announced.
Q I'm sure you've addressed this before, but is it the administration's position that congressional approval of the peacekeeping operation in Bosnia, while advisable and good to have, is not necessarily a legal requirement for the President to deploy the troops?
MR. MCCURRY: The President would certainly welcome support from the United States Congress for any deployment connected to implementing a peace treaty in Bosnia. But at the same time, the President knows his own constitutional obligations as Commander in Chief, and when it comes to acting to protect America's interest in this world he must act and often he must act alone if necessary.
Q What's your understanding of what Perry was talking about the other day when he was talking about building up the Bosnian government army?
MR. MCCURRY: Well, he was discussing, as you would expect -- there would be any deployment of U.S. forces, as you would always expect, would have a defined mission, duration of mission, and an exit strategy associated with it. Now, certainly the Bosnian government, accepting its obligations in the world and its ability to take over self-defense obligations once a peace treaty deepens and the peace process deepens in Bosnia is something you'd expect. That will require training.
We've seen the advantages of professionalization and military coordination between the Bosnian government and the Croatian government as they've worked on military-to-military cooperation in the aftermath of the Federation agreement from 1994. That's the type of thing that the Secretary was speculating about, but that, again, presupposes that we achieve the goal of a peace settlement.
Q Your filibuster has worked.
MR. MCCURRY: My note that I was just given said that we will have a special guest here in one minute. And we're delighted he's here. All right, let me get on with it.
We actually have a double-header today. Good news on two fronts. This morning, the President received a call from Mexican President Ernesto Zedillo, and as a result of that, the President is pleased to announce that he has been informed by the Mexico government that they will repay $700 million of the U.S. financial assistance we provided earlier this year to address Mexico's financial crisis.
We will have a written statement from the President that summarizes his conversation with President Zedillo who, obviously, the President is very much looking forward to seeing shortly here in Washington for a state visit. But for further details on this very significant and important step in our bilateral relationship and in the economic recovery that is now taking place in Mexico, I have asked Deputy Secretary Larry Summers to be here to brief you further on the details.
Larry, thank you.
Q Mike, what's the date of the state dinner?
MR. MCCURRY: October 10.
Q This is how much they're paying back?
MR. MCCURRY: Larry, I think, can run through where they are, what the additional obligation was, what's actually been drawn on the obligation which is significantly less than the guarantee that was extended and then tell you more about the very encouraging news that there's an accelerated repayment.
DEPUTY SECRETARY SUMMERS: Just a very brief statement. Today President Zedillo called President Clinton with the significant news that the Mexican government will begin prepaying its loan obligations to the United States. The Mexican financial program is working. We are seeing today that American taxpayers are being protected just as we promised.
When President Clinton led in providing financial support to Mexico, we promised that with appropriate forms by Mexico, its economy would recover, our taxpayers would be repaid, America's vital interests and a stable export market and a secure border would be protected.
Today, an early down payment on those promises is being made. That's because, as Secretary Rubin said so often a few months ago, if the Mexicans met their commitments and we met ours, this would work. The Mexican financial assistance program is working. American interests are being protected, and the promises made by the President and Secretary Rubin are being kept.
Q What was the original loan, and how much did we actually give?
DEPUTY SECRETARY SUMMERS: The United States indicated that if conditions were met, it was prepared to provide up to a total of $20 billion in financial support to Mexico. Because of Mexico's success in accessing markets and because of the return of confidence, a total of $12.5 billion of that $20 billion is all that has been disbursed so far. Following this prepayment of $700 million, which coincides with the Mexican's announcement today that they have been able to access the European bond market for about $700 million, the outstanding balance will be approximately $11.8 billion.
Q So that's where they got the money, from this bond deal?
DEPUTY SECRETARY SUMMERS: Well, they will get money from this bond deal and from their reserves which have accumulated very substantially. When Mexico was in serious trouble in January, it had approximately $300 million in reserves. It has been able to build those reserves up to $15 billion. At the same time that it's reserves have been built up to $15 billion, the so-called Tesobono debt -- the short-term dollar debt that was a source of the problem -- has been largely extinguished.
Q Didn't they just get over a billion dollars from the IMF?
DEPUTY SECRETARY SUMMERS: They received -- their most recent IMF disbursement was in August and was about $1.7 billion.
Q So this is not robbing Peter to pay Paul?
DEPUTY SECRETARY SUMMERS: No. The Mexicans have been able to access the IMF, but, I think more significantly, they have been able to access the private markets for more than $3 billion and on increasingly attractive terms. In a sense, they've now completed in bond market terms a triple play with a successful dollar bond issue, a successful yen bond issue, and a today's announcement of a mark-denominated bond issue. Again, the total of that is over $3 billion.
Q Does this change the repayment schedule for the $11.8 billion? At what point do they expect to complete repayment of that?
DEPUTY SECRETARY SUMMERS: The $11.8 billion is on a schedule that stretches out over five years. The Mexicans have made clear that they prefer to rely on private market support as much as possible and, depending upon economic conditions, will pay us back as rapidly as is practicable.
Q This is more of a symbolic gesture than any indication that the economy there is picking up so much steam they will be able to accelerate all their payments?
DEPUTY SECRETARY SUMMERS: I think it's more than -- $700 million is more than a symbolic amount of money, and it is a recognition of the fact that they have been able to attract capital from standard private sector sources on a substantial scale. And that is what has enabled them to accumulate some $15 billion in reserves, and that is enabled them to make this payment back to us.
Q How early is this prepayment? When was a first repayment due?
DEPUTY SECRETARY SUMMERS: Mexico had a series of short-term swaps which were being rolled over on a regular basis. This was money that we had made clear was going to be available to them for a substantial period of time.
Q Dr. Summers, how much do you think that Mexico's ability to attract capital is based on their economic performance and how much is it based on U.S. backing?
DEPUTY SECRETARY SUMMERS: I think, going forward, their ability to attract capital over the medium-term is based on the confidence in what their economy is going to be able to accomplish. They've seen an increase in exports this year of nearly a third. They've seen a current account -- a trade situation which was in substantial deficit move to substantial surplus. I don't think there's any expectation at all that their ability to attract these new bond issues which stretch out several years is based on any kind of U.S. guarantee. It's based on Mexico's increasing confidence in Mexico international markets that's been materializing for some time. You can see it in the Mexican stock market which is back close to the levels that it was at before the crisis in December. You can see it in what has happened in the so-called Brady bond market where, if you strip away the portion of those bonds that represents U.S. collateral, the pure Mexican piece has risen by more than 60 percent in value.
So this is really a reflection of the market's increasing confidence in Mexico which, in turn, has been earned by the convincing policies that the Mexicans have pursued -- accelerating privatization, getting the budget into surplus, pursuing tight, noninflationary monetary policies.
Q The Mexican government, will they continue to have these talks on monetary and fiscal policies in Mexico?
DEPUTY SECRETARY SUMMERS: I think the Mexican government has recognized very forthrightly that an adjustment after the kind of shock they have experienced is not easy and that it will be completed most rapidly with credible policy. And so I am convinced that the sound policies that they agreed to follow in their agreements with the IMF and with us will be pursued. I expect that those policies will bear fruit. Most observers are looking for economic growth in Mexico to begin by the end of this year and are looking for the economy next winter to be clearly ahead of where it has been this Fall.
Q Can you comment quickly on our trade deficit with Mexico and your outlook for improvement there?
DEPUTY SECRETARY SUMMERS: Our trade deficit with Mexico is far smaller than it would have been if this program of support had not been able to support confidence to Mexico and enable them to finance imports. We have not seen the kind of drastic decline in U.S. exports that we saw following the 1982 debt crisis. That is because of President Clinton's action.
I expect that with the resumption of economic growth in Mexico that you will see a significant further increase in U.S. exports to Mexico, although I would stress that they are already greater than they were in the spring of 1993, prior to the passage of NAFTA.
THE PRESS: Thank you.
END 12:35 P.M. EDT