View Header


Office of the Press Secretary

For Immediate Release January 21, 1997
                             PRESS BRIEFING
                            BY MIKE MCCURRY,
                       OMB DIRECTOR FRANK RAINES, 
                     SECRETARY OF HHS DONNA SHALALA                  
                           The Briefing Room

2:57 P.M. EST

MR. MCCURRY: Good afternoon, ladies and gentlemen. Welcome to the first press briefing of the second term. God, I love those words.

The President just has concluded a meeting with his national economic team to really set out some marching orders about how we will accomplish an objective the President defined very clearly yesterday in the Inaugural Address -- balancing the budget by a date-certain while balancing it consistent with the values the President has long articulated.

The President, as you just noticed, made a little bit of news concerning his willingness to reach forward to the Republicans with respect to the savings in Medicare in the budget proposal we will submit February 6th. I thought it was important for you to have the benefit of the wisdom of the President's National Economic Advisor, Gene Sperling, Chair of the National Economic Council. I've also got Secretary Shalala, Frank Raines from the OMB, Bruce Vladeck from Health Care Financing Administration, numerous others behind door number one.

But, Gene, why don't I start with you. Maybe you can help people understand the figure that the President used, and then we can answer any questions you've got. I should also say in a very short while we are going to try to provide a little bit of paper for you that walks through some of the elements of these savings, so those of you who are from more specialized publications can see how that number is constructed. But just so people understand the general construct, let's start with Gene.

Q Do you have that paper here, as opposed at HHS?

SECRETARY SHALALA: Yes, it's here.

MR. MCCURRY: Those of you who are departing with pool --

Q He's gone, but when he starts to speak --

MR. MCCURRY: We will make arrangements to cut the sound here when the President's about to speak. I think the briefing will be long over by the time that happens.

MR. SPERLING: Today, for those who didn't hear his statement, the President's main point was that if we wanted to have a balanced budget that balances our values and start working together in a bipartisan way, we need to move quickly to get to the table, to have a real balanced budget negotiation and get it done not only this year, but really as soon as possible.

To that end, the President today said that he would be putting out the outlines of his Medicare component of his balanced budget plan. And the three points that he made was that, number one, this was a policy-driven plan that meets our goals of having reforms in Medicare, that protect quality, give more choice, make Medicare more consistent with what we know about market-oriented tools for efficiency; that, number two, that it would extend the life of the Medicare trust fund to 2007; and that, number three, the number that resulted from these policies was $138 billion over six years.

Now, when we ended negotiations last year, our number had been scored at $116 billion over six years. We had -- at times we had presented $124 billion; it had been scored at $116 billion. Their number was at $158 billion. The number that we're presenting today, $138 billion is, as you could see, approximately halfway between those numbers. For us, we felt that this was the result of good policy and what we thought was the best health care policy. But we also do think it is a good thing that it does turn out to be something that ends up meeting them halfway, because I think we all agree that if we're going to have a balanced budget this year, we have to be able to all sit down and look at what the best policy is, and not be subject to, I think, any of the artificial line-drawing or artificial numbers or symbols that I think at times both sides may have been guilty of last year and may have prevented us from working together and doing something for the American people getting a balanced budget agreement.

We can't wait another year -- the Medicare trust fund cannot wait another year, so we are putting out today broad outlines. Right now, OMB is just scrubbing the last couple of numbers, and we'll get it down. I think it will be in a form that will be very easy to look through. I will give you a few of the basic numbers now, but you will have to see the paper. But as I say, I think it will be rather easy to see.

There will be significant provider savings from the hospital side. The total reductions would be in the area of $32 billion over five years, and $45 billion over six years. Established within there would be $11 billion over five years for direct payments to academic health centers. That would be a plus that offsets that number.

There will be managed care savings of over $30 billion over five years and over $40 billion over six years to deal with what we believe has been an overpayment.

Q That's deduction?

MR. SPERLING: I'm sorry, that's in the managed care area.

Q Is that like to HMOs?


Q How much is that? Give us that number one more time.

MR. SPERLING: The number -- the total number would be over $34 billion for five years and over $40 billion for six years. These are for managed care savings. It includes a phased-in reduction in HMO payment rates from the current 95 percent of fee-for-service payments to 90 percent.

On home care, this plan would save $15 billion over five years, and $20 billion over six years through the transition to and establishment of a new prospective payment system and a number of program antifraud and abuse initiatives that Secretary Shalala has taken so much leadership on. There would be $7 billion in savings over five years and $10 billion in savings over six years through modification and physician updates. There would be $7 billion in savings over five years.

Q What's that, Gene?

MR. SPERLING: Can I tell you something? I'm just -- right now I just want to give you the broad updates, and then I will -- we have --

Q I don't even know what that phrase means, "modification of physician updates."


Q Okay.

SECRETARY SHALALA: It's the way we pay physicians.

Q Revenue enhancement. (Laughter.)

MR. MCCURRY: Gene, make it clear that all this is coming --

MR. SPERLING: Yes. I really just wanted you to get the feel. Number one, we'll have this paper out for you in a number of minutes, and number two, we have Bruce Vladeck and the Secretary here that could go through each of the specifics. I was just trying to give everybody a broad overview at the moment.

We also will include in here -- there will be structural reforms, which is what we very much want to talk about, what Secretary Shalala will be talking about. And I'll let her speak on the structural reforms that we think will be important for the long-term efficiency of the Medicare program.

There are $10 billion in savings in Part B that come from simply extending the 25 percent Part B premium allocation, which is simply continuing the notion that 25 percent Part B costs should be paid by premiums. That establishes -- saves $10 billion. There are a number --

Q That's $10 billion over five years?

MR. SPERLING: Over five years. And $18 billion over six years.

Q How does that save the money? Is it supposed to change, the percentage supposed to change right now?

MR. SPERLING: Current law, even though 25 percent is current policy, current law would have dropped down, I believe, to just inflation. And so when you simply -- even when you continue the 25 percent, you pick up some savings off the baseline even though you're continuing the 25 percent.

These are the basic elements. We wanted to -- this had been leaking out. We wanted to put this out so that we could talk about it and explain it and have a serious discussion about this. This is a serious and a real plan. It is a step forward. It is, as the President says, meeting them halfway.

And one other point I would make clear is to the extent that the home health care transfer helps contribute to extending the trust fund 10 years from now, it is not included in this $138 billion. This $138 billion does not include the home health transfer. So, in other words, we extend the life of the trust fund through Part A specific savings. There is also part of it through a transfer of some home health costs -- over 100 visits. But the main point I wanted to make -- this is just a clarification; I'm only saying this because there's been a little bit of confusion -- the $138 billion is the net savings to deficit reduction. The transfer is not counted in that number.

Q Gene, could I just ask -- when you talk about six years, you're talking about the current fiscal year plus five more?

MR. SPERLING: Yes. Let me tell you why we mentioned this -- no, I'm sorry -- let me tell you why we mentioned the six-year. The reason why we were mentioning the six years is that even though we will now be in a five-year budget window to balance under 2002, what we had heard from several of you was that it was difficult to understand how this compared to what happened last year because we had all used six-year numbers so much. So this will be $100 billion over five years, $138 billion over six. And we wanted to make the six-year number out there even though that would be a -- include the year 2003 simply to illustrate the degree that we had moved closer together with this proposal.

Q And the last time you had a six-year number, your number was $124 billion?

MR. SPERLING: We had proposed $124, but it had been scored at $116 billion.

Q Scored by the CBO.

MR. SPERLING: Yes. And there's had been scored at $158 billion.

Q Gene, why does turn out that the largest jump is in the sixth year? I mean, if you look at -- if you have a $100 billion over five years and then you have $38 billion more in the sixth, which is outside of the balanced budget scope, why is it that year when you get this large --

MR. SPERLING: That has always -- I mean, I can let Frank or Donna speak this, but that is always the path of -- I mean, that is why doing these savings early is so important. The same policy has a -- gets a higher and higher savings. And that is why every year we put it off, we are robbing larger and larger savings. I mean, everything -- your basic logic of a little done today -- when you have a program that is growing significantly, and you slow the growth rate, the savings increase each year, even though it's the same policy.

Q When you -- the list of sources of savings that you had in your last year's proposal to this year's, did you find any new sources, or did you merely wring more out of each category?

SECRETARY SHALALA: We did find new sources and --

Q Okay, what on this list was not in your last year's --

SECRETARY SHALALA: The reimbursement of managed care, for example, of organized care, which is reflecting studies that show that we're probably paying too much for managed care. They'll dispute that, but we have a pretty good grounding for that. In addition to that, we have some structural reforms in the system for home health care, for example. While you saw these categories, within the categories we've made some refinements. But it is both for the Republicans as well as for the administration the usual suspects. You look at what you could do on the hospital side, you look at what you could do with the nursing home side. You look at whether you're accurate in how you're paying people to get quality managed care.

So the categories -- hospitals, managed care, home health and nursing homes, physicians -- those are the categories that Medicare pays in and, therefore, you ought to expect us to go into those categories and see where we can save money.

Q I'm not sure I understood the answer you gave us. The only policy difference between this proposal and your last proposal is that it seeks to reduce the payment schedule for managed care. Is that correct?

SECRETARY SHALALA: No. That's an example.

MR. VLADECK: That's a little too simple. The experts will find that there are numerous policies and it will underlie these. What the Secretary was trying to do is give you where the major dollar impacts were. The largest single dollar impact difference is on managed care. Now, that's in the order of $30 billion, and so -- we're talking about very large programs, very large numbers, so that there will be some very small policies that will come out that would be -- there may be a $1 billion difference over five or six years, we just don't have time to lay out every one of those individual policies.

Q When you say managed care --

Q Are there no premium increases in any of this? You haven't talked about that at all.

MR. VLADECK: No, the only impact on premiums is to hold the Part B premium at 25 percent, but there are no other adjustments to the premiums in the President's proposal.

Q But last year when the Republicans essentially did the same thing, holding the percentage of the Part B premium where it was rather than letting it fall under current law, the Democrats said that was a de facto premium increase.

MR. VLADECK: Every version of the Republican plan, including the '97 budget resolution last January had some premium increase above the 25 percent level.

SECRETARY SHALALA: Yes, but let me go back to the original point the President made. The point is that we found savings in the Medicare program of $138 billion and that that moves us closer to what the Republicans proposed in their last offer. We believe that we're moving closer. The President considers this a good-faith presentation and we're giving you an early idea of what the President is proposing, and that's the point.

We'll be briefing on the details of this tomorrow for the health care press and we'll go through each piece. And the other point we wanted to make which I think Gene made very clearly is the point about home health care, which is not in the $138 billion number; it is outside of that. We think there are good policy reasons to do it, but it should not -- anyone shouldn't think of that as part of the $138 billion.

Q Is home health care part of the $116 billion?

SECRETARY SHALALA: No, it was not. It's not part of the $100 billion; it's not part of the $138 billion; it was not part of our original proposals. It was never part of the overall savings that we were laying out. It was a strategy for good policy reasons, which we'll be arguing. And it does help us on the trust fund side. But in terms of the overall number, it never had an impact on it.

Q Just to clarify this, you're saying you went from $116 billion to $138 billion. In a nutshell, where did you get the extra $22 billion from?

MR. RAINES: Again, let me be very clear here. The Medicare policy that we're announcing has many parts to it. There's -- a number of them have added up to equal the $138 billion. But it's going to be very hard for you to trace dollar for dollar because the baseline has moved and so the value of a policy this year is different than the value of a policy last year. It would require in excruciating detail to show you dollar for dollar.

The important thing is that the policies that we have in this year's proposal, in fact, increased the savings in the administration's plan. We believe it helps to produce a credible budget because it does contribute to budget balance in 2002 in a very significant way. And it has the additional benefit of continuing the narrowing of these differences between the administration's position and that of the Republican majority, which we think can help pave the way to our achieving an overall budget agreement over the five-year period.

Q Is the $100 billion number and the $138 billion, how is that scored?

MR. RAINES: Our current -- this year's policy has not been submitted yet to the Congress --

Q Are you be using OMB scoring techniques, or what would be equivalent CBO numbers?

MR. RAINES: It's our hope that the differences in technique has narrowed over the last year. And so that the numbers that we present and the numbers that CBO develops will be much closer this year than they were last year. The techniques of doing scoring are widely shared. A number of the experts worked together on this. So our hope is that when we say the numbers $138 billion, that the CBO estimate of the same number will be approximately the same. It may be -- it may vary a little bit, but we don't anticipate a very large variance from our estimate and their estimate.

Q If you show this to any of the Republican leaders, do you have any reason to believe that they're going to think you're meeting them halfway?

MR. RAINES: Well, I don't want to predict what they would say. I spent a lot of time talking to them. The message that I have received is that they wanted the President to take the lead on the budget. They have not given us any indication of what they're proposals will be this year. The President will take the lead by producing his budget on February 6th. They also said they thought the President should take the lead on Medicare. And the President is taking the lead on Medicare by coming up with a very substantial proposal. Third, they said that they wanted to see that we were not going to be sticking to exactly our same positions of last year and defending those so that -- put them in the position of them having to stick to their old positions and defend those. We believe that this plan, which goes halfway to the difference that we had last year also meets that. So I think that the elements are there so that we could have a very fruitful discussion on this part of the budget and other parts of the budget.

MR. SPERLING: I just wanted to just wanted to point out that John Hilley and the administration did brief the leadership in both parties before -- I can't tell you exactly what the reaction is, but --

Q When?

MR. SPERLING: Today. So we're putting this out -- and I think just to go back, just to make clear on what Frank was saying on the scoring, all we have at our capacity is the OMB experts who are career experts who have been here through administration through administration and we think have the best track record in town over the last few years, and that's all we can do now.

What Frank was saying is that last year, we put things out, sometimes CBO would score something slightly different. We've been through a whole round; we have a lot better idea of how people score different things, so there's a lot better chance that they will be close. So our hope is that this will be very, very close, but there's no way we can know for sure until we actually present our budget to CBO and they score.

But the main point is that we're moving approximately halfway. Obviously, this is a long budget process. Different numbers can get scored slightly different ways. That's part of the process; we've all been through this before.

Q Secretary Shalala, anytime that home health care is mentioned in any form, it's going to concern a lot of people who have this kind of care. What would the impact of what you're proposing here be on people who are home health care recipients or nursing home recipients?

SECRETARY SHALALA: They will be able to continue their home health care. What we need to do is to make a vigorous effort to eliminate the fraud in the system and to get better management control of the home health care system.

What has happened, without going into excruciating detail is, home health care was developed to be connected to a hospital stay. It has evolved, ad hoc, into this nation's long-term care subsidy and we need to get better control over it. We have made a number of recommendations in this budget that we'll be discussing with Congress. It's not some budget trick; it's a solid, health-related policy proposal that gives better management control that pulls down the fraud that has been rampant for too long in the system and puts it where it belongs in the Medicare system. So we'll be laying out those arguments. But for people to get home health care, it will be there for people that need it at the end of the day.

Q Will it be more expensive?

SECRETARY SHALALA: I do not -- in the President's proposal, it is not more expensive. But again, it is not related to the $138 billion number that moves halfway toward the Republicans, and is a good-faith effort by the President to reach a compromise on what we need to do to protect the Medicare system.

MR. MCCURRY: I don't want to miss the chance to do other subjects in case there's other questions, but let's -- Susan, and if you absolutely need to ask, go ahead.

Q Gene, you're moving closer to where congressional Republicans have been, but you're moving farther away from where many congressional Democrats are. Do you anticipate problems on your own side on the Hill?

MR. SPERLING: Well, what we've always said is that we try to do the policy bottom up and we try to look at what we think are the best policies and policies we can defend. What happened with us is, when we looked at the policy, we saw that it was -- that we thought we could support and feel was good for the Medicare system, we were near $138 billion. Now, perhaps in the different context, you would have tried to keep the number at $124 billion last year where you were still in kind of a negotiating context, where we were sticking with the number and they were. We saw this as an opportunity to be able to tell people who have been our supporters that we still felt that this was good policy and that we still think this is the best policy.

So, for us, we don't feel that we're doing anything that compromises our priorities or our values. But in looking for good policy, we saw a good chance to move halfway towards them, and in the long term, in the big picture, we really do have to get a balanced budget done this year, and we do have to address the Medicare Trust Fund this year. It gets harder every year.

So we're hopeful that those who wanted a lower Medicare number -- and there will be many groups who will be, or some groups that feel we've gone too high on a particular number and we will have to make the case to them that it was good policy and that we thought that this was the right policy. So it's really no different than before in that sense.

MR. MCCURRY: One, two, three -- that's it.

Q When the President was arguing about meeting halfway, he was talking in five-year time frame, so isn't it a false argument for using an out-year number, $138 billion? And what is the five-year Republican number?

MR. SPERLING: Actually, in a five-year context, I think if we go back and look we'll see that we've moved even more than halfway over a five-year context.

Q If you're $100 billion, what are they at five years?

MR. SPERLING: You would have to ask them. I believe it was around $105 billion or $105 billion net, was I thought their proposal last year.

Q They were $114 billion for five years.

MR. SPERLING: That was the gross number. The net number was around $104-$105 billion. So it's even closer.

Listen, we were just using the six-year number to help everybody here and help people in the country understand what the movement had been based on the numbers they were used to.

Q -- bigger plan you're going to negotiate --

MR. SPERLING: We're happy to talk five years.

MR. VLADECK: It's very important. Whenever we talk --if we talk in five-year numbers, people ask us what's the six-year number. If we talk in the six-year number, people ask for five. We're happy to do both. Actually, the policy and the statement we're making is better on five years. All we're trying to say is on the familiar numbers to most people, there is substantial movement. If you look at another number, I assure you there's substantial movement here. And it is the result of taking tough policy decisions to balance the budget and also to move forward discussions on the Hill that we hope will lead to a long-term agreement.

Q Secretary Shalala, last year it was a common administration refrain that this wasn't just a matter of math and splitting the numerical difference; there were important policy debates that were at the heart of it. I mean, you haven't seen the Republican plan this year, but of the plan they had last year, if it gets to the $158 billion figure, are there policies in there that the administration simply cannot compromise on? Do there remain irreconcilable policy differences at this stage?

SECRETARY SHALALA: No. We haven't seen their plan, so I don't know whether we continue -- when we saw their plan last year we made some simple points about what they tried to do. We want to preserve choice. We believe that Medicare beneficiaries ought to take a look at managed care, but if they don't like it after a period of time, they ought to be able to come back into their fee-for-service. We want to protect beneficiaries, because we believe that the average beneficiary doesn't have a lot of money. And as they get older they get poorer. So we're going to look very carefully at any alternative proposals that add cost to beneficiaries.

We want to preserve the health care infrastructure in this country. And to do that, you cannot destroy rural hospitals, big urban hospitals. So what are the savings in hospitals, we're going to look very carefully.

They know what we're concerned about. But fundamentally, the President is committed to a plan, to a Medicare system that guarantees a benefit -- not just a contribution from the government. It guarantees that at the end of the day you're going to get a quality health care system that will be there for you. And I believe the Republicans want to get to the same place. And what we've done is done what they've asked for -- to move -- to take a look at our previous proposals, to make some good health care decisions. And our numbers are now moving closer to theirs. We hope that they'll see the President for what -- as being consistent with what he said to them over the last few weeks, and that is that he's prepared to sit down in a bipartisan way and write a good Medicare bill.

MR. SPERLING: Just one point. Last year they had their reconciliation that the President vetoed. When they came back, they were in a budget resolution context. So they never really filled in all the exact details of their $158 billion. If you looked at the committee reports, there was a lot of reason to think that they were doing structural things, balanced billing and MSAs, that we've thought might have the impact of segmenting the Medicare system and which we would be very concerned about. But it wasn't like the reconciliation bill where there was that degree of precision. So we're all kind of talking about pretty much an assumption that their $158 billion included a lot of the structural reforms that we disagreed with. But we don't know for an actual fact.

Q I have two questions. In negotiating with Republicans with this plan, will the President flatly oppose any proposal to means-test Medicare? And secondly, what proportion or what percentage of these savings is represented in the total entitlement savings that will be in the President's budget?

SECRETARY SHALALA: I actually met with Mr. Archer and Mr. Thomas about an hour ago and indicated to them that the President is laying out his opening offer and that we'd like to see what they have in mind. And as far as we're concerned we're going up there in good faith. They know what we've said before. We've been consistent in wanting to protect low-income beneficiaries. The program is already means-tested -- if I might remind you that low-income Medicare beneficiaries now get their premiums paid by Medicaid. They've had some ideas in the past. What we want to make sure is we preserve health care for elderly and disabled Americans. And we're going to be open to whatever proposals they put forward.

Q Including additional means testing?

MR. RAINES: Let me add to that --

Q Yes, please, because --

MR. RAINES: I will, I will, Mick. Let me add to that. As I mentioned before, in putting together this plan, we have a large number of policies, large and small, that are included. There are some policies that aren't included in this plan that are perfectly acceptable to us. There are some other policies that aren't included in this plan that are not acceptable to us. And in the course of discussions with the Republican majority, we're going to be very happy to point out which fits into which category depending on their interests. But we will be prepared to examine any plan that they set forward in an open-hearted, open-minded way. But we will not hesitate to indicate if there are items that we find do not fit with the priorities of the President.

The key here is this is the President's plan. We would like the Republicans to agree to this plan. If they agree to this plan, it will meet the goals that the President set forward, t will extend the life of the trust fund, and we will be able to move forward in balancing a budget. I believe there's much in this plan for them to agree to and that it is a plan that they can agree to, but of course, because the Congress has to pass legislation to implement it, we will, in the normal course of legislative discussions, discuss with them the President's plan as well as any other plan.

But this, I believe is the plan that they should start with. They should start with the President's plan. If they don't like some element to it, they should offer amendments to the President's plan. But what we should not do, I believe, is get into a posture of dueling plans. If they would like to offer amendments, we'll be happy to give the administration's position on any amendment that they would like to offer, and we'll do so in a way that tries to be as positive as we can be in this discussion if we can maintain a discussion in which we are all moving toward, to a solution to the problem.

Q If you say some policies that aren't in this plan are okay with you, some aren't, well, which category does means-testing fall in?

MR. RAINES: Well, it depends on what you mean by means-testing.

Q Means-testing for affluent Medicare recipients.

MR. RAINES: There are a number of policies that relate to premiums that could very well be acceptable to us in the right context, and there are some other approaches that aren't. But I don't believe it's helpful for us today to guess which one they might propose and then to guess what our answer to be. But we would be very happy in the context of discussing with them a wide range of policies that are consistent with the goals the President has set forth.

Q Just to reiterate, last September, two Septembers ago, President Clinton said he was open to the concept of means-testing for affluent Medicare recipients. Does he still feel that way?

MR. RAINES: I don't have anything to offer you that would change anything that the President has said on this subject in the past.

Q What proportion or what percentage of these savings is represented in the aggregate entitlement savings in the President's budget?

MR. RAINES: Actually, the honest answer to that question is that I don't know off the top of my head. And, second, the answer, if I did know, would be, we wouldn't say it today.

Q Can you clarify one thing? Last year -- if the baseline has changed in the last year, how comparable is it to talk about last year's figures of $116 billion and this year's figure of $138 billion?

MR. RAINES: At some stage, trying to match up numbers over years and years and years gets to be very, very difficult. But I think because these numbers had attained such meaning, we wanted to try to address them in terms that people had become used to, and that's why we're trying to give you numbers that you can match up. But over time and the longer we go, the baseline is going to change, the underlying economics changes and it makes it harder and harder to do these comparisons. But I believe the comparison you're getting today is a fair comparison of where we were last year, where we are this year, where they were last year and our comparison to that.

I believe that this is a fair comparison, but the base of your question is right. At some point, these comparisons begin to fall down because the numbers are changing so much.

Q During the campaign there was a lot of talk in Republican cuts in Medicare. Are these cuts that you're proposing in Medicare right now?

MR. RAINES: I believe there's a lot of sensitivity by the members on the Hill to that question. If you define this as you're going to be spending less money than you otherwise would spend, yes, these are cuts in what the spending would otherwise be. If they would feel more comfortable as describing them as slowing the growth, then I'm comfortable with them describing it as slowing the growth. Our effort here is to get beyond the labels and simply say, we have a policy that is going to result in a Medicare program that's going to have a certain spending pattern over the next five years; we're happy to discuss with them which pattern they would like to propose, and then to discuss how we bring that into law.

Q Thank you.

Q -- why you introduced this today? Why have you given us details today, sir?

MR. SPERLING: Why today? Because yesterday the President told the country that we ought to balance the budget and balance our values and that we ought to show that we can work together to do the nation's business, and we wanted to do something tangible and real today. The balanced budget is one of the biggest issues facing this country, and everybody who went through the last year knows that the issues of precise Medicare numbers were one of the main things that was a blockage to people working together last year. So we wanted to show a policy that showed a movement towards getting something done, and the day after the Inauguration it gives content to the themes he said yesterday and shows that it's for real, and that's really how we plan on working to get things done.

Q It has nothing to do with the timing of the Trent Lott's tax cut proposal?

MR. MCCURRY: No, it had nothing to do with that.

Okay, let's go on. First, I want to say that --

Q Do you get the feeling that the Republicans are ready to say, all right, enough with the political name-calling on you said it was a cut and we said it was the savings, that they actually want to move ahead?

MR. MCCURRY: That will be up to them to address. I think a number of them have said that they want to see the administration address Medicare in a forthcoming way. They felt that maybe we did not do so last year during the campaign season. You've heard us say in the past we don't think that they fairly characterize the President's 1993 economic program with respect to taxation, and there were sharp exchanges on that.

The President, I think, if anything yesterday said the partisan exchanges of the past we need to set aside now, so that both parties come together to do the work of the nation And what we've tried to do today by addressing in sort of a non-rhetorical way what we need to do with respect to reforming Medicare and restructuring Medicare is a step in their direction in coming to common ground on budget values that both parties can embrace as we complete the process of balancing the budget by a date certain.

The President would like to see you all next Tuesday, the 28th, for a press conference if you're interested. Any takers?

Q What time?

Q What time?

MR. MCCURRY: Probably about 2:00 p.m. or 2:30 p.m. -- sort of early to mid-afternoon.

Q Is this the monthly news conference?

MR. MCCURRY: It's the periodic press conference that I said the President would be interested in having.

Q Tuesday, the 28th?

MR. MCCURRY: Tuesday the 28th.

Q Is that our winter press conference? (Laughter.)

MR. MCCURRY: That will be your January press conference.

Q Talk to us about what he's going to be -- or give us as much of a preview as you can about what he's going to be --

MR. MCCURRY: Well, we'll try to cook something up, but right now there's no big pending announcement or major piece of news, although we might look for something that we can fit into that box. But the President, as you know, has pledged to on a routine and periodic basis to take your questions. And that's the date that works for us, if it works for you.

Q I'm sorry, I meant about campaign finance reform, what's going to happen next.

MR. MCCURRY: The President is going to speak very shortly and say a number of things. One, he is going to give a strong endorsement to the new modified McCain-Feingold campaign finance legislation that has been reintroduced on the Hill today. Two, he's going to endorse those things that Governor Romer and newly-elected chair, Steve Grossman, of the Democratic National Committee, will talk about at their press conference coming up shortly. They're going to talk about some of the things the DNC will do to restrict contributions from non-U.S. citizens, contributions from U.S. subsidiaries of foreign companies and foreign-owned corporations and some voluntary efforts we'll make to control the growth in soft money fundraising.

We'll set a voluntary cap on that. What we'd prefer is to enter into partnership with the Republican Party and agree that we would eradicate soft money contributions altogether as the McCain-Feingold legislation would accomplish. But at least as a first step, we're going to set an overall ceiling per anum on the amount that we would collect. And then they're also describe some of the procedures the DNC will have in place to screen and document checks so that we avoid some of the problems and some of the irregularities that we saw during 1996.

Here at the White House, the White House Legal Counsel's Office is finishing final touches on some restrictions that will apply around here as to access or who we -- how we be more scrupulous about those who are invited here to be the President's guests, so we have a better understanding of who they are, for what purpose they are are, for what purpose they've been invited by White House staffers. And we'll be able to give you a little more detail on that. But, in general, they'll just be operational changes in some of the things we do here that will make the processes a little tighter.

Q Just a quick one on another topic.

Q No, no, no.

Q We've got questions on this.

Q Mike, talking about the restrictions, you said the final package -- will we get that today? Can you give us a little more specific on that?

MR. MCCURRY: They're still -- the Legal Counsel's Office is finishing those. What we want to do is do something that works, have some procedures in place that allow us to control with greater scrutiny those who come here as the guest of the President. Now, one thing we have to do is to make sure that we've got the resources to accomplish whatever it is we set forth in policies. So we've pretty well decided what it is we want to do. We obviously want to address some of the problems we've seen in the past, but we want to make sure that whatever policy we establish, set out, we can accomplish with the resources we have here. And that's what they're checking now -- the policy that we would like to have against what we administratively would be able to accomplish with the staff and personnel that we have.

Q Would that be today, though? I guess, for those of us who are trying to figure out what we're going to be able to talk about tonight --

MR. MCCURRY: If we can get it -- the last time I talked to people working on it, they were going to try to get it done by close of business. It may not happen today. But we could talk about it again tomorrow if you're interested.

Q This includes overnight guests as well as the coffee klatch?

MR. MCCURRY: It's just about people who are invited here to the White House and cleared in the White House, how do we know who they are and for what purpose they're here.

Q For social functions, you mean?

MR. MCCURRY: For here for the kinds of things that have been in the news --

Q Staying overnight?

MR. MCCURRY: People who have been here for events that have been sponsored here at the White House by the Democratic National Committee. The President will continue to have friends, relatives, supporters, financial contributors, others here as his social guests. These policies are aimed more at people who are here for their own purposes or business-related purposes, not people who are here as social guests of the Clintons.

Q Will this affect people who -- the practice of inviting people to stay overnight in the Lincoln Bedroom?

MR. MCCURRY: The President enjoys having people stay overnight in the Lincoln Bedroom and will continue to do that. And most of the people who stay overnight in the Lincoln Bedroom are family, friends, relatives, friends of his daughter. That's not the issue that we're talking about here. We're talking about people who might have some demonstrable interest in actions that the President would take as President. And that's what we're aiming our effort at.

Q Coffee-klatch kinds of things.

Q -- a little bit more on that. Besides the case of the Chinese, I guess, weapons merchant who came to the White House, what are some other instances that you think were problematic and that you want to make sure don't happen again?

MR. MCCURRY: Many of those have been reported. And you've had -- you're doing a good job of reporting it.

Q -- that case?

MR. MCCURRY: I don't need to recount them all there. They have been widely reported.

Q Will these restrictions and rules also pertain to Gore?

MR. MCCURRY: They'll be -- I mean, we will put in place a system of procedures that work here for the President and certainly the Vice President will be supportive.

Q Does that mean that he'll still have the Secret Service in the security clearances?

MR. MCCURRY: The Secret Service's mandate is to protect the President and the Vice President from physical danger. As I've said before, they're not in the business of protecting the President from embarrassment. That's the job of the President, and what we need to do is integrate those systems. The Secret Service asks for certain types of data and information that they use for their purposes; we think we can, in that process of clearing people in, integrate the systems.

Q Mike, in establishing the ethics standards for the White House, the President often talked about eliminating even the appearance of a conflict of interest. Isn't there at least an appearance of an ethical lapse, when major contributors are then invited to sleep in the Lincoln Bedroom?

MR. MCCURRY: Absolutely not. I mean, the President of the United States has the right to enjoy the political support, financial or otherwise, from those who are committed to his goals and objectives. And he has a right as a human being and as President to say thank you, and he enjoys having people stay with him in his private residence; that's one way in which he expresses his gratitude. I suspect there are people here who have got family, friends, relatives, acquaintances that they would make similar gestures to from time to time.

Q But we're not President of the United States, Mike.

MR. MCCURRY: The President is a human being. Ultimately the test is, what are his actions that he takes as President, what are the basis upon which he conducts his business, and he does so and must do so in the best interests of the American people.

Q So he would invite strangers who gave big money?

MR. MCCURRY: Let's remember that there is a fundamental premise here which underscores the work that you do on this issue, which is full disclosure. You know who gives money to the President of the United States and you can test for yourselves what the interest is in that person making a contribution. That's why we have disclosure.

Q But, Mike, if I may follow up, we're not handed a daily guest list of the Lincoln Bedroom.

MR. MCCURRY: And I don't intend to do it.

Q So it is not really full disclosure.

MR. MCCURRY: And I don't intend to do that, because the President of the United States is a human being, and is entitled to have guests at his residence.

Q But then that's not full disclosure, Mike.

Q And it hurts the perception.

MR. MCCURRY: I will -- we will continue to fully disclose and are committed to fully disclosing the names of those individuals who contribute to the President's political efforts. And you are fully entitled in your role to check each and every one of those individuals and check whatever potential conflict they might have. That's full disclosure. But the President has got a home that he lives in and he's entitled to have guests there from time to time of his choosing.

Q Related to the full disclosure question, the question about allowing all fundraisers the President participates and also the Vice President participates to be open to the press.

MR. MCCURRY: We have had very good discussions with the new leadership of the Democratic National Committee on this point, and in principle, everyone agrees that we should make fundraising events sponsored by the Democratic National Committee open for press coverage. The circumstances of how we do that on a case by case basis, we will still address, and there are some occasions which are, frankly, intimate dinners of small groups that I don't foresee having press coverage of, except maybe in certain types of circumstances. But we need to work out exactly how we will do that. As a general principle, openness to coverage, everyone now agrees to that.

Q Mike, following up -- if I can follow up on that. Will this be in some way codified in this counsel's --

MR. MCCURRY: This will not be announced today as a codified policy, because every time we looked at trying to write something that would codify the policy, it became cumbersome because each and every principal involved in fundraising, whether it's the President, the Vice President or others, have different types of events that they conduct. What we want to do is maximize and increase the coverage of this activity, but not write a hard and fast rules that's impossible for us to live with, or others.

Q Can you try Paul's questions again as to whether this applies to Gore or to other people at the White House, the new more rigorous standard of clearing people in?

MR. MCCURRY: The measure the DNC are announcing today do apply to the Vice President, and his staff has been helpful in putting them together.

Q As far as White House access. You said that Gore is supportive, but does that mean these same procedures apply to visitors to see him?

MR. MCCURRY: Yes. To the degree they apply to access here to the campus, that is exactly correct.

Q Mike, in terms of what the President is announcing today in the new DNC policies, Mr. Clinton has always said no unilateral disarmament. What changed that?

MR. MCCURRY: I think the President felt it was necessary to move the debate forward that he talked about yesterday to clean up politics so that we are clear that we're doing the public's interest and that we are acting in the public's interest and not responding to narrow, special interests, that we take some additional steps. I don't want to over-exaggerate the importance of what we've done today. It's not as good as what we would achieve with the McCain-Feingold legislation, but at least it is a step forward that says the Democratic Party will take some action to control contributions. And we have challenged the Republican Party, as you know, even just after the election to go even further in obeying the so-called "soft money" contributions altogether.

Q May I just follow up on that? Are you going to be put at a competitive disadvantage because of that?

MR. MCCURRY: We are already at a competitive disadvantage. We were significantly out-raised and out-spent by the Republican Party, probably by a margin of at least 3-2; certainly by more than $200 million, were we out-spent and out-raised by the Republican Party. And yes, you're going to hear a lot of squawking from Democrats on Capitol Hill about these procedures because they know that they're at a competitive disadvantage and they know Republicans have got access to greater wealth in the conduct of their own campaigns. But the President's committed to doing something about it. He's doing that from some position of contrition because we acknowledge that we've had errors on our side, but the other side should certainly acknowledge their errors as well, and that maybe occasionally they might get written about it.

Connie, we'll come back to you because I imagine it's not a question that everyone's going to have to deal with.

Q To return to this question of the White House regulations, virtually any corporate leader who meets with the President has some sort of business interest in actions the President takes. So what do you mean --

MR. MCCURRY: You guys could. Some of you have got stock holdings and you meet with the President and you could ask him a question that might affect your personal holding. But there's a reducto ad absurdum here -- the principle that applies is full public disclosure, and your judgment and evaluation of how policy is made, so you can hold it up to the light of public scrutiny.

Q This is on behalf of your fan club in New Zealand. Yesterday the President talked about -- talked about splitting the atom, and an American took credit on behalf of Americans first splitting the atom. Actually, a New Zealander, Ernest Rutherford, was the first one to split the atom. Why did the President say that -- any response?

MR. MCCURRY: He was talking about the scientific progress associated with the 20th century and talked about the enormous possibilities in the 21st century. He meant no offense to any particular individual of any particular ethnic origin.

Q Mike, I don't think -- can we go back first to Paul's question and then to Allison's question? Do the rules apply to visitors to the Vice Presidential residence?

MR. MCCURRY: How they apply to his residence I'll have to check. I don't know the answer to that. The Vice President conducts his business here at the complex at the Old EOB and here at the White House and the West Wing, and it certainly applies to him here when he's at work.

Q Also, are we going to get a list of all of the people who have had coffees with the President, fundraisers --

MR. MCCURRY: I know that Lanny Davis is working on that, and I don't know the status of that issue.

Q Mike, I still want to go back to this question of what exactly -- how you're regulating access, on what grounds. Is it simply that you're going to screen and know who people are?

MR. MCCURRY: We've had conditions that have been widely recorded in which an individual known to us brings as his guest people who are not really known to us and should have been known to us. That's the kind of situation we're dealing with. They've been widely reported and I don't need to go through all the incidences here. But what we want to make sure is that we know who is here, for what purpose they are here, is there any potential conflict that they might have that would suggest that they shouldn't be here. Pretty simple.

Q Who gets to say yea or nay?

MR. MCCURRY: One of the things we're working through is who ultimately has the responsibility of putting together lists, invitation lists, and keeping track of who actually comes in. That's one of the things we're working on now, because we want to make sure that whatever we put in stone as policy we've got the staff and personnel and budget resources to actually accomplish.

Q When you say there is going to be full disclosure, there's going to be full disclosure of who contributes money. Is there also going to be full disclosure of who comes in to see the President for the thank-you coffees that have been written about?

MR. MCCURRY: The people who contribute are known to you because we disclose, and we are required to disclose, their names. Now, we also prospect, we ask people for money. And we've invited people to come and to hear the President's message and to be in a position to ask him questions, and some of them don't. Frankly, some of them don't buy the President's program, and that's fine.

But I don't know that we need to obligate ourselves here to automatically putting the names of every person out there that we are actually trying to encourage to support us, because they may choose not to and it's not fair for us to suggest that they have been meeting with the President and that they have become supporters and are contributing to the President's political efforts when, in fact, they're not.

So I'm leery of that, but I'm -- we obviously are working in a climate here where we know we've got -- we're going to be held to a higher degree of accountability. We expect that. We welcome that, because the President wants that as part of underscoring what he feels is a renewed need to address the integrity of the system. But we're not going to be bludgeoned into a process here that doesn't protect those who could have every legitimate right to want to hear the President's argument and then make a decision that they just don't want to support it.

Q Well, Mike, couldn't you be bludgeoned into at least releasing the names of those who did attend these thank-you events and also gave money?

MR. MCCURRY: Every news organization in this room has got a very active dialogue with Mr. Davis on that issue, and I just don't know the status of it. I know that he has been addressing that and that's where you should address the question.

Q Mike, I'm a little confused. I'm not clear what we're going to get that we haven't already gotten. You're not going to give us a list of who sleeps in the Lincoln Bedroom; you're not going to give us a list of who comes to coffees. We get a list of contributors now, after the fact --

MR. MCCURRY: Right, and that's the ultimate test.

Q Yes, but, Mike, that's always true. What's new? What new protections are there? What new disclosure is there?

MR. MCCURRY: Well, the protections are to address the situation we talked about: Are there people who should not appropriately be having sessions with the President because their identity is not known and their purpose for visiting is not known. That's the type of question our procedures are aimed at getting at. We were not talking about things that we were going to do here in terms of additional disclosure. We're talking about things that we can do to make sure that we know and have some accountability for who is actually here on the premises.

Q So there will be no new disclosure then, Mike?

Q In how many cases do you think there has been a lapse? How many people do you think have gotten into the White House that shouldn't? I mean, is it a great number, hundreds?

MR. MCCURRY: I think, as I said before, there have been a few instances that I think have been widely reported. Those are the ones were aware of.

Q Could you tell me how this works in practice? Somebody here at the White House would have said to this fellow, you don't happen to be an arms dealer, do you?

MR. MCCURRY: Well, there are different ways -- and that's exactly the kind of question you're looking at -- what degree do you test out and look at who is coming in and under what circumstances they're coming in. We also don't ask for extensive data on people. Some people are cleared in here with just date of birth information and that doesn't necessarily present you in the best possible position to understand who is coming in.

Q But you're envisioning a staff that does Nexis searches, or asks questions, makes people fill out questionnaires?

MR. MCCURRY: Well, that's exactly the -- as we finalize these, that's the kind of thing that you would expect us to do in some instances, and we want to make sure we've got the capacity to do that.

Q Broadly speaking, what are the criteria of people who you don't want coming across the threshold?

MR. MCCURRY: People who have no appropriate reason to be encountering the President of the United States.

Q Can I ask a question on the Supreme Court request to the administration today to get more information on the administration's position on this affirmative action case in Piscataway, New Jersey?

MR. MCCURRY: That is a case that's been litigated very heavily at the District Court level. There have been an appeal for a cert to the Supreme Court. The Court is trying to evaluate that, has asked the administration for its views. That's not an unusual request for the Court. And the Department of Justice indicates that they will respond to the Court's query. It will take them some time, apparently, to look through and evaluate the merits of the argument that the Court is hearing. They intend to reply as promptly as they can.

Q Can you confirm that the Japanese Prime Minister will meet with Clinton here in this spring?

MR. MCCURRY: I have -- no, I can't. I don't know. But I'll check.

Q Can you talk to us a little bit about tomorrow and what the President plans to --

MR. MCCURRY: The President plans to pick up on something he talked about at great length in the Inaugural Address yesterday, and you'll hear him talk about more in coming weeks -- education is the bedrock of that bridge that he's building into the 21st century, because it will lead to higher learning and eventually higher earning by those in the workplace in the 21 century. He is going to talk tomorrow about how he can hold up and promote those who are doing an excellent job of teaching our young people, particularly in the case we will visit tomorrow in Chicago, those who are doing more to increase the proficiency of students in math and science skills.

Q In the economic meeting that the President had this afternoon, how much of that meeting featured a discussion of strategy to defeat the balanced budget amendment?

MR. MCCURRY: That subject, to my knowledge, if it came up, came up only very briefly. The issues were focused in on the presentation of the President's budget plan, how he would advance his budget plan. There are some adjustments being made in some of the presentation aspects of how we will argue the case on the Hill, but we are working on our agenda. The Republicans will pursue their agenda. But our belief is that the strongest argument to the American people about the balanced budget is that we should do it and do it now and not talk about mechanisms to put in place that might lead to a balanced budget in the future.

Q And did he walk through Lott's list of the top 10 bills?

MR. MCCURRY: No, that's their agenda, we have our agenda and our agenda will be reflected in the President's State of the Union.

Q Does the White House have any comment on the overwhelming vote in the House to reprimand House Speaker Gingrich?


Q I missed you on tomorrow. Is that just math and science at the public school or are you also going to put in a plug for the higher ed plan?

MR. MCCURRY: I think he will talk about his education agenda specifically, but the focus tomorrow at this particular -- with this particular school is on the success that this school system has had with respect to math and science education.

Q So no new initiatives, Mike? This is strictly a --

MR. MCCURRY: We've got a lot of new initiatives. The President talked about them in the course of last year. He outlined them in a more visionary way yesterday, and now we're about the business of getting the work done. And we're going to do that by going out and pointing out the success that comes from pursuing the types of efforts that the President has suggested we need to embrace as a nation.

Q On the Medicare rollout, this talk of meeting halfway, is this as much a direct response to Senator Lott's concern and his means misgivings, which he seemed to focus on as far as Medicare over --

MR. MCCURRY: It's accurate to say it reflects our understanding of what the best environment -- the President's understanding of how best to create the environment on Capitol Hill to actually balance the budget. And we obviously take into account a lot of what we hear others say.

Last question.

Q Just so I'm clear, the procedures you're putting in place on fundraiser access to the White House involve internal protections against wrong people getting in, with no new disclosure requirements? Is that correct?

MR. MCCURRY: Well, the disclosure requirements and the ability to comply with disclosure requirements are exactly those that are being talked about by the DNC. The information that's made available and how you track the information and how you look at the contribution side is really more of a function of the DNC. That's been done there.

Our questions here relate more to access and what we're looking at are procedures for access.


THE PRESS: Thank you.

END 3:55 P.M. EST