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THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release February 9, 1998

                            PRESS BRIEFING BY 
                              GENE SPERLING

The Briefing Room

1:17 P.M. EST

MR. TOIV: Good afternoon, everybody. We are going to start off today with a briefing by Gene Sperling on the President's Social Security initiative. We've sort of done this once, but nobody was able to pay attention to it, and so we're going to do it again. So Gene ought to be helpful to you on that.

Q Is there anything you think we don't know about it already?

MR. TOIV: Yes.

Q What?

MR. TOIV: Well, Gene is going to let you know that. And after Gene goes, we're going to have our three-headed monster sort of brief you in place of Mike, who, as you all know, is in the Northeast today. And what we're going to try and do is Ann, of course, will brief on foreign policy stuff; Joe will brief on some of the matters that he's been handling lately; and I'll sort of clean up the rest. And so we'll try to do the briefing in such a way that we don't keep walking back and forth here. We won't hold you all to that, but let's try and do it in some sort of order that way.

And let's start with Gene.

MR. SPERLING: Helen, thanks for the rousing reception, enthusiasm.

Q There are a few other things on the plate.

MR. SPERLING: Not that are important to more people's lives than Social Security.

Q I grant you that.

MR. SPERLING: Thank you. The President in his State of the Union, essentially announced a three-part announcement which was, number one, that all of future surpluses should be reserved until there was a comprehensive Social Security solution, until we know how much of those surpluses might be needed to be part of that Social Security long-term solution; that secondly, that the following months should be a period in which we elevate the Social Security challenge; and that, number three, that we have a strong commitment to actually getting legislation done, starting in January of '99.

Today was a kickoff for that second part, the elevating the Social Security challenge, and doing so through education, through creating public and political pressure for action, and through a careful effort to try to keep this debate balanced and bipartisan during this time period, so there truly is the capability for the type of bipartisan atmosphere next year that will allow us to have a chance of getting Social Security reform completed.

The President at that day -- or in our briefings announced that in an effort to make sure elevating the Social Security challenge was balanced and fair, he had asked the Concord Coalition -- which is, as many of you know, started initially by Paul Tsongas and Warren Rudman and Pete Peterson, and now also includes Sam Nunn and Tim Penny as leaders and has been a main force for fiscal discipline -- would be one of the co-sponsors as well as the AARP.

Today we announced that the first of those would be on April 7th in Kansas City. The President also announced that he would kickoff the Pew Foundation's effort -- their calling Americans to discuss Social Security. They are spending more than $10 million on an effort to elevate this. And March 21st is a 10-city interactive teleconference in 10 cities. And the President will go there and kick that off.

Q The President didn't say whether he would go to Kansas City.

MR. SPERLING: He will. The President will attend the first forum in Kansas City. And we are doing outreach and hope that members of the Republican leadership and the Democratic leadership would also attend. The Speaker has called for similar types of forums and has spoken supportively of the notion of saving Social Security first, or using the surplus first to see how much -- or saving it to see how much is needed for Social Security. But we have talked with many people and we're hoping to have a very significant turn out, or at least support and participation for.

Q Where is he going March 21st to kick off the Pew thing?

MR. SPERLING: It would actually be -- he'd be doing that from satellite from here, which is where the linkage is for the 10 cities.

Today, the President also went through a few of the main issues. I think that today, in my memory, was the first time a President of the United States ever gave a speech where he laid out in detail a coming entitlement challenge, like Social Security, and laid out very specifically what the nature of the challenge is. I think that is significant and I think, obviously, in speaking to a college campus, trying to send the message that this is not about simply the normal politics of entitlements that we have seen often over the last decade, but about a real effort at generational equity, at fixing this problem in a way that supports the retirement security of people in the future, but does so in a preventative way so that it's not dealt with in a crisis at a later time in which it may require significant burdens on people trying to both raise their children and support the Social Security system at a later point.

Let me just quickly note the things that he mentioned. Social Security in 1959, one of the charts he had, was at -- I'm sorry -- in 1959, the poverty rate for elderly Americans in our country was at 35.2 percent. That was largely because Social Security had not really spread to the public in a general way. Not enough people were fully -- had fully worked enough to get the benefits, nor had we had the disability protections that we have now. So from 1955, when there we're 7.5 million people in Social Security, to 25 million in 1970, there are now 44 million, including 7 million who get help from the disability part of Social Security.

That was one of the charts that the President showed, ad that explains why the poverty rate for elderly Americans has gone from 35.2 percent to 15.2 percent in 1979. It was 12.9 percent in 1992, and is now at 10.8 percent.

Let me mention something I don't know if the President did mention, but I think it shows the power of Social Security. The elderly poverty rate is 10.8 percent. If you were to simply subtract Social Security the elderly poverty rate would jump to 48 percent. So, but for Social Security, the poverty rate of elderly Americans would jump from 10.8 percent to 48 percent, which shows I think very powerfully its significance.

The President also talked about the fact that essentially that is because Social Security is a commitment of people working today to ensure retirement for those retiring now -- on the commitment that the future work force will do the same. And the problem that we have that he tried to show quite graphically on the chart is that while in 1960 there were 5.1 percent workers for every person retiring, that has now gone to 3.3 people working per retiree. And by the year 2030 there will be only 2 workers for every person retiring. And that is very much the heart of the problem and the reason that there is a need to fix that now.

The other chart that the President showed showed that the Social Security becomes insolvent in 2029. Essentially the problem comes even quicker. It is in 2012 in which the receipts coming into the Treasury are less than the benefits -- are not enough to cover the benefits going out. Because there is still interest coming into the Social Security trust fund, the Social Security trust fund continues to improve to 2019. At that point, the receipts coming in plus the interest are not enough to cover the benefits going out to Social Security recipients. So that at that point in 2019, the Social Security trust fund becomes depleted; until 2029 it is not able to pay a benefits or would have to pay out over that period only 75 percent of benefits.

And so this is a serious matter and it is a serious issue to try and elevate this debate in a way that we can do this in 1999. Some of the biggest threats to Social Security reform will be the temptation of elected officials to kick the can down the road, that no matter what we do, that they will feel that this is a problem that can be dealt with later and that every Congress will kick the can down the road another year, another two years, until rather than preventing a crisis, we have a crisis.

And if you look at what we have done by making a national effort to elevate the challenge, by saying that none of the surplus can be used for other funds or sources or priorities until Social Security is dealt with. We are very, I think, carefully trying to put pressure on our political system to try to deal with this issue over the next two years. And the President's speech today will be the first of many efforts by this administration to push out that message.

Q How much support do you have from the Republicans, in addition to Gingrich?

MR. SPERLING: Well, I think, as the Post article and others have shown, I think that the President's announcement at the State of the Union on saving Social Security first has fundamentally changed the political debate. I think if you look just in the prior weeks, you had a prominent Republican calling for using $200 billion of the surplus for tax cuts. You have, I think several people in the Democratic Party as well looking at options, I think, for using the surplus for either tax cuts or spending programs. You have both Democrats and Republicans looking at the surplus as a way of solving highway needs. And I think with the President's simple declaration that none of the surplus should be used until we have fixed Social Security, I feel that the debate has very much shifted and, in fact, most of the debate now has been more on what would happen with a hypothetical tobacco legislation.

And I do think one should not underestimate that prior to the State of the Union we were seeing almost the beginning of a feeding frenzy on how the surplus would be used for various different priorities, and that because of the President's declaration we now have close to a consensus that our surplus should be saved until we fix Social Security.

Q Gene, the President was saying today what's wrong with Social Security, talking about the problems. When will he offer his ideas about what a solution to this problem is? A lot of people think he's got a lot of political capital now, maybe he should spend some of that by standing up and offering a fix.

MR. SPERLING: Well, the President asked us to think through how he could actually pass Social Security reform. I think that -- certainly, I think our economic team would be capable of coming up with a decent plan that he could support.

But the question is will it lead to Social Security reform, or what best will increase the prospect of Social Security reform? It is our opinion -- and maybe right or wrong -- but it is our opinion that creating an atmosphere where there could be a bipartisan centrist solution to Social Security is the best hope of that happening. And it is our concern and the concern of many, many others -- and I would ask you to ask other people who care about Social Security reform about this -- but it is their and our concern that were the President or one of the major leaders to come out with a specific detailed plan prior to the election, that it carries with it the risk that that would become a source of political gunfire prior to the election and that that could actually reduce rather than increase the prospects of Social Security reform.

If our calculation on that were to change at some point, that would change our view. But right now I think the best thing we could do is use this year to try to have the kind of atmosphere we had in '97 in the balanced budget agreement, where we I think helped create an atmosphere where we could get together and come up with a bipartisan plan that might be harder for any person to do alone.

And I'd just say we had $400 billion of Medicare savings over 10 years. I don't believe that if either the Democrats or Republicans had made that their platform in '97, that that would have happened. I think what happened is that we were able to work together and come up with that at one time in a way that there was significant buy-off.

Q You said that in the past you used the budget surpluses to pay down the national debt while you were waiting for a solution on Social Security. If you use it to pay down the national debt, how do you then retrieve the surpluses if you decide you need them to shore up Social Security?

MR. SPERLING: I'm glad that you asked that because there's been a lot of I think confusion maybe on that. Partly that's because this topic of the trust fund is certainly a complex one. But let me try to be clear.

Our position was that nobody should pass legislation that drains the surplus, no one pass legislation that drains or spends the surplus until we know how much of the surplus is needed for a comprehensive Social Security plan. Under our planning, under our prospects, we see that -- we don't see a surplus in any significant form happening during the time period we are trying to get this done. So, in other words, our budget -- our hope is to have Social Security reform by the end of fiscal year '99. So it is our -- we are trying to get this done on a timetable in which we do not believe -- or we do not project that a surplus would have accumulated much at that time.

Now, the question is what if, in this time period, prior to the end of fiscal year '99 when we're trying to get Social Security reform, you're asking what happens if the surplus does emerge. What would happen if there's no legislation is it just buys down the debt. And the question is if there was a decent amount of a surplus is there some mechanism in which you would try to save that or keep those savings available for the Social Security trust fund.

I guess my answer is, under our projections we're hoping that will not be necessary. But it is not inconsistent with our view, and if a surplus started to accumulate and people thought that was a reasonable idea, it would certainly be something we would be willing to consider. But the important thing is that under any of these scenarios we shouldn't spend the money. I think if a few billion of that simply goes to paying down the debt while we're solving this problem, I don't feel that's inconsistent with the President's proposal. But neither do I think it's inconsistent if others down the road see a surplus accumulating while we're still debating Social Security reform and want to come up with some form of legislative device for saving or protecting that.

Q What's your answer to Republican criticism that if the President was really very serious about saving Social Security first that money from the tax settlement would be going to Social Security and not to all the various programs that you've delineated in the budget.

MR. SPERLING: I'm sorry, your question was?

Q The question is, Republicans have been critical, saying that if the President was very serious about saving Social Security first that money from the tax settlement would be devoted to the Social Security trust fund and not to the various new programs that you delineated in the budget.

MR SPERLING: We are being consistent since the '92 campaign -- that we believe that you had to have an economic strategy that increased both public investment and private investment. You increased private investment by reducing the debt, increasing more savings and, therefore, lower interest rates that spur private sector investment.

We've also always at the same time argued that you need more public investment in areas like education and training. And if you could do that in a fiscally responsible way in which you paid for that, that was the right strategy. That's the strategy we've had in every single budget. And so what we're saying, and what the President said at this State of the Union, was that for anybody who has new priorities -- him or anyone else -- they should continue to do it under that discipline. And that discipline being that the discipline of the budget rules -- the pay as you go budget rules -- that if you're going to spend a dollar, you paid for that dollar somewhere else. That's the discipline what we're living in.

What we can have now is a separate question of additional money coming in -- not money that somebody got from a budget cut or new revenue increase, but money coming in because the strategy has been working and because we've had a stronger economy. And what we wanted to say there is let's not break our fiscal discipline and essentially treat that as free money that you now break the budget rules and start spending that for everyone's priorities. Let's realize that we still have a major commitment on Social Security and reserve the funds until we know how much of that may or may not be required to fix long-term Social Security.

Q Gene, the President made his speech today in front of college students as opposed to a traditional Social Security lobby like AARP or something. Is he counting on the younger people in generating the momentum or something significant momentum over all of this?

MR. SPERLING: I think it's more that he wants to make clear what he tried to say in the speech in the State of the Union when he said whether you're 70, 50, or just starting to put money in Social Security trust fund. I think he wants to make sure that when people hear him talking about Social Security that they don't think that this is just about the temporary battles that people have seen going on back and forth over the last 5-10 years on Medicare, Medicaid, or other issues, but that this is truly about long-term reform and wants to make sure that younger people understand that he -- that this effort is about helping them, and that somebody who is 33 today will turn 65 in 2029 and that they should care very deeply about this, and that they should not feel that Social Security is as likely to occur for them as seeing a UFO.

So I think he very much wants to make sure -- and I think he said this today -- that his message is an intergenerational message and that he speaks to both the young people, to baby boomers, and to older people. And I thought he spoke eloquently today about the fact that people his age who are looking at their retirement want to make sure Social Security is there for them, but not in a way that would make their children face such high tax burdens in the future that it would be hard for them to support their own children.

So I think you'll see a conscious effort to have a Social Security fix that is fair in terms of generational equity, and that as his message goes out, he'll be making sure that he's trying to talk to different age groups and give them very much the same message as to why we should all care about this kind of intergenerational justice.

Q Gene, it's not clear to me why you think the -- or why the President thinks the American people need a year to understand what the problem is with Social Security. What is it you're trying to prepare the American people for during this year? Why not just call in the congressional leaders now and start work on this and not wait a year?

MR. SPERLING: Look, you have to make your best judgment. I consulted -- I personally consulted with virtually every major group on this issue, and all of them felt -- the people surveying this, spending a lot of money, people that I thought had good political judgment -- that if you went into an issue like this and you tried to go forward immediately with reform before the American people fully understood the nature of the problem, before they had a chance to even look at that, that if you rushed into that in the middle of a political year, that this could too easily become a subject for political cross-fire and that we would end up setting the clock back.

So I understand that anytime you go out and you make a bold, specific proposal on any area you get nice feedback for a day or a week, but that wasn't the question. The question is how can we actually get long-term Social Security reform. And it is our judgment that trying to elevate this debate and trying to keep it bipartisan and trying to create an imperative for action and trying to keep that atmosphere during the period prior to the election creates the best possibility that after the election there could be a chance for bipartisan and long-term Social Security reform.

Certainly if a situation created itself earlier, if people came together we certainly would not be opposed to that. We're simply making our best judgment as to what the best chances for getting that done. And I can say that it is a judgment shared by groups across the political spectrum.

Q Gene, did you have any misgivings about doing these regional forums under the imprimatur of the AARP? In the past they've been the ones vigorously opposed to entitlement reform. And although they say this time they're willing to entertain the idea, it may be that they're going to be opposed to the more aggressive attempts at reform that may be necessary.

MR. SPERLING: Well, the thing you need to understand is that it's being done jointly under the AARP and the Concord Coalition. So it is being done jointly under them. And what we were trying to do is to have two organizations that I think are familiar to all of you that would be responsible for ensuring that there is a sense of balance there.

So instead of one political party or the other putting on one of these forums in which either people would be suspect that it was being tilted towards a particular agenda or that it was too difficult to confront any of the serious issues because it would be seen as being read as indicating a position for or against an issue -- that if you put this in the hands of two groups that together people would view as balanced, that it would give people on both sides of the aisle and of different views the confidence that these would be balanced and fair and someplace they could go talk to.

You know, I should say that we will be working with many other groups -- the National Council of Aging, the Older Women's League, the National Council of Seniors, the National Committee to Preserve Social Security and Medicare with Martha McSteen and Max Richtman -- and certainly other groups that have focused more from the deficit reduction side like CSIS, which has been holding forums on this issue.

But no, I think that having two groups that are seen to people as representing different perspectives and who are committed to trying to make sure things are balanced, I think that works. Certainly, we've gotten criticism from people who don't like the AARP and people who don't like the Concord Coalition. But our argument is together they're an insurance policy that this will most likely be as balanced and fair as anything that you've probably seen recently in terms of a forum that you'd see the President or possibly Republican leaders go to.

Q Can we do this one last question? Gingrich last week asked the administration for specific legislative language on how to handle the reserve. You seem to be saying today that, you know, people can suggest that themselves if they want that, you're not going to do it. Why would you not back up your own proposal with legislation?

MR. SPERLING: There's two questions -- let me just say -- there's two issues on the surplus. One is if you have long-term Social Security reform, and the surplus was going to be used as part of that reform -- so, in other words, if you had a comprehensive Social Security solution and part of the solution was using the surplus, how would the surplus be used. On that, you've already heard from several different people in the political spectrum, different ideas. I don't think there's any shortage of ideas on how the surplus could be used.

Some have suggested that bonds could be -- federal debt, rather than being retired, could be transferred to the Social Security trust fund to help strengthen the Social Security trust fund. That is one idea that some have put out. I believe that Bob Reischauer and Henry Aaron have at least been talking informally with people about whether money could be used -- surplus could be used for equity investments that could strengthen the surplus.

That obviously will be controversial with many people. Others, I think like Senator Gregg and others have said the surplus could be used to help a transition towards a partly pre-funded system. I am not -- let me make clear -- not endorsing nor criticizing any of those. I am just saying that there are many suggestions already as to the mechanics as to how the surplus could be used. Our opinion is that we should wait and see how the surplus or a portion of the surplus fits into a comprehensive Social Security reform.

The second issue is, what if while we're waiting for Social Security reform, a few billion dollars of surplus happens. That was the question I was asked, where right now, by budget rules it would pay down the debt. And our view is that we don't foresee that as being a significant problem because we're trying to get this done in the next year and a half, when we do not project there would be a significant surplus.

But what I said was that if a surplus were to start accumulating before we had a comprehensive Social Security trust fund, and some said it turned out that there was $20 billion or $25 billion dollars accumulating, rather than having that pay down the debt, they wanted to somehow keep that savings in play for long-term Social Security reform. My answer was we don't project that to be necessary, but if that situation arose it would not be inconsistent with our position. And we certainly would be willing to consider that that type of option -- if the situation arose and people thought it was necessary, to stay consistent with our save Social Security first pledge.

THE PRESS: Thank you.

END 1:45 P.M. EST