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THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release April 14, 1999

                           PRESS BRIEFING BY 
        DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL GENE SPERLING,
             AND DEPUTY SECRETARY OF TREASURY LARRY SUMMERS

The Briefing Room

1:10 P.M. EDT

MR. SIEWERT: As you know, the President will have an announcement later today on the details of his Universal Savings Account. Here to provide some background information on that, the Director of the National Economic Council, Gene Sperling; and Deputy Treasury Secretary Larry Summers.

MR. SPERLING: As you know, when the President put forward his State of the Union proposal, he laid out for the country a very basic choice about how to deal with the surplus over the next 15 years as to whether we focused on consumption or adding to savings and dealing with the predictable retirement challenge in Medicare and Social Security that will come. And he laid forward a proposal that essentially called for 90 percent of the surplus over the next 15 years being devoted to savings in some fashion -- 62 percent for Social Security, 15 percent for Medicare -- in terms of largely debt reduction, dealing with our retirement challenges and the solvency of those two programs.

But he also called for 11 to 12 percent of the surplus going to USA accounts as a way of encouraging private savings and encouraging Americans to have a strong retirement security, not only through a strong Social Security, but also through strong pension and savings under the traditional notion that retirement savings should be a three-legged stool and that all are important for a family or for an elderly couple in their retirement.

When we went through the Social Security forum, the President heard two very powerful concepts. He, on the one had, heard about the call for people to keep Social Security a defined, rock-solid benefit guarantee; on the other hand, repeatedly heard that many Americans do not have the chance to save, to build wealth, to share in the tremendous gains that have happened in the stock market, and that we should be doing more to help more people be part of the wealth creation and savings that many Americans -- better off, middle class Americans -- are able to share.

And so we put forward a plan, as you know, that kept Social Security the defined rock-solid benefit that that is, but that, in addition, as part of strengthening the other two legs of Social Security called for a USA account, which was to make a saving account universal.

There are, unquestionably, holes in our current retirement system. Seventy-three million Americans have no employer-provided pensions, 50 percent have no pensions whatsoever. Only 18 percent -- or 20 percent have IRAs. And our tax system, which does an excellent job for many, many Americans through the IRAs and 401Ks does not provide the type of incentives that it should to the families who, because they have lower incomes, lower disposable incomes, have the hardest time saving and, therefore, should have the most incentives.

Right now our tax system, our retirement tax incentives -- 66 percent go to the 5 percent of Americans over 100,000. So, only 33 percent go to families under 100,000 and only 7 percent of the tax benefits -- only 7 percent of the retirement tax benefits -- go to families making under 50,000. These are the families that have to live day by day, paycheck to paycheck and have the hardest time saving.

So we wanted a plan that would not only ensure that all of them had their own accounts, but provided incentives for people to save more, to add more. And so it was designed to not only give more Americans the savings accounts, that more Americans could participate in the wealth creation and see the benefits of accumulated returns and compound interest, but also would provide them an incentive as 401K plans do to provide more savings in a matching way.

The plan that Larry Summers will give you the details on is unquestionably designed to be progressive. It is designed to be progressive to balance out the system so that, as I said, right now the tax incentives only give seven percent to families under $50,000. This seeks to address that by operating in the form not of deductions, which are often, by their nature, less progressive because they are worth more to people in higher brackets, but in terms of a tax credit, an automatic, even refundable tax credit that would go to everybody who, in some form, making under $80,000.

It also is a plan that will address what has often been raised, which is that we often don't give the proper attention to those who stay home at times and take care of children. This would allow both members -- both parents to have their savings -- to have a savings account if their joint income is over $5,000 and under $100,000. And so this, I think, also responds to what we've often heard is the need to address the concerns, not only of the person who may be working, but to the spouse who may be taking more time off to help raise their children.

I think that as you look at our plan, you will see that for most average income families, this will be a more generous tax cut than those making -- than you would get from a 10 percent tax credit. I think in the examples you have there, you'd see that for a couple making $40,000, if they would get $300 each automatically, or $600. And then, as you'll see in the example there, if they were willing to each put in $350, or $700, they could match $700 back. Therefore, together, they'd have $2,000 in their USA accounts in which they would have gotten $600 automatically, and then if they contributed $700, they would have gotten another $700. So that would be a $1,300 tax credit, which would be more than four times larger than the tax credit that same couple would get under a 10-percent across-the-board tax cut.

I also should say that this administration -- that this year, tomorrow, when people -- tomorrow as people fill out their tax credit, there is a child tax credit -- it will be $400 this year and $500 afterwards -- that puts cash in millions of people's pockets to help with daily needs, with child care costs, that is on the tax forms for the first time, that this President proposed and signed, as there is with the HOPE Scholarship, which, again, gives a tax credit that people can use and help pay the cost of college education, child care, et cetera.

This is a tax incentive, however, that is specifically designed to promote savings, to fill the holes in our retirement system, to give those families who struggle from paycheck to paycheck the greatest ability and incentive to save more and to be part of the wealth creation that others are enjoying, and have the additional savings that can lead to a truly dignified retirement security.

With that, let me give you Larry Summers, who will walk through the mechanics, and then we're both here to answer questions.

DEPUTY SECRETARY SUMMERS: Thank you very much, Gene. Retirement security is a crucial priority for American families. A married couple, both of who are age 65, has a nearly one-half chance of living -- having a surviving member to age 90, requiring the financing of 25 years of consumption. At the same time, while we've made enormous progress increasing our national savings rate by reducing the budget deficit, for the first time since the 1930s, American personal savings was negative in the fourth quarter of last year. Retirement savings -- retirement security, increased savings are critical priorities -- all the more with the baby boom generation facing retirement.

And that is what this proposal is designed to address, by supporting the existing retirement security system and making it universal, reaching in particular the 73 million Americans who have no IRA, no defined benefit pension, no Keogh plan and no 401K plan. Proposal establishes Universal Savings Accounts. For all Americans with incomes below $40,000, $300 is put by the government into their USA account. For those with incomes between $40,000 and $80,000, that $300 phases out.

In addition, for all Americans with incomes under $100,000, a matching contribution is made by the government with respect to individual contributions to those accounts. That matching is at a rate of 100 percent for those with incomes under $40,000, phasing down to 50 percent for those with incomes between $80,000 and $100,000.

Between the individual contribution and the government match, each member of a couple is able to contribute $1,000. A married couple who contributes $1,000 each for 40 years can expect at current rates to accumulate $250,000 in today's inflation-adjusted dollars. That is sufficient to finance a $20,000 a year real annuity.

The proposal will involve accounts that will be administered by the federal government to provide a basic set of investment choices. We will also explore with private providers the possibility of private providers providing accounts as well on a carefully regulated basis.

I should emphasize also that this proposal has been designed to reenforce and provide further incentive for the most rapidly growing part of our private income security system, and that is the 401K plan. Individual contributions to 401Ks will be treated just like other forms of individual savings and will be matched with contributions to Universal Savings Accounts. This means an employee at a firm that offers a 401K account will benefit from a triple match rather than the existing double match. I contribute $1 to my 401K; my employer makes a contribution and the government makes a contribution instead.

By integrating USAs with 401Ks to provide this incentive through a contribution to the USA account, based on contributions to the 401K, we reinforce this rapidly growing and important feature of our national retirement security system.

We'll be debating Social Security all year, I'm sure. But it is important to understand that we have, since the Second World War, had a three-legged retirement security system: Social Security, private pensions and individual savings. What is crucial is that even as we strengthen Social Security, we ensure that all Americans have an opportunity to participate in that pension and personal savings leg of the system, and that's what this proposal will do.

Q How much does it cost?

MR. SPERLING: When this is fully implemented, it would cost $38 billion a year, and then it would probably grow at about the rate of inflation. One point I would like to make in terms of like the affordability, really two points, is one, we again see this as something that happens only after Social Security and Medicare have been addressed. In other words, we hold our tax incentive to the same standard we would hold the Republican tax incentive to, which is, first, we have to reserve the funds for Medicare and Social Security as part of debt reduction and increasing solvency, and only after that should we turn to new measures, whether their tax incentives or our USA Account. So this is consistent with the policies we've put forward.

It's also important to see that this is, while a very significant and sizeable tax incentive for retirement for working families, that it is far more affordable. While this would rise by inflation, it would still be under $50 billion by 2009. While the Republican tax cut in the Senate that year is $179 billion and in the House it's $178 billion in their budget resolutions, so it is a sizeable tax incentive, but it is one designed to fit within an overall budget structure that will not crowd out crucial priorities like education, health care, Medicare and Social Security.

Q When would it be fully implemented?

MR. SPERLING: Well, there really are two issues on implementation. One is the administrative challenge of setting up; the other is when the funds would be available once Social Security and Medicare are fixed. I would think that in order to fully have the implementation it would probably be a few years before it would be fully set up.

If there were funds available prior this is something that could be phased in. One could, for example, have an automatic tax credit portion of $200 or $300 a year, and then wait until the surplus is large enough to support the matching contribution. But what we are most committed to is ensuring we have enough for Medicare and Social Security reform, and making sure that we phase this in after that, and making sure that it can fit within a plan that is not only good for Social Security and Medicare, but does not lead to the kind of severe reductions in discretionary spending that you would see in the Republican budget resolution.

Q Gene, is this contingent on the arrival of the expected surpluses every year or 10 years out if the surpluses don't arrive? Is it going to be an automatic entitlement nevertheless? How does that work?

MR. SPERLING: Well, this would be -- no, if we were passing this it would be -- we put things out as a 15-year plan. Obviously, the logic of this would be that it would be if it was popular and working well, that it would be renewed after that. But I think that that is -- the point you raise, which is that these are still projected surpluses, is a reason why one should have a more reasonable size tax incentives so that one is more confident that they will be able to fit in under any scenario.

Here, if you look again at the Republican budget resolution in the House, the numbers are $138 billion in 2007, $153 billion 2008, $178 billion -- that is all money that is gone away from the government under their plan. On each of those years ours would be less than one-third of that. So the risk in our plan is severely less in terms of being able to fit into a fiscal budget -- significantly less than the Republican plans that call for a homogenous commitment right now of surplus money years out.

DEPUTY SECRETARY SUMMERS: If I could just add two very quick points to Gene's answer. First, this proposal comes only in the context of Social Security and Medicare reform, which, if done in the way the administration suggests, would, on current projections, nearly eliminate the national debt sometime between 2015 and 2020, reducing interest expense and making room for initiatives of this kind.

Second, even such risk as there might be, is addressed, as Gene suggested, by the rather limited size of this program compared to some suggested alternatives -- and by what I think is an equally important point, which is that this is a tax cut that is saved. This is a tax cut which individuals have no alternative but to save. And that means its resources going back in the economy; that means it's avoiding crowding out; that means it's contributing to lower interest rates, more tools for American workers, lower mortgage rates for American homeowners and so forth. So a crucial feature of this tax cut is that it's the right kind of tax cut, given what our national economic problems are. It is a pro-savings tax cut.

Q Larry, just to follow up, then, what is the general explanation for why the savings rate has fallen so low, and why is this particular proposal going to be any more effective than IRAs, which are also saved taxes --

DEPUTY SECRETARY SUMMERS: I think there are a combination of factors that explain America's low savings rate. One crucial factor has surely been our economic success and the tremendous wealth accumulation of recent years, which doesn't show up as income, but which people spend out of, nonetheless, leaving measured savings having contracted. If you measured savings relative to an income concept that included the capital gains that have taken place, the savings rate would appear to have declined much less. And, in fact, if one looks at the ratio of wealth to income for the American population, it's actually at an historic high, which is a different concept of saving.

But I think there is a second general national tendency, which is we have tended to encourage consumption with the widespread availability of credit with the tremendous focus on consumer goods in our society. And I think providing a vehicle which encourages savings, which puts emphasis on the retirement security problem is likely to lead Americans to save more than they otherwise would. It gets them in the habit of saving. The available evidence on IRA expansions suggests that they have a similar effect in encouraging people to save. Experience of employers with 401Ks suggests that education programs do have an important impact on savings behavior.

And so I think this type of public action can contribute. And of course, with respect to the guaranteed portion, this is money that is put in an account that has to be saved because there isn't the possibility of withdrawal. And so you have the important difference with an IRA that this is a transfer that has to be saved in substantial part.

MR. SPERLING: Can I just add one thing, though, which is crucial in our overall plan, which is we're not putting all of our saving eggs in this one basket. The savings rate has more than doubled from -- net savings rate -- from 3.1 to 6.7 since we've been here. More than 100 percent of that has come from the reduction in the federal deficit. The overwhelming bulk of our strategy for increasing savings is a debt reduction strategy, and 77 percent of our plan is essentially going to debt reduction of some form for Social Security or Medicare.

So if you're looking at what has been the most successful way to increase national savings in our country, that is the path we are following. And then we are tacking on on top of that an incentive that would be for private savings, and as Larry said, is designed to go after some of the people who can't just shift around or substitute savings, but aren't saving at all, and give them special incentives both by having an account, which many of them are not used to having, and secondly, by giving them an incentive to put more of their funds in to get the availability of a government match.

Q A 401K question -- presumably, what you want to do is keep lowering middle income people from pulling out of that and dumping into this, but in terms of the match, is that phased out as their incomes go up?

DEPUTY SECRETARY SUMMERS: The same income limits, the match of the 401K is exactly parallel to the match of other individual savings -- same income limits that I described.

Q -- there was an act to discourage companies from offering 401K plans to middle income workers that have this government-funded alternative.

DEPUTY SECRETARY SUMMERS: In many cases, companies offer 401Ks primarily for the benefit of higher-income workers, and are then required because of the nondiscrimination rules to make the program attractive to lower-income workers. And that is the constraint under which they operate. They will have an easier time in making the program attractive to lower-income workers now because there will be an additional government match beyond their own. And so setting up a 401K that benefits all workers will be more attractive than it was before.

Q Let me also ask -- you said that the administration proposes only in the context of Social Security and Medicare reform. Say Congress thought that this was an attractive idea and wanted to enact it, but they had not yet dealt with the issue of Medicare reform, for instance. Would the President veto this proposal?

DEPUTY SECRETARY SUMMERS: I don't think it's our place to get into hypothetical possibilities. But the President has been very clear for 15 months now, since the State of the Union a year ago, that his priority is Social Security first. And we would not support the dissipation of the surplus for other purposes, no matter how worthy, until a satisfactory resolution of our broad Social Security and Medicare challenges have been found.

Q Gene, can you talk about the state of the negotiations? You had said publicly, I believe, that the release of the USA Accounts was in part because of diverted attention to Kosovo. People on the Hill clearly are diverted as well. What do you think the chances of actually enacting your Social Security plan and your USA Accounts are?

MR. SPERLING: I think that what you've had is tremendous success following the President's State of the Union in getting a bipartisan commitment that in some form or another, a tremendous amount of the surplus, whether you describe it as the whole Social Security surplus or 62 percent of the unified surplus, that there's been since the President's State of the Union, a tremendous swing among the Republicans to supporting reserving a large amount of the surplus for savings for Social Security or the retirement challenge.

That's the positive. Where we still need to go now is to find some common ground that we can build off of and could be the foundation for negotiations. We feel that our plan very much offered that foundation a commitment to debt reduction -- which now you see in some way people leaning towards -- but a commitment towards debt reduction where in some way the benefits of debt reduction would help Social Security solvency, we believe could be the foundation, the bipartisan foundation, that we could build on and then hopefully have some additional processes to try to go further.

We would like to see the Republicans join us in making a commitment towards debt reduction for Social Security solvency. I think that right now would be the most promising way to move the process forward. But again, it's always -- you know, it's always very hard to predict what's going to happen in the next month. So I think now, with the budget resolution out, I think what will happen is you will see some Republican plans coming out. Then you will have a couple of different options, a few different options on the table, and hopefully that will start to generate members of both parties to look for the type of common ground that can bring people together.

So, while I couldn't give you an exact road map, I still think that there is ample reason for at least guarded optimism that we can make significant progress on Social Security and Medicare this year.

Q The CBO says that the surplus disappears sometime between 2020 and 2030. At those times the claim on the Federal Budget is going to be pretty substantial. Is it responsible to lock into law the expectation that people are going to have this government match and these government contributions without knowing where the money would come from down the road?

MR. SPERLING: The first thing I'll tell you is that that question, I hope you will certainly ask those who just passed the Republican budget resolution, because they have locked in $170 billion, going up to $200 billion a year during that time period, because the tax cuts are a permanent drain of three, four, five times as much, I think this is a reasonable amount. And as Larry said, this is being done in the context of an overall plan where you are dramatically paying down the debt. So you are putting the country in the strongest fiscal situation it would ever be with, as Larry said, virtually no publicly-held debt by that time period, very low interest costs, the lower interest rates that come from having higher savings.

So I think it's a very legitimate concern. I think whenever we pass anything that has a feel or the effect of permanent drain, one should ask the question of whether it will be sustainable even if projections don't work out as we've projected. I think that's a legitimate question. I think we made the judgment that this size of $35 billion to $40 billion when you're looking at projections of surpluses in the $200 billion-$300-billion amounts or more was reasonable, particularly when what you were doing with the rest of that surplus was paying down the national debt and increased savings.

But I just want to remind you, that question is most powerfully asked for a large, undefined tax cut, which is very hard to change later, and so whatever force that concern is, it's a legitimate concern. We make the judgment that ours is responsible in light of projected surpluses, in the light of the rest of our debt reduction. I would argue that those who project using the whole on-budget surplus for tax cuts down the road are not showing the same degree of caution and are putting at serious risk the notion that if surpluses were not as large, that the government would be later forced to go out and borrow again and be a drain on national savings.

DEPUTY SECRETARY SUMMERS: Can I just say one thing? You know, before I got here and was an academic economist, my work was on questions relating to savings, budgets, personal savings. And if you stop and think about the question you just asked, it's a very good question and you step back from what we're here talking about and from this specific proposal, what we're now addressing is the question of whether something that we'll spend three-tenths of a percent of GNP that has to be saved 25 years from now, will represent a bit of fiscal imprudence.

If you think about where this country was just six years ago in terms of our budget situation, when the question was, were we going to succeed in containing a budget deficit that was at four or five percent of GDP, I think the very fact that we can worry and try to assure that there is sufficient resources to answer a question like the one you asked should remind us of how totally far we have come in our attitude towards budgets, where we take surpluses for granted and are concerned about their dissipation at some point 20 years in the future.

Q Gene, by not making this universal are you sort of in essence chipping away at the idea of universality in the overall Social Security program? Because this is part of your reform program, you're not making this universal. What does that say about --

MR. SPERLING: First let me question your premise. This is not part of our Social Security reform plan, this is part of our plan to deal with retirement security. But we made a very conscious decision to have a separate plan for dealing with Social Security and to have this as way, as Larry said, of strengthening the other two legs, the retirement system, the savings and pension side of it. So, first of all, this is addressing those other two parts of the retirement system.

Secondly, I think you have to go back to the statistic I gave at the beginning. We have a system right now with 401Ks, IRAs, et cetera, that clearly works for many Americans. It clearly -- since 66 percent of the benefits go to families making over 100,000, there clearly already is a very ample and significant tax incentives, because at a higher bracket you get 31 cents on the dollar saved as opposed to somebody in the 15 percent bracket that gets only 15 cents on the dollar in tax incentive. And then you get all of the buildup from that higher amount.

So I think where we were looking is how could we take a current system, a system that is a good system but has holes in it, how could we fill those holes? And we felt the way to do it was to have a progressive account that was automatic so that everyone had an account and then had incentives. I think that the people at the brackets over $100,000 have very substantial existing tax incentives, and I would say the large, large percentage of people over $100,000 already are covered, so this would make it universal.

But we did add in our plan that if somebody over $100,000 does not have any form of pension, then they would be eligible for this. So it is universal in the sense that somebody over $100,000 who, for some reason, fell through the cracks and didn't have their plan would be eligible for this. So it very much is designed to take the current system as it is and make it universal.

Q What effect would this have on personal savings? What kind of projections do you have? If people actually did this, what would it do? And, secondly, would it require annuitizing the money that's saved at retirement?

MR. SPERLING: Let me just say that I do think that when you look at the criticisms that are often given of some of the IRAs for upper income that people just shift resources, when you're dealing with people who are not saving at all right now and are living paycheck by paycheck, I think that you're dealing with people who have the lowest disposition to save and by giving them incentives to the degree you're having savings in there, there's less of a chance that that's just being substituted and more of a chance that that is actually increasing savings as opposed to consumption. And so I think this is designed as well as any plan like this has ever been designed to actually increase incremental savings.

But let me let Larry ask that, and Larry also probably has three hours' worth that he could fill you on that answer the same question.

DEPUTY SECRETARY SUMMERS: I'm not sure I do, but I promise you I will not impose it on you. We will not annuitize -- there's no requirement to annuitize the accounts. I'd anticipate that the induced personal savings would be on the order of the revenue cost. On the one hand, there would be some substitution, on the other hand, there would be some inducement of extra savings because of the matching grants and because of the publicity and greater marketing of savings that would be generated.

Of course, when you've got the current level of U.S. personal savings, you've got a sufficiently smaller negative denominator, and so that could be an enormous percentage increase.

Q -- one of these savings accounts and been putting money into it and then faced an unexpected expense, like buying a house or sending a child to college or an illness. Would they be able to draw money out of it before retirement?

DEPUTY SECRETARY SUMMERS: This, as we envision it as a retirement security program, and so it would be for retirement only. And that reflects the judgment about the size of the credit that is involved and reflects what we see at this point as being the greatest need.

We have, in the context of other savings programs such as IRAs, worked to adjust eligibility rules for buying a new home and so forth. But this program, as we envision it, is a pure retirement security program.

Q -- to get your money out of it? Would there be just a penalty, or would you not just be able to do that at all?

DEPUTY SECRETARY SUMMERS: You would not be able to get your money out. That's why there's a lot of confidence that this would generate an extra savings, but of course it means that it doesn't have the consumption possibility and you have to make a choice, and we've chosen to focus this program on savings for retirement.

Q Can I just follow up on that? Because how realistic is it, do you think, for a four-person family with only $40,000 worth of income to set aside $700 annually in the hopes that in 40 years they will realize some sort of return from that? Why not just give a flat out tax credit, a $1,300 -- matching program?

DEPUTY SECRETARY SUMMERS: First, a family with $40,000 would receive the $300 contribution. And so in order to get up to the $1,000, they would only have to contribute $350, because they would get the 100 percent match on what -- they would get the --

MR. SPERLING: Seven hundred for a couple is what he was referring to.

Q -- on the couple, the example here is the family of four.

DEPUTY SECRETARY SUMMERS: So the couple would, if they contributed the $700, would end up with a $2,000 account. It would be an attractive opportunity for people, perhaps for people near retirement. In fact, if one looks at the revenue cost of the program the largest share of the revenue goes to the fixed $300 accounts because not everyone, our estimators judge, will choose to take advantage of this opportunity. But it seems to us that for those who do, and if we want to spread a kind of savings culture in this country, it's important to reinforce savings.

MR. SPERLING: Can I just add on the statistics -- we thought that was a reasonable question, so, I mean, one of the things it does show, though, is that if that family of $40,000 did nothing but take their automatic tax credit, they would still accumulate $76,000 -- would be able to have an annuity of $6,036. So it would still be a substantial improvement to income security, even for a family that could not set aside.

But, truthfully, you know, we had these conversations internally and we looked at both these factors and we decided that the best way to address the concerns that you're raising and induce savings was to have a flat tax credit, so that everybody had an account, but to still have some inducement so that you are actually doing something to increase national savings.

Q I just wanted to ask about China and WTO. how far apart are you? Do you think you'll be able to strike a deal and were you afraid of losing momentum? Is that why you made the announcement yesterday?

MR. SPERLING: The announcement yesterday was completely consistent with what the President's strategy and plan has been all along, which was that we want to get a good deal with China. We were very pleased with the progress we made, but the President also felt that we should not compromise or take a bad deal on several items at the end simply to meet an arbitrary deadline.

And so when he spoke with Premier Zhu Wednesday night before, they both recognized that they had made a lot of progress, that there were some outstanding issues that would be very difficult to get done in that 20 hours that remained, so that they would announce the progress they had made, be very specific about what the openings still were and commit to negotiating as quickly as possible, and that they would both try to make progress.

They had a good conversation yesterday. The President called from the Oval Office. He reached Premier Zhu while he was still in the United States. They spoke and they talked about what the best way --

Q -- having second thoughts and that he bowed to politics and they could have gotten a deal?

MR. SPERLING: Absolutely not the case. I'm telling you, in fact, we provided the maximum transparency on what was happening. We told exactly what we would agree to, we told exactly what hadn't been agreed to in terms of banking, securities, auto finance, textiles, in terms of the duration for non-market economy dumping and for product-specific surges. We told exactly what those things were, said we'd made good progress and said we would want to go back.

We did make the following decision, which was that we were not going to take an unsatisfactory deal on the remaining six, seven items simply to meet an arbitrary deadline. I think that would have hurt -- I think that would have been bad negotiating. I think it would have hurt support for getting permanent MFN for China, and the President said at the press conference and he said in the private conversation Wednesday night, that they would resume negotiations as quickly as possible or in the best way. He spoke with Premier Zhu. They talked about what they thought would be the most effective way of going forward, and they agreed the most effective way would be for us to send negotiators there before the end of the month, and I am hopeful and optimistic that we will get a deal.

But on the other hand, we owe it to American businesses and American workers to get the best deal possible and not to make any political compromises or compromises to meet an arbitrary deadline, and so the President, whatever has been reported, the President has had one strategy for going forward and he has stayed consistently on it.

We are pleased to see more people vocally coming out in support of this, and we're very hopeful that if we are able to conclude a deal, that there will be a surge of support for what the President's done and his open market and China policy and that we'll be able to get China into the WTO this year.

DEPUTY SECRETARY SUMMERS: If I could just say one word on that. All of us on the economic and the foreign policy teams have been committed to the objective of doing everything we can to get the right deal at the right time, and that remains our objective and we are optimistic that we will achieve it.

But we would not serve what is the very important American interest in forging a satisfactory deal with China well if we sought to artificially rush the negotiation to a conclusion, or if we didn't pursue the opportunity to reach this agreement with full vigor. And that is the approach that we are all agreed on taking.

Q Would the President consider enacting the USA Accounts -- Social Security or Medicare?

MR. SPERLING: Asked and answered.

THE PRESS: Thank you.

END 1:52 P.M. EDT