THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY SECRETARY OF EDUCATION DICK RILEY, NATIONAL ECONOMIC ADVISOR GENE SPERLING, AND HEAD OF DOMESTIC POLICY COUNCIL BRUCE REED
The Briefing Room
10:40 A.M. EDT
MR. TOIV: Good morning to all of you. As you know, the President will be visiting Brook Grove Elementary School in Olney, Maryland, today to talk about the importance of education and the impact that the tax cut passed by the Republican majority in the Congress would have on education in this country. And here to brief on those issues are Secretary of Education Dick Riley, the Director of the National Economic Council Gene Sperling, and the head of the Domestic Policy Council Bruce Reed.
MR. SPERLING: As the Congress comes back for the fall, and as children come back for another year of school, America faces a real choice in how to invest our surplus -- real choice about whether or not we're going to invest in the future of our country. And there's three very specific ways that we can use our budget resources to invest in the future.
One is to pay off our debt and thereby lift the debt burden off the next generation by using our economic fortune that -- and our economic strength right now to deal with paying off our debt and lifting the debt burden off the next generation. Secondly is by dealing with Medicare and Social Security and addressing these issues, and helping to make the tough reforms and use the surplus to deal with the solvency of Medicare and Social Security, we, again, lift the burden off the next generation of having to make cuts in their priorities or possible tax increases by us now addressing the Social Security and Medicare burden when we can.
And the third way to invest in our future is to ensure that we are investing enough in our children, enough in education, enough in their futures and the things that mean so much not only for opportunity, but for the productivity of the nation's work force.
It is important to understand that the Republican budget framework, the Republican tax cut is built on a framework that assumes untenable, unimaginable cuts in education and investment in children. Any first-grader, simple first grade arithmetic would tell you that the Republican budget plan would mean devastating cuts in education over the next 10 years.
Let me, without going into too much of the detail, let me just give you the main essentials as to why the numbers add up so simply. The Republican budget resolution assumes that in the year 2009 there will be $606 billion for all discretionary spending -- all domestic and defense spending, there will be $606 billion. If they were to simply in that year alone, simply in that year alone meet the defense budget of President Clinton -- and I should remind you that normally the Republicans often ask for budget defense numbers that go beyond the President's -- but if they were to simply meet what the President has worked out with the Joint Chiefs of Staff of $384 billion, that would leave only $222 billion in the year 2009 for all other domestic spending.
Now, domestic spending this year alone is $304 billion. To simply keep pace with inflation, you would need over $400 billion in the year 2009 simply to keep pace with inflation. Yet what I've just shown is that if the Republicans were to simply match the President's defense numbers, they would have about half of what is needed for all domestic programs in the year 2009.
So, again, their budget is based on the premise that they will have to cut virtually all of government, all of domestic government, by half in the year 2009. But it's worse than that. Their budget assumes there will be no funds set aside for Medicare. If there are no funds set aside for Medicare, every Medicare expert would tell you that eventually we're going to have to drain more resources for Medicare. With no money set aside for Medicare, these cuts would go even deeper.
Furthermore, their tax cut is based on the absurd notion that they're simply somehow going to turn it off in the year 2009. The tax cut across the board that they brag about is $57 billion in the year 2008. It mysteriously goes to $17 billion in 2009. Therefore, they're assuming they're going to have a $40 billion across-the-board tax increase in the year 2009. They're going to cut people's rates up to 2008, and then in 2009 they're going to raise them $40 billion in a single year. Now, nobody can believe that.
So here's the budget framework that the Republicans have. They save $606 billion for all discretionary spending. If they just match the President's defense number in the year 2009, they will have to cut the rest of government by nearly 50 percent. Now, it's pretty hard to cut FAA by 50 percent. It's pretty hard to cut the FBI by 50 percent. It's pretty hard to cut most of these things by 5 percent. Therefore, for the Republicans to talk as if they somehow want to support strong investment in education simply does not hold water.
I think it's important for anybody covering these stories today to ask the Republicans, do they plan on matching the President's defense numbers over the next 10 years. If they do, where are they going to cut 50 percent in real terms in spending; how are they going to possibly fund their increases in NIH and the other things they propose?
This is a -- we've had the politics over the summer. We've had Republicans engage in an effort to convince people that a large, untenable tax cut is preferable to paying down our national debt, investing in education and dealing with Social Security and Medicare. And the public has not bought it. It's now time for us to return and get serious. And the way we should get serious is let's come together and work on Medicare and Social Security. We particularly have a tremendous chance to work together on Medicare. And let's start talking first about how much do we need for education over the next 10 years.
First things first. When we've met our obligation of showing what we need for debt reduction, for Medicare and Social Security and education, then we'll be in a better position to know how much is left for a tax cut, a tax cut that we can afford.
MR. REED: This is the first time that Gene and I have done a briefing together since John Harris referred to us as the two dullest briefers in American public life -- (laughter) -- so Joe may not have mentioned it, but we're going to come back here every morning for two hours until John takes it back. (Applause.)
Q Do you promise not to silverplate them any more stories? (Laughter.)
MR. REED: Anyway, Secretary Riley is here because this budget battle is largely about education. And, as Gene said, the House budget would cut education by 17 percent this year alone, by 50 percent through their tax bill over the next 10 years. And today the President is going to visit Montgomery County and meet two of the 165 new teachers who have been hired under the class size reduction initiative that the President signed into law last year. There are 30,000 other teachers like that who are starting in school this fall around the country.
Under the Republican budget and tax plans there would be fewer new teachers and larger classes, year after year, even as record numbers of kids are entering the schools. And, as Gene said, some in Congress want to set this up so that they spend the whole on-budget surplus early and then spend the Social Security surplus at the end, on bills like Labor, HHS.
Our budget doesn't do that. We stay within the caps and provide offsets for our spending, including a 55 cent excise tax on tobacco, which is good fiscal policy but, more important, it's good health policy that along with the state settlement and some other changes that have been put in place would help to cut youth smoking in half over the next five years and save a million lives.
Now, as you know, this Congress doesn't have the greatest record on tobacco, but this is their chance to do right by the American people. And, as we've said all along, the more Congress looks at other budget alternatives, the better our approach is going to look.
The choice that Congress faces on this is simple: they can cut education, they can spend from the Social Security trust fund -- or they can save children's lives by raising the price of smoking. that wasn't a hard choice for us, it's not a hard choice for most Americans. Under our plan we can save children's lives and save the Social Security surplus.
SECRETARY RILEY: I think Gene and Bruce have made it very clear how significant these Republican cuts in education spending would be -- very significant. Also very wrong-headed, really draconian. And I think we need to stop and think that out. We're talking about a lot of things out there now that at the very time when we should be investing in a future that is based on a commitment to teaching and learning, making our schools better, improving education. These shortsighted cuts would send our nation in precisely the opposite direction and it would be a real mistake.
Now, what is really astonishing is that this misguided legislative effort really ignores the interest of most Americans, almost all Americans, who are absolutely committed to education and even investing more in education very clear from the recent surveys that have come out. There was one this morning, an NPR survey, that was very dramatic, showing how important education is and what the American people wanted to invest in happens to be the very things that this administration has supported.
The Washington Post/ABC survey, very dramatic numbers on what the American people would say in terms even of paying more taxes. We're not requesting more taxes, but they asked the question in a very dramatic way and the American people, three-fourths of them, said, yes, we would be willing to do that for education.
Now, I just got back from a five-state, five-day tour through the south. I was always out in California and the Midwest for about a week. And I tell you it was a very exciting trip. We were enthusiastically taken in through the various rallies and school visits. Students, teachers, principals, government leaders, religious leaders, community leaders, all demonstrating their support for education in this back to school time. And I tell you, when you look out into an audience and you tell someone that the Republicans in Congress are interested in putting numbers out there that are cutting the commitment of the federal government in terms of supporting local -- state and local schools, there is a real questioning look that comes out across the audience, they can't understand it.
For example, consider the 21st century community learning centers or after school programs, very strongly supported, very strongly applied for, way more than the funds that we have available; enhancing our schools, safe havens for the afternoon period. The President proposed to triple this investment in this important educational purpose, and the majority in Congress want to, of course, through these numbers slash it. Now, what is the logic behind that? There's very little logic at all in the Republican tax bill.
The school construction measure is very important. We had an event on that in Norfolk yesterday, badly needed schools, overcrowded schools, enrollment increases; schools that are aging, breaking down, don't have facilities for technology and computers. The President's plan would address this problem by offering interest-paid bonds to allow local communities to modernize 6,000 schools over the next 10 years. The Republican tax proposal would allow less than 650 schools to be modernized. Their arbitrized proposal really, I think, could be an incentive to delay school improvement. The only benefit out of that is holding the funds and not going ahead with the school construction improvement. And certainly it would be very unlikely for a poor school district to have surplus funds that they're just holding for investment purposes.
So when we let our children go to school in classrooms that are unsafe, that are overcrowded, that lack the modern tools for learning, we send them a very unfortunate message about the value we place on education. Imagine going into this next millennium and seeing important renovation and school building going on in virtually every community in this country, what a great message that would be.
Most Americans understand that if you want quality schools it takes hard work and it takes sustained investment. Our proposal, this administration's proposal does it. It seeks to reduce class size, recruit and support quality teachers, renovate and build new schools, invest in programs like Gear Up that help disadvantaged students and their families pave a pathway for college and career. And we're finally beginning to see some very positive results taking place in our increasing commitment to high standards, to accountability, beginning to pay off.
Simply talking about a commitment to education is not enough. And that's why it is this season that Congress ought to be making strong, positive decisions. And I hope Congress will stand up and support the investments in education that they should support.
Q Gene, what evidence do you have that the public isn't buying the Republican tax cut?
MR. SPERLING: Well, as one Republican senator said, when you have to go out and rally people in support of a tax cut you've got problems. I think almost everybody feels that the public has a basic common sense that when somebody is promising you everything that you should be skeptical. They may not understand all the differences between CBO and OMB, but they understand that you cannot promise a huge tax cut that is going to explode in the out years, and at the same time say you're for paying down the debt and investing in education.
They understand that there are choices to be made, and they understand that the President has been willing to come out and say he's willing to make a choice. He's putting the choice for debt reduction first, for Social Security and Medicare first, and for education of our children first; and that when we've made sure that we have taken care of these investments in the future, that then we will look and see how much we can afford for a tax cut.
Ours is $250 billion. That's what we've assumed. But let me be clear about something. The extra funds that we put in for discretionary spending -- $328 billion -- that is not for new additional spending, that would allow a reasonable real increase in defense, and then that would still lead to cuts in inflation-based terms. That would still lead to over 10 percent of cuts in discretionary domestic spending by the year 2009.
So, in other words, we're putting funds in simply to assure that we have a reasonable amount of reduction in government over the last 10 years. Some people think that we've gone too far. The simple math I showed you on the Republican budget shows that it's simply untenable. And again, I've said this before, do not take my word for it. This is all public. The Republican budget resolution is $606 billion in the year 2009. We spent $304 billion in domestic spending this year; to adjust it for inflation would be over $400 billion in the year 2009. They clearly only have about $200 billion left if they met our defense number. That's cutting government by half. That's incredible. That's impossible. That's untenable.
And what it means is it means that the only way out of that is to put significant pressure on cutting education and training in the future and that you're going to raid the money that is supposed to be being set aside for debt reduction and Social Security. I don't think there's any other way to do the math.
Q Gene, you've chosen to speak for the American people and what they want. His question really was, do you have any analysis of what the result is of this Republican strategy of trying to gin up some support for the tax cut. How do you know that there isn't a greater level of support at this time?
MR. SPERLING: Well, first of all, look at the vote that you saw in the Senate -- 50-49 in the Senate-controlled plan on the Senate tax cut bill. I don't think that that in itself reflects tremendous support. Also, look at the way the discussion always flows. The President says Social Security first. They say they're for tax cuts. Then suddenly, as the President keeps talking about the importance of Social Security and Medicare, then suddenly the Republicans move over and say, well, no, we're actually for locking away surplus money for Social Security.
Then we go out this summer -- Republicans call for a huge tax cut. The President stresses debt reduction, that we can pay off the debt for the first time since 1835. Which way do you see the direction going? You see the Republicans now again following the President's lead and talking more about debt reduction.
If you look at the flow of the message, you can see that the Republicans are always following the President's lead on debt reduction, on fiscal responsibility, on saving Medicare and Social Security. And I think that's what you're seeing right now.
Q Do you have any hard numbers that the American public is not buying this tax cut? Or is it all nuance and --
MR. SPERLING: I don't have poll numbers. That is our view, that is our strong perception from members of the administration that have been out talking to people, from what we've seen as a lack of positive response to the tax cut. And I think what you've seen repeatedly is that when the public is asked what their priorities are, their priorities are much more for debt reduction, Medicare, Social Security and education. And let me put it this way -- I don't see anything that has changed that.
Q Gene, it seems that at least the Senate leaders are hardening their position on sticking with the $792 billion tax cut plan even if some of the House leadership seems willing to be a little more conciliatory. After the President vetoes this bill whenever it arrives, does the President -- will the President consider inviting the leadership down here to try to negotiate a scaled-down package?
MR. SPERLING: We've been so consistent, what we've said over and over again, the goal is to make sure that you have an overall budget that takes care of our obligations. And so our goal is not simply to plan the vacation first and then come back and see if we have enough money for food, shelter and clothing. Our goal is to -- what we would like to do and have said all along is that we would like to work with Republicans and Democrats on how we can set aside enough for debt reduction, for taking care of Medicare and Social Security and education, and in that context, then we will know how much there is for a tax cut.
But to simply decide on how much of a tax cut you should have before you know whether you can meet your obligations to Medicare, Social Security and education just doesn't make sense.
Q But, Gene, what's the strategy here? I mean, the President has the veto, he can end this as soon as the bill comes before him. But is he trying to bring the two sides together over this to work it out before the bill gets delivered? What's the strategy?
MR. SPERLING: Well, what we would like to do is we think the way to break the gridlock is not break our fiscal discipline, but to get Democrats and Republicans and the administration together on a Medicare reform package. I think if we could come together and extend the solvency of Medicare past 2025, have real reforms, real competition and a prescription drug package, that I think would be the type of progress that would show we were addressing our obligations to the future and would give us a better sense of how much is left for education, defense, and other issues, so that we'd know how much we can have on the tax cut.
But we've said before, if the choice is between having a large and exploding tax cut that is going to put at risk our policy of fiscal discipline, or simply taking our surpluses and paying down the national debt each year by over $100 billion, we will simply pay down the national debt. It is better -- our first obligation should be to do no harm to the enormous progress we've made in this economy and in fiscal discipline over the last six years.
Q After you do a Medicare deal, if this scenario plays out, would you be willing to entertain a tax cut larger than the $300 billion you've been talking about?
MR. SPERLING: You know, again, I have not seen anyone come forward with a responsible budget that allows for a tax cut over $250 billion. I'm telling you that even our discretionary spending totals, once you account for a real increase in defense -- which I think almost everybody will be for -- still calls for real cuts of over 10 percent by the year 2009. So somebody wants to go beyond our tax cut has to either want to do less for Medicare than we are or they want to have to cut even deeper.
Look, let's be honest, people have not -- and many people in the media have not done a serious analysis of what their tax cut would mean for our budget. Nobody here, there's not a single person in this room who believes that somebody could cut the United States government from the FBI to the FAA to education and training by 50 percent. This is not a real discussion. We are engaged in a real budget process and if somebody wants to work with us they have to be willing to look at all of our obligations.
I think Secretary Riley wanted to address some of the public issue.
SECRETARY RILEY: I haven't analyzed this poll thoroughly, the poll that just came out, ABC-Washington Post poll, lists those things that were very important in year 2000. And they have first is education, 79 percent; second, handling the economy, 74; managing the budget 74. You go on down, 14th -- 14th is cutting taxes at 44 percent. It is next to last of all the things -- they list 15 things and it is next to last. Things that we're talking about -- Social Security is in here at 4th. All of those issues are very high in this poll and it just came out, that's after the Republicans have gone all over this country and talked about this $792 billion tax cut, which would call for these draconian cuts.
Q That came out today, yesterday?
SECRETARY RILEY: Yes, over the weekend.
Q Secretary Riley, what do you say to the Republicans contention that by cycling money for education through Washington you lose so much on the dollar that it's better to leave it in the hands of states and parents, which is what their tax cut bill does?
SECRETARY RILEY: Well, let me say first of all, Title I is a big thing they talk about -- that's our biggest program for K through 12. I don't think people question higher education. Title I, we take, in Washington, the biggest program that goes out to disadvantaged kids between $7 and $8 billion. We take way less than 1 percent, more like one-half of one percent, in Washington. The states then, under the law, are limited to 1 percent. So the school district gets 98.5 percent of the money.
Now, you hear the rhetoric out there, they say 40 percent is kept by the federal government or whatever -- you've heard every kind of thing in the world. Ninety-eight point five percent of Title 1 gets to the school district. Of all of our programs, it's less than 2 percent is used by the federal government.
Our Department is a very small Department and it's a very inexpensive Department and I think it is tightly run. But I'm glad you mentioned that point because that is really a very small cost, having the federal government, the very important role that we play.
Q Gene, are you saying in this end game now that Medicare should go first? What are you going to do to get that process started? Are you going to start talking about it at a staff level or is the President going to talk to people over there?
MR. SPERLING: What I'm saying is that one positive way for us to break gridlock here is to come together on Medicare. The President has put out a specific proposal. It has real reforms, very significant reforms in allowing competition on the managed care side, even allowing managed care plans to rebate Medicare premiums to individuals under this new program; would offer significant new competition; under the traditional Medicare program there's over I believe about $80 billion in savings that the President has put out.
That's important because now the President has put out a number of savings where now anyone in Congress can now support the savings the President has put out with the cover that the President has already supported them. And that was something that many members of Congress said, that the President had to take some leadership there and go out first. There is a specific plan. The Senate Finance Committee is saying that they're going to mark up -- there is certainly an opportunity to do Medicare reform.
You know, you should remember when we started this year Medicare was supposed to become insolvent in 2008. The insolvency number was revised to 2015. If it had been 2008 I think we would have been forced to have to deal with it this year. So I think that is an opportunity to meet the first things first. We obviously would still like to come together on Social Security, as well. But I think that that is a very positive way for us to show the country that we can make progress on something that the country cares about and that we are meeting our existing obligations first, before we're encumbering new obligations, either to new spending programs or to a new tax cut.
Q Could I just clarify one thing you mentioned about tobacco tax? Are you saying that in order to avoid either dipping into Social Security's surplus -- I mean, excuse me, the budget surplus -- or any other means that the tobacco tax, the GOP should revisit the tobacco tax as a way of paying for education and some of these other programs?
MR. REED: Yes. As in our budget we include a 55-cent tobacco excise tax, which helps to offset the cost to federal taxpayers of a number of health related programs. And, as I said, the last Congress showed that it would only stand up to the tobacco lobby kicking and screaming. But when Congress looks at the other alternatives for how to square this budget and get out of town, they're going to be kicking and screaming and they should take a close look at the tobacco proposal.
Q These wouldn't have to be, necessarily, health related programs? You're willing to use that tax toward other programs?
MR. REED: What we've said in the past is that these proposals for raising the cost of smoking have an independent health value, they'll discourage teens from smoking. The combination of the tax we propose in our budget and the state settlement that was already adopted would, by our estimate, save a million lives over the next five years, cut youth smoking in half.
So this is the right thing to do. In our budget we set it aside to offset federal health costs, but we'd like to see the Congress take a look at this for any purpose.
Q For other purposes as well, though? I mean, would you be willing to go along with the use of the tobacco tax to pay for other domestic priorities if that's the only way the Republicans would back it, versus dipping into the surplus?
MR. REED: If they're willing to come forward with a serious proposal to raise tobacco prices, of course we'll look at it.
Q Also, there are reports that Senator Lott might do the lockbox over there either this week or next week. Is that something that you think you can -- maybe as a starting point also reach an agreement, the leaky lockbox, as it's referred to?
MR. SPERLING: As long as they have their tax cut proposal out there nobody can take seriously their claim to protect the Social Security surpluses. Their plan, their supposedly $792 billion tax cut, that assumes again this remarkable fact that they're going to, under their proposal, raise across-the-board taxes by $40 billion in the year 2009.
If they just have their tax cut fully phased-in in 2009, that dips into the Social Security surplus alone. In fact, if you look at the size of their tax cut and the interest that they need for the tax cut, almost all of the last five years of their plan their tax cut already dips into the Social Security surplus.
But in order to believe that they're going to protect the Social Security surplus you have to believe that they're going to raise across-the-board taxes by $40 billion, and about $60 billion total, in the year 2009. You have to believe that. You have to believe that they're going to cut domestic programs like education, Head Start, NIH, FBI by 50 percent; and that they're going to be able to fund a new Medicare solvency program without any additional resources, even while they're asking to repeal many of the savings from '97.
If you believe all those things, then I guess you could take it seriously. Right now, as long as they have this huge, exploding tax cut with no funds set aside for Medicare, with assumption of 50 percent cuts in education, it's absolutely clear that the clear and direct effect of their tax cut plan will be to take hundreds and hundreds of billions of dollars saved, supposed to be reserved in Social Security surplus -- let me say again, the direct and clear impact of their tax cut plan will be to take hundreds and hundreds of billions of dollars from the Social Security surpluses that would have gone to debt reduction and used them to pay for their tax cut. There is just no question about that.
The real and strong lockbox that exists right now is the one the President proposed, which would take all the Social Security surpluses and pay down the debt, and then use the interest savings that come from paying down the debt so that we can strengthen the life of Social Security past 2050. That is the Social Security lockbox the President has put out. I think that if Senator Lott would look seriously at the President's Social Security lockbox plan, one that pays down the debt and then uses the interest savings to extend the solvency of Social Security, and doesn't have an exploding tax cut that would lead to raiding those funds, then I think that would be an excellent way for us to move forward on progress this fall.
Q Thank you.
END 11:15 A.M. EDT
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