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THE WHITE HOUSE

Office of the Press Secretary


For Immediate Release September 23, 1999
                           PRESS BRIEFING BY
                              JOE LOCKHART

                           The Briefing Room

1:45 P.M. EDT

MR. LOCKHART: I have no announcements to start this briefing, so we'll get right to your questions.

Q Joe, does the President expect that there could be a compromise, given that Senate Republicans or Republicans on the Hill have said that they're going to come back at the President again with another tax bill before the end of this Congress?

MR. LOCKHART: Well, I think it's our hope that Congress -- that what we hear from most of the leading Republicans today is not true that they're throwing in the towel. I think political reality at some point is going to set in for the Republicans. They're going to look at the hand they're playing. They're pushing a tax cut the public knows we can't afford. They're ignoring Medicare, which the public is demanding we deal with. And they're going to spend the Social Security surplus, which the public won't let us do.

So I think they'll look at the hand they have and realize the best thing to do is recognize the weakness, throw it in, come back, let's do the American public's business.

Q Do you expect if they come back with another bill that it will be leaning more toward the President's view on how much of a tax cut we can afford?

MR. LOCKHART: Well, the President has made it very clear, the bill has to be affordable and has to be targeted to the middle class. If they come back with some sort of bill that only looks at extenders, they will have squandered an important opportunity.

We need to do first things first here. We need to strengthen Social Security. We need to go and take this historic opportunity to reform the Medicare program in this country to provide for real savings and a meaningful prescription drug benefit. We need to make the investments in our priorities. And we can have middle class tax relief. There's very little difference, except for the mechanics on the Republicans' commitment to middle class tax relief, or the numbers on middle class tax relief, and what the President proposed. We have different ways -- we think our way works better, but we're open to talking to them.

What I don't think the American public will understand is, after playing politics with this bill, why Republican leaders would say, well, we didn't get it our way so we're going to take our ball and go home.

Q Joe, are you saying you wouldn't settle for anything less than the $250-billion range that you say is the common ground between the two proposals? Or if all they come up with is extenders and a few other provisions, that would be acceptable if there's --

MR. LOCKHART: I'm not going to get into specifics here. What I'm saying is there is time to get this done. We have the ability with the surplus to deal with Social Security, to deal with Medicare, and to provide middle class tax relief. It makes no sense to anyone who lives outside the Beltway why, after failing to generate any support in the country for their version of what we believe is a wrong and risky approach to fiscal policy with their tax cut, they would say, well, we're not playing anymore. We're going home and we're going to let the elections take care of themselves, and we're just not that concerned about getting our jobs done.

Q But you also said that tax cut shouldn't even be addressed until you address Medicare reform and Social Security reform.

MR. LOCKHART: That's right.

Q So when the President today was calling for modernizing Medicare reform, are you indicating that you're willing to be flexible on a tax cut package if, for instance, they would support a prescription drug benefit in Medicare?

MR. LOCKHART: We have indicated, I have indicated numerous times that within the context of what's affordable and what's targeted for the middle class there's flexibility on tax cuts, but we've got to deal with Medicare first. The President has put forward a proposal; the Republicans have come back with nothing. But, importantly, the Senate Finance Committee is going to take up the Medicare issue. We've got by all accounts many weeks left in this legislative session, given how far behind they are on appropriations. We can get this done. And I just don't -- it's just hard to see as a winning political strategy that we'll throw out a proposal the public doesn't support and then when we can't pass it, we'll go home and claim victory. It doesn't add up.

Q The President talked about how much could be accomplished if the Republicans would work with him. Is he saying, just accept the wisdom of my point of view and everything will be okay, or is he actually going to try to do something to sit down and negotiate with the Republicans?

MR. LOCKHART: Listen, every Republican leader on Capitol Hill understands that the President's door is open. If they want to come down and do meaningful work, we'll do meaningful work with them. What the President said loud and clear in the veto today was, we have done too much that has benefitted too many Americans to do a u-turn now on fiscal policy. The American public supports that.

The Republicans took their best shot. They said they were going to go out in August and bring the Democrats to their knees. Well, if -- the numbers that are on television today indicate all August did was make it worse. The more they tried to sell it, the worse it was, because it doesn't add up. It squeezes Social Security and Medicare; it squeezes education. And that's exactly the wrong direction as far as the American public is concerned.

Q Why doesn't the President just propose some kind of White House summit? He has done that before to try to jump-start negotiations.

MR. LOCKHART: The President has made it clear that he wants to -- the President reached a hand out in his statement today, and as far as I can tell, what it was met with was most of the Republican leadership saying, well, we're just going to go home. We're going to finish the appropriations process and go home. Now, that's not necessarily a winning proposition for them either, because the way they're going is they will not have done anything on Medicare, they will not have done anything on Social Security, they will not have provided middle class tax relief, and they will spend the Social Security surplus in the process. If that is the strategy they're pursuing, we think it's wrong, we'll try to stop them. But we can't, through projection, change their strategy.

Q Well, don't you at this point have to offer them a little bit, something more to keep a tax cut on the table, like maybe go above $250 billion or $300 billion? Or what are you willing to do to get this moving again?

MR. LOCKHART: We're willing to look at what we can afford. I mean, we can't afford more than that if we're going to do anything on Social Security and Medicare. But if they have ideas of how we can take that kind of tax cut and make sure that it's targeted to the middle class and not just benefitting a few wealthy -- or the wealthy minority -- we're willing to talk to them.

Q Given that there's very little indication from the Republicans that they're willing to talk about this, do you think the President has really lost his last, best chance in these last couple years in office on Medicare, Social Security --

MR. LOCKHART: I don't think so. I don't think so. I think the President has made a very strong argument. This started now almost a year and a half ago at the State of the Union -- not this year, but last year -- when the President talked about saving Social Security first. He has set the agenda here. The public has responded and they've rejected the Republican approach which is tax cuts now, worry about the consequences later. The American public has roundly rejected that idea.

And I think that now that the political theater on this particular act is over, they're going to wake up and, as I said earlier, they're going to realize the hand they're playing. It's a hand that -- the public has rejected their tax cut, the public is demanding Medicare reform, and the public just will not have us spending the Social Security surplus if we haven't addressed their concerns.

Q Right, but the sort of unanswered question he asks is, does this indicate the beginning of the end of the President's ability to meaningfully influence events on the Hill?

MR. LOCKHART: Listen, David, I stood here a year ago with skeptical questions about 100,000 teachers, and the President made the case, made it forcefully, and we got our down payment on 100,000 teachers. We are woefully behind in the appropriations process, which will give us more time. We believe that as we make this case, as they realize the political box they've put themselves into, they will come to the realization that it's time to throw in this weak hand and work on something that will benefit the American people -- address these issues and will, as we have always said, be good politics for everyone because it's good policy.

Q You keep talking about what the American people want, but when they're polled about this, they usually list Medicare, Social Security reform, and education, maybe environment, as their top issues. They don't even have tax cuts on the radar screen --

MR. LOCKHART: That's exactly my point. That's exactly my point, which is --

Q -- whether it's targeted or not. So why are you even --

MR. LOCKHART: Listen to what I've said here, which is, here's what we need to do. We need to strengthen Medicare. We need to reform the system -- this is what we need to do first -- strengthen Medicare, reform the system, provide a meaningful prescription drug benefit. The President talked about that in the State of the Union. We need to strengthen Social Security by getting a real lockbox for the money we can save in the Social Security surplus by putting it into the trust fund and extending the solvency of Social Security.

We need to invest in our priorities. Number one, education. We can do all that, and if we do that, and if we commit to doing that, we can still provide middle class tax relief around -- to the tune of $250 billion.

Q Why don't you just, instead of committing to targeted tax cuts, leave the rest for debt reduction? Isn't that what the American people want?

MR. LOCKHART: I think the American people believe that -- and increasingly believe -- that there are concerns about retirement -- that is the great dual benefit of the USA accounts. I do think that the priorities here the American public has clearly articulated are dealing with Medicare, dealing with education, dealing with Social Security. But the bottom line is the last seven years and the important work that's gone on in the last seven years provides us with a unique opportunity. And it's an opportunity that we should take and not walk away from. And that opportunity says we can do what we need to do on Social Security; we can do what we need to do on Medicare, education; and we can provide modest tax relief for the middle class. We can't do any of that if the Republican Party decides that for political reasons they want to walk away and quit the process.

Q Joe, you said several times the Republicans are spending the Social Security surplus. What are you talking about in particular?

MR. LOCKHART: I'm talking about if you add up their appropriations -- they've already, behind closed doors, agreed to bust the caps, unilaterally. And if you add up all their appropriations bills, and you look at what the on-budget surplus is, they cannot do what they say they're going to do in the appropriation bills and not spend the Social Security surplus.

Now, there's a way that we can address this. We can fund the priorities, we can do education. I mean, the House is marking up a Labor H bill as we speak. That Labor H bill cuts $200 million -- is $200 million less than the 1999 Department of Education budget. It's going to squeeze block grants, after-school program, America Reads, zero out the Gear Up Program. This is the Republican Party, titularly now headed by some -- presidential candidates who are making great speeches about their commitment to education, but they want to cut the budget below 1999. It's fully over $1 billion less than what the President's requested.

So when all the speeches are done and the numbers are added up, you're going to find a couple of things that are certain. One is, they are not committed to funding education the way the President is, they actually want to cut it. And you're also going to find that when the numbers are added up, they'll spend the Social Security surplus. And if you need any evidence of this, don't listen to me, listen to Tom DeLay in an interview with The New York Times the day they went to recess when he talked about a secret plan to spend the Social Security surplus.

Q Have any of the talks with the Republicans on the budget process move beyond the staff to staff level? Has the Chief of Staff, for instance, or any of the principals on the budget gotten involved?

MR. LOCKHART: We've had good conversations on moving forward in Senator Roth's committee on Medicare. There's been conversations from time to time with Chairman Archer on Social Security. There are a lot of Republicans who want to get something done. The problem is, their leadership doesn't. I think their leadership has taken the misguided view that it's good politics to make a statement on taxes, even though the public has, by and large, rejected it, and then walk away and not try to finish the work they need to get done.

Q Which candidate were you referring to when you said, they make great speeches, but really are going to let education get squeezed --

MR. LOCKHART: I saw -- let's name one. I saw a speech recently by the Governor of Texas who is the frontrunner, who talked about his commitment to education. Well, the House is marking up the bill, the Senate has passed Labor H, and I haven't heard a word. Does he agree or does he disagree with what Congress is doing on education. And if he disagrees, I think a test of leadership is pointing out where you disagree and trying to influence your party.

Q The way you phrased it the first time, it almost seemed like you were holding him responsible for controlling the Republican Congress.

MR. LOCKHART: I'm certainly not. Republican Congress controls themselves. But I think it is a test of leadership that if you disagree with where your party is going, that at a minimum, you state it, at a maximum you try to influence the party to do what it needs to do to properly fund the priority.

Q Doesn't the fact that you're -- maybe attacking is too strong a word -- criticizing the Republican frontrunner from the podium at the White House an indication of how politicized this whole thing has become?

MR. LOCKHART: Listen, I think the view of the Republican Party in the Senate and the House has taken is that the budget debate this year is about politics, because they've basically said that we've made our statement on taxes, let's take it to the voters next year. We have a fundamentally and diametrically opposed view, which is, it will be good politics for everyone to sit down and get something worked out and get something done, address Medicare, address education and deal with taxes.

Q On that Labor HHS bill, if something like that emerges from the Congress with the education cuts, would the President veto it?

MR. LOCKHART: I think there's already -- is it a senior advisor or secretary --

MR. TOIV: Not yet, because they haven't gone far enough with it.

MR. LOCKHART: Okay. Let me just say, I think the President has indicated very clearly and the American public has spoken very clearly that education is a top priority, and we're not looking for something that squeezes education in order to provide for other priorities.

Q Other than the defense bill, has the President come any closer to a decision whether to sign --

MR. LOCKHART: No, the President -- I think as some of you know, the President met with Secretary Richardson yesterday and they discussed some of the remaining concerns on the DOE reorg. But I think Secretary Richardson recognizes the very important military aspects of that bill from the readiness money to the pay raise, which is a very important component of quality of life for the military. We're going to continue to work through this and we'll let you know when there is a decision.

Q Joe, the Republicans said if we can't have a substantial tax cut in this robust economy, when can we ever have one. Instead of tax cuts targeted in the framework of things like universal savings accounts, the President raised taxes six years ago, what's wrong with a cut in the federal tax rate to give money back to all tax-paying Americans?

MR. LOCKHART: Let me do a couple of things here. I think, except for about 1.2 percent of Americans, those are the people whose taxes were raised six years ago. And if someone wants to have an argument with me on the results of the President's economic plan, I think I'm going to win that one.

We have lowest unemployment in a generation, lowest interest rates in a generation, almost 20 million new jobs created, the longest peacetime expansion in history. We have an economy that is the envy of the world. It is a decision the President made. Unfortunately, we didn't get any Republican votes on the budget bill in '93, but we had enough votes to push it through.

Americans understand in their own homes and their own pocketbooks how important that program was. Now, on the argument that I think I heard Congressman Watts making about if not now, when, well, I think he ought to sit down and have a conversation with the Chairman of the Federal Reserve, who has indicated that a tax cut now is exactly the wrong time, given where our economy is. I think that they could learn something from his analysis and from the analysis of most of the analysts and bankers on Wall Street and from the analysis ultimately that the American public has made.

They keep talking about what the American public wants and needs, but they're not listening. The American public has said very clearly what they want us to do is to get to work on Medicare.

Q Your answer to the question is, then, never?

MR. LOCKHART: No, the answer is -- we have targeted tax cuts in the President's budget.

Q But the question that Watts asks is, if we can't have a broad-based federal income tax cut now when the economy, as the President said today, is churning along, then when?

MR. LOCKHART: Well, again, I would ask them to go back to school, look at what the Chairman of the Federal Reserve has said, and I'll tell you about the situation we face.

Because of all of the good work that's been done, we do have this surplus, and it's an important aspect of a successful economic program. We also face a challenge because of the demographics in this country. I mean, if not now dealing with Medicare, when? If not now dealing with Social Security, when? People who are baby boomers are 10, 15 years away from needing these programs, and if we don't deal with them now and if we don't deal with them in ways that don't cause great pain now, we will be setting ourselves up for a long-term policy disaster, and this is an issue the American public has said very clearly, over and over again: We want people in Washington to take care of our business and the business we want people in Washington to take care of are Social Security and Medicare.

Q I take your point, but it still doesn't answer the question, which is, you're saying that there are other priorities that are more important than a broad-based tax --

MR. LOCKHART: It's not just me.

Q But I'm just saying the White House answer to the question of on tax cuts, if not now, when is, now isn't the right time and for the foreseeable future, given the demographic changes, maybe there isn't a right time.

MR. LOCKHART: No, I think the White House answer is, we can afford targeted tax cuts now if we enact the President's program. We can afford anywhere between $250 billion and $300 billion. What we can't afford is an across-the-board tax cut that provides only about $250 billion to the middle class, then the rest of it goes to the very wealthiest of Americans.

Q But, Joe, they're taxpayers, too; why shouldn't they get some relief?

MR. LOCKHART: Let me just say one thing, and there are probably some people in this room who fit this class. Anyone who thinks -- yeah, exactly -- anyone in this room who believes that the wealthiest of Americans haven't done well in the last seven years is wrong.

Q Joe, you said before a bad tax cut -- that you preferred no tax cut to a bad tax cut. Is that still the case? When all is said and done, when all the political rhetoric --

MR. LOCKHART: The tax cut that the Republicans sent us today would have sent us on the wrong direction, undoing seven years of positive economic work. It was bad for the economy and bad for our future. The President vetoed it for those reasons. We can still have tax relief, but we're just not going to sign something that doesn't make sense for the future of this country.

Q The net result is, no tax bill and the money just continues to flow into Treasury, that's just fine.

MR. LOCKHART: Listen, the net result of this is we have an historic opportunity to get something done on the issues America wants us to address -- Social Security and Medicare. I can't really explain the logic behind a strategy that says, put out a tax bill that the public doesn't support, and then go home early --

Q When you take the tax bill apart, though, there is a lot of support from Americans for provisions of that tax bill. I mean, you can stand up and say the tax bill as a whole doesn't have the support of Americans, but the provisions in the tax bill do.

MR. LOCKHART: I think there are some provisions in there that are more targeted to the middle class, and if the Republicans want to work with us, we'll work with them on it. I can't -- there is a minuscule amount of Americans who are going to benefit from their proposals on estate taxes. So there is an example of --

Q What about the marriage tax then?

MR. LOCKHART: Listen, if they want to come down in the context of doing something on Medicare and Social Security and talk about the marriage penalty -- the President has supported Senator Daschle's bill last year which dealt with the marriage penalty. If something is affordable and it's targeted, then we've got something to talk about. But when they send down something that's loaded up and can't be paid for and is going to send us in the wrong direction, they'll get the kind of reaction they got from the President today.

Q How do you perceive the budget process unwinding at this point? I mean, are you going to wait for the separate appropriations bills to come in, sign them, veto, or whatnot? And when do you think this process is going to wrap up? Because they're just a week away from the deadline. Obviously you're not going to -- I mean, is this going to be in November, we're going to have CRs, or what?

MR. LOCKHART: That's really a question for the Republican leadership. As you all know, they are quite behind in the process. This is becoming a bit of a recurring theme. But I don't look at next week's deadline -- there's an expectation here that there will be probably a two-week CR. And if it comes down in that form, short and without being loaded up with anything, we certainly are willing -- I mean, the President was very clear today, he wants to work with Congress. There's a lot of work to get done. I don't think we can get everything the President talked about done next week. So we want them to stay here. We don't want them to go home. We want them to stay here and get their work done. And if that means that we go into October and November, so be it.

Q With the White House and administration so concerned about Social Security, why hasn't the President laid out the reform plan for Social Security that he promised about a year and a half ago?

MR. LOCKHART: I think the President said that he would move forward in a way that the thought was most constructive. Let me give you an example here. He laid out a very detailed Medicare plan and we still haven't heard any counter from the Republicans. We're going to continue to work and if they are serious about getting this done, we'll sit down and do legislation on Medicare, we'll sit down and get the details done on Social Security. We can get this all done. I think we proved last year that when you have the will, you can get a lot done very quickly in this town.

Q Does the President still intend to introduce a reform plan for Social Security?

MR. LOCKHART: The President still intends to reform Social Security and extend the solvency of it.

Q Following up on your mentioning that you can get things done very quickly, when you talk about a two-week CR, is that going to be the window of opportunity for everyone to sit down and do the horse trading that's necessary to hammer this thing out?

MR. LOCKHART: It's hard for me to know since the distinct signal from the Republican leadership today was they didn't want to negotiate, they didn't want to talk about anything, they wanted to go home. And I think our message here is it's not time to go home yet, we're not done yet.

Q One last question. Are you looking at a one-time CR, or would you be willing to consider like another two weeks if the first one kind of doesn't produce anything?

MR. LOCKHART: Well, that would sort of take our leverage away if I answered that question, wouldn't it?

Q Yes, but it would make news. (Laughter.)

MR. LOCKHART: Yes, so there you go. I'll take a pass.

Q On energy, can you give us a few more details on what are the sticking points?

MR. LOCKHART: I think Secretary Richardson and his staff have outlined that there are some accountability and clear lines of authority. I think we had some ideas on how to do that. In between the House and the Senate and the conference and the moving, we think that we were starting to go in the right direction, but then we slipped back. So there are some complicated issues within the reorganization that remain a concern.

The problem is, there are some very important and needed things in that bill for the military as far as readiness and pay raise.

Q One more. In the long run, does the administration favor folding the Energy Department into the Department of Defense -- or do you still want an independent Department of Energy?

MR. LOCKHART: I don't think it's our policy to do anything that changes the status of the Department of Energy.

Q Aren't you really in a bit of a bind if, beyond the politics of it -- policy framework -- in a bind if they take a tax cut off the table? Don't you then have a lot less to offer then in exchange for what you want on spending and Medicare?

MR. LOCKHART: I don't think so. I think if you believe Tom DeLay, their strategy was to put us in a bind. And they've managed to -- magnificent strategy to box themselves in. I mean, look at where they are. They have come to the end of this process, they've made a lot of promises about what they'll spend. For all of their talk about fiscal discipline, we've got a $500-million boat in Mississippi that the Pentagon doesn't want but it's going to get there come hell or high water, and they have already busted the cats unilaterally, a decision I think that was -- that they didn't want to do, but they have to, to move the process along because they want to do this unilaterally because they don't want a work list, now they're going to come to a very important step when they add it all up -- they're not going to be able to do all this without dipping into the Social Security surplus. We have offered them ways to work through this.

I personally think that as the days and weeks go on as we get into October, the tobacco tax is going to come and look a lot more attractive to people because there is a way to find common ground on what our priorities are -- there are things we want that get funded, there are some other issues that they feel strongly about get funded, it's good public health policy to raise the price of tobacco, and they're going to be faced with a choice coming down the road of a tobacco tax, or dipping into the Social Security surplus.

It seems to me it's self-evident which track is the way the public wants to go.

Q Does the lawsuit provide political leverage for a tobacco tax?

MR. LOCKHART: No, and I don't see them as related. They're on different tracks. I think the one thing -- I don't know very much about litigation, but the one thing I do know is that's something that's going to take time.

Q Joe, doesn't the administration face the same dilemma -- dip into Social Security or tobacco tax? Aren't you in the same boat they are?

MR. LOCKHART: No, because we have put forward offset in closing loopholes and we've put forward the tobacco tax. The tobacco tax actually generates a significant amount of revenue that provides -- so that we can fund our priorities like education without dipping in. It's a choice that I think will become more stark and more clear as we get near the end.

Remember, we've talked for the last couple of months about the whole process trying to be fuzzed up as we move through appropriations, but I think I predicted from here three months ago that as we got near the end, the numbers would become more clear and the choices would become more clear, and the difficulty would become more clear.

And we had a significant event a week or so ago, when they unilaterally decided that the caps were no longer useful for them. So they were going to bust the tool that they trumpeted in 1997 as the way we were going to stay fiscally disciplined. And now we are inevitably moving in the direction of the appropriations bills as a whole going into the Social Security surplus.

Q So wait a second. You don't support busting the caps?

MR. LOCKHART: The President's proposal on the budget is very clear, which is our budget for FY2000 is within the caps, we get Social Security and Medicare done, and then I think we can go beyond the caps in 2001, once we've addressed these issues.

Q That proposal was in February. I'm talking about now. Do you support busting the caps now?

MR. LOCKHART: Our position remains that we have a way of doing this without busting the caps.

Q The President this morning was sounding very conciliatory. I mean, you, this morning, were sounding very conciliatory --

MR. LOCKHART: That was this morning.

Q -- but what happened? What changed? I mean, you're saying --

MR. LOCKHART: Listen, it's hard to not look at -- I mean, I watched the Republican reaction to the President's speech today. And their message was basically, you know, we're taking our ball and going home. And I just think, as the President said, the public sends us here with work to do. They want us to get our jobs done. They understand that the business of running government is political. But when it comes to their business, there are times to put politics aside and get business done.

And I don't think -- as far as I can tell, there's no one out there clamoring to make the presidential campaigns longer, and to take issues that we should rightfully deal with now and punt them into the next Congress. So I think it's disappointing that a call to get the nation's business done, to work together, to find common ground, is rejected.

Q Isn't it sort of ironic that you're begging the Republicans to send you a tax cut?

MR. LOCKHART: Well, I think it's -- you know, if you go back some years, you could make the case that it's certainly interesting that we're, the Democratic Party, is playing the role of fiscal watchdog. But they certainly are; they have been for the last seven years. And we're sitting with an economy as strong as any that anyone can remember at any time, because the Democrats were strong enough to stand up and vote the budget plan through in 1993, which got us started.

Q Joe, you can stand there and say, we hope they come to their senses; the President's door is always open; we're open to compromise; we'll work with them. But hearing what you've heard, knowing what you know about where you have support in the Congress and where you don't -- I'm asking for a moment of candor here. Do you expect that they'll come to the table, or will this carry over to the next election?

MR. LOCKHART: Let me repeat the answer before, because that was candid.

          Q Yes, but we heard that answer.
          MR. LOCKHART:  Yes, and I'm going to give you the same one,

because that's my candid answer. I mean, if --

Q But do you expect that this will become an election issue next year? Pure and simple. Yes or no?

MR. LOCKHART: Well, budget policy and tax policy is always an election-year issue.

Q No, but will this particular tax cut issue be fought in the next election --

MR. LOCKHART: Well, here's what I believe is --

Q -- or will they come to the table before the end of this Congress?

MR. LOCKHART: I believe that when the smoke is cleared on what Arlen Specter called their great "blue smoke and mirrors," and when the numbers come home to roost, as they say, they're going to realize the kind of hand they've dealt themselves. And they're going to be looking to compromise to get something done this year, because that's what the public demands.

Q So they will come back here wagging their tails behind them?

MR. LOCKHART: No. I think they'll view it as the best policy for them, the best politics for them, and realize that -- they took their best shot on this tax cut. Nobody can fault them for not trying. They went out and spent August, and barnstormed the country, did the best marketing they could, the best sell job they could. And the public said, no, we want you to deal with Medicare. We want you to deal with prescription drugs. We want you to deal with Social Security.

So I think that realization has to be very real to them. And it's certainly our hope that it's a conclusion they come to, and we can get something done.

Q Joe, how are you going to read out on Arafat?

MR. LOCKHART: How are we going to do that?

MR. HAMMER: Call us.

MR. LOCKHART: We'll figure it out. I mean, we've got the pool spray at the top, and we'll figure something out afterwards.

Q Majority Leader Lott just said that he would be willing to consider a rise in the minimum wage if that rise, that expense to small businesses, is offset with tax cuts to small businesses. He didn't define what tax cuts he's talking about. Is that a formula you can work with?

MR. LOCKHART: Well, I think in the past we've raised minimum wage, and there's been some movement on those issues. I think it's incumbent upon him to be specific about what he's talking about. I think the President is very clearly in favor of minimum wages, something that's overdue, as is the Senate Democratic Leadership and the House leadership.

THE PRESS: Thank you.

END 2:25 P.M. EDT

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