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Office of the Press Secretary

For Immediate Release September 30, 1999
                           PRESS BRIEFING BY
                         OMB DIRECTOR JACK LEW,

The Briefing Room

1:55 P.M. EDT

MR. TOIV: Good afternoon, everybody. Let me announce a couple things. First of all Mr. Lockhart, at least temporarily, has left the building. He was going to brief afterward, but he will not now unless there is a great clamor for him, in which case he'll come back later on and do it.

Secondly, on the subject of poverty and the administration's record, Gene, in addition to briefing here, tomorrow at the National Press Club at 10:00 a.m. will be giving a speech on the administration's record on poverty as shown by today's figures. It's an awfully good record. Gene is going to talk about that tomorrow.

Now, here today, Jack Lew is going to lead this off and Jack is going to talk a little bit about the President signing the continuing resolution, talk about the current budget situation, and take questions, as well, at that time, because then Jack is going to have to leave.

And then, Martin Baily, the Chair of the President's Council of Economic Advisors, and Gene Sperling, the Director of the National Economic Council, will brief on the census -- the poverty figures released by the Census Bureau today. After all that, I know you're all confused, but Jack will lead off.

MR. LEW: Thanks, Barry.

Let me start just by giving you a little bit of where we are. With the CR, continuing resolution, signed, we now have three weeks -- Congress now has three weeks to finish quite a lot of work. The President has signed into law four of the bills that were sent to him -- the military construction bill, the Treasury-postal bill, the legislative branch bill and the energy and water bill. And he's vetoed one bill, the District of Columbia bill. The other bills haven't come yet.

When the CR goes into effect at midnight tonight, we, in the strongest possible way, urge the Congress to get to work to finish these bills and to get them to us. We remain ready to work with them to resolve our differences, but there is a lot of work to do in these three weeks.

The other thing I wanted to mention just at the beginning, is the question that has been addressed by the Congressional Budget Office in the last 24 hours, and just to offer our view of what is going on with these numbers on the Social Security surplus.

I think that the letter that the Congressional Budget Office sent yesterday evening to Congressman Spratt, he is about as clear as anything I've seen in terms of racking up where these bills are. And it makes clear that no matter what you call the gimmicks, if the money is spent in fiscal year 2000, then it's spent, and it counts against the ledger. And if they were to stop where they appear to be right now, they would be at least $18.6 billion into the Social Security surplus.

I don't think they're done yet. If I were doing the calculation I might be off by a little higher, by a billion or two, but the analysis is basically correct. And that means that they have to go back and they have to look at the options and take a second look at things that we think they've prematurely rejected.

The President went through the options that were in our budget. We remain very much standing behind those options. I was with Senator Daschle and Congressman Gephardt this morning; they reiterated that they're very much behind the coherent comprehensive budget plan that we put forward. And we hope that there is a way to bring a discussion together so that there is another alternative to draconian cuts or spending the Social Security surplus, which would be paying for what we need to do. That's what the President's budget does and that's what we think the Congress should do. And we hope we can work with them towards that end.

And with that, I would be happy to take a couple of questions before Gene and Martin take over.

Q I was wondering if you could clarify what the President said earlier about trying to jointly agree on spending rather than resorting to gimmicks. Was the President actually saying that as long as both sides agree to spend above the caps he would not veto future appropriations bills?

MR. LEW: I think the President was really stating what I just said, which is that there are only so many choices, there are only so many ways to finish the year's work. One could make deep cuts. That's not a very likely outcome, nor is it one that we would necessarily be supporting. We don't want to see cuts in education. We don't want to see cuts in environmental programs or in a host of other areas.

The challenge is to have more alternatives before us than deep cuts or spending the Social Security surplus. We've offered another way to do it. It is not necessary to limit the choices. It is necessary to make tough choices, tough political choices, in terms of whether it's tobacco taxes, whether it's taxing polluters through superfunds so that polluters pay for the damage that they've caused, or whether it's closing loopholes. These are choices. We think that any of those policies stands up against comparisons to the two alternatives that Congress has before it.

Q But so far the only thing both sides have agreed on is to reject each other's ideas on how to pay for this. So if that's the case, then wouldn't the solution be to agree to spend more?

MR. LEW: Well, I think that it's fair to say that there hasn't been the final engagement yet, so I hope it's premature to say that final rejections have taken place. If there -- there are places where we've indicated Congress has spent more than we would in quite a number of the bills. If you look at the very detailed comments we've made -- we've pointed out quite a lot of spending that we didn't request that we don't think is terribly essential. If we could agree on talking about some of those items, maybe we could reduce some of the spending.

But we would not make the choice to cut education rather than pursue the options we put on the table. Until you get together, until there is a conversation, of course, both sides stick to their position. I'm not going to stand here and make unilateral concessions, nor would they.

I hope that they use these three weeks to engage in a serious discussion so that we don't end up with conflict at the end of these three weeks. We saw in the past what happens when we do have conflict. I don't think that's the best thing for the country. It's not what we want. And we remain ready to look towards a different way of working things out.

Q Two questions based on information that's coming out of Speaker Hastert's office. First, on the idea of what the CBO reported yesterday -- now there is something new. They went back to Crippin and said, listen, if we have discretionary outlays of $592 billion; do we have to dip into Social Security? And, in fact, CBO came back and said, no, you don't have to dip into Social Security with $592 billion.

MR. LEW: The problem is that their bills don't add up to $592 billion. Where they are right now, with a more complete accounting, which is what CBO did yesterday in the letter to Congressman Spratt, was about $612 billion-$613 billion. It's no mystery if they were to spend less, they wouldn't be dipping into the Social Security surplus. But their bills spend more.

Q Do you know where that figure of $592 billion came from?

MR. LEW: I think that's the number that you could spend without spending the Social Security surplus. (Laughter.) As I suspect that they worked backwards. That was the way the question was asked. I mean, CBO was asked a question -- if I was asked that question I would answer it the same way. If you only spent as much as is available without spending the Social Security surplus, you won't be spending the Social Security surplus. But the bills do spend more, and that's the issue.

Q The other thing coming from Hastert's office is talking about something that Joe Lockhart said yesterday, criticizing the Republicans for advanced appropriations or forward spending, whatever term one uses, which really means spending money that will be accounted until the next year, until the 2000 budget, the 2001 budget.

MR. LEW: Right.

Q And Hastert says, we would remind Mr. Lockhart that in the President's budget the administration used $18.8 billion in advanced appropriations. The notion that using advanced appropriations as a gimmick is certainly news to us -- $18.5 billion of the President's budget would not be spent in fiscal year 2000. So --

MR. LEW: I would respond by saying that advanced appropriations are not in and of themselves something that are good or bad. We've done it before and that's a fact that we are -- it's in our budget. It's a fact. It's a matter of degree. It's a question of how far you go and where you do it.

The amount that they're doing is at a level that is unprecedented. And actually in the same CBO letter yesterday to Congressman Spratt there was a quite alarming detail which is that they would actually -- they view it as being a programmatic effect on the Head Start Program to have the size advanced appropriation that the bill is looking at.

Now we've made the point in our budget that there are no programmatic consequences, nothing is going to change. It's a way of just matching the funding with the years when it's going to occur. If you start getting beyond a certain point there are programmatic consequences and I was actually alarmed when I saw the CBO report and I haven't had a chance to go behind it and ask questions. But that's what happens when you go overboard. And we know for a fact that you can only do so much advance appropriations before you create problems. And I think we're going to have to look item by item where they end up in order to reach a conclusion as to whether or not it has the kind of consequence which would mean less money being available than it otherwise would be. I believe that the analysis that CBO did yesterday is a warning signal that they've gone too far.

Q Can you just explain to those who didn't take accounting, how, by spreading out the EITC payments, how does that save money? Is it because instead of paying it out in a lump sum, you spread it out; therefore, you don't have to pay interest on that money because you still hold it?

MR. LEW: Sure. And if you move three months of payments into the next year, you're just shifting it from year one to year two. So if you've got a lump sum of the equivalent of $100 a month, it will be $1,200 if you got it all at once in year one. If you put three months into the next year, it will be $900 in year one and $300 in year two. It doesn't change the total obligation of the federal government in any real way, but it does shift it.

The problem is that it's not just a gimmick. Unlike a lot of the things which are a question of either accounting or scorekeeping, there are real adverse, problematic consequences to this EITC proposal. It's a very bad thing to expect the people who are working their way out of poverty, working their way off of welfare, to give the equivalent of a free loan to the government in order to get an accounting benefit is wrong. To spread out the payment is wrong. It would have the effect of taking what's now a lump sum, which gives a working family that is trying to make a go of it, the opportunity to maybe go out and buy a used car -- spreads the money out so that there's no discreet large lump-sum payment. That, structurally, is a very bad thing to do.

There are now reports out of accounting firms and from the Treasury that it isn't even administrable. So it's a bad thing to do.

I wouldn't say that that's a gimmick; that's a bad policy. And it's a policy that we oppose, and the President spoke very strongly to this morning.

MR. BAILY: Thank you. Well, there have been a lot of good economic numbers that the economic team has had a chance to report in the last seven years. But I think these numbers about income and poverty really are some of the most exciting and satisfying. They're really beginning to see the payoff from the growth of GDP, the decline in unemployment, and the other favorable things that we've seen.

As the President said, median household income increased by 3.5 percent. This is the highest level recorded by the Census Bureau in a series that goes back to 1967. All types of household among the different categories -- family households -- the real median income, for example, of married couple families rose 3.4 percent. Female-headed households rose 4.2 percent. The so-called non-family households -- that's single people and unrelated -- rose, actually, 6.3 percent.

So this is really very widespread, this increase in income. It's also widespread across the different income levels, the quintiles. All the quintiles of income, all the quintile groups rose. They all rose by about 10 percent since 1993. So that, again, as the President said, rather than seeing this very unequal pattern of income, we're now seeing everybody being lifted up by the strong economy.

Looking at some of the subgroups, we found that Hispanic households actually showed especially large increases. This group had a median household income that grew 4.8 percent. African American families, the median household income, that remained roughly constant between '97 and '98, but it experienced over a 15-percent increase since 1993. So this level remains, I think as the President said, at about its all-time high.

Turning now to poverty, the people that perhaps one at some level is concerned most about, the poverty rate fell to 12.7 percent. That's the lowest it's been since 1979. It fell from 13.3 in 1997 -- so it had a substantial drop in one year. That was a drop of 1.1 million people that moved out of poverty just in the one year between '97 and '98.

If you look since 1993, the number of people moving out of poverty is 4.8 million. So that's really a dramatic change in the situation of poor people in our economy.

On the poverty front, both black and Hispanic populations showed improvement. The poverty rate for African Americans fell to 26.1 percent. That's obviously high, but it's down from 26.5 in 1997. There were declines also among Hispanics, as you would expect given the strong income growth of that group.

The child poverty rate is 18.9 percent. That's high, much higher than we would obviously like to see. But it fell from 19.9 percent in 1997. It's actually had a 17 percent decline since 1993. So that's a group of people that I think we can really cheer is beginning to see some substantial improvements.

Poverty among the elderly remained about unchanged.

Behind these growth in median income and reductions in poverty have been strong earning gains. After adjusting for inflation, the earnings of male full-time year-round workers rose to $35,345 in 1998. That's a 3.4 percent increase from '97. Median earnings of female workers didn't rise quite as much; it rose by 2 percent.

So I think, overall, this is something where we've seen the growth in GDP; we've seen the other numbers -- this is really translating to what people on Main Street are experiencing. Thank you.

MR. SPERLING: Let me just make a couple of additional points. Looking at the poverty rates over the longer period of time, I think when you look at the five years you see real and significant movement. As Martin suggested, the children's poverty rate was at 22.7 in '93, and is now at 18.9, which represents a 17 percent drop.

Probably the most frustrating statistic and one of the most disturbing facts in the American economy is the African American child poverty rate was at 46.1 percent in 1993. That has fallen nearly a full 10 percent, or is 20.4 percent less; it's now 36.7 percent. That reflects very much the good and bad news in these numbers. That's a fall from 46 percent to 36.5 percent -- is a very significant fall. And yet, at 36.7 percent, the African American child poverty rate is still a stain on our national economic record. Nonetheless, it does show over the five years how significant the movement has been.

If you look at the growth, as has often been discussed, there was dramatically increasing inequality during the 1980s. If you look at the lowest 20 percent, during the Reagan and Bush administrations, or between 1981 and 1993, the lowest 20 percent saw their incomes fall 4.4 percent in real terms. Over the last five years, the lowest quintile has seen income growth of 10.3 percent.

And so, over a five-year period, virtually every quintile has seen their incomes grow about 10 percent in real terms. That is significant. As you heard from the President, for family income, that's meant $5,000 more in inflation-adjusted dollars.

Strikingly, for African American families, the growth has been even greater -- about $5,100. Or put another way, while income growth has averaged 12.1 percent between '93 and '98, for African American families, it has averaged 21 percent, which is a very significant income gain for African American families.

The last point I wanted to make was just concerning the earned income tax credit. The census uses an alternative poverty measure that includes the earned income tax credit, so one can see what difference that makes. Under that definition of poverty, in 1993 there were 40.2 million Americans in poverty. In 1998, there were 7.7 million less. That's under that definition.

The significant thing is that 2.2 million of those who would be removed from poverty were due not just to the earned income tax credit, but to the earned income tax credit increase in 1993. So, in other words, in 1993, about 2.1 million people were raised out of poverty by the earned income tax credit. By 1998, because of the increase in 1993, 4.3 million. So a very significant chunk of the improvement in the poverty rate, as much as 25 percent or more, comes from the earned income tax credit, which has also had several academic studies recently that have shown its effectiveness in encouraging particularly single parents to move into the work force.

That is why, in reference to John's question, we are so strongly opposed to the $7 billion to $8 billion the Republicans seek to raise through essentially cutting the earned income tax credit. Indeed, it's rather stunning that the day that the poverty reports are coming out, the day that we're seeing poverty improving, the day that we are seeing once again that the earned income tax credit is one of our best tools in the fight to reduce poverty, that the Republican solution to their own budget mess is to put the burden on the hardest-pressed working families who need the earned income tax credit to make a decent living for their family.

And just to give a sense of how this works -- and Jack described this some before -- one way it would be very easy for the Republicans, if they wanted to, to do less on the -- have to pay out less in revenues and make it easier to make their numbers add up would be to tell all Americans that their tax refund -- they weren't going to get their tax refund this year. Instead of getting -- if someone was owed a $2,400 tax refund, the government would basically say, we need you to loan it to us. We'll pay you back $200 a month over the next 12 months.

In that case, the person, instead of getting their $2,400 right away, gets only $200 each month. If they need that money they've got to borrow and pay interest costs on the money they're expecting. And what does that do? That shifts some of the money past September so it's into the next fiscal year.

Well, if the Republican Congress were to go to the American people and tell them that their way of solving their budget mess was to tell them that they couldn't have their tax refunds at the end of the year, that they had to give basically an interest-free loan to the government, and that we would -- the government would pay them back over 12 months, there would be outrage.

So, since they could not do that, they chose to do the exact same thing to the poorest working families in our country, the people with the least political power. It's unacceptable. And that's why this President, at least, is going to use his power to ensure that that never becomes the law of the land.

And how I described it is exactly how it would work. A family that was counting on getting a $2,400 earned income tax credit refund would now get only $200 and have it spread out over 12 months. For lower-income families who have the least access to borrowing, this is a particularly hard hit.

They may have to borrow at very high rates, if they were counting on those funds. And in fact, many families, as it is, borrow at unfortunately high rates in anticipation of getting their earned income tax credit, and then use their earned income tax credit to pay back the loans.

So it is a -- as Jack Lew said, it's not really a gimmick, it's really just bad, I think almost unconscionable, policy. We should be -- if we have to make tough choices, let's do them in a way that's good policy. Tobacco, raising the price of tobacco is good policy. It deters teen smoking; it has positive health impacts. But this is about the last place we should look when trying to deal with our budget problems.

Martin and I are available for questions if anyone has any.

Q Can I just follow up on what you just said? Just to go back to how you save the money, it's a matter of spreading it out. You're talking about 12 months. Most people get their refunds in May, June, something like that, I suppose, if you file early, and I don't know when the EITC checks first come out --

MR. SPERLING: It would be pretty much the same. It would be dependent on when you file your tax return. So if this was a normal year and this was a family, let's say a family making $13,000, $14,000, with two or three kids, right at the poverty rate, or a little above the poverty rate -- and let's say their earned income tax credit was $2,400 -- and we've seen many moving stories over the years of people who got their earned income tax credit and used it as their moving expenses to get a new job, or one person to pay tuition - so if they were counting on that for an expense like that, instead of, let's say, in May getting $2,400, they would get $200 in May, $200 in June, $200 in July, $200 in August and so on.

Now, what would happen there is instead of that whole $2,400 being paid in the fiscal year, the federal government would only be paying six or seven months of that in this fiscal year, and, therefore, they would be shifting how much they paid to the next fiscal year.

Q So the money you save is really -- it's advanced appropriations, in a sense. It's forward spending and you're saving the money by keeping the money -- you're not having to pay interest on quite so much national debt -- is that right?

MR. SPERLING: Well, it is, in a sense, taking it interest free. It's forcing the poorest families in our country to essentially give the government an interest-free loan, number one. And number two -- but number two, the bulk of the savings simply come from simply shifting something you were going to spend in one year and shifting it to the next year.

Advance appropriations basically went, as Jack was saying, to situations where money just spent out slowly. It just didn't happen to be spent that year. This would actually be taking something that is due to people, and has always been due, and shifting it out. Now, as I said, there is absolutely no difference conceptually between doing that with earned income tax credit and doing that with people's tax refunds.

You could tell everybody that their tax refunds would be paid out in 12 -- you would divide it by 12 and pay it out in 12 separate months. The reason why they wouldn't do that is because that would be so enormously politically unpopular, people would so quickly perceive that as either a tax increase on themselves or that they were being forced to loan the government money, and so, of course, they wouldn't do that. And that's what makes it so cynical. In that sense, they've just simply decided to do that on a relatively politically powerless part of our society.

And a group of people, that if you look back and listen to what most people said, is one that both Democrats and Republicans seem to want to help -- people who want to work, who are working, who want to get off welfare, who want to move up. That's who the earned income tax credit helps. It seems like the very last people you would decide to put the burden of an extra $7 billion or $8 billion on.

Q Are there any of your appropriations bills that you anticipate signing now?

MR. SPERLING: Well, I would prefer to let Jack answer that. I think that we -- I think that the VA-HUD bill in the form that it came out of the House, of course, we would veto. But there are discussions going on. I don't think that it's a great mystery. I think we're very clear what our priorities are, what an acceptable bill is.

On Labor-HHS, we've made very clear that we would veto both the House and the Senate bill. On the other hand, again, it is no mystery what it takes to make those bills acceptable. We need a commitment to smaller class sizes, using the money for teachers to keep class sizes small in the early grades; to after-school programs; to the mentoring for children, poor children to go to college. We've been very straightforward in what it would take for us to sign those bills.

Q Gene, if the Republicans came to you in the next couple of weeks and said, well, we recognize some of the arguments the President made today; we are, in fact, in a box and we need to use maybe some of the Social Security surplus, would you rule that out?

MR. SPERLING: What the President said is that we've put forward a budget that does not go into the Social Security surplus because --

Q I'm not talking about the budget you put out in February, I'm talking about right now. Would the President rule out allowing the Republicans to use some of the Social Security surplus to make --

MR. SPERLING: I think what we would say is let's sit down and see what kind of offsets we could agree on. There is no reason for us to get into this false choice that says you either have to go into the Social Security surplus or you have to have the type of devastating cuts in education that you see in the House Labor-HHS bill. There is a third alternative, and it's an alternative that requires being willing to make some tough choices and take some political heat.

When the President calls for raising tobacco prices that is not an easy thing to do. That is unpopular even with some members of our party, with some of our friends. But it's the type of tough choice that you have to take if you want to have some budget discipline. So I don't think we have to fall into that now.

Let me point to another budget fact that I think we all know, which is that there always are some offsets that are more difficult for each party to do alone, but when people want to work together they can come up with. So really it comes for -- is there a commitment to a straightforward budget that makes the tough efforts to see if we can get offsets so that we can have a strong education, national security budget, without having to into the Social Security surplus.

Q The President talked about speaking with a chairman, committee chairman on the phone.


Q Was this about Medicare, and can you give us any idea about what sort of progress has been made on that front? Was he talking to Chairman Roth?

Q Was he -- (Laughter.)

MR. SPERLING: You know, I didn't think the President should have said that because I thought that those of us who briefed afterwards would be asked to discuss it. But, clearly, the President, as you saw, felt that he wanted to keep the identity of the person he spoke with confidential. And so I will honor that.

In terms of Medicare, though, there is no question that our Chief of Staff, John Podesta, has spoken with him, and that we are certainly interested in finding the appropriate occasion to meet on Medicare and to work on coming forward with a Medicare reform bill that we think could add solvency to the life of Medicare, deal with voluntary prescription drugs and have some of the real reforms and competition that we think we could get done.

There are areas of agreement on ways to provide better competition, particularly in the fee-for-service area. But I think there is some overlap in our ideas on the managed care area as well. So there certainly has been outreach and discussions in that area and we still believe that we should not throw in the towel in trying to get serious Medicare reform done this year.

Q Is there any reason to expect that there is going to be some movement, some new movement as a result of the President's conversation or --

MR. SPERLING: I'm not commenting on who the President spoke with. I can tell you that John Podesta has reached out and met with Chairman Roth. And, yes, I would say that we're hopeful that there could be progress on Medicare.

Q The President, when he was out here, seemed to acknowledge that the '97 spending -- or the '97 budget agreement spending limits were tight, and that the Republicans did not seem to be interested in either his tobacco tax cut idea -- tobacco tax increase, his corporate loophole closers, any of his ideas, nor is he interested in any of theirs. He also seemed to acknowledge that if they could jointly agree on spending, that these needs could be met out of the non-Social Security revenues. So what was he saying?

MR. SPERLING: What the President was doing was he just wanted to give a straightforward description of what the alternatives are and then describe what his preferred solution is. And so he just gave you a very straightforward description and said that he thought that rather than playing shell games and gimmicks, we should tell people honestly what the choices are. And he said that there are different options one could do. He said that is an option, but he made very clear that's the not option he wants to do.

The option he strongly is calling for is to pay for what we need to -- to have a strong education, national security budget on the discretionary side, and to do so without going into Social Security. And what he's done is shown that he's met the test of saying how he would pay for it; he's met the test with policies, policies that are politically difficult, but ones that he had the guts to put forward. And what happens in any budget is that you put up your proposals and you show that you have a way to pay for it. And if the other side does not agree with it, then it's usually incumbent on them to give their alternatives.

Now, so far, the only thing we've seen as an alternative is this earned income tax credit, which is, first of all, terrible policy; and, second of all, I really have no idea how one could figure out how to do an earned income tax credit slice over 12 months. I don't think it was done as a serious and well-thought-out alternative. I think there's no reason that we could not get together and work on some of the offsets that would be necessary so that we could, this year, meet the goal of not dipping into the Social Security surplus.

Q Do you have an estimate of how much the EITC proposal that they're putting forth would cost an average family?

MR. SPERLING: I think if you just looked at it, it would probably be $200 or $300. But I think what you don't know for families that have little wealth is what kind of hardship it would cause to not get those funds.

So, for example, someone who then had to borrow at extremely high cost to make up for money they were counting on, the cost could be much higher. If it's money that was needed to go to work -- I remember quite well somebody from the 1992 presidential campaign who used her last earned income tax credit to move here to get a job and has never been on another earned income tax credit since.

It has often been the case that people struggling to get into the work force face as a major barrier the inability to move to an open job, to buy a used car that can get them to their job, or tuition to get into school. And if they're counting on that and that does not come through, you could have significant hardship.

But the real point is if one has to find $8 billion, what's the fairest and the best policy way you could do it. I would argue that that would be about the least attractive policy option. I would think that the last place you would look is the hardest-pressed working families.

Q Gene, could you go through the other so-called spending gimmicks the President and you talked about, that the Republicans have proposed, and whether they're vetoable or whether they work?

MR. SPERLING: Well, a couple of things are quite obvious. If you look at former Speaker, or Speaker-designee Livingston, he, himself, harshly criticized the use of the census, which has been in our Constitution and has been around since the 18th century, that that does not quite qualify as an emergency.

LIHEAP is a program that is authorized every year, has existed for many, many years. That is simply an arbitrary designation of that as an emergency. I think these are the type of things that are not -- kind of go beyond the pale.

And I think what Jack was saying in terms of the advanced appropriations is that it's one thing to do it in reasonable amounts where it's appropriate, but if, as he's suggesting, it actually means that there would be less services or less Head Start services in the area where you're doing the advance funding, then it's not just an accounting measure; then you actually are cutting services that are being promised.

Q Gene, aren't you also saying that in the best of all worlds, even though the White House would prefer that you could agree with Congress on offsets, that if you can't agree, that you would rather dip into Social Security and have them send you unacceptable provisions? And if they send you unacceptable provisions, the President will veto them, which would lead to a government shutdown? So, ultimately, aren't you saying that if you can't agree on offsets, you would rather have them agree to dip into Social Security with you?

MR. SPERLING: No, I did not say that. And, no, I'm not saying that. And I'm not getting into that. Again, I think it's a false choice and I think it's defeatist to sit there right now and say that we're not capable of coming with ways of meeting our fiscal discipline.

The fact is the President did, and he did so with policies that we think are good, but take a little bit of political guts to put forward. He's met that test. There's no reason that the Republicans couldn't. And certainly, when you have Democrats and Republicans both agreeing together on way to pay for things, that gives each side a certain amount of political cover that makes it easier to meet budget targets. That's one of the reasons you have good-faith negotiations.

But up to this point, we've just seen Republicans presenting things in this false choice, and I don't think we need to fall into it. I think our budget shows that there is a different alternative.

Q -- how many Americans on the EITC all would be affected, because you talked about -- as well, and you talked about -- is that a family of four that would get $2,400 a year?

MR. SPERLING: I can find out -- I used $2,400 because it's easy to divide by 12. But I could get for you exactly what families would get $2,400. My guess is it would be a family of three or four in the $15,000-$16,000 range. But I can get that for you specifically.

On the number, there's about 20 million tax recipients of the earned income tax credit. About 4 million of them are individuals who get a relatively small earned income tax credit up to the poverty rate for one. The majority of the 16 million have children, and I believe that if you counted the children, the total number of people would be somewhat over 40 million. But in terms of taxpayers, 20 million taxpayers benefit from the earned income tax credit, with about 16 million of them being families with children.

Thank you.

END 2:32 P.M. EDT