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Office of the Press Secretary

For Immediate Release November 18, 1999
                           PRESS BRIEFING BY
                      CHIEF OF STAFF JOHN PODESTA
                       AND OMB DIRECTOR JACK LEW

                           The Briefing Room

1:20 P.M. EST

MR. PODESTA: Good afternoon. Somebody told me it wouldn't be prudent, but message: We're happy. As the President said in Istanbul, this budget is a clear victory for the American people. On point after point, we have insisted on their priorities and stood up for their values. We demanded continued fiscal discipline; we are paying down the debt; we are hiring teachers; we are working to turn around failing schools; we're working to keep those schools accountable for results; we're putting police on the streets; we're protecting the environment. We're going to help people with disabilities get into the work force and stay in the work force. And we're strengthening American leadership around the world.

When President Clinton took office, the deficit was increasing the debt by hundreds of billions of dollars every year. When people in Washington talked about fiscal discipline, the conversation was all about deficit reduction. The only question was how to stop the self-induced financial hemorrhaging. The debt was hardly on the screen, but today the deficit is gone and we're actually working to eliminate the debt.

Because the President stood firm against all kinds of fiscal irresponsibility, especially the $800-billion risky tax scheme that he vetoed in August, we are actually working now to eliminate the debt. We're on course -- if we stay on his course to actually eliminate the debt by 2015, which is something I think to be quite proud of. At the same time, we're investing in our children's future and protecting the earth they'll inherit.

This is the strongest environmental budget of our administration. The budget increases for President Clinton and Vice President Gore's Land Legacy initiative were increased by almost half. This historic effort to strengthen our ability to preserve America's natural treasures and wildspaces, to give communities the power to preserve farms and parks, coastal areas and forests is a priceless gift to Americans in the next millennium. And we overcame enormous special interest pressure to insert anti-environmental provisions into this budget.

The President would not allow Congress to walk away from its commitment to smaller class sizes and quality teachers. Because of this budget we're going to stay on course to hire 100,000 new highly-qualified teachers for our schools. This is very important for our children and a great victory for America.

We also know that more teachers aren't a cure-all for failing schools; we need to set the high standards and demand that they're met.

This budget will con our efforts to make America's neighborhoods safe. The 1994 crime bill put 100,000 new police officers on the street, and they have helped produce the lowest crime rates in a generation. Now this budget will help us hire another 50,000 police officers and give them the equipment they need to drive crime down even further.

And this budget does not walk away from America's critical responsibilities around the world. We'll keep our commitment to the Middle East peace process, at long last pay our U.N. dues and take important steps to relieve the debts of the world's very poorest nations.

Let me close by saying this was obviously a long and complicated process, and I want to congratulate our entire budget team, but especially the two people who are standing with me -- Jack Lew and Sylvia Mathews -- for such a terrific job. And I want to thank the leaders of both parties in Congress who worked together with us to produce this budget.

I especially want to thank the Democratic members of Congress whose unwavering support for better education, more police, a healthy environment, and strong American leadership around the world, has made all the difference in these budget negotiations.

Let me turn it over to Jack for a few comments, and then we'll take your questions.

MR. LEW: Thank you, John. Not to repeat everything that John said, I'll just say a few words, and then we'll take your questions.

I'd like to start with the fiscal policy because we're going to be talking at length about the specific items that were changed in our negotiations -- we have to take a step back and think about what it means that we've reduced the debt of this country $140 billion over the last two years. We're on a course towards eliminating our publicly held debt.

This is a budget that's part of a fiscal policy that's very, very disciplined. It's a part of a fiscal policy that is a total reversal of the fiscal policy we inherited, and it's a course that, if we stay on it, we'll keep our economy growing the way it is today.

What we've done over the past few weeks is really to have a debate over priorities. It has been a debate about what we should be spending our resources on and how we should be paying for it. We went into the negotiations determined to have additional spending in the priority areas that John outlined, but we were also equally determined to pay for the additional spending the we incurred. We accomplished both of those results.

We went through the negotiations line by line, item by item. I think we can stand here today saying that we have accomplished the policy priorities that we set out to accomplish -- in the areas of education, public safety, the environment, international affairs, and many, many other areas.

I'd like to say just a couple of words about the process because we're in Washington at what people call the most partisan times, and I'd like to echo first what John said about the support we had from Democratic members. We felt it every minute of every day, and we're very grateful for it. But the part of the story that is not told so much is that inside both parties are deeply honorable people who want to do the best thing and want to get the job done.

We were working with chairmen of both the House and Senate appropriations committees who are honorable, decent men -- it was a pleasure to work with them. We were dealing with a chairman of the Budget Committee who, as always, it was a pleasure to deal with.

There were hot moments -- you saw most of the hot moments -- but there were also a lot of very constructive moments. And I must say, after six very hard weeks, this is the way we should do our work. We should do our work airing our differences, fighting over policies we care about, and getting the job done for the American people.

Q How do you respond to women's pro-choice groups who say that the White House basically sold them out on the U.N. dues package?

MR. LEW: First of all, I think you have to look at the detail of what the provisions regarding the family planning, Mexico City provisions are, and what it was part of. It was a package of issues. The U.N. debt was connected to these issues, and the debt relief that John described in terms of paying off the debt of the poorest countries of the world was tied to these provisions. So it wasn't just a question of what is the policy on family planning.

I'm not going to say that we're happy to have to make a compromise on family planning. We think the position that was taken that was taken by our opponents on this is wrong. But at the same time, we negotiated an honorable compromise that we think does not undermine our ability to conduct the programs that we have. There's a waiver in this; the President will exercise the waiver. We will continue to run the programs subject to the conditions that are there.

If you look at what we got, it is enormously important. Paying our U.N. bills is something that was -- it was a humiliation to this country that we were both in arrears and making no progress towards getting out of arrears. In the area of third world debt, the very poorest countries in the world are going to have debt relief that will enable their economies to grow, that will enable the poorest men, women and children of those countries to have a brighter future.

So, over all, it is a package that we think has done a lot of good, and I think, as far as the details of the family planning provisions go, we negotiated something out that will allow the program to continue.

Q Can I follow up on that, please? A group of Congresswomen have made some requests of what they see as remedies for the deal involving the international family planning. Any chance that those requests will be fulfilled by the President?

MR. PODESTA: Mr. Rossetti is talking with those members of Congress now. I think there are a number of good ideas that they've put on the table, and we'll follow up and work with them. I think, as Jack said, we were disappointed we even had to be involved in this negotiation. These issues never should have been linked. I think it was extreme members in the other party -- even Jesse Helms thought this was a bad idea. But we were faced with the situation in which we had to enter into these negotiations, and we felt like, at the end of the day, that the balance was struck in a way that was acceptable to the President. I wouldn't say that any of us are happy about it, but it was acceptable in order to do the important things that Jack described on debt relief and paying our U.N. dues.

In the end of the day, I think we want to move forward with a positive agenda of family planning around the world, and we're anxious to work with members of Congress toward that end.

Q Mr. Podesta, neither one of you mentioned the spending caps or whether you can manage this budget without dipping into Social Security. By how much are you exceeding the spending caps?

MR. LEW: Well, I think that I did address it by saying that we set out in these negotiations to pay for everything we did. And that's something we accomplished. We have raised some questions in the past about some of the underlying issues; there are questions, there are competing views. I think we're going to have to wait and see -- these are estimates -- what the final numbers are.

I think that with regard to the spending caps, the measure of whether or not the spending caps are being met is whether or not the specific technical provisions of the Budget Enforcement Act are being complied with. And we worked hard to make sure that that would be the case so that we won't have a sequester.

With regard to the surplus, everything that we've done over the last two weeks, three weeks of negotiations we've paid for. We paid for our priorities; we paid for eliminating a portion of the across-the-board that we said was excessive; and we paid for restoring the spending in health programs that we think was irresponsibly delayed into the next year.

So we've gone about it in a fiscally prudent way. I think that it's probably best to approach it that way as we go forward. We will continue to put budgets together as we did at the beginning of this year. We put together a budget this year that was fully paid for and that had some tough choices. We regretted that some of the tough choices we proposed were not politically acceptable to the Congress, and they were rejected. Some of them would have imposed burdens on special interests -- cigarette companies that sell cigarettes to minors; companies that pollute and don't pay Superfund taxes. We had a host of proposals that were rejected. We're going to come back as we put our budget together for next year, and we're going to continue to do it the way we do it. We started the year paying for what we're doing; we ended the year paying for what we're doing.

Q Well, if I may follow up, Tom DeLay just said a couple of days ago that he really wasn't sure that what you're coming out with would not dip into Social Security and that Congress would have to take another look at it after January or February, and there could be a need for rescissions. Are you on the same wavelength that you're going to also take another look at whether, in fact, you're not dipping into Social Security?

MR. LEW: I can't speak to the policy that they're going to take in the future; that's a question you'll have to ask them. As far as we're concerned, I think we've spoken very clearly on what our priorities are and how we want to go about doing the budget.

Q Does that mean that OMB's accounting of this budget deal will include some of the gimmicks that the Republicans are using to mask any dipping into the surplus?

MR. LEW: Well, I think that -- I can answer this at a technical level or at a political level. At a technical level, OMB scoring is always done by OMB scoring. So to the extent that Congress directed the scoring by OMB, that's what we do anyway. So we're going to score these bills based on our estimates.

Q Some of theirs was CBO's scoring, some of it was OMB scoring.

MR. LEW: To the extent that there were differences, we will continue to use OMB scoring. That's how we score -- we do not have the ability to change our baseline except at the beginning of the year when we put the budget out. So we work with a baseline through the year. So we will continue to score these bills as we have. And we have not had a chance to score the bill that was filed at 3:00 a.m. this morning, so I can't speak authoritatively on that yet.

Q Although it's understandable that you would want to acknowledge those priorities that were met this year, there are several pieces of legislation that won't be arriving on the President's desk. What's the prospect for such legislation in an election year next year -- specifically, Medicare reform, prescription drugs, patients' rights, minimum wage?

MR. PODESTA: Well, we're -- as we've said on numerous occasions, we're quite disappointed that their special interests seem to have a grip on the patients' bill of rights. We can't raise the minimum wage. We can't pass common-sense gun legislation because of the hammerlock the NRA has apparently on this Congress.

But I think that if you look back at 1996, in an election year, you'll see that there are times in which the parties can come together in the face of an election and think about what the people really want, what the people really need, and under the impending election coming closer and closer in front of them, I think we can get some things done. And I would include Medicare reform in that, and include the notion of not only just reforming Medicare and extending the life of the trust fund, but modernizing the program by adding a prescription drug.

So I think that we're quite hopeful that as we come back together in January that we can begin to address those key questions and key issues for the President, but we're not oblivious to the fact that they've been tied up throughout the course of this year in this Congress and we're going to have to work very hard, appeal to the public, and take our case to the public in order to break through what seems to be a hammerlock the special interests have on at least some of those bills that you mentioned. And, hopefully, we'll be able to do that and we'll be able to come together as we did in this Congress and pull those provisions together.

I would say the one thing that we're extremely disappointed by, that was not included in this budget negotiation, was a provision that was originally in the Senate-passed version of the Commerce-State-Justice bill which was the hate crimes legislation, which is so necessary. And we talked to the Speaker and leader Lott many times about it; the President talked about it in his last conversation with them when they talked about the .38 percent cut. We couldn't get that done here, but we're going to come back and try to get it done next year.

Q Is there another factor here, too, besides the special interest influences you mentioned? Isn't it a possibility, too, that this Congress, frankly, isn't very much interested in giving President Clinton any of the bigger-ticket items, like Social Security, like Medicare reform, that he could legitimately consider to be part of his own legacy, or his legacy wish list?

MR. PODESTA: Well, it's hard for me to speak for the Congress. I think that we'll put forward a program, as we did in the last State of the Union we'll put forward in the next State of the Union, and we'll try like the dickens to try to get it done. I would say that if you think about the way we ended up this year, we were able to come together and get bipartisan agreement on a very important bill -- the bill to deal with people with disabilities getting into the work force, the so-called Jeffords-Kennedy bill. And I think we're very proud of that and we're very proud that we could work with people in both parties to come to the center and get that bill accomplished this year.

The House showed that they could pass a patients' bill of rights that was real, that was strong. But we've got some work cut out for us, especially given the fact that that conference has already been stacked against us.

MR. LEW: If I can just add a word -- and Kennedy-Jeffords is a perfect example. Last year when we were in the budget negotiations, we made an effort to get the legislation to bring disabled people back to the work force and help them get health care coverage. We failed last year. We couldn't get it in the negotiations. This year we worked it through; we worked in a bipartisan basis; we kept going right until the end; we paid for it and we got the policy in.

The very last provision to be added, in fact, was $100 million for a demonstration project here, which is enormously important. It's a program which will enable people who have disabling diseases who are going to get progressively sicker -- people with AIDS, people with multiple sclerosis, people who are not yet fully disabled, but who know they're going to be disabled -- to stay in the work force, have health care coverage and have that health care coverage -- and not have to leave the work force in order to become eligible for Medicaid. That is enormously important policy.

I mean, we sometimes get lost in the numbers and we say we got $100 million -- this isn't about money. Of course, we have to pay for it and the fiscal policy has to be balanced. But this is about people and their lives. And it was enormously important, and when the President spoke with the Speaker about the final issues, this was one of the issues that he asked to be included and insisted be part of a final agreement, because it really does make a difference in terms of people's lives.

Q Can I ask you about, following up on some of these other questions, at the beginning of the year there was a lot of skepticism that overhauled Medicare was possible this year. I remember you personally were fairly robust in your predictions that the skepticism is wrong and that it can be accomplished. Can you assess why it didn't happen, what was the roadblock in your --

MR. PODESTA: Well, I think, quite frankly, that one of the major reasons it didn't happen is we ate up so much of the clock on the risky tax schemes the Republicans put forward. So the moment the President put down his Medicare reform plan, which extended the solvency of Medicare passed 2025, added a prescription drug, modernized the program, took the best of what we thought came out of the Breaux Commission, the Medicare Commission report, made a real offer to the center, I think, to try to work with people in both parties -- I think the Congress took a detour off to try to put together this huge tax scheme that I think would have jeopardized all the things we're talking about today -- education, the COPS, the other important priorities -- and clearly, given the newfound concern for the Social Security surplus, clearly would have jeopardized our ability with fiscal prudence to not keep spending the Social Security surplus in future years.

The President rejected that, the American people rejected that. Unfortunately, it took up about a quarter of the whole time that the Congress was in session this year to work our way through that. We finally sent it back to the Congress and they abandoned it. But I think that really ended up, then, putting us into a situation where we really had to just get the regular appropriations bills done.

I'm still optimistic about it. I think in the course of meetings with Senator Moynihan and Senator Roth and others, the President talked about trying to get going on this again next year, as we negotiated the adjustments to the 1997 Balanced Budget Act to deal with hospitals and teaching hospitals and skilled nursing facilities, and the other things that are included in this legislation. He talked to them about getting going again on a more broad-scale reform and adding a prescription drug benefit, which I think is really critical at this time. And they said they were open to it, that -- Chairman Roth said that he intended to come back to this, hold hearings at the beginning of the year and see if we could put something together.

Senator Breaux I think has just put together a new plan that he's put forward, which, quite frankly, I'm sorry that I haven't been able to work through the details of because we've been involved in this process. But we look forward to working with members of both parties in both Houses, and we think a modernized Medicare system with a prescription drug benefit that is fiscally prudent and extends the solvency of Medicare is a doable result for us in the next year.

We also intend to come back, quite frankly, and work on Social Security. I think that that is an issue in which we put forward now a plan that would capture the savings from paying down the debt from Social Security -- from reducing the debt from saving the Social Security surplus, and crediting that back to Social Security. Chairman Archer has got some other ideas. I think they just held a hearing on that. Secretary Summers testified. Maybe we can get back to the table and see if we can make some progress on that as well.

Q Can I ask you about the $3.5 billion being transferred from the Fed to Treasury? In 1996, Greenspan called the kind of practice gimmickry. Now, the White House put that in -- is it your position now that that's now acceptable practice?

MR. LEW: Well, it is a transaction that has real effects in terms of the unified budget. The monies are not credited to the unified budget unless the transfer occurs. In a year when the debate has been about whether or not there is a surplus, and in particular, whether there is a non-Social Security surplus, the size of that non-Social Security surplus matters and is very real. This has a real effect on that. And we think that it does help to pay for a number of the things that we've done.

I think that it's important not to just look where we ended up in the discussion about how to pay for the different changes that were made. I'm disappointed that some of the proposals that we offered that would have, I think, been really very important policy and would have had savings that were very real were rejected.

For example, we had long discussions about a tobacco youth penalty. I don't think that just as a matter of budgetary savings, a matter of policy, it's just unimaginable to me that we would want to leave in place a system where companies have no disincentive to sell cigarettes to 18, 17, 16, 12 year olds. The policy on its own is a good policy. We pushed it, we argued for it, we had support, actually, among members both Democratic and Republican members. It was interesting that it was not just a partisan debate.

Ultimately, the idea was killed. It was killed because there are people in positions -- I think in leadership positions -- who objected to it. We haven't given up on that. We're going to continue to fight for policies that we think are good policies that also give us room in our fiscal policy to have additional resources available for priorities.

There are a number of other provisions where special interests would have been burdened. I mentioned earlier polluters paying under the Superfund program. These are very, very worthy proposals which we'll be back with. I'm glad in the end we were able to agree on a package that scores, that's real, so I can stand here today and say we paid for all the things that we changed.

Q Mr. Lew, could you tell me if you think that the dairy issue will hold up this process.

MR. LEW: I can tell you that it's going to delay the process; it already has. We made very clear in many occasions that whatever your views on dairy policy, it just didn't belong in this omnibus appropriation bill. It is an issue that members and senators are divided on because of their own view of the policy and their regional interests. It is not an issue that belonged in this appropriation bill.

We warned them that it was going to delay things. We urged them not to bring it in. I hope it doesn't delay things inordinately. Yesterday we were very concerned that it was going to lead to a possible government shutdown. We're not out of the woods yet. When I came in here, we hadn't yet gotten a CR that gets us beyond midnight tonight.

I hope that that doesn't happen. I think it would be most unfortunate. But the way to avoid these kinds of problems is to keep these must-pass bills clear of the kinds of controversy that attract delay. We urged them not to. I think that they're working through on their own schedule. I know I listened to the speeches this morning and the conversations I had -- there are members on both sides who want to finish, but they have some hurdles to get over.

Q At the beginning of this year, you and CBO estimated that on the non-Social Security side you'd have a trillion-dollar surplus over the next 10 years. Now that you're over this budget with all the things pertaining to it, are you still as confident that you're on track for a trillion-dollar surplus?

MR. LEW: I'm confident that we're on track for the surplus that we've predicted, and I think the way the economy has performed and the way we have managed to enforce fiscal discipline, we may be further ahead than we were. We haven't completed our analysis of the numbers yet. This may come as a surprise, but we're a little behind schedule in working on next year's budget. That process begins this afternoon in earnest. The preliminary numbers, obviously, are very encouraging. And I think, yes, we are on track.

Q Jack, you and Obey and Specter and Shalala and Bliley met on organ transplant delays and had an ironclad agreement. Bliley has broken that. What's your response?

MR. LEW: Well, I'm not sure who has broken it. I'll leave that for others to -- I'm not sure that it's in the House that it was broken. But we had an agreement; it was an honorable agreement. It was actually the only issue in these budget negotiations where we brought in a Cabinet representatives, other than the core budget negotiating team, to make the case. It was a technical area. The members were divided not on party lines, but with differing views, and there was an intense, long debate and negotiation. And it was worked out and it was worked out in an honorable way that both sides were comfortable with.

I personally think it is outrageous that there is any change in the policy. I'm of the view that a deal is a deal. And we had a deal. We are determined to continue to pursue the organ policy. We think that lives are on the line. It is important policy that has real consequences for real people. And we're going to do everything we can do to stick to the schedule that we've outlined.

THE PRESS: Thank you.

END 1:50 P.M. EST