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Office of the Press Secretary

For Immediate Release January 26, 2000
                           PRESS BRIEFING BY
                              JOE LOCKHART

                           The Briefing Room

12:10 P.M. EST

Q What's with the bear?

MR. LOCKHART: What's with the bear? Okay, let me tell you about the bear. The bear is here from West Lafayette, Indiana, from Burnett Elementary School. I guess they send it around to famous places, and for some reason it came to me via George Tenet's office at the CIA. So I just wanted to give it a little more viability. (Laughter.)

Q Check it for recording devices.

MR. LOCKHART: It may be coming to your office soon.

Okay, I have no announcements except for the President will begin his State of the Union preparations shortly, will do the interview that I mentioned this morning in the gaggle, and then probably spend the rest of the day working on the speech.

Q Joe, CBO surplus estimates came out yesterday. And their worst case scenario apparently would have $800 billion more in the 10-year surplus forecast than last year -- than recently, anyway. Isn't there enough room now, given that kind of surplus, for the tax cuts magnitude that the Republicans want, or some of the candidates want -- $450 billion-$500 billion?

MR. LOCKHART: Well, there certainly isn't room --

Q -- and what the President wants?

MR. LOCKHART: No. There certainly is not room for -- let me start with this. The CBO put out a number of numbers yesterday; there's only one set of numbers that are realistic, based on the Republicans' own spending plans, based on what they did last year, based on the kind of budget they passed last year. To argue that you can do a baseline assuming some 1997 numbers that they've already inoperative is just not a very fruitful exercise.

I think the numbers argue a couple things. One is that the economy is growing strongly, as a direct result of some of the steps the President took in 1993. I think we'll spend some time talking about that tomorrow night when we look at the State of the Union. I think that the numbers do argue that there's room for tax cuts, tax cuts that are targeted at the middle class, that will help the middle class deal with the real challenges they face in this country, and the President will talk about the tomorrow night.

The numbers don't argue that you can have the kind of explosive out-year tax cuts that some of the candidates have talked about. You look at the numbers that some of the Republican leading candidates have put out and very clearly there won't be enough money to make the kind of investment in Social Security, Medicare that needs to be done, and very clearly it will squeeze out the investments that we need to make in education.

I mean, there's a lot of rhetoric that you'll hear on the campaign trail over the next weeks about hear on the campaign trail, over the next weeks, about their commitment to education. You can't have the kind of risky tax scheme that they've talked about and make the kind of investments that you need to make.

Q So has the White House released its own figures, surplus figures?

MR. LOCKHART: No. The White House -- the projections that the White House will release will be part of the President's budget, which will be released on February 7th. I think what's important is the President, as he stood here yesterday and said, is increased surplus numbers can be used to pay off the debt early, and can be used to have the right kind of tax cuts. And that's what he'll propose.

Q Do you think those numbers, when they're released, will be substantially lower than the numbers released yesterday?

MR. LOCKHART: Well, let me put it this way. I'm not going to get into how they will measure up. There were certainly -- there were some unrealistic numbers put out by CBO yesterday, perhaps for -- I don't know what the reasons are. But there really is only one realistic way to look at their numbers.

I think OMB's numbers will be, as they have been in the past, consistent and conservative -- which has served us very well over the last seven years, because again, these are projections. Once you spend something, if your projections are wrong, you can't get it back. So I think the OMB numbers have been conservative, but if you look at them in contrast to CBO numbers, they've been accurate.

Q Joe, is that to say that a tax cut on the order of magnitude of the one that the President vetoed last August would be just as much of a dead letter under these new projections as it was last summer?

MR. LOCKHART: Certainly. I mean, you look at what they -- the tax cut that Republicans on the Hill are talking about championing this year mirrors the plan put forward by Governor Bush. That is a tax cut that explodes after five years, can't be sustained, and is actually, I think, if you look at the numbers, probably larger than what the Republicans put out last year.

There's a right way, we believe, and a wrong way to do this. The right way is to be fiscally disciplined, take advantage of this historic opportunity that the surpluses provide to make the investments that we need, to extend solvency for Social Security, modernize Medicare, and do middle class tax relief. I mean, the problem with the tax cuts, in addition to the size, is how they're skewed to the best off in this country. I think when they put the tax cut program together, I think Governor Bush may have watched so much television. It looks like, you know, who wants to please a millionaire, not who wants to provide tax cuts to the middle class.

Q Oooh.

MR. LOCKHART: Didn't like that one, Jen. Where are -- (laughter.)

Q You've been saving that one up, Joe.


Q Joe, Speaker Hastert has said that one of the first bills that --

MR. LOCKHART: I'll leave out my final answer line, too, because I can't take the groans. (Laughter.)

Q -- will vote on is the marriage tax cut, which many Democrats support on the Hill. Is that the type of tax cut the President would consider --

MR. LOCKHART: Oh, no, the President has spoken in the past in support of trying to address the marriage penalty. I think the President will have a very sensible and robust approach to providing middle class tax relief, but we'll have to wait until tomorrow night to hear more about it.

Q Will he set an alternative to that?

MR. LOCKHART: I think the President will give a speech -- you'll get a much better sense tomorrow night where he is on middle class tax relief.

Q Joe, is the White House categorically opposed to ever cutting income tax rates?

MR. LOCKHART: I think that we believe that our opportunity here is to target tax relief, particularly those who need it the most -- middle class who in various areas have challenges, whether it be in long-term care, whether it be in putting kids through college. I think that that is -- we believe that that is the best approach right now.

I don't think there is a sort of theological opposition here. We also think, given the strength of the economy and given the opportunity we have to face the challenge of Social Security and Medicare, that this is the best approach. Now, down the road, in future administrations, the conditions and opportunities and challenges may change, and may call for a different prescription. But we think that given where we are, this is the best way to do it.

And I think -- we had a debate about this last year. The Republican Congress, this was the centerpiece of their agenda. You will all remember the boasts about how, when they got home and sold this, we would be brought to our knees here at the White House and things would change, and that's not how it turned out. We felt strongly that our view is right and the public supported it, and that was validated by the debate last year. And I think it would be more useful to move forward and try to find areas of common ground as far as finding the sort of targeted tax relief, the middle class tax relief that both Democrats and Republicans can agree on, rather than spending a lot of time having an ideological debate that is not going to get us anywhere.

Q Some entitlement reformers sort of think that now, with the economy so good and the surplus projection so high, is the time to look at Social Security in a structural sense. Does the President agree, and if not, why not?

MR. LOCKHART: Well, I think -- you know, the President has made very clear over the last two years that we ought to do first things first, and take care of Social Security before we deal with a number of other issues. As far as getting comprehensive, structural reform done, we've been working hard to develop a bipartisan consensus on that, which -- you're not going to get it done without it. We'll continue working on that.

But I think that difficulty aside, it doesn't mean we can't do more to extend solvency. And I think the difference between what the President's talked about in the last year, and some of the approaches the Republicans have taken is, he's actually put something on the table that does extend solvency and that does lock up the interest savings, by paying down the debt, for the purposes of Social Security. We put some legislation up on the Hill last year, and that's what we're going to push this year.

Q Joe, based on all the initiatives that the President's going to talk about tomorrow night, should we expect tomorrow night's address to be the longest speech he's ever given? (Laughter.)

MR. LOCKHART: I'm trying to figure out what I learned from the expectation games in Iowa this week. Mark, it is so long -- and it'll only be measured in hours, rather than minutes. (Laughter.) And if we get above 37 -- I mean, if we're less than two hours, it will be a great speech.

Q -- applause?


Q Joe, the Republicans have actually been talking about advancing three smaller tax packages: one on marriage penalty, one on education, and one on New Markets initiatives. So I don't quite understand what you mean by comparing it to the Bush plan.

MR. LOCKHART: Well, listen, I've heard some talk about smaller. But I also saw the Chairman of the Budget Committee, who came out last week and said he is going to introduce and push the Bush tax plan, which is a $500 billion tax cut over five years, which -- the Republican tax cut last year was, I think, on the magnitude of $800 billion or so over a 10-year period. So it's not clear. It's not clear whether the Republicans are going to pay lip service to paying down the debt, or whether they're seriously committed to that.

But I think the President will have an opportunity tomorrow night to lay out his approach to this, and his proposals. And I think at the end of the day, once the debate is over, we expect to get bipartisan support for it.

Q Joe, isn't it only logical that Republican leadership or whatever, up on Capitol Hill, would support the kind of plan that the party's likely nominee would put forth? And didn't they do something similar, I think, in '96 with Dole?

MR. LOCKHART: They may very well. And that's a choice that they'll have to make. But I think it's a debate we had in '96. It's a debate we had in '98. And it's a debate we had in '99. And I think the American public has made clear that the priority here is making sure that we take this opportunity, and we don't miss this historic opportunity, to pay down the debt, and to become debt-free for the first time since 1835; that we do provide tax relief that we can afford; and thirdly, we continue to make the strategic investments, whether they be in education or health care.

You know, we're back into the early part of the season. We watched it play out last year when we had the equivalent of three-card Monte with the budget -- of just continually moving things around, and the numbers not adding up until the end. And it's certainly our hope that we don't play that game this year, that we can work together, we can work with real numbers, and we can get the budget done on time this year, and get a budget done that invests in America, but is also fiscally responsible.

That's what the President will talk about tomorrow night. That's what his budget will reflect, that he releases February 7th. And we'll just have to see where the Republicans are.

Q Joe, Senator Domenici also said yesterday that it's taken 30 to 40 years to build up this debt, and that paying down 60 percent of the public portion of it in the next decade struck him as a fair approach. What's wrong with that?

MR. LOCKHART: I think the President believes that we have an opportunity here to pay down all of the debt over the next 13 years. These opportunities, as Senator Domenici properly recognized, don't come along that often. And I think it's very easy to squander an opportunity like this, and not have the ability to reach your goal for quite a long time.

So I think the President's view -- and you know, there are certainly those who will side with Senator Domenici and Republicans who argue that you don't need to pay down the debt -- we just believe that the benefits are so manifestly obvious to Americans who will deal with lower interest rates, lower home mortgages, lower car payments, lower credit card rates that we ought to take this opportunity to get this done. And I think -- you know, as Secretary Summers has talked about and the President has talked about, you find that the more you do to enhance this virtuous cycle the more benefits you get, the more they compound. We're seeing that now.

We're seeing in CBO numbers, I think you'll see in OMB numbers that the budget surpluses are larger than we thought because the economy is strong; we have been able to pay down debt, lowering interest rates. And this is all something that will continue in this virtuous cycle, as far as helping to continue this unprecedented expansion continue.

Q Economically speaking, though, isn't there diminishing returns with paying down the debt, that you lessen the crowding out effect that everyone had talked about, as you buy it down, and at some point, whether it's $200 billion left it's not as big a problem as it was when --

MR. LOCKHART: You can get economists to talk about diminishing returns. I think what's important here is there is value to paying down the debt.

Q Economic value?

MR. LOCKHART: Yes, there is clear economic value to paying down the debt. And I think experience here in Washington indicates that you need to set a goal, you need to focus attention on a goal of eliminating it, to keep people focused on doing it, to keep people from -- to make it plausible, to take the hard steps that we've taken over the last seven years. And I think there is both economic benefits to paying off the debt and I think there is also some benefits in getting it done and getting all the rewards that are available once you're in that kind of economic situation, and setting a goal and having lawmakers focus on that and focus on the job.

Q Joe, the President said that he expects a lot of bipartisan support on a number of his initiatives in the next year. Has he made an effort to contact any of the Republican leadership since they came back into town, to kind of kick off that --

MR. LOCKHART: I don't think he's spoken -- generally, I think people are coming in sporadically to town and the real kick off of the session will start on the State of the Union. I expect the President will meet in short order with the leadership on both sides of the aisle, because he is quite sincere in his belief that this can be a year where we get things done.

And, obviously, the only way you can get things done when the Republicans control both Houses of Congress is to work with them.

Q Joe, when the President made the announcement that he wants to pay down the debt by, I guess, 2013, instead of 2015, doesn't that involve sacrifices that take place so far after he leaves office that it's sort of meaningless to have a President who leaves office in a year talk about what's going to be done in 12 years?

MR. LOCKHART: No. I mean, budgeting is done, it's not done month to month, it's done over a period of years. And as you've seen, you could have taken that approach in 1993 or 1994 and said, well, because budgeting goes out over time, we'll just worry about this year. I think what the last seven years teaches us is that if you have a sensible budget that goes out over time, you can pay down debt, we can get rid of deficits. There was a time when people didn't think you could get that done in this country. I mean, it was unimaginable that the $400 billion deficits that were projected for now wouldn't keep growing and growing, and all we could was stem the increase in them.

So I think the President has shown that we can turn around our yearly budgets, get out of deficits and into surpluses. And if we set the proper course, we can pay down the debt completely.

Q Thank you.

MR. LOCKHART: Terry's bored. (Laughter.)

END 12:28 P.M. EST