This is historical material, "frozen in time." The web site is no longer updated and links to external web sites and some internal pages will not work.

THE WHITE HOUSE

                     Office of the Press Secretary
                     (State College, Pennsylvania)
________________________________________________________________________
For Immediate Release                                      July 10, 2000

                        REMARKS BY THE PRESIDENT
            TO NATIONAL GOVERNORS ASSOCIATION ANNUAL MEETING

                      Penn State Conference Center
                      State College, Pennsylvania

2:20 P.M. EDT

THE PRESIDENT: Thank you very much, Governor Leavitt, Governor Glendening. And Governor Ridge, thank you for welcoming me back to Pennsylvania and to Penn State. The Governor was kind enough to come to the airport, and we were reminiscing about the opportunity I once had to come to Penn State to give the commencement address. And we talked about the Creamery, and then I learned all the governors had been given access to the ice cream at Penn State. That was the one thing I was going to give you today. (Laughter.)

Let me say to all of you, the most important thing I wanted to do today is just come here and say thank you for the opportunities that we've had to work together over the last eight years. Some of you -- just a few now -- were governors when I served. Governor Thompson outlasted me. Governor Junklow made a comeback; Governor Hunt made a comeback. But it's been a wonderful experience for me. I look forward to your coming to the White House every year. And even though we're going to start the very important Middle East peace talks tomorrow, I didn't want to miss this opportunity to come to say thanks.

I really treasure the times that I spent. I remember the first time you came to the White House in '93, I'd only been President a couple of weeks, and they were very busy times. And my staff was all obsessed with getting our budget to Congress and all that, and they didn't really understand why I wanted to spend four or five hours with the governors. And I told Governor Kempthorne when he left the Senate that he was going to be one happy camper after the next election -- and I was right, wasn't I? (Laughter.) So I thank you.

If you go back and look at the transcripts and the agenda of the 1993 NGA meeting, and you compare what you discussed then to what we're talking about today, it is obvious that our country has come a long way in the last seven and a half years. Back then, we were all focused, as we had been in a couple of previous years when I was a governor, on big and immediate crises -- the enormous deficits, the high unemployment, the soaring crime, the rising welfare rolls, the cost of health care and the growing number of uninsured Americans.

At the time you came to the White House in '93, I pledged to make a new partnership between the state and the federal governments, to put the American people first and to turn our country around. And we have done a lot of things together that you should be very proud of: welfare rolls the lowest in over 30 years, cut in half; the crime rate at a 30-year low; the Children's Health Insurance Program, the largest expansion of health insurance for children since the enactment of Medicaid; we've slowed the crippling costs of Medicare and Medicaid and extended the life of Medicare by a quarter century; we've expanded trade, with over 300 trade agreements. And the governors have, without exception, always been there in a bipartisan way, and for that I am profoundly grateful.

And let me thank you, especially, for the work that many of you did on permanent normal trading relations with China. Most of our constituents who call us about that -- in favor, anyway -- do so because they understand the economics of it. But I have to tell you, after the last seven and a half years, I have a different perspective. We fought three wars in Asia in the last 50 years. And I believe if we adopt this trade agreement it will dramatically reduce the chances that our children will have to fight any wars in Asia in the 21st century. So anything you can do to help me get it up in the Senate in the next few days, I'd be very grateful for, as well.

We've worked together on the empowerment zones and other community development efforts. And I'd like to thank the Delta governors here, which start with Governor Ryan in Illinois and go south, for the help that you have given me for our Delta initiative. The size of government is the smallest it's been in 40 years. We've eliminated over 16,000 pages of regulations. The Department of Education, as Secretary-Governor Riley never tires of telling me, alone has reduced regulations by over 60 percent.

And as all of you know, we have worked to aggressively grant waivers to states to continue to be laboratories of democracy. And I'll say more about that in a few moments.

But finally -- and I owe the governors a lot of thanks for your support on this -- across all of our partisan differences, you have never stopped supporting as a body bringing back common-sense notions of fiscal discipline to Washington. By cutting the deficit, expanding trade, and investing in our people, we've got the longest economic expansion in history.

People ask me all the time -- I brought the Chairman of the Federal Reserve, Alan Greenspan, who is here today -- there was an interesting article in one of the major newspapers referring to us as the "Odd Couple" -- which I took, Mr. Chairman, as a compliment. (Laughter.) I think it was, what's this sophisticated financial genius doing working this deal with this, as someone used to refer to me, the governor of a small southern state. I was so naive at the time, I thought it was a compliment. (Laughter.) And I still do.

But, anyway, we've work together. And people ask me all the time, well, tell me about Bob Rubin, or Lloyd Bentsen, or Gene Sperling, or your economic advisors, what new, stunning insight did you bring to Washington. And I always have a one-word answer -- arithmetic. I think we brought arithmetic back. And I hope that, again across party lines in the years ahead, you will keep arithmetic as an element in our national policy-making.

We have an enviable, but unfamiliar task now -- we've got to decide as a people, what should we do with the largest surplus in history, and a very large projected surplus. And if I could just make one point here today that to me is more important than anything else I'll say down the road in these remarks, I believe dealing with good fortune is just as stern a test of a country's judgment, values and character, as dealing with adversity.

I say this over and over again, but I'll repeat it one more time. There's not a person in this room over 30 years of age that cannot remember at least one time in your life when you made a personal or a business mistake, not because things were going so badly, but because things were going so well you felt there was no penalty to the failure to concentrate. It is just human nature.

So this is a big, big moment for our country. You know what I think we ought to do. I think we ought to do what I said in the State of the Union. I think we ought to take on the big challenges and big opportunities in a responsible way; to keep the economy going and spread its benefits; to deal with the aging of America; to deal with the fact that child poverty is twice what it is among the elderly people; all of our kids still aren't in the best schools; prove that we can beat these big environmental challenges and grow the economy; to make America the safest big country in the world; to help people balance work and family better; to meet our national security and foreign policy challenges; to put a more human face on the global economy; to keep bringing people into the circle of our national community as we grow more diverse.

But this election season is very important for making that decision. I, frankly, think that Americans should be very upbeat about this, because it gives us a chance to have a very positive political season. And I think maybe over the last seven years we've finally purged some of the poison out of national politics. And I would really like to just see a debate where people get up and say, okay, it's a big election, we have honest differences over everything from education and the environment and crime and Internet privacy rights and how to build a national community and the future of the courts -- everything -- and let's just talk about it and let the voters decide.

And let's just assume everybody running is honorable and just say what the differences are and let the people decide. That's what I hope will happen in this election. Because in our lifetime we may never get another chance like this. We have never had a chance like this in my lifetime, not ever, not once. The last time we had an economy this prosperous was in the 1960s, that was the last longest economic expansion in history. And when I graduated from high school in 1964, I had the feeling that I think a lot of Americans think today -- I thought everything was on automatic, nobody could mess it up. I thought all the civil rights problems of the country would be solved in the courts and the Congress. I thought everything would be hunky-dory.

Two years later, we had riots in the streets; four years later we had Dr. King and Senator Kennedy killed, and we had a President who couldn't seek reelection because the country was so divided. And a few months later, the last longest economic expansion in American history was history.

So if I could just say anything, I hope when you go home you'll ask the American people in your own states to be really good citizens this year, and concentrate. And just think and decide -- because we may never have this chance again in our lifetime. And it is profoundly important.

I also believe that it's important what we do in the next six months. And I know all the press coverage is always on the fights that we have, but let me tell you, we actually agree on things every now and then in Washington. And there are a lot of things we could do in the next six months that I think are pretty important. Let me just review.

Already this year, the Congress lifted the earnings limit on Social Security. I think that's really important. If you live to be 65 today, you've got a life expectancy of 82. And if things keep going the way they are and there's only two people working for every one person drawing Social Security, we ought to want some older people in the work force. I hope to be one of them. (Laughter.) And it passed almost unanimously.

I signed a bill the other day, the Electronic Signatures bill, necessitated by Article I of the United States Constitution, to make sure that there could be a contract using e-commerce. I see where some people think there's some problems with it; if there are, we'll fix them up. But we don't want to slow down e-commerce, we want to speed it up.

We had the China bill passing in the House, and in the House and the Senate a remarkable bill to expand our relations -- trade relations with Africa and our neighbors in the Caribbean. So there's a chance we can get a lot done.

And one of the things that I would like to just say today -- and again, because of the season we're in, I guess my opinion can't avoid having some sort of partisan edge -- but I'd just like to tell you where things are and where I hope we can go with them in the next few months.

I think our single most important obligation now, since most Americans make good things happen in their own lives apart from government, is to try to keep this economic expansion going and to try to spread its benefits to people in places that have been left behind.

Now, let me deal with the latter first. The spreading its benefits, for me, means passing the New Markets initiative that I presented to the Congress, which the Speaker of the House, we've worked together on it and we now have a uniform, unified bill where we took the best ideas of the Republicans, the best ideas of the Democrats and we're going to essentially try to give people the same incentives to invest in poor areas in the Mississippi Delta or the Indian reservations or the inner-cities that we now give them to invest in Latin America, Asia and Africa, along with a little extra help. And we've worked very hard on this. It was an astonishing announcement at the White House the other day, with the broadest ideological spectrum of people I've ever seen in the Roosevelt Room at the same time. And I hope you'll help us pass that.

In a larger sense, I think we've got to keep the economy going by hewing to the same principles of fiscal discipline that got us where we are. That means I think whatever combination of spending and tax cuts any candidate for any office proposes, there ought to be enough left over to get us out of debt over the next dozen years, to pay down the public debt.

Why? Because it will keep interest rates lower. And let me just give you one little tax cut factoid. If keeping interest rates a percent lower than they otherwise would be for a decade reduces mortgage payments alone in the United States by $250 billion -- keeping interest rates lower than they otherwise would be for a decade by just 1 percent amounts to a $250 billion tax cut on mortgage payments alone. That doesn't count car loans, college loans, business loans, which are obviously very important because you want the cost of capital for borrowing for business expansion to be as low as possible for obvious economic reasons.

So I think that's very important. That's one of the reasons I supported the Vice President when he said we ought to lock away the Medicare taxes the way we lock away the Social Security taxes. A lot of the surplus has, in effect, been overstated and a lot of our deficits in past years were understated because the taxes from Social Security and Medicare were producing more money than we were spending every year -- as all of you know, and we used to talk about around here all the time.

So now we said, okay, we're not going to spend the Social Security tax money, we're going to use it when it comes in to pay the debt down. And that's what I think we ought to do with Medicare. Now, in addition to that, because I think we have a big aging crisis, I believe that we ought to take the interest savings from debt reduction by doing that -- something we didn't do before -- and put it into Social Security and Medicare, and if you did that you could take them on out beyond the life of the baby boom generation.

And, by the way, let's get to the numbers, that's about 20 percent of the projected surplus. It's about $400 billion of the $1.9 trillion projected on-budget surplus. So it's a great hedge in case the money doesn't show up.

Now, once we agree to do that, I think we've got a great opportunity to decide as a nation how to spend the rest of it -- whether it should be on tax cuts or investment, or what the mix should be. The budget I presented for this year has significant new investments in education, health care, research and development and defense and foreign policy and the environment, especially meeting the challenge of climate change. But it also provides targeted tax relief for long-term care, child care, college tuition, retirement savings and easing the marriage penalty.

But the main thing is, it leaves $500 billion in a fund for America's future that would be completely unencumbered for the next President and the next Congress. Because I think it would not be responsible for me to propose how to spend all that money -- if anybody cares what my opinion is, it'll be worth that and a quarter will get you half a soda pop, after next year. But I will be glad to give it, but I don't think it would be responsible to propose it. So I've decided to just leave it there.

But I'm very concerned about the way we're moving in Congress and I just want to point out, the congressional majority -- with some support from members of my party, as well -- has taken a sort of an incremental approach to this, starting with tax cuts. Now, none of the tax cuts proposed individually would bust the budget. But if you add them all up and you combine that with the proposals that are out there for next year, that are, in effect, going to be commitments, since they're part of the election contract, it would exhaust every dime of the projected surplus and then some. And I believe that would lead to a rise in interest rates and a slow-down in the economy and, ultimately, to fewer revenues over the long run and less investment for things like adding a prescription drug benefit to Medicare.

I'll give you an example. This week the Senate is going to vote on repealing the estate tax. And there is some speculation that it might pass by a veto-proof majority. Now, one reason is the full benefit of the estate tax relief we provided in 1997 has not been -- it was phased-in over a period of years, so that hadn't been felt by the taxpayers. We provided some estate tax relief in 1997, I really didn't think it was enough, I think there should be more. But I don't believe we should completely repeal it. It cost $100 billion in the first 10 years, in today's terms, and $750 billion in the second 10 years; 100 percent of the benefits go to 2 percent of the American families; and only a small fraction of those are those that really need the help -- the farmers, the family farmers and the small business people. You could take them out altogether for much less money and do what we say we want to do.

And I think it's important to point out -- one man I know who is a billionaire called me the other day and said, why are you doing this for me. I said, I'm not. One-tenth of 1 percent of the American people would get half of the benefits of the bill. Now, if you're philosophically opposed to the estate tax, then it's just a matter of principle. But if it's a matter of economics and you're sympathetic with small businesses and family farmers, there is a way to get this done for much less money and, by the way, give more relief to others. I mean, you could argue that the rates are too high, because they're higher than the maximum income tax rates now, something that didn't used to be the case. There are lots of options here. But repealing it costs a lot of money.

So what I asked the Congress to do -- and they also want to pass a marriage penalty relief bill. But I think for us to repeal the estate tax before we raise the minimum wage or give a tax relief to low income working families with lots of kids or give a tax deduction for college tuition or increase the child care credit or adopt a long-term care tax credit is a huge mistake. First of all, I think it reflects a wrong set of priorities, but it puts us on a -- then people will say, well, we did that; now we've got to do all this, and pretty soon, before you know it, you've spent more money than you meant to and we're back in the soup again.

So what we need to do is get everybody together and figure out who wants what and what we can afford to do, and do it in a way that allows us to keep the fiscal discipline, to stay with arithmetic.

Now, I asked Congress to compromise with me. I basically said, let's do a Medicare prescription drug benefit for $250 billion, and a tax reduction package focused on the marriage penalty relief, which is very important to the Republican majority, for the same amount of money. Let's set aside the Medicare trust fund money, and let's just save the rest and adopt a good budget this year.

Now, this week Congress is also going to vote on the marriage penalty. I hope that they will consider this, because we really have a lot to gain here by doing this in a balanced way. The surpluses are there because of fiscal discipline. And let me just say, one big thing that I want to thank you for, because a lot of you had to bear the burden of it, was the reduction in the growth of Medicare and Medicaid. Since we made some changes in that -- and it was growing at three times the rate of inflation when I took office -- we've reduced projected federal health expenditures by over half a trillion dollars, and extend Medicare solvency through 2025.

This is something very few people know. About 30 percent of the improved budget outlook included in the Midsession Review -- that is, about 30 percent of this extra trillion dollars in surplus that is projected -- comes from lower spending in Medicare and Medicaid, thanks to your efforts and ours to reform the programs and reduce fraud and waste.

So I think spending these dollars more efficiently is good for the economy. But I also want to say, investing more can be good, too, if it's done wisely. I recommended that we put $40 billion back into these programs, because we actually cut them more than we meant to. Back when we did the Balanced Budget Act in '97, we agreed that this is what we wanted to save, and we got a list of programs from the Congressional Budget Office necessary to save it, and it actually -- they saved a lot more money than we thought. And it wound up putting undue burdens on the providers. So I think we've got to give a little of this money back over the next 10 years, and I hope that you will support that.

But we also know that there's some other needs there. Children without health insurance often don't get glasses, or treatments for ear infections. That limits their ability to learn. We know that adults without health insurance are 50-70 percent more likely to be hospitalized for treatable conditions, running the cost of health care up. We know that seniors who can't afford prescription drugs are more likely to end up in nursing homes, running their quality of life down and their health care costs up.

And when that happens, it means the states pay Medicaid nursing home bills, because Medicare doesn't pay the prescription drug bill in the first place. Now, that's why I proposed that we let -- we have expansions of the health care program. And that's why I set aside over $250 billion over 10 years for this voluntary prescription drug benefit.

If we were starting the Medicare program today, we'd never set it up, none of you would, without a drug benefit. Thirty-five years ago, when we started Medicare, medicine was about doctors and hospitals. Doctors were making house calls still, and hospitals weren't very expensive, and the whole thing was different than it is today. And the pharmaceutical revolutions that we've seen in our lifetime didn't exist.

And let me say -- let me just tie this again to the aging of America. This Medicare prescription drug issue is a big issue today. It will be twice the issue in 10 years. The sequencing of the human genome is the beginning of a biomedical revolution the extent of which we cannot imagine. I believe that those of you who have children who are like my child, in college and about to go out and start their lives, I think it is almost certain that their children -- the children of people in college today -- will be born with a life expectancy of 90 years. And keep in mind, that will include those who die of violence, accident and things of that kind.

And we're going to have to just think about getting older in a whole different way. And we'll never be able to have the kind of society we want unless we can have shared and equal benefits and access to the biomedical revolution manifested in the development of these new drugs.

Now, what I recommended was a voluntary program; the prices would be set by competition, not by government price controls. But I think it is the only thing that will work if, like me, you believe everybody who needs it ought to have access to it.

The Congress passed a bill that would set up a private insurance plan and basically covered the cost of people up to 150 percent of the poverty line, but that's only $12,600 for an individual, and $16,500 for a couple. And it leaves out over half the people who need drugs today who can't afford them.

And, in addition to that, the health insurance companies -- and all of you know they haven't always been my biggest advocates; I mean, we've fought about everything -- but the health insurance companies say the thing won't fly, that they cannot put together insurance policies that will work that will be affordable. And there was an article in one of the newspapers within the last 48 hours that said that one of our states has a program like the one that the House passed, and not a single insurance company has offered a policy under it, because they don't want to participate in something that's not real.

So I want to make these two points. I hope I can make an agreement, an honorable agreement, an honorable compromise -- like the Balanced Budget Act of '97, like the Welfare Reform Act in '96 -- on tax relief and the Medicare drug program. But I think we ought to leave a huge chunk of this money to the next President and the next Congress. And I think we ought to commit ourselves to saving another big chunk of it, no matter what.

For us to commit all the projected income of the country over the next 10 years is a mistake. If I asked you, every one of you in this room, what's your projected income over the next 10 years, and how comfortable are you that you're going to have that money, and you just think about it right now and settle on something you've got 80 percent confidence in -- and I asked you to come up here right now and sign a contract committing every penny of your projected income for the next 10 years, would you do it?

Now, this ought not to be a partisan issue. We shouldn't do this. And everybody who -- people in my party, everybody that proposes a spending program, everybody that proposes a tax cut program, whatever they're proposing, it all ought to add up and there ought to be a good chunk of safety net left in there, because that money may or may not be there.

And the number one thing we've got to do is keep this engine going -- because most Americans do most of what they do without direct contact with the government, and we want them to be able to succeed.

So I've got a lot of hope that we can still get something good done in this last session of Congress. I have a lot of hope that we can pass the drug program. I think we ought to increase the health care coverage under the Children's Health Insurance Program to cover the parents of the CHIP kid. I think that we ought to make sure, however, that we don't see a revival of the idea of shifting the cost of uncompensated care to the states -- and I think that's what a prescription drug grant would do.

So you all have to weigh in on this. You can do what you think, but you just think about what we could do for health care if we had a Medicare prescription drug program, if the parents of CHIP kids could buy into CHIP. And if people between the ages of 55 and 65, with a modest tax credit, could buy into Medicare, we could cover the 25 percent of the uninsured people in America, the ones who need it most, and we could increase the length and quality of life of our seniors. So I hope we can do that.

Now, let me just say a few words about a couple of specific issues of concern to you. I want to thank you for the work you've done with the CHIP program. We've now got over 2 million kids enrolled. I'm especially proud of the states that have found innovative ways to overcome the problems of signing kids up. And I always hate to mention some, for failure of not mentioning others, but I would like to acknowledge, for example, that Ohio has changed its system to make it easier for CHIP parents to mail in forms that are simpler. Indiana has actually gone out to schools and child care centers and had a remarkable amount of success in signing people up. Virtually every state has done something innovative.

But the money is there to sign the rest of the kids up. There's another 2 million or 3 million kids we could get signed up. Some people in Congress think that because it's been out there and not spent, it should be taken away. This is another version of what happened when there was a proposal to take back billions of TANF dollars from welfare reform. Now, the money is the direct result of the success we've had in the TANF case of moving people from welfare to work. I think it ought to be left with the states.

I think states should use it to finish the job of welfare reform, making sure families don't lose Medicaid when they leave welfare for work; making sure the dollars help families still on the rolls move into the work force. But welfare reform's success, it seems to me, shouldn't be turned against the states. It should be used to make sure that people that are still falling through the cracks have a chance to make it, as well.

And I want to thank those of you that are responding to this. I mention, in particular, Washington State did something that I read about that impressed me. They found that they had cut a lot of families off Medicaid erroneously when they returned to work, and they actually chased them all down to sign them up again, individually. And that's the sort of thing that I think the Congress should be reminded of, people in either party who think that this money should be taken back.

So I hope we can do more with CHIP and do more with welfare reform. And I know one of the things you've been waiting for us to do -- and Secretary Shalala has already mentioned this, I think -- is to send out the guidance on applying for CHIP waivers. A lot of you have innovative ideas to use this Children's Health Insurance Program to cover more people. And that guidance will come out before the end of the month, and I just want to urge you to make the most of it.

The one area in terms of social indicators where our country cannot claim to be better off today than it was eight years ago -- and the only one, as far as I know -- is that a higher percentage of our people are without health insurance. And the only way I can figure out to do anything about it is to make the CHIP program work better, ultimately cover the parents of the CHIP kids, and do something about the people who are not old enough for Medicare, but have lost their health insurance at work.

We need more waivers, but we also will have to provide more resources. The governors have advocated building on CHIP, a lot of you have. And I have strongly supported it. My 2001 budget sets aside $110 billion over the next 10 years for health insurance for those parents and their kids and others. And as I said, if we do this, we can cover another quarter of the uninsured people in America.

Now, this doesn't have anything to do with the surplus. This is in the regular budget. This is what I proposed in the beginning, so I'm not double-counting any of this money. And, again, it's something that I hope we can do in a bipartisan way. I hope we can pass a good education budget for you, in a bipartisan way.

But I'd like to begin -- end where I began. I thank you for the last eight years. I thank you for the role you played in turning this country around. I ask you to help ensure an election season which is positive, open and vigorous about the real and honest differences, but devoid of the poison that has too often clouded the judgment of everybody involved in the public process. I think we can have that kind of an election. And it would be good for America.

I ask you to help me make the most of this next six months -- make the progress we can make, but do nothing -- nothing -- that would undermine the fiscal discipline that got us to this remarkable dance. And if we can do that, I think that we will be unbelievably well-positioned. I think the greatest days of this country are still ahead; I think all the stuff that's happened in the last eight years is just a prelude. I think that what will happen in information technology, what will happen positively in globalization -- I think we'll see a digital bridge instead of a digital divide -- I think that all these things will happen if we don't forget our fundamental responsibilities.

And I'm looking forward to observing and to being a responsible citizen after the next six months. And, meanwhile, I will do everything I can to get everything I can done in the time we have remaining.

The only other thing I would say to all of you is, we have some congressmen in both parties that are afraid if we don't have everything left to fight about, we won't have anything left to fight about -- and that's not true. Now, we could pass everything I proposed today and still have plenty left to fight about in the election.

So I ask everybody to take a deep breath, be grateful for the prosperity we have, understand the enormous responsibility it puts on us, and let's do what we can to make the most of it.

Thank you very much. (Applause.)

END 2:55 P.M. EDT