    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [August 2, 1993]
    [Pages 1297-1301]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Interview With Newspaper Editors
    August 2, 1993

        The President. Hello?

    Economic Program

        Q. Mr. President, I want to give you the first question and to point
    out that the attention you've given our Senator Herb Kohl in the last
    couple of days has raised his level of notoriety to a point that he
    hasn't known since he was elected. Now, I know you wouldn't trade a
    vote, but is there anything that you and Senator Kohl mutually want in
    terms of legislation or other benefits for Wisconsin that you have an
    interest in?
        The President. The main thing that Senator Kohl was concerned
    about--he was interested in two things, to be fair, and there was--in
    the national interest. One was to minimize the burden on middle class
    taxpayers. And when he looked at the whole package and saw that working
    families with incomes under $30,000

    [[Page 1298]]

    were held harmless and that working families with incomes of $50,000 and
    $60,000 were looking at a $33-a-year burden with the spending cuts, I
    think that really made a big difference to him.
        The other thing that he was interested in that I think is certainly
    as significant over the long run is he wanted a program that had some
    real economic growth incentives, that had some business help in it. And
    this program does a lot for small businesses. Over 90 percent of the
    small businesses in the country are eligible for a tax reduction if they
    reinvest more money in their businesses. It does more for research and
    development. It does more for revitalizing homebuilding and real estate.
    It does more across a whole range of issues. For the heavy industry in
    Wisconsin, under this plan, there will be more incentives to invest in
    new plant and equipment in Wisconsin to be competitive there as opposed
    to going overseas. So all those things were important.
        And then the third issue that he raised, which I certainly agree
    with him on, is that we need to bring this deficit down to zero. And in
    order to do that, we're going to have to cut more. But to do that, we
    have to reform the health care system. So the next issue is how to bring
    down health care costs so we can get this budget deficit down to zero
    and not just take $500 billion off of it.
        Q. Have you convinced him, Mr. President, that these changes are
    enough to get his vote on this issue?
        The President. Well, I hope so. I've worked hard on that. That's
    going to be up to him, not me, and I don't think I should speak for him.
    But let me say this: I think he has really done a good job here, and he
    has been very important in bringing a business, pro-jobs perspective to
    the whole debate. So we'll just see. But we've got a $495, $496, $497--
    something in that range--billion dollar deficit reduction package. We're
    now going to have more cuts than tax increases in the package. The top
    1.2 percent of the American people, of people with incomes over $200,000
    will pay more than 75 percent of the burden now. And there are
    quantifiable spending cuts now in excess of $250 billion across the
    whole range of Federal programs. So it is a very important first step
    here.
        Q. Mr. President, you haven't had quite as good a success with our
    Senator Boren, who, I think, like many people in Oklahoma are concerned
    that the spending cuts to come later--when we went through that in 1990,
    and they never came. Why should things be different this time?
        The President. Well, for one thing I'm going to have a trust fund
    and all the money will have to be put into the deficit reduction
    package, both the spending cuts and the tax increases. What actually
    happened in 1990, Jim, to be completely accurate about it, is that the
    Congress adopted a plan based on the previous administration's rosy
    revenue estimates. And no one really thought the revenues would grow
    that much; so they didn't. And then spending increased because the
    recession went on and more people were entitled to Medicare and
    Medicaid. And between those two things, they were in deep trouble.
        Now, let me just address the major objections Senator Boren has,
    because I think what he says is right, but it's not a good reason to
    vote against this program. What he says is that in order to take the
    deficit from where we're taking it down to zero, you have to do
    something about the entitlement programs, especially about Medicare and
    Medicaid. Now, that is true. But the problem is if you don't reform the
    health care system, that is, if you don't fundamentally restructure the
    system of the way health care is insured against and the way the--
    cutting out a lot of the paperwork and a lot of the things that are more
    expensive in America than anywhere else that have nothing to do with
    health care, and you cut the medical expenses of the Federal Government,
    all in the world you're going to do is have a hidden tax on the private
    sector because the providers will do what they always do. They'll pass
    their costs on to people that have insurance. So that, for example, the
    Daily Oklahoman would have its medical premiums go up more than
    otherwise would be the case because the Government's not paying the full
    cost of its health care.
        So I don't disagree that we have to do something about health care
    costs and entitlements. But the time to do that is in the context of a
    health care reform debate, which we're going to start as soon as we can
    get this budget out of the way. If we don't adopt the budget, we'll
    never get there. Everybody who looks at it can see that this budget's a
    lot better deal than the one in 1990. The numbers are more realistic.
    The growth package is realistic. We've got new business capital gains
    tax in there and all

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    kinds of other incentives for small businesses to grow. Over 90 percent
    of the small businesses can get a tax reduction under this plan because
    of it. This is going to create some jobs, too. So it's a better package.
        But you can't solve all the problems of the world in this bill.
    That's my quarrel and dispute with Senator Boren. He's right, you've got
    to get the entitlements if you want to go to zero, but we're going to
    have to do it in two steps, not one.
        Q. Mr. President, a lot of people are concerned with, out here, the
    fact that the spending reductions, the major ones, seem to come so late
    in the plan, and the tax increases come so early. Wouldn't it be better
    to go back in and make another slash, even if this means delaying the
    budget a little bit?
        The President. Here's the problem with it: First of all, there are
    going to be more spending reductions all the way along. The House of
    Representatives has already approved $10 billion in spending reductions
    over and above what's in this budget, but working with me. I've
    encouraged them. The Vice President is going to have a reinventing
    Government report out sometime next month, which will provide a lot more
    savings. So we're just getting started on the spending reductions. And
    then as I said, we'll be able to project a decade of spending controls
    in the health care area if we do health care reform.
        The problem is that no matter what you do with that, the budget we
    have now and the budget we're going to have next year--we're already
    preparing to cut more off next year right now. But that is not an excuse
    not to act now. Still the big reductions in spending are those that
    aggregate up over time. That is, if I cut $10 billion this year and $10
    billion next year, then that's $20 billion over this year's figure and
    then $30 billion and $40 billion. You see what I mean? So the spending
    cuts are always going to look bigger in the out-years because they
    compound one another.

    Small Business

        Q. Mr. President, we're relaying some of our readers' questions. One
    of them was, how can the job market grow when small businesses are
    afraid new taxes and the health plan will put them out of business?
        The President. Well, first of all, new taxes and the health plan
    won't put them out of business. We've tried to send a clear signal to
    the small business community that there won't be a tax problem here. But
    if they have to have a premium to cover their own employees, we will
    limit how much of their payroll it can be, and it will be phased in over
    a period of years.
        But let me flip it over to you on the other side. Seventy percent of
    the small businesses in America provide some health care coverage for
    their employees, and almost all of them pay much more than they should
    because we're the only country in the world that forces employers who
    cover their employees to subsidize employers who don't, and that's what
    happens. Everybody in this country gets health care, but if you don't
    have health insurance and you can't pay for it, you get it too late when
    it's too expensive. You show up at the hospital; you get cared for, and
    then the providers, the doctors and the hospitals, in effect, raise
    their costs to everybody else. So you could argue that the small
    business community as a whole in this country is more hurt by the system
    we have than by the one we're moving to.
        Also, let me make one other point. We spend about 10 cents on the
    dollar more than any other country in the administrative costs of our
    health care system because we have 1,500 separate health insurance
    companies writing thousands of different policies, all with different
    rules and regulations, so that the cost of compliance is staggering, and
    then the Government aggravates it.
        So I think the small business community will wind up ahead on this.
    But we've tried to send some clear signals that we're not going to pop
    them with a big payroll tax, and I do think employers who don't provide
    anything for their employees should bear some responsibility through the
    private insurance system. But it ought to be limited and phased in so
    that nobody goes broke doing it.

    Economic Program

        Q. Mr. President, on Friday, last Friday we had a conversation with
    Roger Altman about your budget plan, and one of the questions we asked
    him was what the administration would have done differently to sell this
    plan. And he was very frank about it. He said, ``We would have started a
    lot earlier.'' And I'm curious in terms of your strategy why you didn't
    really start giving everybody the hard sell a lot earlier.
        The President. You mean not in the Congress

    [[Page 1300]]

    but in the country?
        Q. Yes, talking to the people.
        The President. Well, actually we did a lot of that, but we didn't
    have our war room set up, and we were, frankly, just overwhelmed by the
    day-to-day news coverage of Republicans carping about taxes and unable
    to kind of break through about what the facts of the program were.
        I worked hard--for 2 months after I made my State of the Union
    Address I went out into the country once a week. I did my best to talk
    about the program. But we didn't have the kind of organized disciplined
    effort we've had for the last few weeks in reaching out to local
    newspapers and television and radio stations and bringing in opinion
    leaders and doing all these things we're doing now. And I think we did
    lose control of the debate. Also, to be fair to them, to Roger Altman
    and the others, an issue like this tends to go through cycles. I told
    the people about it on February 17th, and they liked it. Then the sort
    of negative rhetoric took over. Now we're kind of coming back to
    reality, and all the surveys show we're bringing it back our way now.

    Interest Rates

        Q. Mr. President, Alan Greenspan has been giving some subliminal
    signals about raising interest rates. Wouldn't that sort of derail your
    plan for reducing the deficit if the interest rates went up? And are you
    worried about that?
        The President. Yes, I am. I don't think you should raise interest
    rates until there's real economic growth that brings on real inflation.
    I mean, there's no real inflation in this economy, and we can have
    growth without inflation. And I think we may be reading too much into
    his remarks.
        Q. Have you talked to him directly about what he did mean since he
    made those remarks?
        The President. No, but I talk to him fairly often, and I'm scheduled
    to have another session with him pretty soon. I know him pretty well,
    and my read on what he said was if inflation warranted it, he might
    raise interest rates. But if you think about it, what we're trying to do
    in bringing the deficit down is to justify keeping the interest rates
    down even when there's economic growth because the Federal Government
    will be taking less capital away from the markets, and therefore, there
    won't be as much competition for it, and we ought to be able to keep
    lower interest rates. That's our theory. He has constantly and
    consistently supported the deficit reduction efforts of this
    administration in very explicit terms. So I would be surprised to see
    him raise interest rates when we're doing something to support the
    reverse. If we were having 4 or 5 percent growth and inflation was
    getting out of hand, I could understand it. But there's no grounds for
    it now.

    Economic Program

        Q. Mr. President, obviously, in this part of the country it would
    have been more popular to cut spending first, raise revenue later. You
    used the early year forecast of the deficit to go back on your pledge
    for a middle class tax cut. Since, there have been other estimates, why
    haven't you gone back to a cut spending first program?
        The President. Well, first of all, we are cutting spending. We are
    cutting spending. This idea that we're raising taxes--taxes come in
    constant amounts, whether it's a fuel tax or an income tax.
        This is a dodge. David Stockman, who pioneered Reagan's program in
    1981, has now admitted in repeated interviews that they cut taxes twice
    as much as they meant to because they got into a bidding war with
    Congress, that there is no way to restore any kind of fairness to the
    Tax Code or reduce the deficit to zero unless there is a revenue
    component. So if I were to say, ``Okay, we'll put these spending cuts in
    for a couple of years, and then we'll raise taxes,'' all we would do by
    doing that is basically have a bigger deficit in the first years because
    we'd have the spending cuts but not the taxes, and we would have higher
    interest rates, and we'd have slower economic recovery.
        Let me just say, in the year that I'm in now--which I'm not even
    responsible for this budget until October the 1st--our deficit is going
    to be about $25 billion less than it was predicted to be when I became
    President.
        But to go back to the middle class tax argument, after the election
    but before I took office, the previous administration said, ``Oh, by the
    way, the deficit's going to be $165 billion bigger over the next 5
    years.'' So I always in that campaign said I am not going to say ``read
    my lips'' because I've run a government long enough at the State level
    to know that sometimes circumstances can change on you. I've been very
    candid with the American people about that. I think most people with
    incomes

    [[Page 1301]]

    of $50,000 a year don't think $33 a year is too much to pay. I think
    what most people have believed is, they've been told that they're going
    to be paying a fortune. And----
        Q. Mr. President----
        The President. Now, wait a minute. Let me just finish this. I want
    to make this point. I'm going to be President 4 years. We've got
    opportunities to have even more fairness in the Tax Code if we're
    bringing down the deficit and we are opening up economic growth. There
    are all kind of options to do things over the next 4 years. But the most
    important thing now is to do something about the deficit. The truth is
    that all these people who say they want to cut spending now, what they
    really want is an accounting practice which still would have all the
    spending cuts come in the 3d, 4th, and 5th year of this budget cycle.
        What they're really saying is let's pass a bill that says it's going
    to cut spending later now before we raise taxes. They don't propose more
    spending cuts in these first years than I do, none of them do. And to go
    back to Senator Boren's bill, particularly the one he offered in the
    Senate didn't have nearly as much support as the one I offered, because
    it didn't have the kind of deficit reduction unless you did what he
    proposed to do, which was to take more out of Medicare for middle class
    people. And even then it wasn't going to happen for the 3d, 4th, or 5th
    year, most of it.
        So the people that say cut spending now are saying, ``We don't want
    to cut any more spending than Bill Clinton does right now, but we want
    to pass a bill that cuts spending in the 3d, 4th, and 5th year in health
    care without health care reform and then talk about whether we should
    tax the wealthiest Americans later.'' That's what they're really saying.
        Q. Is there any chance, do you think, that this bill will go down?
    Is there any chance that it will not pass in the Senate?
        The President. Well, sure there is. But I think it will pass. And
    the reason I think it will pass is this: I think most of those people
    are going to say, is this a better bill than we've ever had before and
    better than we had in 1990? And the answer to that will be, yes. Is this
    fairer to average Americans than the ones we've been considering? The
    answer to that will be, yes. Does this restore some economic growth
    incentives for small business, for new high-tech businesses, for
    housing, for real estate that we haven't had in the Tax Code for 7 or 8
    years? And the answer to that will be, yes. Does this bill lift the
    working poor out of poverty and encourage people to get off welfare, not
    with a Government program but by using the tax system to reward people
    who work, even at very low wages? The answer to that will be, yes. And
    then the last question is, do we want to hang around here in Washington
    for 60 or 90 more days and debate this, and either come back here and
    pass something very like it or something that's so much weaker that
    we'll have higher interest rates, more uncertainty, and we'll waste 2 or
    3 months when we could be dealing with health care, with welfare reform,
    with a crime bill, with things that will grow this economy with a new
    world trade agreement, all these things we need to get on about the
    business of doing.
        We are literally paralyzed here. We can't get anything else done.
    The only other major initiative that's going to come out of this is the
    national service bill that I've been working on for a long time. Other
    things cannot even be dealt with.
        And again I want to say to those of you interested in the cut issue,
    keep in mind the Vice President is going to issue our reinventing
    Government report within 60 days. The Congress is still cutting some
    other spending with my strong support. We are going to have more cuts
    even than we have now. But to delay this program is a great mistake. All
    it will do is paralyze the Government, paralyze the financial markets,
    and leave us with uncertainty. We've been talking about this since
    February. It's time to move.

    Note: The interview began at 3:25 p.m. The President spoke via satellite
    from Room 459 of the Old Executive Office Building. Participating in the
    interview were the editorial page editors of the Milwaukee Sentinel, the
    Milwaukee Journal, the Arizona Republic, and the Reno Gazette Journal.