    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book II)]
    [December 13, 1993]
    [Pages 2156-2163]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks at a Conference on Entitlements in Bryn Mawr, Pennsylvania
    December 13, 1993

        Thank you very much. Ladies and gentlemen, it's a pleasure for me to
    be here. I have looked forward to this conference with great
    anticipation for some time. I want to thank Congresswoman Margolies-
    Mezvinsky for getting this together and for inviting me here. I thank
    President McPherson and this wonderful institution for hosting us. I'm
    delighted that Speaker Foley and Congressman Penny are here from the
    Congress, and Senator Kerrey and Senator Wofford, your own Senator, are
    here to talk about these important issues. I want to also thank all the
    people who helped to put this conference together and to all the people
    in our administration who were invited and are here participating. We
    pretty much shut the town down in Washington today and just sort of came
    up here to Pennsylvania to talk about entitlements.
        This is a very serious subject, worthy of the kind of thoughtful
    attention that it will be given today. I hope there will be a great
    national discussion of the issues that we discuss today, and I hope that
    this will be the beginning of a debate that will carry through for the
    next several years.
        I ran for President because I thought our Nation was going in the
    wrong direction economically and that our society was coming apart when
    it ought to be coming together. I wanted to work hard to create jobs and
    raise incomes for the vast mass of Americans and to try to bring our
    country back together by restoring the bonds of family and civility and
    community, without which we cannot hope to pass the American dream on to
    the students who are here at Bryn Mawr or the students who will come
    behind.
        To do this, we must all, without regard to party or philosophy, at
    least agree to face the real problems of this country: 20 years of
    stagnant wages; 30 years of family decline, concentrated heavily among
    the poor; 12 years in

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    which our debt has quadrupled, but investment in our future has lagged,
    leaving us with twin deficits, a massive budget deficit and a less
    publicized investment deficit, the gap between what we need to invest to
    compete and win and what we are receiving in terms of new skills and new
    opportunities. These things are linked. Creating jobs in growth requires
    that we bring down both the budget deficit and the investment deficit.
    High Government deficits keep interest rates high; they crowd out
    private demands for capital; they take more Government money to service
    the debt. All this tends to reduce investment, productivity, jobs, and
    ultimately, living standards.
        The deficit increased so dramatically over the last 12 years because
    of things that happened on the spending side and on the revenue side.
    Defense increased dramatically until 1987, but it's been coming down
    since then quite sharply. However, the place of defense, as we'll see
    later, has been more than overtaken by an explosion in health care costs
    going up for the Government at roughly 3 times the rate of inflation.
    Interest on the debt is obviously increased more when interest rates
    were high than now, but always when the accumulated national debt goes
    up. And the larger number of poor people in our country has inevitably
    led to greater spending on programs that are targeted to the poor.
        On the revenue side, the tax cut of 1981 wound up being roughly
    twice the percentage of our income that was originally proposed by
    President Reagan as the President and the Congress entered into a
    bidding war. And then in 1986 we adopted indexing, a principle that is
    clearly fair but reduced the rate of growth of Federal revenues by
    adjusting people's taxes downward as inflation pushed their incomes
    upward. And finally, a prolonged period of very slow growth has clearly
    reduced Government revenues and added to the deficit.
        If you look at this chart, you will see that we inherited a deficit
    that was projected to be actually--when I took office, for the fiscal
    year that ended at the end of September--above $300 billion. And it was
    headed upward. The blue line here is what I found when I became
    President. It was clear that something had to be done. I asked the
    Congress to pass the largest deficit reduction package in history. It
    had $255 billion in real enforceable spending reductions from hundreds
    of programs. Now, let's make it clear what you mean.
        When you hear the word spending ``reductions'' or ``cuts'' in
    Washington terms, it can mean two things. One is a reduction in the rate
    of increase in Government spending from the previous 5-year budget,
    which is still an increase in spending but not as much as it would have
    been had the new reduction not taken place. The second thing it might
    mean is what you mean when you say ``cut,'' which is you spend less than
    you did before you used the word. [Laughter] And it is important to know
    which one you're talking about. However, both are good in terms of
    reducing the deficit over a 5-year period. We not only reduced the rate
    of increase but actually adopted hundreds of cuts this year. The budget
    year that started on October 1st has less spending than the previous
    year in 342 separate accounts of the Federal budget. Adjusted for
    inflation, this means a discretionary spending cut of 12 percent over
    the next 5 years, more than was done under the previous two
    administrations. If this continues, according to the Wall Street
    Journal, then by 1998, discretionary spending--that is the
    nonentitlement spending and discounting interest on the debt, the things
    that we make decisions on every year--will be less than 7 percent of our
    annual income, about half the level it was in the 1960's.
        In addition to the discretionary spending cuts, our budget did
    reduce entitlements, making reductions in agricultural subsidies, asking
    upper income recipients of Social Security to pay more tax on their
    income, lowering reimbursements to Medicare providers, making other
    adjustments in Medicaid and in veterans' benefits. Now, all these cuts
    are already on the books. We are also cutting, with the help of the Vice
    President's National Performance Review, over 250,000 positions from the
    Federal payrolls, largely by attrition and early retirement over the
    next 5 years. We're finally attempting to reform the system in ways that
    will permit us to save billions of more dollars in discretionary
    spending through reform of personnel budgeting and, most importantly,
    procurement systems, if the Congress will authorize all three of those
    systematic reforms.
        We also passed some taxes: a modest 4.3 cents-a-gallon gas tax,
    which so far has been barely felt because we have the lowest price in
    oil in many, many years, so the price of gasoline has actually dropped
    since the gas tax was put on. We also asked the top 1.2 percent

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    of Americans to pay higher income taxes because their incomes went up
    the most, and their taxes dropped the most in the previous 12 years. The
    corporate income tax on corporations with incomes above $10 million a
    year was raised. Middle class families will pay slightly less taxes
    because, again, of the adjustments for inflation. And taxes were cut for
    15 million families who worked for very modest wages as a dramatic
    incentive to get them to continue to choose work over welfare.
        When Congresswoman Mezvinsky and her colleagues voted for this
    economic plan, they voted for your economic future, for lower deficits,
    higher growth, and for better jobs. They did vote to cut spending. They
    did not vote to raise taxes on the middle class. And frankly, the kinds
    of radio ads that have been--this is the only political thing I'm going
    to say today--but the kind of radio ads that have been run against her
    in this district do not serve the public interest because they do not
    tell the truth. If somebody wants to say that we should not have raised
    income taxes on the top 1.2 percent of the American people, let them
    advertise that on the radio. If someone wants to say that the corporate
    income taxes above $10 million a year in income should not have been
    raised, let them advertise that on the radio. If someone wants to say
    that the gas tax was unfair, let them advertise that on the radio. But
    do not try to tell the American people there were no budget cuts and
    they paid all the tax increases, because that is simply not true. And we
    have a lot of work to do in this country and a lot of honest
    disagreements to have; we need not expend our energy on other things.
        And if you don't believe that, read the front page of the Wall
    Street Journal this morning. That is hardly the house organ of my
    administration. [Laughter] Read the front page of the Wall Street
    Journal this morning talking about the unprecedented cuts that this
    budget made. It does not do anybody any good to continue to assert
    things about that economic plan that are not true. The markets had it
    figured out. That's why interest rates are down and investment is up.
    That's why inflation is down and more jobs have come into this economy
    in the last 10 months than in the previous 4 years. The markets figured
    it out. All the smoke and mirrors and radio ads in the world couldn't
    confuse the people that had to make investment decisions and read the
    fine print.
        That's the good news. Now let's talk about the continuing problems,
    the real problems. The economic plan which the Congress adopted
    represents the red line. That's how much less the deficit will be. And
    the aggregate amount between these two lines is how much less our total
    debt will be by 1998. The yellow line represents where we can go, by
    conservative estimates, if the health care plan is adopted. You still
    have an operating deficit, and the national debt will still increase by
    this amount, but not by that amount.
        So we are clearly better off with the economic plan. We will have to
    make further cuts, by the way, to meet this red line. We're not done
    with that. We will be better off still if we do something about health
    care--I'll say more about that in a minute--but there is still more to
    be done. The debt of this country now is over $4 billion. That means our
    accumulated debt is more than two-thirds our annual income. It is
    important that the debt, as a percentage of our annual income, go down.
    It is way too high, much higher than it has been outside of wartime. It
    is important that the annual deficit, as a percentage of our income, go
    down. It will go down under this plan, but we can do more to try to
    reduce the aggregate debt and the deficit as a percentage of our income.
    Both of them are too high.
        Now, let's look at the next chart here. I think you all have it out
    in the audience. This chart just basically shows where your money goes.
    When you pay Federal taxes or when the Government, on your behalf,
    borrows money, in debt, we spend 47.4 percent in entitlements--that is
    what we're here to talk about today--about 21 percent on defense, it's
    going down, as you'll see in a minute; about 18 percent on nondefense
    discretionary, which is being held constant; and about 14 percent in
    interest on the national debt.
        Let's look at the next chart now. This chart gives you an idea of
    which spending categories are headed in which direction. Average annual
    real growth--now, I want to tell you what this means. I haven't lived in
    Washington very long so I still use ordinary meanings for words. So I'm
    not very good--[laughter] When you see ``real'' on a Government chart,
    that means adjusted for inflation. You'll never find that in a
    dictionary, but that is what it means. In other words, these are the
    numbers adjusted for inflation at a projected inflation growth of more
    or

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    less 3\1/2\ percent a year. If you look at that, you see defense is
    going down. Frankly, we're reducing it as much as I think we responsibly
    can and, in fact, more than we responsibly can unless Congress will pass
    the procurement reform so the Defense Department can buy what it needs
    for our national defense at more efficient prices. But I hope that will
    happen. Other entitlements--we'll come to that in a minute, what those
    other entitlements are--they're also going down relative to inflation.
    That is basically the entitlements for the poor and the veterans'
    benefits and agriculture benefits.
        Nondefense discretionary is a little under zero, as you see. That's
    all the investments for education, for training, for technology, for
    defense conversion, for you-name-it, anything for infrastructure, for
    roads, anything we spend money on that we have an option not to spend
    money on that--we'll come back to that--is going down relative to
    inflation. If there were no inflation numbers here, it would actually be
    just a tiny bit above the line, but it is functionally zero. For all
    practical purposes, if I want to increase the amount of money, for
    example, we spend on Head Start in Pennsylvania by a million dollars, we
    have to cut something else by a million dollars. We are not increasing
    the aggregate amount of this kind of discretionary spending. Net
    interests will go up, and again, this is adjusted for inflation, so it
    is continuing to rise because the amount of the debt is continuing to
    rise.
        Social Security will go up, again, adjusted for inflation. This is
    the population increase, effectively, in Social Security. There aren't
    new benefits being added, so there will be a couple of percent growth in
    population between now and 1998. So it will go up by the amount of
    increasing numbers of people on Social Security.
        And look what happens to health entitlement. It's going up more than
    twice as much as Social Security, more than 3 times as much as net
    interest, and everything else is going down. Now that's what's
    happening. Let's go on to the next chart.
        As the chart shows here, this is the new revenues we're getting in
    this year. Now, the new revenues include the tax increases that we just
    talked about. They're about 40 percent of that revenue growth. The rest
    of it's just ordinary increases in tax revenues to the Government coming
    from increasing employment or increasing incomes. So every year we get
    some revenue growth. This revenue chart is about 60 percent ordinary
    revenue growth, 40 percent new taxes. As you can see, the whole thing
    goes to deficit reduction, interest increases, and entitlement
    increases. That's where the money went.
        Eighty percent of the new revenues, including taxes and revenue
    growth, went to deficit reduction and interest increases; 20 percent of
    it went to entitlement increases. As you can see, that does not leave a
    great deal of room for any kind of future investments. This is something
    that presumably both Senator Kerrey and Congressman Penny will talk
    about today. But there is, I think it's fair to say, a broad consensus
    in the Congress among Republicans and Democrats, among liberals and
    conservatives, that there are some things on which we are not spending
    enough money to get us to the 21st century. We have put ourselves in a
    box after the last--trying to work our way out of this deficit business
    so that we do not have the flexibility to make those kind of growth-
    oriented investments in the public sector. That is a dilemma. So we have
    two continuing dilemmas, if you will: one, we've still got a deficit and
    a debt problem; two, there are things which literally over 80 percent of
    the Congress, both parties, would agree we should invest more in that we
    simply cannot invest more in because of the problem we have with the
    budget. Could we go on now to the next chart? Let's go on to the next
    chart.
        Now, this gives you a picture of entitlement spending. And I know
    Alice Rivlin talked about this a little before, and she knows a lot more
    about it than I ever will, but I think it's worth going back over
    because this is an entitlements conference. So it's worth focusing on
    what an entitlement is and, when you hear people use that term, what
    they are.
        So look at this. These entitlement programs are programs that
    provide benefits for people that have certain characteristics. People
    who meet the test of eligibility for the program get it, notwithstanding
    some previously budgeted amount for that program. That's why they're
    called entitlements. For example, someone who has paid into the Social
    Security Trust Fund along with his or her employer who is 65 becomes
    entitled to Social Security. You just go to the Social Security office
    with the documents that prove you're eligible, and you're going to get
    the check no matter how many other people qualify for Social Security.
    Since it's hard to

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    know in advance exactly how many people will apply for benefits,
    Congress doesn't set aside a specific amount of money as it does for the
    discretionary spending programs. Instead, it simply directs to Treasury
    to make payments to everybody who applies and qualifies for the benefits
    under the laws.
        There are two main kinds of entitlements. And you can just see by
    looking up here what they are. They are the contributory entitlements,
    that is, you're entitled to something because you paid into it. It's
    contract oriented. Social Security is a contributory entitlement.
    Medicare is a contributory entitlement. Federal retirement is a
    contributory entitlement. You did the work; you put the money aside; you
    get it back.
        Then there are the entitlements for those in need or entitlements
    that are in a special category because you can't predict how much is
    going to be needed every year. The entitlements for those in need would
    include AFDC, supplemental security income, the Medicaid program,
    medical care for the poor. Agriculture is in a separate category. It has
    been treated as an entitlement partly because it's so caught up in the
    global economy, it's impossible to predict from year to year how much of
    the support subsidies will be needed.
        Now, the contributory retirements are sometimes called middle class
    entitlements because they benefit everybody, the middle class or, Mr.
    Peterson will tell you in a few minutes, the upper middle class or the
    wealthy. If you pay in, you get it back plus a cost of living increase.
    Now, the poor people's entitlement, I said, are mostly in the category
    of like AFDC and food stamps and Medicaid. But let me show you something
    about these entitlements, because most people, I think, don't know this:
    Social Security is 43 percent of the total; Medicare is 18 percent;
    Medicaid is 11 percent; Federal retirement is 8 percent; unemployment is
    5 percent, obviously it goes up or down, depending on what the
    unemployment rate is and how long people are unemployed; food stamps are
    4 percent; ``other'' is 11 percent. In the other, you have agriculture,
    veterans, supplemental security income, which is for lower income
    elderly people, and AFDC. The welfare program of this 11 percent is 2
    percent. The average monthly welfare benefit in America is actually
    lower today, adjusted for inflation, than it was 20 years ago. The
    program is more expensive because there are more poor people. But I
    think it's quite interesting to point that out. Most people are
    surprised to know that the welfare budget is about 2 percent of the
    entitlements or about 1 percent of the overall Federal budget.
        Now, the entitlement programs for the needy, as you can see, make up
    about 12 percent of the whole budget or about a quarter of the
    entitlement spending. The biggest entitlements are Social Security and
    Medicare. They are about 61 percent of the total. When you add Federal
    civilian retirement and military retirement, you've got over two-thirds
    of the entitlements there.
        Now, I think it's important to point out, just in passing, that
    behind every one of these entitlements there's a person. That's why it's
    so controversial when they're debated in Congress. It's not just
    organized interest groups. There are people who believe they are
    literally entitled to receive something back that they paid into. It is
    the middle class entitlements, that have united us and brought us
    together, that also have the strongest constituencies and provoke the
    biggest controversies when we get into dealing with this. And these
    programs are also very important in human terms.
        I just might mention, too, if you look at Medicare, before Medicare,
    there was a good chance that Americans, when they got older, would need
    charity care, would simply do without health care. Today nearly 34
    million people go to see a doctor or get medical care because of the
    Medicare program. Social Security has changed, literally, what it means
    to be old. In the beginning of 1985, for the first time in our history,
    the percentage of our elderly people who were above the poverty line was
    better than the percentage of the population as a whole. In other words,
    the poverty rate for the elderly was lower than the poverty rate of the
    general population.
        It is very difficult to say that this was a bad thing. That was, I
    argue, a good thing. We should not view this whole program, in other
    words, as welfare. It is not a welfare program. Does that mean that
    there should be no changes in it? No, it just means that we should be
    very sensitive about the fact that this is something that has worked.
    Because of these programs, we are a healthier people. We are a more
    unified country. We treat our elderly with greater dignity by having
    allowed them to earn a decent retirement and to maintain a middle class
    standard of living, independent of whatever their chil-

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    dren are required to do and to make them more independent over the long
    run. This is a huge deal in a country where the fastest growing group of
    people, in percentage terms, are people over 80 years of age. This is a
    big deal.
        Now, I recommended exposing more of the incomes of the top 10 or 12
    percent of Social Security recipients, somewhere in that range, to
    taxation, and Congress adopted a modified version of that plan. That was
    an entitlements move. I thought it was an appropriate thing to do
    because a lot of people in upper income levels, by definition, have
    other sources of income, too, and will get back what they paid into
    Social Security plus reasonable interest growth in a reasonably short
    period of time. So I thought it was fair to do that.
        We recommended upper income people pay more for Medicare benefits. I
    think that is reasonable to do because the Medicare payment itself only
    covers a small percentage of the total cost of Medicare. Where I think
    we should draw the line, however, is in trying to have happen to the
    elderly middle class what is happening to the nonelderly middle class.
    All over the world today, and certainly in all the advanced countries of
    the world, the middle class is under assault. Earnings inequality has
    increased in the last 12 years. It is becoming very difficult for
    working people to sustain a middle class way of life. We are going to
    have to all change. We've got to change our Government policies. People
    are going to have to acquire much higher levels of skill and be
    committed to training for a lifetime. There are a lot of things that
    have to be done. But the general policy point, I think, is valid. We do
    not want to deal with a problem like the deficit which is aggravated
    because middle class people's incomes have stagnated by having the same
    sort of income stagnation for the middle class elderly.
        So I think there are things we can do to deal with this. They will
    be discussed later. We did some things to deal with the entitlements in
    the last budget. But let us not say that it was a bad thing to
    dramatically reduce poverty among elderly people or that it is a bad
    thing for our consumer economy to maintain a large number of middle
    class people in their retirement years. That means that we have to have
    honest, specific, and clear discussions of this, as unencumbered as
    possible by these sort of rhetorical bombs flying in the air from the
    left and the right, just talking it through and listening to each other
    and asking ourselves: What will be the practical impact of proposed
    change A, B, or C, and will we all be more secure? Will our children and
    our grandchildren be better off? Will this help to stabilize and
    increase the middle class ballast of our society? And I think we are on
    the verge perhaps of having that discussion in no small measure because
    of this kind of conference.
        Now, let's go on, and let's look at what I think the real problem in
    the entitlements is, is clearly the danger signal for the long run.
    Let's look at the next chart. As you can see, 20 years ago, health
    spending and entitlements, Medicare and Medicaid, 13 percent of the
    total; 1983, 19 percent of the total; 1993, 30 percent of the total;
    2003, 43 percent of the total. Keep in mind--and this is with the number
    of elderly people going up like crazy, so the population of people
    drawing Social Security is going way up, right? And still, look at that.
    So clearly, that is the portion of Government spending that is out of
    control. That is the portion of entitlement spending that is out of
    control. Now let me just illustrate it by a couple more charts real
    quickly.
        Let's go to the next one. Nondefense discretionary outlays are going
    down as a percent of our income. Social Security outlays as a percentage
    of our income is solid, stable here. It could go up some in the next
    century, is projected to, when all the baby boomers go in. I heard Ms.
    Rivlin refer to that as the President's generation. I am the oldest of
    the baby boomers. But still, you see, it's stable as a percentage of the
    gross national product. And the Congress, in 1983, after the bipartisan
    commission on Social Security made recommendations for fixing Social
    Security, attempted to keep this number stable by gradually raising the
    retirement from 65 to 67, by about a month a year over a prolonged
    period of time starting just in the next century.
        Now let's go on to the last one. This chart shows you that unlike
    Social Security and discretionary spending, medical spending is going up
    like a rocket. Medicare and Medicaid have tripled since 1982. Medicare
    and Medicaid will soon cost more than Social Security. And next year for
    the first time--in large measure because Medicaid is a State-Federal
    matching program, so that every State has to put in money along with the
    Federal Government--next year, for the first time, States will spend
    more money

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    on health care than education. And since I supported this--I see other
    present and former Governors around this table. In the 1980's we said to
    the National Government, ``You've got a problem with the deficit. We'll
    spend more on education; you do what you have to do to deal with your
    other problems.'' This is a very serious danger signal. If you want the
    States to spend more educating people, getting children to the point
    where they can compete, training the work force--to have the States all
    of a sudden spending more on health care than education is a very
    serious danger signal for the distribution of responsibilities between
    the State and the Federal Government.
        Now, we have some options. If we want to control Medicare and
    Medicaid spending, basically we have some options. And to be fair, again
    I want to say, during the 1980's under the Reagan and Bush
    administration, the two administrations and the United States Congress
    did try to cooperate on several things to control Medicare and Medicaid
    spending. They took total pricing controls away from hospitals and
    doctors. They tried to do a number of things. But what happened? If you
    control the price of a given product in this environment, what happens?
    Providers can provide more products, I mean, more of the same product,
    right? You increase the volume if you lower the price, and the money
    still goes up. That's one problem.
        Secondly, poverty increased in the eighties and is continuing to
    increase among the poor, both the idle and the working poor, and that
    drives the Medicaid budget up. So controlling unit prices didn't work.
    The other thing you could argue that we could do is to try to control
    the categories within Medicare and Medicaid, basically, just spend less.
    In other words, even though they're entitlements, just say we are going
    to spend less on certain categories by both controlling volume and
    price. Is there a problem with that? Yes there is. What is it? Any
    doctor or hospital will tell you that there has been a lot of cost
    shifting in this health care system, and it's one of the causes of
    rising prices and inefficiency. Cost shifting largely occurs in two
    ways: when hospitals have to care for people who don't have any
    insurance or when they provide Government funded health care at less
    than their cost of providing the service, they shift the cost onto the
    private sector.
        So we could bring this deficit down, we could do this--I want to--
    let's 'fess up, we could do this. We could just cut how much we're going
    to spend on Medicare and Medicaid, even though it's an entitlement, in
    terms of price per unit and volume. We can just take 'er down. But if we
    do that, what will happen? Those costs will be shifted by the health
    care providers to the people who already are providing insurance with
    the impact that it will be a hidden tax increase on businesses and on
    employees. Employees will probably see it in not getting pay raises they
    otherwise would have gotten. Businesses will see it in spending more on
    health insurance premiums and having less to reinvest in the business or
    to take in profits. I don't think it is a fair thing to do. That is why
    our administration has argued that if you really want to solve this
    problem, you have to go back and have comprehensive health care reform.
        This is the only country in the world that doesn't find a way to
    solve that issue--the only advanced nation, that is, that doesn't give
    basic health care to all its citizens within a framework that controls
    costs in the public and private sector. We're spending 14.5 percent of
    our income on health care. Nobody else is over 10; Germany and Japan are
    at 9. The health outcomes of other countries are roughly similar to
    ours. We can't get down to where they are because we spend more on
    technology and more on basically costly treatments than other countries
    do and more on medical research. And that's fine. And we can't get down
    to where they do because we have more violence and higher rates of AIDS
    and other very expensive diseases than other countries. But we could do
    better. And unless we do better in an overall way, in my judgment, we
    are going to be in trouble.
        Now, we had a nonpartisan analysis by the respected firm of Lewin-
    VHI last week about our health care plan. This company does research on
    the economics of health care for businesses, unions, consumer groups. It
    includes people who served in the Reagan and Bush administrations as
    budget and health officials. They say that our plan will reduce the
    deficit. We think it will reduce it even more than they will. I won't
    get into the details of that today. We're here to talk about
    entitlements. The point I want to make is I believe you don't get
    entitlement control, you don't get ultimate deficit control unless you
    do something about Medicare and Medicaid. I believe you don't get that
    done just by cutting Medicare and Medicaid unless

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    you want to hurt the private sector. Therefore, I think we have to have
    some sort of health reform. That's what I believe. You have to decide if
    you believe that, but I think it's important.
        Let me just close with this. This is the lead editorial in this
    morning's Washington Post. It says--on the entitlements mess--and it
    says as follows: ``Nor have all the entitlements been badly behaved in
    recent years in terms of costs. The health care programs are the budget
    busters. By contrast Social Security costs have risen in stately fashion
    with population and inflation. And the costs of all the other
    entitlements taken together, including those that support the poor, has
    declined in real terms.'' Remember what ``real'' means in Washington,
    less than the rate of inflation. ``The real Federal budget problem''--
    that's the normal word ``real''; here they mean real like you do--``the
    real Federal budget problem isn't entitlements, it's health care.''
        So I say to you we can talk about these other entitlements, and we
    should. As we talk about them, let us not make our middle class squeeze
    problem worse than it is already. That's one of the profound problems
    that is driving this country. One of the reasons that Senator Wofford is
    in the Senate today is because of the anxieties of middle class workers
    in Pennsylvania.
        Let us continue to work on this deficit. Let us realize the deficit
    is too big and the debt is much too large as a percentage of our gross
    national product. Let us realize that there are two problems with it.
    One is the deficit, and the other is we aren't investing enough. But on
    the entitlements issue, I would argue the real culprit is health care
    costs, and we can only address it if we have comprehensive health care
    reform.
        And let me close by saying one more time, if Marge Mezvinsky hadn't
    voted for that budget, we wouldn't be here celebrating economic progress
    or talking about entitlements. We'd still be back in Washington throwing
    mudballs at each other. And I respect her for that, and I'm glad to be
    here today.

    Note: The President spoke at 10:45 a.m. at Bryn Mawr College. In his
    remarks, he referred to Mary Patterson McPherson, president of the
    college; Alice M. Rivlin, Deputy Director of the Office of Management
    and Budget; and Peter G. Peterson, former Secretary of Commerce and
    president of the Concord Coalition.