    [Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (1999, Book II)]
    [August 6, 1999]
    [Pages 1390-1393]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks on the Drought and the National Economy and an Exchange With
    Reporters
    August 6, 1999

        The President. Good morning. Before I leave to go home to Arkansas,
    I want to comment briefly on two matters.
        First, I want to talk about the action we're taking to address the
    terrible, crippling drought that continues to grip so much of our
    Nation. Throughout much of this country, we have seen the worst drought
    since the Dust Bowl days. And as the National Oceanographic and
    Atmospheric Administration will formally announce later today, in
    Maryland, Delaware, New Jersey, and Rhode Island, this is the worst
    drought for farmers ever recorded.
        Such a natural calamity can have devastating consequences, not only
    for farmers but for small businesses and communities that depend upon a
    thriving agricultural sector and for the electric power systems so vital
    to our Nation. We're worked hard to help the victims of the drought and
    the heat wave. But as weather disruptions become even more common, and
    they will, they will demand a more coordinated response by the National
    Government. So today I'm directing that the White House immediately
    convene a task force of the relevant cabinet agencies to coordinate our
    efforts and focus our attack on this problem. We must do more. It is our
    duty as a national community.
        Second, I want to talk a little more about our efforts to continue
    our prosperity for all Americans. For 6\1/2\ years now, we have pursued
    a different economic strategy from the previous 12 years; one based on
    fiscal discipline, investing in our people, selling our products around
    the world. It has produced sustained prosperity, the longest peacetime
    expansion in history. Now, it has also produced an era of surpluses
    after 12 years in which we quadrupled the national debt. This is
    working. Today we received more evidence.
        Just this morning it was announced that America's remarkably low
    unemployment rate remains at a remarkably low rate of 4.3 percent, that
    inflation is low, and that last month alone, over 300,000 new jobs were
    created in America. This brings the total since January 1993 when I took
    office to 19.2 million new jobs.
        We should not abandon a strategy that is working, especially since
    now we are beginning an era of surpluses which will enable us to meet

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    our big, long-term challenges for the 21st century, the aging of
    America, the education of our children, sustaining our long-term
    economic growth. Therefore I am disappointed, though not surprised, that
    the majority party in Congress has chosen to pass its massive tax cut;
    one that plainly would damage our economic future and make it impossible
    to secure and modernize Medicare. But again, I want to assure the
    American people--because this tax cut will not save and strengthen
    Medicare, because it will not add a day to the Social Security Trust
    Fund, because it will not pay down the debt and pay it off for the first
    time in over 150 years--this tax cut will not become law.
        This morning it was reported in the press that the Republican
    leadership has revealed that actually they have the secret strategy even
    to spend the Social Security surplus. They very explicitly want to raid
    the Social Security surplus to pay for huge economic--huge tax cuts and
    a risky economic scheme. They say they're spending more money now to
    force that result. Now, that's the sort of thing they did before that
    got us in trouble and gave us an average unemployment rate that was too
    high and a growth rate that was too low and huge, huge deficits.
        This really troubles me because for the last 2 years they have
    promised the American people they would work with us to save Social
    Security first. I can think of nothing more cynical and irresponsible.
    My strategy is still the same. Let's do first things first. Let's save
    Social Security, save and strengthen Medicare, pay off the national debt
    for the first time since 1835, figure out what we have to invest in the
    education of our children and in the national defense and preserving the
    environment and our essential mission, and then give the rest of the
    money back to the American people in a tax cut.
        We can have a tax cut, but it is wrong to put the cart before the
    horse. It is wrong to plan the vacation before we pay the home mortgage
    and send the kids to college. That's what they're proposing to do. It is
    wrong. It will take us right back to the situation that got us in so
    much trouble in the 1980's, and I will not countenance it. But we can
    make progress.
        Just today there was a report that, led by the Republican physicians
    in the House of Representatives, enough Republicans have joined the
    Democrats to guarantee that the House will pass a strong Patients' Bill
    of Rights. This is the sort of thing we can do if we work across party
    lines, as we did with welfare reform, as we did in the Balanced Budget
    Act of 1997. We can do something that would have seemed impossible just
    a few years ago. We can pay off the national debt, keep interest rates
    low, and give our children a healthy economy for a generation. We can
    save Social Security. We can save and strengthen Medicare with
    preventive benefits and the prescription drug. We can do these things.
    We can invest in our children's future. We can use this historic
    opportunity of a lifetime to do our duty by the next generation.
        This is not a time to walk away from that duty, and again I implore
    the Members of the Republican majority to come up with their own
    Medicare plan, sit down with me and talk about it, figure out what we
    have to spend and invest, and then we can give the rest back to the
    American people in a tax cut. But we have to do first things first.
        I will not--I will not see, after 6\1/2\ years of progress, us
    return to the problems that we faced in the years before I took office.
    We're not going to do it. It is not right. We should be looking to the
    21st century and facing the challenges and doing right by our children.
    And that's exactly what I intend to do.

    Drought Relief and Emergency Assistance to Farmers

        Q. Mr. President, on this Federal drought task force, sir, what
    specifically do you have in mind? What could the Federal Government do
    that it's not doing now? And how do you respond to critics who say you
    haven't pushed hard enough for drought relief now for drought-stricken
    farmers?
        The President. Well, I think that there should be more drought
    relief in the agricultural efforts. I believe we have to go back and,
    before the farm bill comes to me--the emergency farm bill that is
    working its way through Congress is designed largely to deal with the
    problems of the last 4 years: record-high world crops, the collapse of
    the markets in Asia, the collapse of the prices, and that's important
    because that deals with what all the farmers do off the east coast. But
    if you look at what they're facing here, there needs to be a special
    provision to deal with the drought crisis. And I hope that and believe
    that there will be.
        So, I wish we could have done it before the August recess, but I
    think it will be there in

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    time to aid the farmers. I don't believe that this Congress will walk
    away without doing something to deal with the emergency problem caused
    by the drought. I'm going to be with James Lee Witt in Arkansas tonight. We're both going to be home, and I
    expect to have a discussion with him about it, about what we should do.
        Yes, go ahead.
        Q. And what about the task force?

    Nomination of Roger W. Ferguson, Jr.

        Q. What about Roger Ferguson? We understand that you're going to
    appoint him today to the Fed?
        The President. I am. He will be the first African-American Vice
    Chair of the Fed. He is superbly qualified. He has served well. And I am
    very excited about the prospect of his service. I'm glad he's willing to
    do it.

    Tax Cut

        Q. Mr. President, you've made a point of saying that the only way of
    strengthening Medicare and meeting your priorities would be to have a
    tax cut in the $300 billion range. Are you saying that the Republicans
    have to come down to that range? And if so, if it were to include an
    across-the-board tax cut or components that you don't philosophically
    agree with, would you be willing to entertain those as long as it's in
    the $300 billion parameters?
        The President. No. Let me back up and say first of all, the most
    important thing to me is that Congress engage in the same exercise I did
    and that I believe the Democrats on the Senate Finance Committee and the
    House Ways and Means Committee tried to do, which is to say, what do we
    believe it will take to secure Medicare, provide a modest prescription
    drug benefit, these preventive changes, and all the modernization and
    competition things that I think we all agree need to be done? What will
    it take to do that?
        What does the Congress--even the Republicans are up there spending a
    lot of money. What about the money they're going to spend over and above
    the '97 balanced budget limits for education, for medical research, for
    the teaching hospitals, the inner-city hospitals, the therapeutic
    services? What about the veterans? Have they decided--what do they want
    to spend for defense? And we have to protect Social Security.
        Now after we do all that, then they ought to ask themselves what
    their revenue estimates or whatever revenue estimates they intend to
    use--what is left? And then that is how we ought to determine the size
    of the tax cut. We're doing this backwards. So you have this curious
    situation where the majority party is both passing a big tax cut and
    passing big spending bills without any sense of how this is going to be
    reconciled. So to me, the most important thing is that we engage in the
    same process, that we put first things first.
        Now, if we can agree on an amount, do I have to be flexible on how
    it's done? Of course I do; they have more votes than we do. Even the
    Democrats in Congress had a different plan than I did, and I thought
    they had some good ideas. The most important thing is that we engage in
    a process that saves Social Security and Medicare, that pays the debt
    off, and that continues to invest in education, defense, and the things
    we have to invest in. Then I think we ought to give whatever's left back
    to the American people in a tax cut. I obviously will argue for the
    fairest possible way.
        I mean, if you look at the tax cut they adopted, the top one percent
    get 25 percent, the bottom 81 percent get 25 percent. So I think that,
    you know, 75 percent of the benefits go to the top 20 percent of the
    people. I think that there are problems with it, but I'm--clearly we'd
    have to negotiate the content, the details. But the amount should be
    determined not by politics but by arithmetic and by what we agree on in
    Medicare and the investments we agree to make in our country's future
    and our education and defense and the environment and by what we have to
    spend for the agriculture, for the veterans, for the problems that are
    now out there with the teaching hospitals, the inner-city hospitals, the
    therapy services have been canceled, those kinds of things. We need to
    find out what we are going to do and what we have to do and what is
    right for the long-term interest of America, and then we can have the
    short-term tax cut.
        And let me just make one other point about that, as we celebrate
    300,000 more jobs and finally breaking the 19 million job barrier. We
    have seen warning after warning after warning in the business press in
    the last 2 weeks that a big tax cut in the face of this growing economy
    would be viewed as an inflationary measure which would cause the markets
    to raise interest

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    rates, which would turn right around and take the benefits away from
    ordinary Americans that they get from tax cuts. If you get a tax cut
    today and the tax cut causes higher home mortgage rates, higher car
    payment rates, higher interest--credit card rates, higher college loan
    rates, and a weaker economy, then it won't take long for that tax cut to
    disappear in the flash of an eye. And that's another thing that ought to
    be considered here.

    Fed Chairman Alan Greenspan and Inflation

        Q. Mr. President, regardless of the tax cut debate, the unemployment
    report today was only the latest in a series this week that have raised
    concerns about inflation. Would a small increase in interest rates now
    be an understandable response to that? And secondly, have you made any
    decisions on Chairman Greenspan and another term at the Fed?
        The President. Well, first of all, I think he has done a terrific
    job, and they will make their own judgments. But what I am doing is
    designed--he testified in the Congress along these lines. Now I'm very
    gratified that the actual inflation rate is not high. It is true that
    we're finally getting some wage increases the last 2\1/2\ to 3 years for
    ordinary people, and they're getting ahead again after 20 years of
    falling behind. And I think that's good. But we--what--we should do
    everything we can, those of us with political responsibilities in the
    Government, to fight inflationary pressures so we continue to create
    jobs and raise incomes without inflation which will certainly raise
    interest rates. The market will raise them, whatever the Fed does, if we
    really have big inflation come back into the economy.
        So I'm doing my best to hold inflation down, and that's the signal
    that I want to send today. I never comment on the interest rate
    decisions of the Fed, and I don't want to start now. I think that we
    have had an independent policy, but our policies have reinforced one
    another, which is to have growth and jobs without inflation. And that's
    what I think we should do.
        Thank you very much.

    End of the Fiscal Year

        Q. The end of the fiscal year is just 2 months away. Do you think
    we'll have a train wreck, sir?
        The President. No.

    Note: The President spoke at 9:50 a.m. on the South Lawn at the White
    House prior to departure for Little Rock, AR. A portion of these remarks
    could not be verified because the tape was incomplete.