    [Public Papers of the Presidents of the United States: WILLIAM J. CLINTON (1999, Book II)]
    [August 8, 1999]
    [Pages 1404-1410]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the National Governors' Association in St. Louis, Missouri
    August 8, 1999

        Thank you so much, Governor Carper,
    Governor Leavitt, and Governor
    Carnahan; thank you for welcoming me back to
    Missouri and to St. Louis, a place that has been so good to me and our
    family and our administration.
        I must tell you, this has been a great day for me already. My staff
    says I'm entitled to a great day once in a while. I got to spend the
    night in my mother-in-law's house, go to
    early church in my church, and have breakfast with my friends, and then
    come to meet with you. Something bad may happen tomorrow, but this has
    been a good day. [Laughter]
        When I first spoke to the Governors as President in 1993, I promised
    that we would build a new partnership, and I said I would try to hold up
    my end of the deal in three ways: first, by bringing down the Federal
    budget deficit so we could have lower interest rates and greater
    investment and a recovering economy.

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    I've been a Governor through one boom and two busts; the booms make the
    job easier. Second, I promised to work with you to end welfare as we
    know it, to prove that poor people could succeed at home and at work.
    And third, I promised to loosen the rules and lift the regulations on
    Medicaid, that had long stopped Governors from providing more health
    care for less.
        Six and a half years later I think it's clear that this partnership
    has worked, through the hard work of the American people and the
    economic plan we put in place in 1993, followed up with the bipartisan
    Balanced Budget Act of 1997. We've turned record deficits into record
    surpluses, as Governor Carper said. Most of
    your budgets also enjoy healthy surpluses.
        We have the largest peacetime expansion in history, and on Friday I
    announced that we've gone over 19 million new jobs in the last 6\1/2\
    years, with homeownership the highest in the history and minority
    unemployment the lowest ever recorded.
        You all know, and I think Tom referred to this, that with the
    welfare waivers that we granted the States, followed by the Welfare
    Reform Act in 1996, your initiatives have led us to the lowest welfare
    rolls in 32 years now. Last week in Chicago, I was able to announce that
    every one of your States is meeting the work requirements in the new
    welfare law, something that the American people should be very grateful
    for. And we now have 12,000 businesses in our Welfare to Work
    Partnership committed to hiring people from the welfare rolls into the
    work force.
        With the bipartisan balanced budget bill of '97, we created the
    children's health insurance program, $24 billion, the largest expansion
    of health coverage since the creation of Medicaid. We've waived or
    eliminated scores of laws and regulations on Medicaid, including one we
    all wanted to get rid of, the so-called Boren amendment. And last week I
    signed the federalism Executive order, putting to rest an issue that has
    divided the administration and the Governors for far too long.
        In so many areas we share a common vision. I heard Governor
    Hunt talking when I walked in today. I
    thought, I've heard that voice for more than 20 years. It's still
    singing more or less the same song, and it gets better every time he
    sings it. I thank you, sir.
        So I would say to you that this country is poised to enter a new
    century and a new millennium with its best days still ahead. But we have
    some significant long-term challenges. I think we're in a position to
    meet those challenges. And I'd like to talk very briefly about the next
    steps that could affect you on the Federal budget, on welfare, and on
    health care.
        First, let me say that I do see this as a generational challenge: to
    deal with the aging of America; to deal with the children of America,
    which are more numerous and more diverse than ever before; to deal with
    the long-term economic health of America; to bring the light of
    opportunity to places that have still not felt any of this recovery.
    Those are just a few, but I think the biggest, of our long-term
    challenges.
        So what I propose to do is to take over three-quarters of this
    projected surplus and set it aside in ways that would enable us to
    lengthen the life of the Social Security Trust Fund, in ways that would
    cover the entire life of all those in the baby boom generation--that is,
    I don't expect to be around in 2053; I'd like it if it turned out that
    way, but I kind of doubt it will happen--in ways that would lengthen the
    life of the Medicare Trust Fund, bring the best that we know in terms of
    competitive technologies and other things to play, have more preventive
    screenings to try to keep people out of the hospitals, and have a modest
    prescription drug benefit, something we plainly would provide if we were
    creating Medicare for the first time today.
        If we do that, there will still be enough money to meet our
    fundamental obligations--in education, national defense, medical
    research, veterans, agriculture, the environment--and to have a modest
    tax cut. And we can do it, and pay off all the publicly-held debt in
    this country for the first time since 1835, when Andrew Jackson was
    President. We can do that in 15 years.
        Now, I think that's important, because in a global economy where
    interest rates are set in part by the movement of money at the speed of
    light across national borders--I'll make you a prediction: In 20 years,
    people will think all rich countries should not have debt because that
    will keep interest rates lower, investment higher, more jobs, more
    incomes, smaller costs for everything from homes to college education.
    And our trading partners around the world that are struggling to lift
    themselves up, or countries that get in trouble as the Asian countries
    did over the last couple of years, will be able to get the money they
    need at lower interest rates,

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    recover more quickly, and help us to continue to integrate the world
    into a global market.
        Now, as you know, I'm having a big argument about this in
    Washington. And I know you've already heard the other side of it.
    [Laughter] But let me just say, I think if you hear it at first blush,
    the plan of the Republican leadership has some appeal. They say, ``Look,
    we've got this big projected surplus, and we want to let the Government
    keep two-thirds of it and give the people a third of it. And why is that
    unreasonable?''
        Well, here's the problem. First of all, you all have been there; a
    projected surplus is not the same as one in the bank. And we don't know
    that. But secondly, there are the budget problems, economic problems,
    and aging realities that I would argue undercut this tax bill that has
    passed the Congress. Let me just mention them.
        First of all, the two-thirds of the surplus that the Republican
    leadership--and I applaud this--is committed not to spend is that
    produced by the Social Security taxes. So they say we're not going to
    spend it at all, which means the only money available for spending over
    the '97 budget caps is the 100 percent they want to give away in the tax
    cut. And it is 100 percent, because it's not just the size of the tax
    cut, but when you cut taxes that much, you reduce debt less, so your
    interest rates are higher, the interest payments are higher. So you have
    to add to the tax cut the interest payments that we will have to pay
    that we would not otherwise have to pay.
        So basically, it means that the surplus we project to come from
    Social Security taxes will be out here, and if it's kept that way it
    will be used to pay down the debt. And that's good; not as much as my
    plan, but it does pay some down, and that is good, and I applaud that.
    But it also means that you and we and the American people are stuck with
    the '97 budget caps for the next decade.
        Now, let me tell you what that means. First of all, it's not real.
    The same people that voted for this tax cut are up there spending money
    to help the farmers, and they ought to be. We've got a terrible crisis
    on the farm in America, and we need to deal with the present emergency,
    and we need a long-term modification of the '95 farm bill to reflect the
    fact that it has no safety net. And we need to do it in a way that
    doesn't mess up market prices, doesn't go back to the bad old days of
    overly-managed farm programs by the Federal Government. There are ways
    to do this, and we have to be careful how we do it. There are a lot of
    good things in that farm bill, in terms of having the Government get out
    of telling people what to plant and where; had a good conservation
    reserve program, had a lot of good things, but it had no safety net.
        So the Congress on the one hand is cutting the taxes and on the
    other hand spending money for farmers. They're putting more money back
    into the veterans' health budget, which they ought to do; there's some
    need there. They want a defense increase even bigger than the increase I
    want, neither of which can be funded under the new balanced budget
    calculations if you keep the Social Security surplus out of it. And that
    doesn't count what you will want us to do to help you in education or
    Medicaid or anything else. And it doesn't count what I hear every place
    I go, in every State, in communities large and small, which is that we
    had cuts that were too severe in the Medicare budget in 1997, which has
    imposed enormous burdens on the teaching hospitals in every State in the
    country, on the hospitals with large numbers of poor people, and on a
    lot of therapy services, for example, for home health care, which have
    been cut back.
        So, on the one hand we've got a construct that sounds simple and
    good. We keep two-thirds of the surplus; we give you a third back, to
    the people. But it means that we have to stay within the 1997 budget
    caps, which are already being broken, and which should be exceeded.
    You've got to do something about agriculture. We've got to do something
    about these teaching hospitals. We need some relief for the Veterans
    Administration, and that doesn't deal with all the things that you've
    been talking about, probably, before I got here. Now, so that's the
    budget problem.
        So one of two things will happen. If we had this construct, we
    either have huge cuts in all these things--huge--or we would have a
    reversion to past policies. We'd go back to deficit spending. At least
    we'd be deep into the Social Security portion of the surplus.
        Secondly, there are the aging realities. The plan that has passed
    does not do anything to extend the life of the Medicare Trust Fund, nor
    does it do anything--even though it holds

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    the taxes back--it doesn't do anything to extend the life of the Social
    Security Trust Fund.
        Just taking the tax receipts and holding them separate does not
    extend the life of the Social Security Trust Fund. To do that, you have
    to do what I suggested, which is to take the interest savings you get
    from paying the debt down for 5 years and put them into the Social
    Security Trust Fund. And I believe we have to find some way of
    bipartisan agreement to increase the rate of return in the Trust Fund,
    and the only way to do that is to get out of buying something besides
    Government securities. And I think there's a way to do that, and I still
    believe we can get an agreement on that.
        So there's--then the third thing is the economic realities. We have
    been told repeatedly, in a soft and indirect way, from the Federal
    Reserve Chairman to the pages of all the
    business articles that you read, that if, with the economy growing like
    it is, if we have a tax cut of this size, it will lead to larger
    interest rate increases, and most people will turn right around and pay
    back, in higher interest costs, what they are going to get in a tax cut.
        Now, it is true, as Governor Carper said, that we don't have indexes
    of inflation here, because America has a relatively open economy and
    because of the breathtaking increases in productivity, because of
    technology and other things. We don't. But the Fed took a preventive
    step, as all of you know, the last time it met. And we have gotten a
    signal that is loud, clear, and unambiguous, that if you have a tax cut
    this big, an economy that's doing this well, there will be higher
    interest rate increases, and the people will lose what they get in a tax
    cut in higher interest costs. I personally think that is a mistake.
        Now, consider the flip side of this. Here we, the baby boom
    generation, our generation, has been derided by others and by ourselves
    for 30 years for being self-indulgent and all that and been poorly
    compared to the World War II generation. Well, in their youth, they were
    required to save the world and to get us through the Depression. And we
    had no such challenge. But in our middle age, we are being given a
    chance to get this country out of debt for the first time since 1835. We
    are being given a chance to stabilize Social Security and Medicare, so
    that when we retire we don't have to have our hands out to our kids to
    support us and take money away from them that they would otherwise spend
    on our grandchildren. And I think it's the opportunity of a lifetime.
        Now, we can still have--my view is the way to resolve this is to
    stop putting the cart before the horse. To pass the tax cut before we
    decide what the Medicare fix is, what are we going to do on that,
    whether we're going to extend the life of the Social Security Trust
    Fund, and what we need to spend for these other things is kind of like a
    family sitting down to dinner and saying, ``Let's take the vacation of a
    lifetime; when we get home, we'll see if we can't make the mortgage
    payment and send the kids to college.'' You wouldn't do it. Nobody else
    would do it, and I think it's a mistake to do it.
        Now, if you disagree with all this and you want to go back and spend
    the Social Security surplus, we can do it. We can do all these things.
    But you mark my words: Interest rates will be higher; this economy will
    be weaker than it otherwise would have been; and 30 years from now we
    will wonder what in the living daylights we did with the opportunity of
    a lifetime. And I think that's why one of the members of the Republican
    Party who voted against this was Governor Voinovich, who happens to be a Senator. And another was Senator
    Snowe, whose spouse was one of our colleagues.
        And so I just would ask you to consider this. To me this is not
    politics; this is arithmetic. We went back to old-fashioned arithmetic
    in Washington the last 6\1/2\ years, and it worked pretty well. We had
    to get rid of 200 or 300 programs. We've now got the smallest Federal
    establishment since John Kennedy was President. And everybody had to
    take a little medicine they didn't like but because the economy has
    grown so much we've actually had more money to spend than we ever
    dreamed. And we've begun to lift children out of poverty; we've begun to
    do some other things.
        But if you look at this looming problem of what the aging of America
    will do--twice as many people over 65 in 30 years--if you look at what
    you all are facing, with 2 million teachers about to retire, with the
    largest number of kids in schools ever, with increasing diversity, it
    just seems to me that--and if you look at the obligations I have and
    that any President would have of either party to maintain military
    readiness and deal with the aging of a lot of our systems and to compete
    for talented young people to get them into the military when they can
    get so many good jobs doing other things,

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    if you just look at all of this, and if you look at the fact that the
    money is not there yet, this is all projected surplus, it seems to me
    that the better course is to think of the long-term future of our
    children. And I really do believe this is a generational challenge for
    the so-called baby boomers, and I don't think we ought to blow it. And
    if I can stop it, I will.
        But let me say something else. This is not--it is literally true
    that instead of spending more money on the farms, we'd have to cut the
    farm safety net programs; we'd have to eliminate the crop insurance
    bill. We'd have to have a $32 billion cut in Medicare, which we're not
    about to do. We'd have to do all these things.
        But let me say that I am also not pessimistic about this. To solve
    this problem we have to have a majority of both parties and both Houses.
    And most people say, ``Well, you're already in the political season, all
    the States''--some of you have done this--``all the States have moved
    their primaries way up. So everything is now about nothing but politics;
    we can't get this done.'' I just think that is dead wrong.
        We passed a bipartisan balanced budget agreement in 1997,
    overwhelming majorities of both Houses and both parties. In '96, in the
    teeth of the election, we passed that welfare reform bill, overwhelming
    majorities in both Houses and both parties. And you know, we're all
    still getting paid; every 2 weeks we're drawing a check up there, and if
    we just realize what we're supposed to do for our check we'll figure out
    a way through this.
        I am not nearly as pessimistic as a lot of people are about the
    prospects of our reaching an agreement, and I am determined to try to do
    it.
        Now, let me just talk briefly about two other things that were part
    of our partnership. One is welfare reform. I know a lot of you have been
    concerned, probably a lot of you in both parties, about the discussion
    in Washington where some of you, apparently, have been asked outright,
    how would you feel if we took some of your welfare reform money back?
    Now, to be fair, I want to just tell you, they're in a terrible bind,
    because they're living with the budget caps, and they want a tax cut
    that will keep them in the budget caps, and they've got to spend--
    they've got to help the farmers; they've got to do something for the
    farmers. And we probably have cut the veterans' budget too much, and
    they want to spend more and more on defense, and there's a general
    consensus that we need to--not on how we should help you with education,
    but that we should continue to support that, as you have the largest
    school populations in history.
        Now, I think that it would be wrong to take the money away. But what
    I want to urge you to do is to make sure that you have made every effort
    you can to spend the money in the appropriate way. We know, for example,
    that we're way below--and I'm trying to get this in the tax bill, by the
    way, because keep in mind, there can be a tax bill; it just can't be as
    big as the one that's passed--we're way below meeting the national need
    for child care for low-income working people. And if we're going to move
    more people from welfare to work, we've got to do more on that. So I
    hope you'll consider that.
        There also are some States--I know, you know, Governor
    Thompson only has 14 people left on public
    assistance in Wisconsin. [Laughter] There are some States where the
    reduction has been so low that, arguably, it is physically impossible to
    do. And if you all can come up with a fix for that for, you know, if you
    get the rates below a certain amount that deals with the education of
    poor children or something, you know, tries to creatively deal with
    this, bring it to me. I don't want to put anybody in an impossible
    situation.
        But I think that the problem of giving poor children a step on the
    ladder to a mainstream American life, beginning with education and
    health care and good parental support, is a problem that our successors
    and interests will be facing here 10, 20 years from now. And if we can
    set up the right framework we'll be doing a very good thing.
        So you can do two things. You can just say--they can say, ``Well,
    can we have some of this money back, because we've got a budget
    problem.'' And you can say, ``No,'' and you can probably win then. And
    I'd be for it, by the way, I'd be for your position. I'd say no, too.
    But I recommend--I think the better course is for you to say, ``No, but
    here's what we're going to try to do to spend this money that you're
    giving us,'' and if we're in a position like--I don't know how many
    States are in this position, but Tommy and
    I talked about this briefly in Chicago the other day--if you're in a
    position where you just can't, you say, ``Here's how we really ought to
    make some changes so we can

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    invest this in our kids and their future.'' I think that's important.
        There's also some discussion in Washington about whether the
    Congress should reduce the funding for the CHIP program. And again, I
    think that's a mistake, because between CHIP and Medicaid, as now
    funded, the vast majority of children in this country without health
    insurance could get it. And that would be a good thing. And I want to
    say that thanks to the efforts that a lot of you have made, and the
    outreach efforts that have been made, the Kaiser Family Foundation says
    that there's now 1.3 million kids enrolled in the CHIP program, which is
    a huge increase in the last 6 months. So it's finally beginning to pick
    up.
        However, we know that there's money out there for 4 to 5 times that
    many children to get health insurance. And I think that rather than talk
    about giving the money back to Congress, we should talk about how we're
    going to invest it for the purpose for which it was intended. It was one
    of the signal achievements of the Balanced Budget Act of 1997, a
    completely bipartisan thing, and a really laudatory effort. But all of
    you had to get out there and design programs and figure out how you're
    going to interface it with Medicaid and figure out how to tell people
    about it. It was a complicated thing, but we wanted to do it in a way
    that this portion of it would be as little hassle for you as possible.
        And a lot of things have happened. In Nevada, for example, I know
    our educator-Governor there says the school
    principals are getting children signed up for CHIP. In Alabama, the All
    Kids program is mobilizing coaches to enroll children who want to be in
    sports. In California, Governor Davis is doing
    outreach for CHIP in 10 different languages. So a lot of good things are
    happening.
        And I think it's important that we remember that this year, this
    coming school year, will be the first full year of full opportunity and
    operation of the CHIP program in all the States. So I think it's too
    soon to rush to judgment about this. This is the first full year of
    fully operational CHIP programs in all the States.
        I think we need to do more to support the outreach and to take
    advantage of the children's health initiative. Now, beginning tomorrow,
    we're going to send every school superintendent in America a letter, and
    every member of the National Association of Elementary Principals will
    get letters from that organization, asking them to participate in an
    outreach effort to inform parents about the value of health insurance
    and their eligibility.
        Next month, when the children get back to school, the Departments of
    Justice and Health and Human Services are going to launch outreach
    efforts with the United Way. For example, school lunch applications will
    come with flyers explaining the CHIP program; workers are going to be
    sent to local McDonald's to sign up families there; Health and Human
    Services is going to run a radio message campaign to publicize it.
        I think there is an enormous amount of promise that is still to be
    fulfilled here. I need to ask you to do a couple of things. First of
    all, we need more data to really make the system work. We can't improve
    the program or know what's wrong with it unless we know how many
    children have signed up for it. To date, 20 States haven't sent us the
    information. Some haven't reported on the basic information about
    children on the Medicaid rolls. And we know that from outside studies
    that in some States individuals who are Medicaid eligible don't always
    get the opportunity to enroll without delay, as the present law
    requires. We need to figure out why this is happening and figure out how
    to stop it.
        So this month, as was reported, I think, already, we will begin
    working with you in partnership to do some onsite reviews to ensure that
    there are no roadblocks, intentional or, even more likely, unintentional
    roadblocks, to those who are eligible for Medicaid. I think that now
    that we have the funding and the extra flexibility to manage welfare and
    health care, we've got to make the most of it. Let me just give you some
    examples.
        There is $500 million in the budget to reach out to families who
    lack health insurance, but are eligible for Medicaid, to simplify
    procedures for signing them up. We've gotten rid of the census rule that
    two-earner families that work over 100 hours a week are ineligible for
    Medicaid, even if their incomes are still low enough to qualify. All of
    you will get substantial funds on the tobacco settlements. They can be
    used for preventing youth smoking, but also for expanding health
    insurance. I hope you will make the most of this.
        Let me just make a couple of specific suggestions about CHIP, in
    addition to what we're

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    trying to do. I think the things that would have the greatest impact are
    presumptive eligibility for CHIP, as well as Medicaid, and sending
    eligibility workers into schools, into churches, into health care
    centers, into day care and preschool centers, places where the children
    are where their parents will come.
        We have--this is an enormous opportunity to shrink the health
    problem of no insurance for children. We know we have about 10 million
    kids without health insurance. And the last 6 months of the CHIP program
    indicate to me that if you just keep working at it, we can get up at
    least to the 4 to 5 million kids that we anticipated. But if you look at
    the combined eligibility and the level of funding of Medicaid and CHIP,
    there's no question that the vast majority of uninsured children in this
    country could in fact get coverage. And it would make a demonstrable
    difference in their health and in their performance in school over the
    long run.
        Well, let me just finally close by saying that, in some ways, these
    are all high-class problems. If I had come here in '93 and said, ``Now,
    I'll be back here in a few years, and we'll talk about how to spend the
    surplus,'' you would have said, ``You know, I thought that guy had good
    sense, but he's completely lost it.'' This is a high-class problem. But
    all high-class problems have accompanying high-class responsibilities.
    This is the last NGA meeting of the 20th century; the 92d meeting of the
    Governors, or the 92d year in which you've met. I've been to 19 of them.
    The first one, in 1908, was called by--that's not the one I went to.
    [Laughter] Although some days I feel like I went to it. [Laughter] The
    first one, in 1908, was called by a former Governor, Theodore Roosevelt.
    He was a great Governor and a great President and a very farsighted man.
    And he called the meeting, interestingly enough, about the conservation
    of our Nation's resources.
        Now, I'll make you another prediction. When I look around this room
    and I see how many of you I've visited in natural disasters over the
    last few years--you and your successors will spend a lot more time in
    the next 20 years talking about the conservation of national resources
    in the context of natural disasters and climate change. And so, it will
    be deja vu again. And Teddy Roosevelt will look even smarter than he
    does today.
        But I want to close with a quote that he gave to the first
    Governors' meeting. He said, ``Both the national and the several State
    governments must each do its part, and each can do a certain amount that
    the other cannot do, while the only really satisfactory results must be
    obtained by the representatives of the national and State governments
    working heartily together.''
        I think that if we work heartily together, we will turn these high-
    class challenges into gold-mine opportunities, and our children will
    live in America's greatest days.
        Thank you very much, and God bless you.

    Note: The President spoke at 2:25 p.m. in the St. Louis Ballroom at the
    Adam's Mark Hotel. In his remarks, he referred to Gov. Thomas R. Carper
    of Delaware, chair, and Gov. Michael O. Leavitt of Utah, vice chair,
    National Governors' Association; Gov. Mel Carnahan of Missouri; Dorothy
    Rodham, the President's mother-in-law; Gov. James B. Hunt, Jr., of North
    Carolina; Senator Olympia J. Snowe's husband former Gov. John R.
    McKernan of Maine; Gov. Tommy G. Thompson of Wisconsin; Gov. Kenny C.
    Guinn of Nevada; and Gov. Gray Davis of California. The President also
    referred to CHIP, the Children's Health Insurance Program.