[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,

[[Page 1406]]

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,

[[Page 1408]]

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

[[Page 1410]]

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.