    [Weekly Compilation of Presidential Documents Volume 29, Number 31 (Monday, August 9, 1993)]
    [Pages 1573-1580]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Interview With the Louisiana Media

     August 4, 1993

    Economic Program

        Q. Do you have a commitment from Bob Kerrey or did DeConcini do it
    for you?
        The President. I think I should always let the Senators speak for
    themselves. I've always believed that if the program passed in

    [[Page 1574]]

    the House, it would pass in the Senate. I don't think they will let it
    go down.

        If you listen to the criticisms of--for the people who are voting
    no, they all basically say, at least in private what they say, they say
    one of two things: They either say that this is a good program; it's
    serious deficit reduction; it's progressive; it has incentives for
    growth and new jobs; 90 percent of the small businesses in the country
    get a tax break if they invest in their businesses; the working poor are
    lifted out of poverty. That affects 390,000 taxpayers in Louisiana,
    working families. But they say that the adversaries have put so much bad
    news on the people and they've convinced so many people that it doesn't
    reduce the deficit, it doesn't cut spending, and it taxes the middle
    class, that we can't ever fix it. So it's just bad politics even though
    it's good for the country.

        The other argument is that it doesn't solve every problem. We still
    have to control health care costs. We still have to deal with that to
    bring the deficit down to zero. That is true, but you can't do that in
    this bill. You have to reorganize and reform the health care system to
    do that. You've got a classic example with Charity Hospital or with any
    of your health care providers that get Medicare funds. If we did what
    some of our critics say here and we just slash Medicare, put a cap on it
    without reforming the underlying health care system, one of two things
    would happen: We would either really hurt middle class Medicare
    recipients plus the hospitals and other providers of Medicare, or those
    providers would take the shortfall and pass it on to your employers so
    that everybody who has private health insurance would pay more.

        So I think most people know this is a good program. It's good for
    the country, and I think it'll pass.

        Q. So that means that DeConcini did lock it up for you, then?

        The President. I believe it will pass. I'm not going to--all the
    Senators will have to speak for themselves. I believe if the House
    passes it, the Senate will pass it, I believe. But we haven't passed the
    House yet. That's tomorrow's test.
        Q. We've heard all day about how good this plan is for Louisiana.
    Yet, many Louisiana Democrats, two in the House, maybe three, and of
    course Senator Johnston, plan to vote against it. Disappointed,
    considering that----
        The President. Sure, I'm disappointed, But you know, they took a
    terrible licking on all the sort of negative attacks on the plan early
    on. Senator Johnston told me, he said, ``I know there are a lot of good
    things in this plan, but the people of Louisiana don't know it. And I
    don't think they will know it.''
        I don't know how in the world we could ever make any decisions in
    this country if we made decisions on that basis. But you know, the truth
    is that 15,000 Louisianians, according to our research, will pay the
    higher income tax rates, and 390,000 Louisianians will benefit from the
    earned-income tax credit reductions for the working poor, and over 90
    percent of the small businesses will be eligible for substantial tax
    reductions if they invest in their businesses. I mean, those are the
    facts. And the average family of four with an income of $50,000 will pay
    $35 a year under this program, and all the money goes to reduce the
    deficit. And there are now more spending cuts than tax increases in the
    deficit.
        All I can do is take the people who have not declared and keep
    hammering home the facts. And I hope we will get those--but a lot of
    your House Members said the same thing to me. They said they were just
    afraid that the public had been so misinformed that it would never get
    all straightened out. My argument is that it will get straightened out
    if it passes, because once the bill passes, reality takes over and the
    rhetoric shrinks. I mean, either you are affected by it, or you aren't.
    You know how it works, or it doesn't.
        Q. Mr. President, what about Congressman----
        The President. No, go ahead. I've got to give other questions.

    Spending Cuts

        Q. How do you expect the Congressmen to go along with the spending
    cuts in the long run? I mean, if they vote tomorrow yes, they're voting
    for, what, $255 billion----

    [[Page 1575]]

        The President. Billion dollars, that's right.
        Q. ----billion in tax cuts. But, I mean, you down, down the road--I
    mean, we've seen this happen before and----
        The President. Well, I want to make two points about it and what's
    different about it this time.
        The first point is that today I issued an Executive order which is
    legally binding on my Government, which requires all the tax increases
    and all the spending cuts to be spent on deficit reduction for the 5-
    year life of the budget. And that has the force of law. So if any of our
    people divert from that, they are breaking the law.
        The second thing is that if we miss the target in any given year,
    because it's impossible for any of us to calculate to the dollar what's
    going to happen to our enterprises for 5 years, any year we miss it I
    have to come back in with a plan to fix it.
        In addition to that, I told the House Members today that we were
    going to try to pass these requirements as a separate piece of
    legislation in September, and I feel confident we will. The Republicans
    essentially--we could have put it on the budget, but the Republicans in
    the Senate threatened to filibuster it if we did. I don't know why,
    because they were for it, I thought.
        Now, the other point I want to make about the spending cuts: There
    are three other opportunities we're going to have to cut spending to
    continue to drive the deficit down. Opportunity number one is in the
    health care debate. If we reform the health care system properly, over
    this decade we will spend less money on Medicare and Medicaid than we
    otherwise would. But if we do it right, then we'll be saving money for
    the private sector as well as the public sector. For example, we spend
    about 10 cents on the dollar in administering the health care system,
    because of all the various insurance and governmental regulations that
    no other country spends. We can do better. We can cut health care
    spending.
        Second, the Vice President has a reinventing Government report
    coming to me next month which will recommend a substantial amount of
    reorganization of the Government to eliminate both waste and corruption,
    that will bring us new savings. The Government is just like any other
    big company. It needs to go through a period of restructuring now. But
    this Government has not fundamentally been reexamined since Herbert
    Hoover's civil service report in the late fifties. So there will be more
    cuts coming there.
        The third thing I want to say, because I know there's a lot of
    skepticism about the Congress that you should know, that Congress will
    have further opportunities between now and September 30th to cut
    spending in the regular appropriations process. In other words, what
    this bill says is they have to cut at least this much spending, at least
    $255 billion. That's what this bill does. But they can cut more. The
    House of Representatives has already approved more than $10 billion in
    spending cuts over and above what we require and sent it on to the
    Senate. And I've been working for the last 2 days on trying to organize
    a Senate-House effort to continue to cut spending when this is over. So,
    we're just getting started. This is the first step, not the end of this
    road.

    Conservative Democrats

        Q. Congressman Stenholm announced that he would not vote for the
    plan. Mr. McLarty said don't cut him out yet. He may be--put him in a
    middle column. My first question is, are you going to try to attempt to
    persuade Mr. Stenholm to join the yes voters? And the second question
    is, do you think Mr. Stenholm can pull away enough conservative
    Democrats who were perhaps going to vote for the plan if Stenholm did,
    so they could say ``a good conservative Democrat like Stenholm voted yes
    so I can, too.'' Do you think he can pull away enough that will threaten
    passage in the House?
        The President. I don't think he can. I think he could, but I don't
    think he will. That is, I think he is in a very unique position. I like
    and admire him very much. He was very disappointed when the
    parliamentary maneuvers by the opposition party in the Senate made it
    impossible for us to put these budget control mechanisms on the final
    bill. But he came over today to the White House when I issued the
    Executive orders, and he said he would do everything he could to pass
    it.

    [[Page 1576]]

        He made a statement that he's sort of stuck with now. And I think
    it's a statement that he thought was responsive to his constituents. He
    said, ``Look, I voted for the Btu tax, and I'm from Texas, but it raised
    $70 billion. If you're going to have this gas tax, which only raises $23
    billion, that's the only thing the Republicans can claim we're doing to
    the middle class. Why don't we just get rid of it.''
        The problem is with getting rid of it is that we also have a whole
    lot of Democrats who will only vote for deficit reduction if it's the
    biggest package in history and if it's over $495 billion. They want it
    to be real deficit reduction. And we couldn't ever get a majority weigh
    to make up that $23 billion to get rid of the fuel tax. So I think
    Stenholm has taken some public positions which narrow his options. And
    he knows that several people who voted no before have declared yes
    today. We had three of them in a press conference today, including
    Charlie Wilson from Texas. But there are at least two others from Texas
    who are changing from no to yes.
        So I believe we'll have enough to pass it in the House. But I will
    say again to you, to respond to your question, the key in my judgment is
    the House. I do not believe the Senate will let the bill fail and let
    the whole thing come apart if the House passes it. But we've got to keep
    our focus on first things first.

    Republican Opposition

        Q. How disappointed are you that all 215 members of the GOP
    delegation in Congress are united against your plan?
        The President. Oh, I'm terribly disappointed. Let me give you an
    example. There are 20 to 30 Republicans in sort of a moderate caucus in
    the House who told me in the beginning that they didn't mind voting for
    taxes on upper income Americans, that their problem was the Btu tax and
    the Social Security tax, you know, extending the income tax to some
    Social Security income.
        So we took the Btu tax out, and now the Social Security tax only
    affects the upper 10 percent of Social Security recipients who have a
    net worth, average net worth in excess of $1 million, and who will still
    get what they put into the Social Security system plus interest back
    without taxation. So I wish they would come with us, because I know that
    there are Republicans who want to vote for this.
        I have talked to Republicans in the Senate who tell me they think
    that this is a good plan and better than the alternatives anyway. And I
    regret it. But, you know, the leadership basically have said they were
    all going to go on strike, and that's what they've done.
        But let me say this. I think if we pass this plan tomorrow and the
    next day, I do not believe this will ever happen again, because then the
    dynamics of every other debate favor broadening the base of the country
    and the party. If you look at health care, the crime bill, the welfare
    reform bill, the trade issues, there will be supporters and perhaps
    opponents in both parties on all issues. We will really be able to have
    a more bipartisan coalition. And every budget issue we have to deal with
    in the future that I can foresee will be nontax spending control issues.
    And they won't have the maneuverability, I don't think, to control all
    those Republicans. I think you'll see more of what we saw in the
    national service bill, which Senator Breaux and I worked very hard on,
    where we did get Republicans who broke the filibuster in the Senate, got
    a big Republican vote in the House, and a nice group of Republicans
    supporting us in the Senate. I think you'll see more of that.

    Economic Program

        Q. Mr. President, tell me--people that we see in our polls just
    don't believe that higher taxes and Government cutting is going to help
    them. I mean, that's what the polls show, and obviously you're trying to
    change that. Can you tell people in Shreveport, Louisiana, and Hope,
    Arkansas, and Longview how directly their lives will be better next year
    than they are right now because of this?
        The President. Yes, and I can tell you three or four specific
    reasons. Number one, if we bring down this deficit, we will be able to
    keep these interests rates down at historically low levels. Interest
    rates started to drop from the minute we announced this program. And
    every time we've made progress on it, they dropped some more. And every
    time there was some rumor that we were going

    [[Page 1577]]

    to lose control of it, interest rates spiked up a little bit.
        If you have low interest rates stable for a couple of years, what
    happens is people refinance all this huge debt from the eighties, their
    home loans, their business loans. That lowers their cost of carrying
    that debt, puts money directly in their pocket. And if they know it's
    going to be stable, then they turn around and reinvest it. So there are
    already millions of Americans who have refinanced their home loans
    because of these low interest rates that the deficit fight has brought
    about. If we can keep it back down for a year, then a lot of that money
    will be reinvested. So they will benefit directly if they refinance
    their homes or their business loans or take out a lower loan for
    consumer credit or college or a car or if they reinvest it.
        The second thing is that, I will say again, 90 percent of the small
    business people in this country are eligible--which is probably more
    than 90 percent in Arkansas and Louisiana--are eligible for significant
    and retroactive tax reductions if they invest in their business. We
    almost doubled the expensing provision for small businesses. That means
    that over 90 percent will have a net tax cut if they reinvest.
        We increase incentives for people to invest in new businesses and
    small businesses. If you hold the investment for 5 years, you cut your
    income tax rate by half. And the smaller businesses, the newer ones, are
    the ones that created the jobs. So that will directly affect them.
        Then, the last thing I want to say is that over a quarter of the
    working families of Louisiana will be eligible for relief under the
    earned-income tax credit, because they earn less than $30,000 a year.
    And working families with children with earnings of less than $30,000 a
    year will be held harmless from the gas tax through income tax cuts. And
    if they're much lower than that, they'll actually get a tax break out of
    it.
        So there will be more cash in Louisiana, in Shreveport and more
    economic incentives to invest in the economy. And a lower deficit helps
    everybody.
        Otherwise, let me say what happens if we don't do this. If we don't
    do it, this deficit will move up toward $500 billion and $600 million a
    year, and every year more and more of our tax money will go to pay
    interest on the debt instead of to invest in education and other things.
        The other thing this plan does, I think it's worth pointing out,
    that's very helpful to Louisiana and Arkansas is it invests more money
    in Head Start; in early childhood health programs, which are real
    problems in our two States; in job training programs; in defense
    conversion programs for people who have been hurt by military cutbacks
    to train them for new jobs and to help communities adjust; and in making
    college more available to young people. So those are the specific ways
    that people will be benefited by it.
        Q. Certainly, Mr. President, there's an antitax sentiment out there.
    The Btu tax was scrapped. Now we have a 4.3-cent gas tax. Why should
    Louisianians feel good about that?
        The President. They shouldn't necessarily feel good about that; they
    should think it's a price worth paying to get the deficit down and to
    get these incentives for the economy to grow. If you look at it,
    gasoline in real dollar terms--that is, adjusted for inflation--is at
    its lowest price in 30 years. So this is the least burdensome time to
    put this on. Let me compare it. If you compare the tax burden imposed on
    the middle class in the 1990 tax bill and this one, that bill imposed a
    burden 2\1/2\ times greater than this one. So we tried to minimize the
    burden on the middle class, hold working families with incomes under
    $30,000, which is a big percentage of Louisiana and Arkansas, harmless
    from the tax increase and asked the people in the upper 1.5 percent,
    people with incomes above $200,000, to pay 80 percent of the taxes,
    because they got a majority of the income gains of the 1980's; literally
    the top 1 percent got over 60 percent of the income gains and got a tax
    cut.
        So I think this is a fair program. The main thing is, we're going to
    lock all this money up and put it to bringing the debt down. And we all
    win if that happens.

    Spending Cuts

        Q. Mr. President, why are so many of your spending cuts postponed
    for 4 or 5 years? And will they really ever take place?

    [[Page 1578]]

        The President. Oh, yes. They're legally bound to take place. But let
    me say this in response to what Senator Dole said last night. You ought
    to go study the program he presented the Senate. A higher percentage of
    his cuts occur in the last 2 years than mine. The reason for that is
    that these cuts tend to be cumulative. That is, if you start right now
    and you want to shave a program--let me give you a program that I tried
    to shave that we are going to cut, the subsidy for people who grow wool
    and mohair, you know? The wool and mohair subsidy is $600 million. It's
    money that can't be justified. It goes back to the Korean war. Because
    the people that represent those farmers didn't want to eliminate it
    altogether, we're phasing that in. If you cut farm subsidies, which
    we're doing, it's fairer to phase that in. You want to give people time
    to prepare for that.
        The other reason, frankly, is that we have already gotten for next
    year and the year after in our budget virtually flat spending from this
    year. So if you want to go from flat spending to big cuts, you've got to
    give people time to adjust to that. But these cuts are absolutely real,
    and they have to be put in.
        The only thing that could derail this budget is if there's a big
    recession and the revenues don't come in or we don't with discipline,
    deal with the health care issue, which I intend to do.

    Deficit Reduction

        Q. You said the debt would be going down just a second ago. But
    isn't it true it will actually be going up but at a slower rate?
        The President. No, the deficit, the annual deficit will go down. But
    since there will be a deficit, the national debt will go up but at a
    much lower rate.
        What we need to do is to work toward bringing the deficit down to
    zero. If you look at my little chart that I was showing last night, what
    it shows--and by the way, all charts show this. Anybody else's chart
    would show the same thing, the other plans would show the same thing.
    You can bring this deficit down substantially in 5 years, but because of
    the exploding cost of Medicare and Medicaid and because health care
    spending is going up at twice the rate of inflation or more, after 5
    years that becomes such a big percentage of the budget, unless you
    control that, the deficit starts to go up again.
        If you want to bring it down to zero, what we have to do is to make
    sure we reform the health care system and do it in a way that by the
    time this budget ends it cycle in the 5th year, you start having health
    care costs go down. And believe me, health care costs--in this budget,
    what that means is health care would go up at the inflation rate plus
    population. Or in other words, if we could take it up to 6 percent a
    year instead of 9 percent a year, we could bring the deficit down to
    zero in about 9 years.
        And let me say, that would be a very good thing. You can contract
    the economy too much. Let me just say there are a lot of economists who
    say, not conservative economists but traditional progressive economists,
    who say in all periods of slow growth you should cut taxes and increase
    spending. The problem is our debt is so big we can't do that, that's
    crazy. So how can we reduce the deficit and grow the economy? By keeping
    the interest rates down and having people refinance. But you can't do it
    too fast.
        So if you go back and look, we're about where Japan was in 1975.
    They were in the same fix we're in now. They had a deficit that was
    about the same percentage of their income. And they said, ``We're going
    to bring this thing down to zero. We're going to do it in 10 years.''
    And 10 years later they did it. And now they've run a balanced budget or
    had a small surplus for the last 5 years as a result of that, even
    though their economy is growing slower than ours. They have more
    flexibility to deal with their system than we do. So we've got to do
    this. And I feel very good about it. I think it's going to work. But
    we've just got to realize we didn't get into this fix overnight; we're
    not going to get out of it overnight.
        Let me just close with this. There are two issues here. One is,
    what's the condition of the economy and what caused it? The second is,
    what's the proper response from Government? The economic problems we
    face have been developing over a 20-year period. Average workers' wages
    in this country peaked in 1973, if you adjust for inflation. Since '73
    more than half of the American people have been working harder for the
    same or lower

    [[Page 1579]]

    wages, while they paid more for health care, housing, and education.
    That's because of all these changes in the global economy. That's run
    through Republicans and Democrats. That's a fact of this age and time.
        The Reagan response, which was continued by President Bush, was cut
    taxes, tilted heavily to the wealthiest Americans on the theory that
    they would reinvest it, and spend more money on defense because that
    will balloon the high-tech economy at home. What happened was, when we
    had to start bringing down defense at the end of the cold war, by that
    time health care costs were going up faster than defense was going down.
    We had to keep spending money on the same health care and interest on
    the debt. And because they were unwilling to cut other spending or to
    ask the wealthiest Americans who got the big tax cuts in the eighties to
    just restore some--we don't even restore all of it. Tax rates are still
    going to be lower than they were in 1980 before this happened. Because
    we were unwilling to do that, we had this big imbalance.
        So what I'm trying to do is to say--I'm not blaming anybody for the
    larger economic things. These are 20 years in the making. We can turn it
    around, but we have to have a different response. We have to change from
    trickle-down economics to an invest-and-grow economics. And that means
    bringing the deficit down and targeting investments for business,
    because that's what we're trying to do.

    Public Works Projects

        Q. One last question, Mr. President. I cover Eldorado and Monroe,
    and you've inflated a lot of people's appetites with all the talk of the
    interstate coming through there, I-69. Eldorado doesn't have one.
    Northeast Louisiana would like to get more than its share because it's
    through Senator Johnston's wording in the bill--the proposal's going
    through Shreveport. What assurances can you give us in northeast
    Louisiana and southern Arkansas that we get a fair share of the public
    works project?
        The President. Well, the Congress, of course, will ultimately
    approve the route. But I can tell you that basically if you look at my
    record at home, I've always supported those things. And that's one way
    that we're going to keep jobs and incomes up in this country. We're
    going to have to continue to invest--that's a Government program, if you
    will, that in my judgment is not waste. We have to continue to invest in
    these things. And I will do what I can to see that we keep the
    investments on schedule. Especially because of where I'm from, I can't
    be in the position myself of picking the routes. But I think the
    Congress will do that, and it looks to me like you're in pretty good
    shape on that score.

    Deficit Reduction

        Q. Mr. President, an old friend of yours and a man who many
    Louisianians admire very much said today at noon, I heard him: ``His
    deficit reduction plan just won't work,'' unquote, Buddy Roemer. What
    can we take back--[laughter].
        The President. Spoken like a good Republican. Let me say, I believe
    first of all that what the Republicans have done, they ran this
    Government for 12 years. We went from a $1 trillion to a $4 trillion
    deficit. Now, the Democratic Congress has voted for that, but you need
    to know that under both the Reagan and Bush administration Congress
    actually appropriated a little bit less money than the Presidents asked
    for.
        My answer to you, sir, is that not very long ago one of our Nation's
    newspapers, the Philadelphia Inquirer, went around and interviewed what
    you might call neutral experts on the deficit reduction plan, basically
    the budget analysts for the big accounting firms and other big finance
    firms. And they all concluded that my budget was the most honest one
    presented in a decade, the first Presidential budget to be taken
    seriously by Congress since the first Reagan budget. And the budget
    analyst for Price Waterhouse, the big accounting firm, whom I have never
    met and don't know and obviously doesn't work for me, said that my
    budget was the best budget in more than a decade, and the only thing I
    was wrong about is that it would reduce the deficit more than I was
    saying, not less. So let's just hope he's right. I think he is.
        Thank you.

    [[Page 1580]]

    Note: The interview began at 5:32 p.m. in the Red Room at the White
    House. A tape was not available for verification of the content of this
    interview.