[Weekly Compilation of Presidential Documents Volume 29, Number 31 (Monday, August 9, 1993)]
[Pages 1526-1531]
[Online from the Government Publishing Office, www.gpo.gov]
<R04>
Interview With Newspaper Editors
August 2, 1993
The President. Hello?
Senator Herb Kohl
Q. Mr. President, I want to give you the first question and to point
out that the attention you've given our Senator Herb Kohl in the last
couple of days has raised his level of notoriety to a point that he
hasn't known since he was elected. Now, I know you wouldn't trade a
vote, but is there anything that you and Senator Kohl mutually want in
terms of legislation or other benefits for Wisconsin that you have an
interest in?
The President. The main thing that Senator Kohl was concerned
about--he was interested in two things, to be fair, and there was--in
the national interest. One was to minimize the burden on middle class
taxpayers. And when he looked at the whole package and saw that working
families with incomes under $30,000 were held harmless and that working
families with incomes of $50,000 and $60,000 were looking at a $33-a-
year burden with the spending cuts, I think that really made a big
difference to him.
The other thing that he was interested in that I think is certainly
as significant over the long run is he wanted a program that had some
real economic growth incentives, that had some business help in it. And
this program does a lot for small businesses. Over 90 percent of the
small businesses in the country are eligible for a tax reduction if they
reinvest more money in their businesses. It does more for research and
development. It does more for revitalizing homebuilding and real estate.
It does more across a whole range
[[Page 1527]]
of issues. For the heavy industry in Wisconsin, under this plan, there
will be more incentives to invest in new plant and equipment in
Wisconsin to be competitive there as opposed to going overseas. So all
those things were important.
And then the third issue that he raised, which I certainly agree
with him on, is that we need to bring this deficit down to zero. And in
order to do that, we're going to have to cut more. But to do that, we
have to reform the health care system. So the next issue is how to bring
down health care costs so we can get this budget deficit down to zero
and not just take $500 billion off of it.
Q. Have you convinced him, Mr. President, that these changes are
enough to get his vote on this issue?
The President. Well, I hope so. I've worked hard on that. That's
going to be up to him, not me, and I don't think I should speak for him.
But let me say this: I think he has really done a good job here, and he
has been very important in bringing a business, projobs perspective to
the whole debate. So we'll just see. But we've got a $495, $496, $497--
something in that range--billion dollar deficit reduction package. We're
now going to have more cuts than tax increases in the package. The top
1.2 percent of the American people, of people with incomes over $200,000
will pay more than 75 percent of the burden now. And there are
quantifiable spending cuts now in excess of $250 billion across the
whole range of Federal programs. So it is a very important first step
here.
Senator David Boren
Q. Mr. President, you haven't had quite as good a success with our
Senator Boren, who, I think, like many people in Oklahoma are concerned
that the spending cuts to come later--when we went through that in 1990,
and they never came. Why should things be different this time?
The President. Well, for one thing I'm going to have a trust fund
and all the money will have to be put into the deficit reduction
package, both the spending cuts and the tax increases. What actually
happened in 1990, Jim, to be completely accurate about it, is that the
Congress adopted a plan based on the previous administration's rosy
revenue estimates. And no one really thought the revenues would grow
that much; so they didn't. And then spending increased because the
recession went on and more people were entitled to Medicare and
Medicaid. And between those two things, they were in deep trouble.
Now, let me just address the major objections Senator Boren has,
because I think what he says is right, but it's not a good reason to
vote against this program. What he says is that in order to take the
deficit from where we're taking it down to zero, you have to do
something about the entitlement programs, especially about Medicare and
Medicaid. Now, that is true. But the problem is if you don't reform the
health care system, that is, if you don't fundamentally restructure the
system of the way health care is insured against and the way the--
cutting out a lot of the paperwork and a lot of the things that are more
expensive in America than anywhere else that have nothing to do with
health care, and you cut the medical expenses of the Federal Government,
all in the world you're going to do is have a hidden tax on the private
sector because the providers will do what they always do. They'll pass
their costs on to people that have insurance. So that, for example, the
Daily Oklahoman would have its medical premiums go up more than
otherwise would be the case because the Government's not paying the full
cost of its health care.
So I don't disagree that we have to do something about health care
costs and entitlements. But the time to do that is in the context of a
health care reform debate, which we're going to start as soon as we can
get this budget out of the way. If we don't adopt the budget, we'll
never get there. Everybody who looks at it can see that this budget's a
lot better deal than the one in 1990. The numbers are more realistic.
The growth package is realistic. We've got new business capital gains
tax in there and all kinds of other incentives for small businesses to
grow. Over 90 percent of the small businesses can get a tax reduction
under this plan because of it. This is going to create some jobs, too.
So it's a better package.
But you can't solve all the problems of the world in this bill.
That's my quarrel and dis-
[[Page 1528]]
pute with Senator Boren. He's right, you've got to get the entitlements
if you want to go to zero, but we're going to have to do it in two
steps, not one.
Spending Cuts
Q. Mr. President, a lot of people are concerned with, out here, the
fact that the spending reductions, the major ones, seem to come so late
in the plan, and the tax increases come so early. Wouldn't it be better
to go back in and make another slash, even if this means delaying the
budget a little bit?
The President. Here's the problem with it: First of all, there are
going to be more spending reductions all the way along. The House of
Representatives has already approved $10 billion in spending reductions
over and above what's in this budget, but working with me. I've
encouraged them. The Vice President is going to have a reinventing
Government report out sometime next month, which will provide a lot more
savings. So we're just getting started on the spending reductions. And
then as I said, we'll be able to project a decade of spending controls
in the health care area if we do health care reform.
The problem is that no matter what you do with that, the budget we
have now and the budget we're going to have next year--we're already
preparing to cut more off next year right now. But that is not an excuse
not to act now. Still the big reductions in spending are those that
aggregate up over time. That is, if I cut $10 billion this year and $10
billion next year, then that's $20 billion over this year's figure and
then $30 billion and $40 billion. You see what I mean? So the spending
cuts are always going to look bigger in the out-years because they
compound one another.
Small Business
Q. Mr. President, we're relaying some of our readers' questions. One
of them was, how can the job market grow when small businesses are
afraid new taxes and the health plan will put them out of business?
The President. Well, first of all, new taxes and the health plan
won't put them out of business. We've tried to send a clear signal to
the small business community that there won't be a tax problem here. But
if they have to have a premium to cover their own employees, we will
limit how much of their payroll it can be, and it will be phased in over
a period of years.
But let me flip it over to you on the other side. Seventy percent of
the small businesses in America provide some health care coverage for
their employees, and almost all of them pay much more than they should
because we're the only country in the world that forces employers who
cover their employees to subsidize employers who don't, and that's what
happens. Everybody in this country gets health care, but if you don't
have health insurance and you can't pay for it, you get it too late when
it's too expensive. You show up at the hospital; you get cared for, and
then the providers, the doctors and the hospitals, in effect, raise
their costs to everybody else. So you could argue that the small
business community as a whole in this country is more hurt by the system
we have than by the one we're moving to.
Also, let me make one other point. We spend about 10 cents on the
dollar more than any other country in the administrative costs of our
health care system because we have 1,500 separate health insurance
companies writing thousands of different policies, all with different
rules and regulations, so that the cost of compliance is staggering, and
then the Government aggravates it.
So I think the small business community will wind up ahead on this.
But we've tried to send some clear signals that we're not going to pop
them with a big payroll tax, and I do think employers who don't provide
anything for their employees should bear some responsibility through the
private insurance system. But it ought to be limited and phased in so
that nobody goes broke doing it.
Getting the Message Out
Q. Mr. President, on Friday, last Friday we had a conversation with
Roger Altman about your budget plan, and one of the questions we asked
him was what the administration would have done differently to sell this
plan. And he was very frank about it. He said, ``We would have started a
lot earlier.'' And I'm curious in terms of your strategy why you didn't
really start giving everybody the hard sell a lot earlier.
[[Page 1529]]
The President. You mean not in the Congress but in the country?
Q. Yes, talking to the people.
The President. Well, actually we did a lot of that, but we didn't
have our war room set up, and we were, frankly, just overwhelmed by the
day-to-day news coverage of Republicans carping about taxes and unable
to kind of break through about what the facts of the program were.
I worked hard--for 2 months after I made my State of the Union
Address I went out into the country once a week. I did my best to talk
about the program. But we didn't have the kind of organized disciplined
effort we've had for the last few weeks in reaching out to local
newspapers and television and radio stations and bringing in opinion
leaders and doing all these things we're doing now. And I think we did
lose control of the debate. Also, to be fair to them, to Roger Altman
and the others, an issue like this tends to go through cycles. I told
the people about it on February 17th, and they liked it. Then the sort
of negative rhetoric took over. Now we're kind of coming back to
reality, and all the surveys show we're bringing it back our way now.
Interest Rates
Q. Mr. President, Alan Greenspan has been giving some subliminal
signals about raising interest rates. Wouldn't that sort of derail your
plan for reducing the deficit if the interest rates went up? And are you
worried about that?
The President. Yes, I am. I don't think you should raise interest
rates until there's real economic growth that brings on real inflation.
I mean, there's no real inflation in this economy, and we can have
growth without inflation. And I think we may be reading too much into
his remarks.
Q. Have you talked to him directly about what he did mean since he
made those remarks?
The President. No, but I talk to him fairly often, and I'm scheduled
to have another session with him pretty soon. I know him pretty well,
and my read on what he said was if inflation warranted it, he might
raise interest rates. But if you think about it, what we're trying to do
in bringing the deficit down is to justify keeping the interest rates
down even when there's economic growth because the Federal Government
will be taking less capital away from the markets, and therefore, there
won't be as much competition for it, and we ought to be able to keep
lower interest rates. That's our theory. He has constantly and
consistently supported the deficit reduction efforts of this
administration in very explicit terms. So I would be surprised to see
him raise interest rates when we're doing something to support the
reverse. If we were having 4 or 5 percent growth and inflation was
getting out of hand, I could understand it. But there's no grounds for
it now.
Economic Program
Q. Mr. President, obviously, in this part of the country it would
have been more popular to cut spending first, raise revenue later. You
used the early year forecast of the deficit to go back on your pledge
for a middle class tax cut. Since, there have been other estimates, why
haven't you gone back to a cut spending first program?
The President. Well, first of all, we are cutting spending. We are
cutting spending. This idea that we're raising taxes--taxes come in
constant amounts, whether it's a fuel tax or an income tax.
This is a dodge. David Stockman, who pioneered Reagan's program in
1981, has now admitted in repeated interviews that they cut taxes twice
as much as they meant to because they got into a bidding war with
Congress, that there is no way to restore any kind of fairness to the
Tax Code or reduce the deficit to zero unless there is a revenue
component. So if I were to say, ``Okay, we'll put these spending cuts in
for a couple of years, and then we'll raise taxes,'' all we would do by
doing that is basically have a bigger deficit in the first years because
we'd have the spending cuts but not the taxes, and we would have higher
interest rates, and we'd have slower economic recovery.
Let me just say, in the year that I'm in now--which I'm not even
responsible for this budget until October the 1st--our deficit is going
to be about $25 billion less than it was predicted to be when I became
President.
But to go back to the middle class tax argument, after the election
but before I took
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office, the previous administration said, ``Oh, by the way, the
deficit's going to be $165 billion bigger over the next 5 years.'' So I
always in that campaign said I am not going to say ``read my lips''
because I've run a government long enough at the State level to know
that sometimes circumstances can change on you. I've been very candid
with the American people about that. I think most people with incomes of
$50,000 a year don't think $33 a year is too much to pay. I think what
most people have believed is, they've been told that they're going to be
paying a fortune. And----
Q. Mr. President----
The President. Now, wait a minute. Let me just finish this. I want
to make this point. I'm going to be President 4 years. We've got
opportunities to have even more fairness in the Tax Code if we're
bringing down the deficit and we are opening up economic growth. There
are all kind of options to do things over the next 4 years. But the most
important thing now is to do something about the deficit. The truth is
that all these people who say they want to cut spending now, what they
really want is an accounting practice which still would have all the
spending cuts come in the 3d, 4th, and 5th year of this budget cycle.
What they're really saying is let's pass a bill that says it's going
to cut spending later now before we raise taxes. They don't propose more
spending cuts in these first years than I do, none of them do. And to go
back to Senator Boren's bill, particularly the one he offered in the
Senate didn't have nearly as much support as the one I offered, because
it didn't have the kind of deficit reduction unless you did what he
proposed to do, which was to take more out of Medicare for middle class
people. And even then it wasn't going to happen for the 3d, 4th, or 5th
year, most of it.
So the people that say cut spending now are saying, ``We don't want
to cut any more spending than Bill Clinton does right now, but we want
to pass a bill that cuts spending in the 3d, 4th, and 5th year in health
care without health care reform and then talk about whether we should
tax the wealthiest Americans later.'' That's what they're really saying.
Q. Is there any chance, do you think, that this bill will go down?
Is there any chance that it will not pass in the Senate?
The President. Well, sure there is. But I think it will pass. And
the reason I think it will pass is this: I think most of those people
are going to say, is this a better bill than we've ever had before and
better than we had in 1990? And the answer to that will be, yes. Is this
fairer to average Americans than the ones we've been considering? The
answer to that will be, yes. Does this restore some economic growth
incentives for small business, for new high-tech businesses, for
housing, for real estate that we haven't had in the Tax Code for 7 or 8
years? And the answer to that will be, yes. Does this bill lift the
working poor out of poverty and encourage people to get off welfare, not
with a Government program but by using the tax system to reward people
who work, even at very low wages? The answer to that will be, yes. And
then the last question is, do we want to hang around here in Washington
for 60 or 90 more days and debate this, and either come back here and
pass something very like it or something that's so much weaker that
we'll have higher interest rates, more uncertainty, and we'll waste 2 or
3 months when we could be dealing with health care, with welfare reform,
with a crime bill, with things that will grow this economy with a new
world trade agreement, all these things we need to get on about the
business of doing.
We are literally paralyzed here. We can't get anything else done.
The only other major initiative that's going to come out of this is the
national service bill that I've been working on for a long time. Other
things cannot even be dealt with.
And again I want to say to those of you interested in the cut issue,
keep in mind the Vice President is going to issue our reinventing
Government report within 60 days. The Congress is still cutting some
other spending with my strong support. We are going to have more cuts
even than we have now. But to delay this program is a great mistake. All
it will do is paralyze the Government, paralyze the financial markets,
and leave us with uncertainty. We've been talking about this since
February. It's time to move.
[[Page 1531]]
Note: The interview began at 3:25 p.m. The President spoke via satellite
from Room 459 of the Old Executive Office Building. Participating in the
interview were the editorial page editors of the Milwaukee Sentinel, the
Milwaukee Journal, the Arizona Republic, and the Reno Gazette Journal.