[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.