[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

[[Page 1530]]

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.