[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.