[Weekly Compilation of Presidential Documents Volume 29, Number 50 (Monday, December 20, 1993)]
[Pages 2571-2578]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks at a Conference on Entitlements in Bryn Mawr, Pennsylvania

 December 13, 1993

    Thank you very much. Ladies and gentlemen, it's a pleasure for me to 
be here. I have looked forward to this conference with great 
anticipation for some time. I want to thank Congresswoman Margolies-
Mezvinsky for getting this together and for inviting me here. I thank 
President McPherson and this wonderful institution for hosting us. I'm 
delighted that Speaker Foley and Congressman Penny are here for the 
Congress, and Senator Kerrey and Senator Wofford, your own Senator, are 
here to talk about these important issues. I want to also thank all the 
people who helped to put this conference together and to all the people 
in our administration who were invited and are here participating. We 
pretty much shut the town down in Washington today and just sort of came 
up here to Pennsylvania to talk about entitlements.
    This is a very serious subject, worthy of the kind of thoughtful 
attention that it will be given today. I hope there will be a great 
national discussion of the issues that we discuss today, and I hope that 
this will be the beginning of a debate that will carry through for the 
next several years.
    I ran for President because I thought our Nation was going in the 
wrong direction economically and that our society was coming apart when 
it ought to be coming together. I wanted to work hard to create jobs and 
raise incomes for the vast mass of Americans and to try to bring our 
country back together by restoring the bonds of family and civility and 
community, without which we cannot hope to pass the American dream on to 
the students who are here at Bryn Mawr or the students who will come 
behind.
    To do this, we must all, without regard to party or philosophy, at 
least agree to face the real problems of this country: 20 years of 
stagnant wages; 30 years of family decline, concentrated heavily among 
the poor; 12 years in which our debt has quadrupled, but investment in 
our future has lagged, leaving us with twin deficits, a massive budget 
deficit and a less publicized investment deficit, the gap between what 
we need to invest to compete and win and what we are receiving in terms 
of new skills and new opportunities. These things are linked. Creating 
jobs in growth requires that we bring down both the budget deficit and 
the investment deficit. High Government deficits keep interest rates 
high; they crowd out private demands for capital; they take more 
Government money to service the debt. All this tends to reduce 
investment, productivity, jobs, and ultimately, living standards.
    The deficit increased so dramatically over the last 12 years because 
of things that happened on the spending side and on the revenue side. 
Defense increased dramatically until 1987, but it's been coming down 
since then quite sharply. However, the place of defense, as we'll see 
later, has been more than overtaken by an explosion in health care costs 
going up for the Government at roughly 3 times the rate of inflation. 
Interest on the debt is obviously increased more when interest rates 
were high than now, but always when the accumulated national debt goes 
up. And the larger number of poor people in our country has inevitably 
led to greater spending on programs that are targeted to the poor.
    On the revenue side, the tax cut of 1981 wound up being roughly 
twice the percentage of our income that was originally proposed by 
President Reagan as the President and the Congress entered into a 
bidding war. And then in 1986 we adopted indexing, a principle that is 
clearly fair but reduced the rate of growth of Federal revenues by 
adjusting people's taxes downward as inflation pushed their incomes 
upward. And finally, a prolonged period of very slow growth has clearly 
reduced Government revenues and added to the deficit.
    If you look at this chart, you will see that we inherited a deficit 
that was projected to be actually--when I took office, for the fiscal 
year that ended at the end of September--above $300 billion. It was 
obvious that it was headed upward. The blue line here is what I found 
when I became President. It was clear that something had to be done. I 
asked the Congress to pass the largest deficit reduction package in 
history. It had $255 billion in real enforceable spending reductions 
from

[[Page 2572]]

hundreds of programs. Now, let's make it clear what you mean.
    When you hear the word spending ``reductions'' or ``cuts'' in 
Washington terms, it can mean two things. One is a reduction in the rate 
of increase in Government spending from the previous 5-year budget, 
which is still an increase in spending but not as much as it would have 
been had the new reduction not taken place. The second thing it might 
mean is what you mean when you say ``cut,'' which is you spend less than 
you did before you used the word. [Laughter] And it is important to know 
which one you're talking about. However, both are good in terms of 
reducing the deficit over a 5-year period. We not only reduced the rate 
of increase but actually adopted hundreds of cuts this year. The budget 
year that started on October 1st has less spending than the previous 
year in 342 separate accounts of the Federal budget. Adjusted for 
inflation, this means a discretionary spending cut of 12 percent over 
the next 5 years, more than was done under the previous two 
administrations. If this continues, according to the Wall Street 
Journal, then by 1998, discretionary spending--that is the 
nonentitlement spending and discounting interest on the debt, the things 
that we make decisions on every year--will be less than 7 percent of our 
annual income, about half the level it was in the 1960's.
    In addition to the discretionary spending cuts, our budget did 
reduce entitlements, making reductions in agricultural subsidies, asking 
upper income recipients of Social Security to pay more tax on their 
income, lowering reimbursements to Medicare providers, making other 
adjustments in Medicaid and in veterans' benefits. Now, all these cuts 
are already on the books. We are also cutting, with the help of the Vice 
President's National Performance Review, over 250,000 positions from the 
Federal payrolls, largely by attrition and early retirement over the 
next 5 years. We're finally attempting to reform the system in ways that 
will permit us to save billions of more dollars in discretionary 
spending through reform of personnel budgeting and, most importantly, 
procurement systems, if the Congress will authorize all three of those 
systematic reforms.
    We also passed some taxes: a modest 4.3 cents-a-gallon gas tax, 
which so far has been barely felt because we have the lowest price in 
oil in many, many years, so the price of gasoline has actually dropped 
since the gas tax was put on. We also asked the top 1.2 percent of 
Americans to pay higher income taxes because their incomes went up the 
most, and their taxes dropped the most in the previous 12 years. The 
corporate income tax on corporations with incomes above $10 million a 
year was raised. Middle class families will pay slightly less taxes 
because, again, of the adjustments for inflation. And taxes were cut for 
15 million families who worked for very modest wages as a dramatic 
incentive to get them to continue to choose work over welfare.
    When Congresswoman Mezvinsky and her colleagues voted for this 
economic plan, they voted for your economic future, for lower deficits, 
higher growth, and for better jobs. They did vote to cut spending. They 
did not vote to raise taxes on the middle class. And frankly, the kinds 
of radio ads that have been--this is the only political thing I'm going 
to say today but the kind of radio ads that have been run against her in 
this district do not serve the public interest because they do not tell 
the truth. If somebody wants to say that we should not have raised 
income taxes on the top 1.2 percent of the American people, let them 
advertise that on the radio. If someone wants to say that the corporate 
income taxes above $10 million a year in income should not have been 
raised, let them advertise that on the radio. If someone wants to say 
that the gas tax was unfair, let them advertise that on the radio. But 
do not try to tell the American people there were no budget cuts and 
they paid all the tax increases, because that is simply not true. And we 
have a lot of work to do in this country and a lot of honest 
disagreements to have; we need not expend our energy on other things.
    And if you don't believe that, read the front page of the Wall 
Street Journal this morning. That is hardly the house organ of my 
administration. [Laughter] Read the front page of the Wall Street 
Journal this morning talking about the unprecedented cuts that this 
budget made. It does not do anybody

[[Page 2573]]

any good to continue to assert things about that economic plan that are 
not true. The markets had it figured out. That's why interest rates are 
down and investment is up. That's why inflation is down and more jobs 
have come into this economy in the last 10 months than in the previous 4 
years. The markets figured it out. All the smoke and mirrors and radio 
ads in the world couldn't confuse the people that had to make investment 
decisions and read the fine print.
    That's the good news. Now let's talk about the continuing problems, 
the real problems. The economic plan which the Congress adopted 
represents the red line. That's how much less the deficit will be. And 
the aggregate amount between these two lines is how much less our total 
debt will be by 1998. The yellow line represents where we can go, by 
conservative estimates, if the health care plan is adopted. You still 
have an operating deficit, and the national debt will still increase by 
this amount, but not by that amount.
    So we are clearly better off with the economic plan. We will have to 
make further cuts, by the way, to meet this red line. We're not done 
with that. We will be better off still if we do something about health 
care--I'll say more about that in a minute--but there is still more to 
be done. The debt of this country now is over $4 billion. That means our 
accumulated debt is more than two-thirds our annual income. It is 
important that the debt, as a percentage of our annual income, go down. 
It is way too high, much higher than it has been outside of wartime. It 
is important that the annual deficit, as a percentage of our income, go 
down. It will go down under this plan, but we can do more to try to 
reduce the aggregate debt and the deficit as a percentage of our income. 
Both of them are too high.
    Now, let's look at the next chart here. I think you all have it out 
in the audience. This chart just basically shows where your money goes. 
When you pay Federal taxes or when the Government, on your behalf, 
borrows money, in debt, we spend 47.4 percent in entitlements--that is 
what we're here to talk about today--about 21 percent on defense, it's 
going down, as you'll see in a minute; about 18 percent on nondefense 
discretionary, which is being held constant; and about 14 percent in 
interest on the national debt.
    Let's look at the next chart now. This chart gives you an idea of 
which spending categories are headed in which direction. Average annual 
real growth--now, I want to tell you what this means. I haven't lived in 
Washington very long so I still use ordinary meanings for words. 
[Laughter] When you see ``real'' on a Government chart, that means 
adjusted for inflation. You'll never find that in a dictionary, but that 
is what it means. In other words, these are the numbers adjusted for 
inflation at a projected inflation growth of more or less 3\1/2\ percent 
a year. If you look at that, you see defense is going down. Frankly, 
we're reducing it as much as I think we responsibly can and, in fact, 
more than we responsibly can unless Congress will pass the procurement 
reform so the Defense Department can buy what it needs for our national 
defense at more efficient prices. But I hope that will happen. Other 
entitlements--we'll come to that in a minute, what those other 
entitlements are--they're also going down relative to inflation. That is 
basically the entitlements for the poor and the veterans' benefits and 
agriculture benefits.
    Nondefense discretionary is a little under zero, as you see. That's 
all the investments for education, for training, for technology, for 
defense conversion, for you-name-it, anything for infrastructure, for 
roads, anything we spend money on that we have an option not to spend 
money on that--we'll come back to that--is going down relative to 
inflation. If there were no inflation numbers here, it would actually be 
just a tiny bit above the line, but it is functionally zero. For all 
practical purposes, if I want to increase the amount of money, for 
example, we spend on Head Start in Pennsylvania by a million dollars, we 
have to cut something else by a million dollars. We are not increasing 
the aggregate amount of this kind of discretionary spending. Net 
interests will go up, and again, this is adjusted for inflation, so it 
is continuing to rise because the amount of the debt is continuing to 
rise.
    Social Security will go up, again, adjusted for inflation. This is 
the population increase, effectively, in Social Security. There aren't 
new benefits being added, so there will be

[[Page 2574]]

a couple of percent growth in population between now and 1998. So it 
will go up by the amount of increasing numbers of people on Social 
Security.
    And look what happens to health entitlement. It's going up more than 
twice as much as Social Security, more than 3 times as much as net 
interest, and everything else is going down. Now that's what's 
happening. Let's go on to the next chart.
    As the chart shows here, this is the new revenues we're getting in 
this year. Now, the new revenues include the tax increases that we just 
talked about. They're about 40 percent of that revenue growth. The rest 
of it's just ordinary increases in tax revenues to the Government coming 
from increasing employment or increasing incomes. So every year we get 
some revenue growth. This revenue chart is about 60 percent ordinary 
revenue growth, 40 percent new taxes. As you can see, the whole thing 
goes to deficit reduction, interest increases, and entitlement 
increases. That's where the money went.
    Eighty percent of the new revenues, including taxes and revenue 
growth, went to deficit reduction and interest increases; 20 percent of 
it went to entitlement increases. As you can see, that does not leave a 
great deal of room for any kind of future investments. This is something 
that presumably both Senator Kerrey and Congressman Penny will talk 
about today. But there is, I think it's fair to say, a broad consensus 
in the Congress among Republicans and Democrats, among liberals and 
conservatives, that there are some things on which we are not spending 
enough money to get us to the 21st century. We have put ourselves in a 
box after the last--trying to work our way out of this deficit business 
so that we do not have the flexibility to make those kind of growth-
oriented investments in the public sector. That is a dilemma. So we have 
two continuing dilemmas, if you will: one, we've still got a deficit and 
a debt problem; two, there are things which literally over 80 percent of 
the Congress, both parties, would agree we should invest more in that we 
simply cannot invest more in because of the problem we have with the 
budget. Could we go on now into the next chart? Let's go into the next 
chart.
    Now, this gives you a picture of entitlement spending. And I know 
Alice Rivlin talked about this a little before, and she knows a lot more 
about it than I ever will, but I think it's worth going back over 
because this is an entitlements conference. So it's worth focusing on 
what an entitlement is and, when you hear people use that term, what 
they are.
    So look at this. These entitlement programs are programs that 
provide benefits for people that have certain characteristics. People 
who meet the test of eligibility for the program get it, notwithstanding 
some previously budgeted amount for that program. That's why they're 
called entitlements. For example, someone who has paid into the Social 
Security Trust Fund along with his or her employer who is 65 becomes 
entitled to Social Security. You just go to the Social Security office 
with the documents that prove you're eligible, and you're going to get 
the check no matter how many other people qualify for Social Security. 
Since it's hard to know in advance exactly how many people will apply 
for benefits, Congress doesn't set aside a specific amount of money as 
it does for the discretionary spending programs. Instead, it simply 
directs to Treasury to make payments to everybody who applies and 
qualifies for the benefits under the laws.
    There are two main kinds of entitlements. And you can just see by 
looking up here what they are. They are the contributory entitlements, 
that is, you're entitled to something because you paid into it. It's 
contract oriented. Social Security is a contributory entitlement. 
Medicare is a contributory entitlement. Federal retirement is a 
contributory entitlement. You did the work; you put the money aside; you 
get it back.
    Then there are the entitlements for those in need or entitlements 
that are in a special category because you can't predict how much is 
going to be needed every year. The entitlements for those in need would 
include AFDC, supplemental security income, the Medicaid program, 
medical care for the poor. Agriculture is in a separate category. It has 
been treated as an entitlement partly because it's so caught up in the 
global economy, it's impossible to predict from year to

[[Page 2575]]

year how much of the support subsidies will be needed.
    Now, the contributory retirements are sometimes called middle class 
entitlements because they benefit everybody, the middle class or, Mr. 
Peterson will tell you in a few minutes, the upper middle class or the 
wealthy. If you pay in, you get it back plus a cost of living increase. 
Now, the poor people's entitlement, I said, are mostly in the category 
of like AFDC and food stamps and Medicaid. But let me show you something 
about these entitlements, because most people, I think, don't know this: 
Social Security is 43 percent of the total; Medicare is 18 percent; 
Medicaid is 11 percent; Federal retirement is 8 percent; unemployment is 
5 percent, obviously it goes up or down, depending on what the 
unemployment rate is and how long people are unemployed; food stamps are 
4 percent; ``other'' is 11 percent. In the other, you have agriculture, 
veterans, supplemental security income, which is for lower income 
elderly people, and AFDC. The welfare program of this 11 percent is 2 
percent. The average monthly welfare benefit in America is actually 
lower today, adjusted for inflation, than it was 20 years ago. The 
program is more expensive because there are more poor people. But I 
think it's quite interesting to point that out. Most people are 
surprised to know that the welfare budget is about 2 percent of the 
entitlements or about 1 percent of the overall Federal budget.
    Now, the entitlement programs for the needy, as you can see, make up 
about 12 percent of the whole budget or about a quarter of the 
entitlement spending. The biggest entitlements are Social Security and 
Medicare. They are about 61 percent of the total. When you add Federal 
civilian retirement and military retirement, you've got over two-thirds 
of the entitlements there.
    Now, I think it's important to point out, just in passing, that 
behind every one of these entitlements there's a person. That's why it's 
so controversial when they're debated in Congress. It's not just 
organized interest groups. There are people who believe they are 
literally entitled to receive something back that they paid into. It is 
the middle class entitlements, that have united us and brought us 
together, that also have the strongest constituencies and provoke the 
biggest controversies when we get into dealing with this. And these 
programs are also very important in human terms.
    I just might mention, too, if you look at Medicare, before Medicare, 
there was a good chance that Americans, when they got older, would need 
charity care, would simply do without health care. Today nearly 34 
million people go to see a doctor or get medical care because of the 
Medicare program. Social Security has changed, literally, what it means 
to be old. In the beginning of 1985, for the first time in our history, 
the percentage of our elderly people who were above the poverty line was 
better than the percentage of the population as a whole. In other words, 
the poverty rate for the elderly was lower than the poverty rate of the 
general population.
    It is very difficult to say that this was a bad thing. That was, I 
argue, a good thing. We should not view this whole program, in other 
words, as welfare. It is not a welfare program. Does that mean that 
there should be no changes in it? No, it just means that we should be 
very sensitive about the fact that this is something that has worked. 
Because of these programs, we are a healthier people. We are a more 
unified country. We treat our elderly with greater dignity by having 
allowed them to earn a decent retirement and to maintain a middle class 
standard of living, independent of whatever their children are required 
to do and to make them more independent over the long run. This is a 
huge deal in a country where the fastest growing group of people, in 
percentage terms, are people over 80 years of age. This is a big deal.
    Now, I recommended exposing more of the incomes of the top 10 or 12 
percent of Social Security recipients, somewhere in that range, to 
taxation, and Congress adopted a modified version of that plan. That was 
an entitlements move. I thought it was an appropriate thing to do 
because a lot of people in upper income levels, by definition, have 
other sources of income, too, and will get back what they paid into 
Social Security plus reasonable interest growth in a reasonably

[[Page 2576]]

short period of time. So I thought it was fair to do that.
    We recommended upper income people pay more for Medicare benefits. I 
think that is reasonable to do because the Medicare payment itself only 
covers a small percentage of the total cost of Medicare. Where I think 
we should draw the line, however, is in trying to have happen to the 
elderly middle class what is happening to the nonelderly middle class. 
All over the world today, and certainly in all the advanced countries of 
the world, the middle class is under assault. Earnings inequality has 
increased in the last 12 years. It is becoming very difficult for 
working people to sustain a middle class way of life. We are going to 
have to all change. We've got to change our Government policies. People 
are going to have to acquire much higher levels of skill and be 
committed to training for a lifetime. There are a lot of things that 
have to be done. But the general policy point, I think, is valid. We do 
not want to deal with a problem like the deficit which is aggravated 
because middle class people's incomes have stagnated by having the same 
sort of income stagnation for the middle class elderly.
    So I think there are things we can do to deal with this. They will 
be discussed later. We did some things to deal with the entitlements in 
the last budget. But let us not say that it was a bad thing to 
dramatically reduce poverty among elderly people or that it is a bad 
thing for our consumer economy to maintain a large number of middle 
class people in their retirement years. That means that we have to have 
honest, specific, and clear discussions of this, as unencumbered as 
possible by these sort of rhetorical bombs flying in the air from the 
left and the right, just talking it through and listening to each other 
and asking ourselves: What will be the practical impact of proposed 
change A, B, or C, and will we all be more secure? Will our children and 
our grandchildren be better off? Will this help to stabilize and 
increase the middle class ballast of our society? And I think we are on 
the verge perhaps of having that discussion in no small measure because 
of this kind of conference.
    Now, let's go on, and let's look at what I think the real problem in 
the entitlements is, is clearly the danger signal for the long run. 
Let's look at the next chart. As you can see, 20 years ago, health 
spending and entitlements, Medicare and Medicaid, 13 percent of the 
total; 1983, 19 percent of the total; 1993, 30 percent of the total; 
2003, 43 percent of the total. Keep in mind--and this is with the number 
of elderly people going up like crazy, so the population of people 
drawing Social Security is going way up, right? And still, look at that. 
So clearly, that is the portion of Government spending that is out of 
control. That is the portion of entitlement spending that is out of 
control. Now let me just illustrate it by a couple more charts real 
quickly.
    Let's go to the next one. Nondefense discretionary outlays are going 
down as a percent of our income. Social Security outlays as a percentage 
of our income is solid, stable here. It could go up some in the next 
century, is projected to, when all the baby boomers go in. I heard Ms. 
Rivlin refer to that as the President's generation. I am the oldest of 
the baby boomers. But still, you see, it's stable as a percentage of the 
gross national product. And the Congress, in 1983, after the bipartisan 
commission on Social Security made recommendations for fixing Social 
Security, attempted to keep this number stable by gradually raising the 
retirement from 65 to 67, by about a month a year over a prolonged 
period of time starting just in the next century.
    Now let's go on to the last one. This chart shows you that unlike 
Social Security and discretionary spending, medical spending is going up 
like a rocket. Medicare and Medicaid have tripled since 1982. Medicare 
and Medicaid will soon cost more than Social Security. And next year for 
the first time--in large measure because Medicaid is a State-Federal 
matching program, so that every State has to put in money along with the 
Federal Government--next year, for the first time, States will spend 
more money on health care than education. And since I supported this--I 
see other present and former Governors around this table. In the 1980's 
we said to the National Government, ``You've got a problem with the 
deficit. We'll spend more on education; you do what you have to do to 
deal with your other problems.'' This is a very serious danger signal. 
If you want the

[[Page 2577]]

States to spend more educating people, getting children to the point 
where they can compete, training the work force--to have the States all 
of a sudden spending more on health care than education is a very 
serious danger signal for the distribution of responsibilities between 
the State and the Federal Government.
    Now, we have some options. If we want to control Medicare and 
Medicaid spending, basically we have some options. And to be fair, again 
I want to say, during the 1980's under the Reagan and Bush 
administration, the two administrations and the United States Congress 
did try to cooperate on several things to control Medicare and Medicaid 
spending. They took total pricing controls away from hospitals and 
doctors. They tried to do a number of things. But what happened? If you 
control the price of a given product in this environment, what happens? 
Providers can provide more products, I mean, more of the same product, 
right? You increase the volume if you lower the price, and the money 
still goes up. That's one problem.
    Secondly, poverty increased in the eighties and is continuing to 
increase among the poor, both the idle and the working poor, and that 
drives the Medicaid budget up. So controlling unit prices didn't work. 
The other thing you could argue that we could do is to try to control 
the categories within Medicare and Medicaid, basically, just spend less. 
In other words, even though they're entitlements, just say we are going 
to spend less on certain categories by both controlling volume and 
price. Is there a problem with that? Yes there is. What is it? Any 
doctor or hospital will tell you that there has been a lot of cost 
shifting in this health care system, and it's one of the causes of 
rising prices and inefficiency. Cost shifting largely occurs in two 
ways: when hospitals have to care for people who don't have any 
insurance or when they provide Government funded health care at less 
than their cost of providing the service, they shift the cost onto the 
private sector.
    So we could bring this deficit down, we could do this--I want to--
let's 'fess up, we could do this. We could just cut how much we're going 
to spend on Medicare and Medicaid, even though it's an entitlement, in 
terms of price per unit and volume. We can just take 'er down. But if we 
do that, what will happen? Those costs will be shifted by the health 
care providers to the people who already are providing insurance with 
the impact that it will be a hidden tax increase on businesses and on 
employees. Employees will probably see it in not getting pay raises they 
otherwise would have gotten. Businesses will see it in spending more on 
health insurance premiums and having less to reinvest in the business or 
to take in profits. I don't think it is a fair thing to do. That is why 
our administration has argued that if you really want to solve this 
problem, you have to go back and have comprehensive health care reform.
    This is the only country in the world that doesn't find a way to 
solve that issue--the only advanced nation, that is, that doesn't give 
basic health care to all its citizens within a framework that controls 
costs in the public and private sector. We're spending 14.5 percent of 
our income on health care. Nobody else is over 10; Germany and Japan are 
at 9. The health outcomes of other countries are roughly similar to 
ours. We can't get down to where they are because we spend more on 
technology and more on basically costly treatments than other countries 
do and more on medical research. And that's fine. And we can't get down 
to where they do because we have more violence and higher rates of AIDS 
and other very expensive diseases than other countries. But we could do 
better. And unless we do better in an overall way, in my judgment, we 
are going to be in trouble.
    Now, we had a nonpartisan analysis by the respected firm of Lewin-
VHI last week about our health care plan. This company does research on 
the economics of health care for businesses, unions, consumer groups. It 
includes people who served in the Reagan and Bush administrations as 
budget and health officials. They say that our plan will reduce the 
deficit. We think it will reduce it even more than they will. I won't 
get into the details of that today. We're here to talk about 
entitlements. The point I want to make is I believe you don't get 
entitlement control, you don't get ultimate deficit control unless you 
do something about Medicare and Med- 

[[Page 2578]]

icaid. I believe you don't get that done just by cutting Medicare and 
Medicaid unless you want to hurt the private sector. Therefore, I think 
we have to have some sort of health reform. That's what I believe. You 
have to decide if you believe that, but I think it's important.
    Let me just close with this. This is the lead editorial in this 
morning's Washington Post. It says--on the entitlements mess--and it 
says as follows: ``Nor have all the entitlements been badly behaved in 
recent years in terms of costs. The health care programs are the budget 
busters. By contrast Social Security costs have risen in stately fashion 
with population and inflation. And the costs of all the other 
entitlements taken together, including those that support the poor, has 
declined in real terms.'' Remember what ``real'' means in Washington, 
less than the rate of inflation. ``The real Federal budget problem''--
that's the normal word ``real''; here they mean real like you do--``the 
real Federal budget problem isn't entitlements, it's health care.''
    So I say to you we can talk about these other entitlements, and we 
should. As we talk about them, let us not make our middle class squeeze 
problem worse than it is already. That's one of the profound problems 
that is driving this country. One of the reasons that Senator Wofford is 
in the Senate today is because of the anxieties of middle class workers 
in Pennsylvania.
    Let us continue to work on this deficit. Let us realize the deficit 
is too big and the debt is much too large as a percentage of our gross 
national product. Let us realize that there are two problems with it. 
One is the deficit, and the other is we aren't investing enough. But on 
the entitlements issue, I would argue the real culprit is health care 
costs, and we can only address it if we have comprehensive health care 
reform.
    And let me close by saying one more time, if Marge Mezvinsky hadn't 
voted for that budget, we wouldn't be here celebrating economic progress 
or talking about entitlements. We'd still be back in Washington throwing 
mudballs at each other. And I respect her for that, and I'm glad to be 
here today.

Note: The President spoke at 10:45 a.m. at Bryn Mawr College. In his 
remarks, he referred to Mary Patterson McPherson, president of Bryn Mawr 
College; Alice M. Rivlin, Deputy Director of the Office of Management 
and Budget; and Peter G. Peterson, former Secretary of Commerce and 
president of the Concord Coalition. A tape was not available for 
verification of the content of these remarks.