    [Weekly Compilation of Presidential Documents Volume 33, Number 30 (Monday, July 28, 1997)]
    [Pages 1109-1112]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Remarks Following a Meeting With the Budget Team and an Exchange With
    Reporters

    July 22, 1997

    Budget Negotiations

        The President. I'd like to make a brief statement, and then I'll be
    glad to answer some questions.
        I've just finished a meeting with my budget team, reviewing where we
    are on the budget negotiations. We have worked very hard to pursue an
    economic strategy of reducing the deficit, cutting where we could, then
    investing more in education, in the future of this country, and selling
    more American products and services overseas. And it's working. I
    believe it's very important now to complete the job and get a balanced
    budget agreement that will continue to invest in our country and enable
    us to grow.
        This agreement--let me say again what this agreement does. I think
    it's important. It has $900 billion in savings over the next 10 years.
    It reforms the Medicare program and preserves the Trust Fund for another
    10 years. It also contains the biggest expansion in health care for
    children since 1965--5 million; the biggest expansion in investment in
    education from the national level since 1965; the biggest increase in
    access to higher education since the G.I. bill passed 50 years ago; and
    billions of dollars to put people on welfare in the work force, as well
    as special incentives to help the distressed areas of this country get
    some jobs and participate in this recovery. That's what this agreement
    does. Now, there are those who say that we'd be better off without an
    agreement; none of these things will happen without an agreement.
        As to the tax cut, my priorities are clear. I want to help children,
    I want to support education, I want to make sure that we give
    appropriate relief to middle income families. I do not believe it is
    right to deprive teachers, police officers, firefighters, nurses who
    have children in the home and who have only one earner and therefore
    earn less than $30,000 a year, of the benefits of this tax cut. And we
    believe we have found a way to get around the objection that some
    Republicans

    [[Page 1110]]

    have made of having the IRS collect it as a tax payment. We think we can
    avoid that.
        But on the other hand, we don't want to--that's on the Medicare
    premiums--we don't--let me back up and say, we believe, first of all,
    that the tax cut is a tax cut even if it's a refund. Secondly, on the
    Medicare premiums for higher income people, I strongly support that. I
    said as soon as I got back from Europe that I would be disappointed if
    it were not in the bill. There is a dispute about exactly how we should
    collect the premiums. We think we have found a way to meet the
    Republican objective that it shouldn't look like a tax payment and still
    collect the premiums. If you're going to have a collection on upper
    income people, it's not fair to have some people pay it and some people
    not. So we think we've gotten around that.
        Now, let me finally say that I am still quite optimistic that we
    will get an agreement that is consistent with our principles. We've had
    good bipartisan cooperation throughout this process, and I expect it
    will continue. Our budget team is going up to the Hill again shortly,
    and we expect that we'll keep working until we get success.
        Q. Since you're that optimistic, what's the stumbling block? What's
    holding it up?
        The President. We still have some differences of opinion. Let me go
    back through them. On the upper income premiums for Medicare, we have
    some differences in how we think it should be structured, but the main
    stumbling block seems to have been that the Republicans don't want it to
    look like an IRS tax payment. They don't want it to look like a tax
    increase, even though it wouldn't be.
        Our problem is if HHS collected these upper income premiums, they'd
    have to set up a whole new bureaucracy, and our people estimate that
    half the money would be lost. And we don't want another big problem of
    fraud and abuse here. So we've come up with

    an idea that we think would allow Treasury to collect the money but to have
    it go directly to the Medicare Trust Fund so there would be no question of
    a tax payment. And we think that would ease a lot of the Republican and,
    frankly, some of the Democratic concerns that it wouldn't look like a tax
    increase. But if we're going to collect the upper income premiums, surely,
    all Americans would say we shouldn't give away $12 billion. And you can't
    expect the really honest person to go out of his or her way to pay it and
    then half the people not pay it, and there would be a lot of
    disillusionment there. So we think we've solved that problem. That's a
    stumbling block.

        And we still have a difference over this refundability. We're going
    to try to work through that. But I think we can get it, but we--I
    offered a tax plan, as you know, right before I left for Europe, to show
    good faith in working with the Republicans. And I think we'll keep
    working through it until we get something that we can both live with.

    The Vatican and Nazi Gold

        Q. Mr. President, are you concerned about the revelations overnight
    that the Vatican may have been involved in stashing Nazi-era gold? And
    have you been in touch with the Vatican government over this?
        The President. Well, let me say, I have talked to the--all I know is
    that there was apparently some suggestion that maybe there is a document
    here, somewhere in the Government Archives, which would shed some light
    on that question.
        As you know, the United States has taken the lead on this. We've
    worked very hard. I well remember the first time I heard about it when
    Mr. Bronfman talked to the First Lady about it. And we've worked very
    hard on this. And the Treasury Department has assured me that they have
    historians combing the records, and we will reveal whatever information
    we have and let the facts take us where they lead us. But we'll keep
    working on this until we do everything we can to make it right.

    Boeing-McDonnell Douglas Merger

        Q. Mr. President, on Boeing, besides talking to Italian Prime
    Minister Prodi, what other European leaders have you talked to? And
    having made some phone calls, what is your sense? Do you get a feeling
    that there is a chance that the European Commission will not block the
    Boeing-McDonnell merger?

    [[Page 1111]]

        The President. I'd like to see a resolution of this. This merger--
    the Federal Trade Commission, which, as you know, is independent under
    our law, has ruled that this is clearly not a violation of our laws
    because there is only room for two big commercial manufacturers. And
    indeed, the commercial side of the McDonnell Douglas business has
    suffered with the rise of the European company, Airbus.
        The European antitrust laws are slightly different. Boeing has
    offered a good-faith resolution of this; they're trying to

    work through it. Our main concern is that only the antitrust considerations
    play a role in this decision and that we do everything we can to avoid a
    more political decision which would lead to an unfortunate trade conflict
    between the United States and Europe. And we're working hard to avoid that,
    and I've done quite a bit of work on it over the last 3 days and will
    continue to do so. I think there is a way to work this out, and I'm hopeful
    that by Wednesday when the Commission meets that an agreement will have
    been reached.

    Medicare

        Q. Two questions on the tax budget deal. Number one, one of the
    criticisms, vis-a-vis Medicare, was whether you had sent a strong enough
    signal that you wanted these higher Medicare premiums. Is that the
    signal that you're now trying to send? And number two----
        The President. No. If you will remember, I think it was--as soon as
    I got back from Europe, I said that I would be--publicly--that I would
    be quite disappointed if we did not have an upper income premium as a
    part of the agreement. I believe that that was a public statement I made
    the minute I got off the plane, practically.
        Secondly, our negotiating team has made it very clear to the House
    and Senate negotiators for a long time that we thought it was an
    appropriate thing to do, that our only concerns were: number one, if we
    were going to do it, we wanted it to be collectible, we wanted it to be
    real; and number two, we did not want upper income recipients to receive
    absolutely no discount at all because that would encourage them to get
    out of the program all together, number one, and number two, because in
    the '93 agreement to reach our $500 billion deficit target, which we
    greatly exceeded, but we took the cap off of the payroll tax that pays
    into Medicare. So upper income people now are paying a very high
    percentage--or much more money into the program than they will ever draw
    out anyway. So, for those two reasons, we thought that we should not
    charge 100 percent of the value.
        Now, I think we can work those two things out. As I said, I
    understand why a lot of the Members of Congress say, ``Well, we don't
    want the--if the IRS collects this, it will look like a tax payment, and
    we don't want it to look like a tax increase.'' And we agree with that.
    So we've now come back and offered them another way to do this, which I
    am very hopeful will break the impasse and enable us to go forward and
    have this. I think it's an important principle.
        Most of the savings in the first 5-year period, indeed, most of the
    savings in the 10-year period, will come from the structural reforms
    that we've offered in Medicare: more competition, more choices, more
    managed care. But still I believe when you look well down the road at
    the time when the baby boomers will retire, it's good to put this
    principle in place now, and I'm very hopeful that we can get it.
        And let me say, I saw some stories today about people worried about
    the political repercussions of this. My best judgment is that a big
    majority of the American people will support this. They understand how
    big the baby boom retirement generation is. They understand how large
    the subsidy is on Medicare. And I would be happy to defend the vote of
    any Member of Congress, Democrat or Republican, who votes for this.
        Q. The second part of the question, if I may----

    Nomination of William F. Weld as Ambassador to Mexico

        Q. How about Weld? Are you sending him up----
        The President. Yes.

    Bipartisan Cooperation

        Q. Hold on, the second part of the question, if I may. One of the
    issues on the budget

    [[Page 1112]]

    deal is how much is it complicated by Republican infighting. Can you
    talk about that a little bit?
        The President. Well, my best judgment is that we should do what
    we've been doing. I think--I have seen in the last year a spirit of
    bipartisan cooperation which did not prevail in the previous period. And
    I think that it will continue to prevail. I think it is so clearly in
    the interest of the country. And I don't have any comment about what's
    going on among the Republicans, except that I don't believe it will
    interfere with our ability to reach an agreement. I don't think that
    they will permit it to do so. I think it is in the interests of the
    country, and I think that's what we'll do.

    Analysis of Drug Sentencing

        Q. Mr. President, can you comment on Attorney General Reno's
    suggestions on crack cocaine?
        The President. Yes. Attorney General Reno and General McCaffrey have
    sent me their recommendations. I have accepted it, and I have urged them
    now to go to work immediately with the Congress to try to reach an
    acceptable resolution of this. They did a lot of work on it. They
    deserve a lot of credit for the exhaustive analysis that they applied to
    this problem, and I've accepted it. And that's our position, and we're
    going to try to work with Congress now to achieve a resolution.

    Nomination of William F. Weld as Ambassador to Mexico

        Q. Today or tomorrow--are you going to be able to pass by Helms, or
    are you going to fight him, or what?
        The President. Well, I'm going to nominate him, and we're going to
    work hard to see if we can confirm him and we'll see what happens. We're
    going to do what we can.
        Q. Do you think it's possible? Albright's using her wiles.
    [Laughter]
        The President. I don't know. That's better than I could have said
    it. [Laughter]

    Note: The President spoke at 11:25 a.m. in the Cabinet Room at the White
    House. In his remarks, he referred to Edgar Bronfman, president, World
    Jewish Congress; and Barry R. McCaffrey, Director, Office of National
    Drug Control Policy.