[Weekly Compilation of Presidential Documents Volume 35, Number 7 (Monday, February 22, 1999)]
[Pages 233-238]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks on Legislative Priorities for the Budget Surplus

February 17, 1999

    She was great--give her a hand. [Applause] Great job. Well, thank 
you very much, Sharon. You did a great job, and I feel better knowing 
that you're out at NIH, doing great work there.
    I would like to thank Secretary Rubin and Commissioner Apfel and 
Senator Robb and Representative Baldwin. I'd like to thank Congressmen 
Levin and Hoyer for being here, and the members of the administration;

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all of the young people here from your various organizations. We have 
young people here from City Year and AmeriCorps. We have young people 
here from the University of Maryland, from the James MacGregor Burns 
leadership program. We have young people here who are doing other things 
with your lives, who consented to come.
    I want to talk a little today in greater specifics about the nature 
of the choice facing our country now. For 200 years, the test of each 
generation of Americans has been not simply how well they did in their 
own time but whether they left our country in better shape for future 
generations. Because of the size of the baby boom generation, to which 
the First Lady and I and a few others in this room belong, we have a 
special responsibility to the generation represented by most of you in 
this room and by Sharon in particular, as she spoke.
    We have rarely had both a clearer picture of the large challenges 
facing our future and more resources to meet them. And I don't just mean 
money although we do have a strong position in that budget. But our 
country is doing well. We have a lot of confidence. We have a lot of 
access to information. We have a lot of tools for dealing with our 
challenges that many of our predecessors did not have. Since we have a 
pretty good idea of what the challenges are and we have an extraordinary 
array of opportunities and resources to meet them, I would argue to you 
that we have an even greater obligation than our predecessors did to do 
just that.
    We now have embarked on a great debate as a result of our surplus, 
on the one hand, and the evident financial challenges to Social Security 
and Medicare on the other. We have clearly two different strategies 
through all the complexities for moving into the future: one offered by 
our administration and many members of our party and the Congress, on 
the one hand; and on the other, by the leaders of the majority party in 
Congress. We're debating how best to seize this moment, how best to 
provide a better future for you.
    This is a truly historic opportunity. And it is very important that 
as a people we choose wisely. It is a substantive debate. It is an 
honest debate. It is a debate worth having.
    Underlying all the details and all the complexities you will hear 
this year about how you do the accounting on the surplus, how we should 
increase the rate of return on Social Security, what exactly we should 
do on Medicare, how much money will be required in the future for 
defense, should we also be investing more in medical research and 
education and other things over the long run, what should be the size of 
the tax cut and who should get the tax cut--all of these questions are 
quite complex, particularly when you try to mesh them together in one 
plan. But underlying all of it, there is fundamentally a very simple 
choice: Will our first priority be spending the budget surpluses we have 
worked so hard to create on a terrifically appealing tax cut in the 
moment? Or, will our first priority be investing whatever the necessary 
amount of the surplus is for at least the next 15 years to strengthen 
Social Security and Medicare, to cut taxes in a way that help people not 
so much today but to save for their own retirement and to pay down the 
national debt as much as we possibly can, so that we can guarantee 
longer term prosperity into the 21st century?
    That is really what the simple choice underlying all the details 
will be. What is our first priority? It's no secret what I think it 
should be. I think we should move forward with the economic strategy of 
the last 6 years, to put a priority on investing in our people and the 
future. I do not believe we should go back to a version of the policy 
that dominated the United States in the 12 years before this 
administration came to office and gave us a decade-plus of deficits and 
quadrupling the national debt and underinvestment in our future.
    The proposed new tax policy of the majority party in Congress, I 
believe, would spend too much of the surplus now and invest too little 
of it for tomorrow. I believe it would target the lion's share of the 
benefits away from the middle class who need the money the most to 
prepare for the future of their children and their own retirement. I 
believe it would reward consumption over savings when we should be doing 
the reverse.
    Our plan would put priority on investing for the future. And I'd 
like to say, in defense of our plan, I think we ought to be at least

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entitled to the benefit of the doubt, based on the last 6 years.
    Seven years ago, when I was running for President and going from 
college campus to college campus, there was a lot of anger, a lot of 
frustration. There were a lot of young people who felt that they had 
been betrayed by their parents' generation, because we had just allowed 
things in this country to get out of hand. The deficit was out of 
control, the debt had quadrupled, interest rates were high, unemployment 
was up, social problems were growing worse, and the division--the sense 
of anxiety and division in the country was intensifying. And there was 
really a lot of doubt about whether our country was up to meeting these 
challenges. I didn't doubt that very much because it seemed to me that 
it just simply required people in positions of responsibility to make a 
few clear decisions. And remember, in every complex debate the details 
really matter, but they only matter after you make the big, simple 
decisions.
    We now have the longest peacetime expansion in our history; 18 
million new jobs, almost; wages are going up at nearly twice the rate of 
inflation. We have the highest homeownership in history: the lowest 
percentage of our people on welfare in history; the lowest recorded 
rates of our minority unemployment since we've been keeping those 
statistics, for about 27 years now; the lowest peacetime unemployment in 
our country since 1957. Last year, for the first time in three decades, 
as Senator Robb noted, the red ink turned to black with a surplus of $70 
billion. We project a slightly larger surplus this year, with more to 
come.
    Now, of course, over the next 15 or 20 years, there will be 
fluctuations that we can't predict exactly from year to year. If we have 
a recession, there will be fewer people paying taxes, and there will be 
more money going out to the unemployed. But the point that has to be 
emphasized is that the long-term projections are good because we have 
eliminated the permanent structural deficit. We now have a permanent, 
structural balanced budget and surplus.
    And that is what has brought us to this moment of decision, that and 
the evident financial crisis which will be imposed on Social Security 
when the baby boomers retire and on Medicare even sooner, because we're 
living longer and there's more technology and because the older you get, 
the more it costs to maintain a state of wellness.
    Now, I would say again, I realize that the path we have recommended 
and the path that I personally, passionately, believe in, will not be 
the most popular one at first hearing. But I ask you to at least look at 
the last 6 years and say, maybe they ought to be given the benefit of 
the doubt.
    I was very moved when Sharon talked about being a nurse and learning 
from dealing with all different kinds of people that no one can predict 
what will happen to you in life. My mother was a nurse, and she used to 
tell me those stories over and over again. By pure coincidence, less 
than an hour before I came over here, I got word that a young woman 
whose family has been close to Hillary and me over the last several 
years, who has two young children, just found out that she has cancer. 
Now, she may be fine; there's wonderful treatment available; the tests 
are just being done. But the point is, a week ago such a thing would 
have never crossed her mind. She is the picture of health; she is a 
fitness fanatic; she has no conduct that would indicate propensity to 
develop it. These things happen.
    And the great dilemma for all of us, both in our family and our work 
lives and in our national life, is that we really have to always be 
planning for the future as if we're all going to be all right from now 
on, because as a country and as a people and in our families, most of us 
are, most of the time. But we also have to plan for a future in which we 
recognize our shared responsibility to care for one another and to give 
each other the chance to do well, or as well as possible when the 
accidents occur, when the diseases develop, when the unforeseen occurs, 
or when time takes its toll and we get older--which looks younger every 
day to me. [Laughter]
    And that is the question. This is--it's hard to imagine a more 
profound subject, really, with which to be dealing. Tammy was talking 
about her grandmother and her niece. This is something that affects us 
all, and as time and chance occurs, and we try to fulfill our 
responsibilities, we have to make it work out so that, at the end of the 
day, our families

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are stronger and our Nation is stronger and your future is brighter.
    Now, what I want you to think about today is what we should do as 
our first priority with this surplus. When I took office in 1993, we 
were spending 14 cents of every dollar you paid in taxes paying interest 
on the national debt--$200 billion--15 times more than we were spending 
on education, training, and employment services, just to make the 
interest payments. By the year 2014, when I took office, it was 
projected that we'd be spending 27 cents of every dollar you pay in 
taxes making interest payments on the debt--$1.28 trillion.
    Now, just by eliminating the deficit over the past 6 years and going 
into these surpluses, we now know that we'll be able to meet our Social 
Security obligations between now and 2032, because the Trust Fund will 
be available--actually, it will be in about 14 years that the taxes will 
not cover the payments on a monthly basis, but the Trust Fund, the 
savings account, will carry to 2032.
    Now, that's a lot of progress. But we've still got some real 
challenges. Number one, 2032 is not that far away, and when you're 
dealing with money this big, the sooner you start to deal with the 
problem, the easier it is to deal with it. And the longer you take to 
deal with it, the more difficult, the more painful, the more expensive 
it will be and the more unpleasant our choices will be. Number two, 
we're still carrying a $3.7 trillion publicly held debt on our books.
    Now, I believe if we were to use the budget surpluses 
overwhelmingly, to pay down the national debt for 15 years and target 
that money to Social Security and Medicare, it would dramatically 
improve your economic future, and it would be a great safety protection 
against the possibility of adverse economic developments beyond our 
borders, which could affect us here. We can also save Social Security 
and Medicare. We can keep the promises that have already been made. We 
can provide substantial tax relief, targeted heavily to the middle-class 
families to save for retirement.
    You know, half the seniors in this country would be in poverty today 
if it weren't for Social Security. But the poverty rate among elderly 
women is still twice the overall poverty rate of our seniors. Women have 
longer life expectancies than men. They're more likely to--I expect NIH 
to change that, by the way, with all the investment we put in. 
[Laughter] They're more likely, therefore, to spend more years alone and 
more likely to be in poverty.
    We need to have a tax relief package that encourages people to save 
for their own retirement--you, now. And we can increase Government 
savings and do it in a way that provides tax relief that also increases 
private savings for your future, which I think is very, very important. 
And parenthetically, as you pay down the debt, that leads to lower 
interest payments for college loans, for mortgage loans, for car 
payments, for credit card payments. It leads to lower interest rates for 
business loans, which leads to higher investment and more jobs and a 
brighter future. So you get a two-for-one thing if you do it. But to be 
fair, the choice is, you have to give up some of the tax cut that the 
congressional majority would offer you today, which sounds nice.
    Now, my proposal is, save 62 percent of the surplus for Social 
Security for the next 15 years and invest a modest portion in the 
private sector so we can increase the rates of return on the Social 
Security Trust Fund. That takes us to 55 years for the soundness of the 
program.
    Next, I want to extend the life of Social Security to 75 years, 
which is where we have traditionally thought it should be, so that young 
people living in college today--college students today, if we do that, 
would be covered well into their nineties. I think we should do more to 
reduce poverty among elderly women. I think we should lift the limits on 
what people on Social Security can earn for themselves, without having 
to give back their benefits, in effect. We can do this if we make some 
other choices and work together. They're clear, and they're not 
complicated, really. They'll be somewhat unpopular, but we have to do 
some things to get this done.
    Second thing I want to do is to give another 15 percent of the 
surplus for 15 years to Medicare. If we do this, we can keep it safe and 
sound until 2020, and I hope we can go further. I think that we should, 
at a

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very minimum, cover the greatest growing need of seniors, which is for 
affordable prescription drugs. This is a big deal. Anybody involved in 
medical research will tell you that we can actually keep seniors out of 
the hospital and out of trouble and, therefore, lower the aggregate 
costs of health care over the long run, if we can work Medicare out so 
we can absorb the front-end investment of a prescription drug benefit.
    And by the way, by the time your parents--those of you in your 
twenties--are on Medicare, it will be more true. And by the time you are 
there, it will be even more true. So the quicker we get to a health care 
program that allows people to manage their own health care and stay 
healthy and use whatever modern medicine develops to do so, the better 
off we're going to be.
    Now, the third thing I propose is that we have a tax cut of over 
$500 billion to create USA accounts, Universal Savings Accounts, that 
would be targeted to middle class families to help them save for their 
own retirement. Social Security alone is not enough for people to 
maintain their standard of living. Many people in the years where 
they're working hard and raising their kids and worrying about sending 
them to college do not have the resources to save. We want to make it 
possible through the tax cut to have more people save for their own 
retirement.
    So where are we with all this? The Republican leadership has said 
that generally it supports setting aside 62 percent of the surplus until 
we save Social Security. That's good, and I appreciate that. So we have 
national unity on that issue. Then we can argue about the details about 
what the best way to do that is. But that's where the agreement ends. 
And I think it's important--they still really haven't made a commitment 
to extend the life of the Social Security Trust Fund from 55 to 75 
years, and you should demand that all of us do that. Everybody here in 
your twenties, you should demand that we not walk away from this session 
of Congress without extending the life to 75 years and doing something 
about the poverty rate among elderly women and letting our seniors get 
out from this earnings limitation.
    Now secondly, they do not agree that we should set aside 15 percent 
of the surplus to save Medicare and to pay down the national debt even 
further to lower future interest rates even more, to spur even more 
economic growth. I think this is a terrible mistake. That does not mean 
that we won't have to make some tough choices to reform the Medicare 
program. But we're going to be better off saving more of this surplus, 
paying down the debt more, and saving Medicare along with Social 
Security.
    Third, we differ on the tax relief. I believe that tax relief is 
appropriate. I don't think that the whole surplus should be retained by 
the Government, even for Social Security and Medicare. But when you've 
got a country with a savings rate as low as ours is and when you know 
right now that working families need to be saving more for their own 
retirement, it seems to me wrong to have a tax cut where a 
disproportionate amount of the benefits will go to people in very high 
income categories, who have taken care of their retirement fine and who 
have made a good deal of money in the stock market over the next 6 
years, and not target even greater tax relief to middle income families 
who need to do more to save for their own retirement.
    So those are the basic differences. But I just want to hammer to the 
young people here home the following things: You should want us to save 
Social Security and Medicare, not only for yourselves but for your 
families. You heard Tammy Baldwin talking about that. I can tell you 
that the baby boom generation is really worried, as I said in the State 
of the Union, that our retirement will cause undue burden on our 
children and on our children's ability to raise our grandchildren.
    So if you don't have to worry about that, that is also a direct 
financial benefit to you. If you don't have to worry about the medical 
bills of your parents because we save Medicare, it could be worth a lot 
more to you if your parents get sick than a short-term tax cut would 
today--a lot more. And if we continue this debt reduction and we go as 
far as Secretary Rubin said--just think about it--having public debt the 
smallest percentage of our economy that it's been since before we went 
into World War I.
    I'll tell you what that will mean in 15 years, just 15 years. And 
believe me, 15 years passes in the flash of an eye. What it means is 
that

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we will only be spending 2 cents of every dollar you pay in taxes on 
debt service. And 15 years from now, if the Congress wants to give more 
tax relief, let them do it; 15 years from now, if we're on the verge of 
a comprehensive cure for cancer and they want to give it to the National 
Institute of Health, let them do it; 15 years from now, if we have some 
other big crisis and we want to have a major investment in education, as 
we did when we got into the space race, let them do it.
    We should be willing to give some of these decisions to the future, 
instead of taking it now, when it looks easy, but we'd be squandering a 
historic responsibility. I am quite willing to leave a decision like 
that to the future. A lot of you may be here then. I'd like for you to 
have the option to do what is necessary.
    So again I say, underneath all these complexities, there is a 
fundamentally simple choice. Should our first priority be an across-the-
board tax cut now, of a size which will keep us from dedicating a lot of 
this surplus to Medicare and will reduce our ability to pay down the 
debt and keep down interest rates and keep up investments over the long 
run and tie the hands of future decisionmakers? Or, should our priority 
be to save Social Security and Medicare and have targeted tax relief to 
help retirement savings be built up in middle class families that have 
not been doing it or that need more, in a way that maximizes our ability 
to pay down the debt?
    Some people in this room have heard me tell this story too many 
times, but I want to say it one more time. When I was a freshman in 
college and I took a course in the history of civilization, in the last 
lecture of the year, my professor at Georgetown said that the 
distinguishing characteristic of Western civilization was that we had 
always, at critical junctures, been driven by what he called ``future 
preference,'' the idea that the future can be better than the present 
and that each individual and society as a whole have a personal, moral 
responsibility to make it so.
    Now, that's really what this is about. Their idea sounds simpler, 
sounds good, even sounds fair: 10 percent for everybody. Our idea will 
give you a stronger economy, will save Social Security and Medicare, 
will stabilize families, will strengthen the ability of the United 
States to lead the world, and will make you feel a whole lot better 15 
years from now when you're dealing with both the opportunities and the 
pain of time and chance that affects us all.
    You know, I see a few of the young people here today with ashes on 
their foreheads. Yesterday was Mardi Gras; for Christians, today is Ash 
Wednesday. For people all over the world this is about to be springtime 
and a season of renewal. This is a time for renewal. I hope we make the 
right decision, mostly for your sake. And I believe we will.
    Thank you, and God bless you.

Note: The President spoke at 3 p.m. in the East Room at the White House. 
In his remarks, he referred to Sharon Brigner, clinical nurse, National 
Institutes of Health, who introduced the President.