Press Briefing by Chief of Staff Leon Panetta and Mike McCurry

The Briefing Room

1:24 P.M. EST

MR. MCCURRY: Good afternoon, and welcome to the White House. I asked Leon Panetta, our Chief of Staff, to come visit with you very briefly at the briefing. Because the Republicans have introduced their tax cut proposal, I thought it would be appropriate for Leon to give you the President's response and to take maybe just a few questions before we proceed with the regular daily briefing.

Mr. Panetta.

MR. PANETTA: Today, the House Republicans released their tax plan. I understand the Chairman of the Ways and Means Committee gave a brief speech, but I think the proposal itself is formally being introduced and presented today. And I'd like to comment on it, because it raises, we think, some very serious concerns about the fairness of the proposal, and also the fiscal integrity of the proposal as well.

According to the Joint Committee on Taxation, the proposal itself will cost nearly $200 billion over five years, $188 billion, to be specific. They did not release the 10-year cost, interestingly; however the Joint Committee estimate of the proposal in the Republican contract, which is very similar to this plan, is an estimate that is over $700 billion over 10 years.

Included in the proposal is their capital gains tax break, which we also understand would cost about $170 billion over 10 years and their corporate depreciation write-off, which costs nearly $90 billion over 10 years.

They're also proposing a new wrinkle in the bill that is to be introduced. They want to reopen a massive tax loophole in the code that has been used to allow many of the countries' largest corporations to avoid paying any income taxes, whatsoever. That loophole was closed in 1986 by the creation of the alternative minimum tax, corporate minimum tax, and the Republicans are now proposing to abolish that tax as part of their bill.

Now, less than three months ago, in addition to the substance of the proposal, the question also has to be asked, how are they going to pay for this proposal. Less than three months ago, the new Chairman of the House Budget Committee, John Kasich, made a promise to the American people, and I want to quote what the promise was: "In January, I'm going to bring to the floor a revised budget resolution. We will take the savings by cutting spending first, and we're going to put them in a bank, so nobody on Wall Street, nobody across this country, nobody on Main Street is going to think that what we're doing is to give out the goodies without cutting government first."

Today we're seeing the goodies, particularly for the wealthiest taxpayers in this country. But we still haven't seen the spending cuts as to how all of this is to be paid for. We haven't seen the spending cuts to pay for their tax cuts. And we certainly haven't seen the first dime -- the first dime -- of spending cuts to pay for the balanced budget they continue to promise.

Two years ago, the administration, as all of you know, proposed a budget, got it passed well before the April 15th deadline, was passed on April 1. The American people were aware of what we presented. Congress debated it. Congress did the job and abided by the budget act requirements on Capitol Hill.

The American people now have a right to see the spending cuts that would pay for these tax cuts. Before -- before, not after -- but before they debate the tax bill on the floor of the House, at the very least they deserve to see how they pay for these tax cuts and how they will achieve their deficit reduction goals by April 15th.

The fact is that if you look at what spending cuts they're talking about even up to this point, they would only pay for a fraction of the tax cuts that they are proposing. We haven't even started getting into how we reduce the deficit target that the Republicans have been talking about. And it's also interesting to see where those cuts would come from.

As all of you know, programs like the school lunch program, the school breakfast program, the WIC program for mothers, infants and children, food stamps, summer jobs for kids, housing for the needy, assistance for the homeless, safe and drug-free schools, teacher training under Goals 2000, national service and other programs that impact on the most vulnerable. If you take all of these cuts together, if you just take all of these cuts together, they fall well over $100 billion short of what they're now promising in tax cuts to the most privileged in our society.

The President rejects the idea -- rejects the idea of targeting the most vulnerable in our society, our children, needy families, the homeless, in order to pay for these tax cuts, especially for tax cuts that are benefitting the wealthiest.

So today we would like to call on the Republicans to do two things: First, to do what the administration did in 1993 when we presented the $500 billion in deficit reduction to this country and to the Congress. Present it and get the budget resolution passed by April 15th. That is the requirement of the budget act, we owe that to the American people, we owe that to the Congress, we owe that to our children to show exactly how these cuts, how our deficit is to be reduced over these next five years.

They need to present that to the American people, they need to show the specific spending cuts, and they, frankly, do not need a constitutional amendment in order to fulfill that requirement. They have a majority. They represent a majority in the House and a majority in the Senate. There is nothing to stop them from presenting that budget resolution and getting it passed.

Secondly, we also asked them to do what this administration did when it comes to tax cuts -- target the tax cuts to working families in this country, target the tax cuts to working families in this country. But at a minimum, we would ask the Republicans to drop the most onerous features of their tax provisions -- capital gains tax break, the corporate depreciation and write-off, and the corporate income tax provision basically wipes out the requirement that they pay taxes.

In the end, I think we have one fundamental question to ask of the Republicans: How can they justify -- how can they justify -- providing almost a quarter of a trillion dollars in tax benefits to the most privileged in our society by cutting the most vulnerable in our society -- kids and school lunches? It just doesn't work. The American people are not going to accept that, we're not going to accept it.

Q: What is the concern here? Is it your concern that the Republicans will not cut enough to balance the budget, or that they will?

MR. PANETTA: The concern is that they have, almost after 60 days into their contract, as of this moment have not presented one dime of deficit reduction.

Q: You don't think they will? Is that what you're afraid of, is that they won't do it?

MR. PANETTA: Our concern is that we presented our budget, we did it, it's over 30 days that our budget has been up on the Hill; we have yet to see their budget resolution. What I'm saying is, let us see from the Republicans how they're going to pay for these tax cuts, which they promised to pay for before they brought the tax cut bill to the floor -- how are they going to pay for that, and how are they, then, going to achieve their deficit reduction goal of balancing the budget by the year 2002?

I think the American people now need to know that. The time has come for no more excuses on this issue. We've gotten all the excuses, we've been through all the excuses. Tried to change the Constitution, that didn't work. They were trying to find courage to change the Constitution, that didn't work. They're trying to say we're going to do the tax cut bill before we do the spending cuts. Frankly, that's not going to work. No more excuses, do the job, present your budget, and as the President said, once they present their budget, we will give it full and fair consideration.

Q: Are you worried that they will somehow do this in secret, and the American public won't find out about it?

MR. PANETTA: What my worry is right now is that they won't do it.

Q: That they won't cut the budget?

MR. PANETTA: That's right.

Q: In 1993, the President proposed his own targeted capital gains break, which Congress passed. Is the President unwilling to accept any kind of capital gains break at this point? Is he willing to say absolutely no cut, or would he be amenable to a targeted -- to produce corporate or small business growth?

MR. PANETTA: The President, when he spoke about the Middle Income Bill of Rights, I think made the position clear that the Middle Income Bill of Rights represents what we think are the tax breaks that ought to be provided to working families in this country -- tax breaks that target the need to raise kids, the tax breaks that involve education deductions for being able to educate your kids, take care of your families. That should be the target. And any test with regards to anything other than that, that's passed by the Congress, has to be a test of, A, is it helping working families in this country, is it fair to them, is it paid for. And I think those are the tests that will apply to other provisions.

But right now, the President's main focus is, let's focus on targeting any tax breaks to working families, and let's pay for whatever tax cuts we provide. That is not the case here.

Q: In singling out these three tax provisions, are you saying the President will veto a tax cut plan that contains those?

Mr. PANETTA: Without getting into the debate about what he will or won't do, I can tell you that the President is strongly opposed to these provisions in a tax cut proposal.

Q: Did you have an estimate on the alternative minimum tax, if it's --

MR. PANETTA: Les, do you know?

MR. SAMUELS: It would be probably about $10 billion or $12 billion a year that they raise, so in the last five years, about $60 billion -- would be just a rough guess. We're waiting for those 10-year numbers.

Q: When does that start?

MR. SAMUELS: They start now, and they spend about $17 billion between now and the year 2000, and then they repeal it entirely in the year 2000.

Q: It phases out.

Q: Leon, Nancy Reagan and Bill Bennett charged the administration has done almost nothing to raise the level of visability of the drug problem, and that because that's the case, parents think there is no problem and kids go and experiment, and drug use among school children is on the rise.

MR. PANETTA: Well, Lee Brown, Dr. Brown, who is testifying today, I think, has really presented a case for what this administration has done in terms of this area. We have increased funding with regards to drug programs. We have increased enforcement. We have also increased the targeting that we feel needs to be done with regards to education and counseling on this tragic problem. So I think we've got a record that the administration is proud of.

I think what the Republicans need to do is to tell us how they can criticize on one hand for our drug program and at the very same time propose to eliminate the drug-free schools program which affects 94 percent of the school districts in this country and is aimed at trying to teach and counsel kids to avoid drugs. That's what Mrs. Reagan has been fighting for most of her life. I would hope that she would equally criticize the Republicans for what they're proposing in the rescission bill, which guts the drug-free school program.

Q: Well, they seem to be suggesting that the President hasn't used the bully pulpit enough where drugs are concerned, that he's said very little, except that he didn't inhale, according to Bennett, that's a quote.

MR. PANETTA: I think the President has provided without question strong leadership in this country with regards to the whole crime issue. We were able to pass a crime bill last year that without question was the strongest and toughest crime bill passed in the history of this country, that not only addressed punishment, but also addressed prevention. Part of that prevention was aimed at providing additional programs to assist in fighting drugs. I think this President has spoken out on this issue. He's spoken out strongly. But more importantly, he's put his money where his mouth is, which is basically to try to support those programs that would, in fact, provide better counseling for kids and drugs.

MR. MCCURRY: All right, the heavy lifting having been done by the heavy lifters, I'll take any other questions you may have.

Q: Is it still a good idea, Mike, for Mrs. Clinton to go to Pakistan?

MR. MCCURRY: It's an excellent idea for Mrs. Clinton as an ambassador of goodwill and as an advocate for causes that she believes in to make the journey that she's anticipating, as it is for her to do so many of the things that she's been pursuing as First Lady. This is a trip that's been planned for a long time, could have a lot of very good beneficial results for our bilateral relationships in South Asia. And I think that she plans to proceed with her trip accordingly.

Q: Do you have anything yet on Pickering being called back to Moscow?

MR. MCCURRY: Yes, apparently there's a somewhat overblown account out of Vladivostok. He has been asked to go back to Moscow to prepare for the meeting that Secretary Christopher has now announced today that he will be holding soon with Foreign Minister Kozyrev. Christopher and Kozyrev will meet obviously to review matters pertaining to the upcoming summit between President Yeltsin and President Clinton. And the ambassador in Moscow will help preview the meetings that will occur between the Secretary of State and the Foreign Minister.

Q: When would that be?

Q: What summit would that be?

MR. MCCURRY: The summit will be the summit that the President has told you that he intends to have with President Yeltsin sometime in the first half of 1995.

Q: Downing Street has said that the fundraising visa for Gerry Adams is bound to sour relations. What's your comment?

MR. MCCURRY: Well, we have a very productive and good and warm and special relationship with the United Kingdom. And we would hope that we can proceed, while we may differ somewhat on tactics, from time to time we will proceed in the spirit of that relationship, which is aimed ultimately on the question of Northern Ireland to a peace process that can resolve the troubles.

Q: What about the question, though?

Q: The question was, are you -- Downing Street has told you two days ago when Sir Patrick Mayhew was here, it was bound to sour relations; you went ahead anyway.

MR. MCCURRY: We would hope that it wouldn't and don't see any reason that it should.

Q: What guarantees can you give that the funds that he raises won't be used to buy weapons?

MR. MCCURRY: Well, the best guarantees are those that are embedded in the peace process itself -- actions speak louder than words, but we certainly will watch very carefully what the parties in the process do, and whether they will keep on the pathway to peace that we think they are committed to pursuing. And we will certainly expect that the representations that have been made about the fundraising activities here are pursued as they have been indicated to us.

Q: Mike, just for the record, could you tell us exactly why the President decided to make this decision at this particular time?

MR. MCCURRY: Well, you've heard me earlier today, and I think some of the others that have talked to you, we believe that there has been progress made. And based on that progress so far, the President decided to grant Gerry Adams a visa that will include some of the fundraising activities in the past that he has been prohibited from pursuing. In part, it's based upon the statement today by the Sinn Fein which adds decommissioning of weapons to the items under discussion with the parties, and that has been a fundamental of ours for sometime, the question of disarmament.

Q: Do we regard this as a major concession?

Q: That statement was issued this morning, and we were told the decision was made last night.

MR. MCCURRY: Well, there's been active discussion underway between the parties that we have been involved in. So we had some knowledge of how the statement would unfold today.

Q: Do we regard this as a major concession on their part?

MR. MCCURRY: On their part? No, we believe it is a step forward. It's a step forward on a process that we believe needs to be nurtured and deepened.

Q: When exactly did the President last speak to Major, and when is the next communication?

MR. MCCURRY: I'd have to check, Brian. I don't know the answer to that.

Q: Can you explain why we have no coverage of Ghana's leader and so forth, in the usual style?

MR. MCCURRY: If I'm not mistaken, President Rawlings does intend to visit with you at the conclusion of the meeting.

Q: And the President, too?

MR. MCCURRY: No. The President will be otherwise occupied.

Q: Your administration is rightly furious about the terrorist murders of American diplomats in Karachi. In the light of that, does the President think it appropriate to be inviting to the White House reception a man who has been a mouthpiece to terror for 25 years, and does he care about the effect that will have on the British people in general, and especially on the many British people whose relatives have been killed by Mr. Adams' cohorts?

MR. MCCURRY: We are far too early in the investigation of the murders of the diplomats in Pakistan to know their motive or to know anything about them, frankly, or to know whether they have made the kind of commitments to a peace process that have been made by Gerry Adams.

Q: They could easily have done so, and still murdered your diplomats.

MR. MCCURRY: If you have any information about who they are, you're entitled to the $2 million reward that we've now offered. (Laughter.)

Q: The Chief of Staff makes clear the fact that it's time for the Republicans to put up or shut up on their own budget plan. But this matter of the rescissions is different. That's a budget that's already passed. Is the President just hoping that the Senate will be his sword and his shield here? What precisely is he willing to live with of those, and how, precisely, does he see the path --

MR. MCCURRY: The President addressed himself to some of those questions, generally today, at the conclusion of the session he had with some of you. He indicated, among other things, give me line-item veto and we could make some progress very quickly on cutting the kind of spending that is wasteful and unnecessary, but the House will consider the rescission package next week -- there will be ample opportunity to review what they do, and there will be ample opportunity based on -- I think there are a little bit more moderate and sensible statements from some in the Senate, there will be opportunity to address this issue as the rescission package works its way through the Congress.

Q: But are there things in that package that he clearly could not live with if they stood as they are now?

MR. MCCURRY: Yes. And he indicated some of them today, if I'm not mistaken, at the end of his remarks.

Q: Obviously, he answered the question that you agreed to take earlier. Why doesn't he want to say which ones he can live with?

MR. MCCURRY: Well, look, we're in a process where we will be bargaining with the Congress, we will be negotiating with them to try to produce a package that is to our liking. But I think you hear us over and over again say it ought to start from the premise that they need to be more forthcoming generally on how they would approach questions related to the federal budget. They won't give the American people a budget. They won't give them even information about where they want to go with the federal budget, and we think that the American people are entitled to hear that so they can get some better sense of what the federal budget will look like in the hands of the Republican majority.

They know from the President what it would look like, because we've sent a budget proposal to them.

Yes, sir. Award-winning comments from The Kansas City Star, right?

Q: I understand the President was at school this morning, talking about school lunches, and I was wondering what is the President's stand on the issue?

MR. MCCURRY: He spoke, I think, at some length today about the importance of that program and what type of benefit there arises from connecting both nutrition programs and education. What we know and has been so clear is that children who are well-fed learn better. And the President, among other points, was making that point today.

Q: Do you have any reaction to President Mitterrand inviting Castro for a visit?

MR. MCCURRY: I'll have to check on that. I actually, frankly, didn't know about it. I'll find out more about it.

Q: The EC President corresponded with President Clinton yesterday and asked him to weigh in on the WTO impasse. Has the President received that letter, what is his reaction to it?

MR. MCCURRY: That reflects, I think, what we've been saying, that we are in active consultation with our trading partners now about the question of the WTO leadership, and we will have something to say on that at the appropriate time. I'll check it specifically on the letter. I had heard about the letter, but I don't know whether the President has had a particular reaction to it. But we'll make a note and we'll try to get to that tomorrow.

Q: There's a growing number of members of Congress that are increasingly disenchanted with tax cuts from either side of the aisle, and they think deficit reduction should take priority. How does the administration intend to make its case for middle-income tax cuts from either side of the aisle when they think deficit reductions should take priority? How does the administration intend to make its case for middle-income tax cuts -- growing sentiment?

MR. MCCURRY: Because we make the case for the Middle Class Bill of Rights in the context of the deficit reduction done by this President, over $600 billion worth of deficit reduction in the first two years of the administration alone, and a FY '96 budget proposal that cuts $144 billion in spending resulting in an additional $81 billion in deficit reduction. Given that enormously hard work to cut the deficit, we think we can shoehorn into the budget the type of middle income tax relief that the President has proposed in the Middle Class Bill of Rights.

Q: What, on the theory that it was time for a rest?

MR. MCCURRY: No, Brit, on the theory that there -- it's very, very important -- I mean, there are objectives associated with the Middle Class Bill of Rights that will grow the economy in the out years. It actually will help us continue the recovery by giving people training, education, providing opportunities for the type of child care opportunities that Americans need to have productive employment. That's sensible economic policy matched up with effective and aggressive budget deficit cutting.

Q: Mike, you said that the President was going to be otherwise occupied this afternoon when the President of Ghana came out. What else is on the President's schedule this afternoon?

MR. MCCURRY: Those items that I indicated to you this morning.

You had a question, Todd?

Q: No.

MR. MCCURRY: Josh?

Q: I don't think you did indicate --

Q: No, he didn't.

Q: I must have missed it.

MR. MCCURRY: I said he was -- I don't -- doing office appointments this afternoon. I ran through the rest of the day. Yes, I did the rest of the day this morning.

Yes, Josh.

Q: Could you confirm that Jesse Jackson is coming to the White House this afternoon to talk with --

MR. MCCURRY: Yes, we did that this morning, I think.

Q: Can you go into what was discussed at that point, was it on all on --

MR. MCCURRY: I don't think he's here yet. I think he's coming in this afternoon. He'll be here at around 2:00 P.M.

Q: Is the discussion specifically devoted to affirmative action?

Q: He'll never tell --

Q: Is the discussion specifically devoted to affirmative action, or are there other issues on the --

MR. MCCURRY: The Reverend, when he talks to members of the White House staff, as he will this afternoon, very often has a number of things on his mind. I wouldn't want to predict. I would -- I'd hazard a guess that affirmative action may be something that he wants to talk about. But we'll try to --

Q: For those of us who -- I'm terribly sorry I didn't make it to your morning briefing, who is he seeing?

MR. MCCURRY: He is seeing the Chief of Staff, Mr. Panetta; Alexis Herman; Harold Ickes; George Stephanopoulos and a cast of thousands. I might even drop by myself to say hello.

Q: Any timetable on when the affirmative action review will be completed?

MR. MCCURRY: Only the one that the President indicated publicly at his Press Conference, which was soon.

Q: A group of Senate Democrats yesterday promised an alternative plan to eliminate the deficit by 2002, or thereabouts, which would suggest that they would not find room to shoot for any tax breaks this year or possibly future years. What is the administration's reaction to their alternative plan?

MR. MCCURRY: We'll take a look at it.

Yes, Terry.

Q: The President of Ghana has visited Libya a number of times and said that he doesn't regard Libya as a terrorist state. He says that the Lockerbie trial should be held in a neutral country, as they feel; he's got some trade agreements with Cuba. Why does the President want to meet with them? Is he trying to talk him out of the positions, or --

MR. MCCURRY: No, those are not -- I mean, we just -- we have different points of view on those issues, but those are not likely to dominate the conversation that the President will have with President Rawlings today. The kind of things we do expect to come up are the work that President Rawlings has done. He's currently the leader of ECOWAS, the Economic Council of West African States.

In that context, they've been doing an awful lot of work on peace keeping in Liberia. And I think at the top of the agenda, for both President Rawlings and President Clinton, will be the efforts that Ghana has made with other partners in West Africa to advance the peace process in Liberia.

I expect also that they will be talking about peacekeeping efforts Ghana has participated in generally. They will certainly talk about some trade and investment opportunities in Ghana. President Clinton will be interested in what steps President Rawlings will take to attract foreign investment to Ghana. I believe they will discuss francophone West Africa, generally, and some of the relations developing in that part of the continent.

One thing that the President will urge President Rawlings to do is to support the indefinite extension of the nuclear nonproliferation treaty. And then they will talk about the domestic political reforms that President Rawlings has undertaken. There has been considerable advances towards democracy in the last decade in Ghana. President Rawlings was elected with 58 percent of the vote in 1992, an election that was considered by most international observers to be free and fair. And there have been considerable domestic political reforms since then, which they will review. In short, it's a bilateral relationship that is an important one to the United States, and one which I think reflects the change that's occurring throughout the continent of Africa.

Q: Mike, does the administration have any reaction to the House putting off a vote on term limits? Do you all care?

MR. MCCURRY: Well, it's just -- when the rubber hits the road on the Contract it sometimes -- they hit the brakes, too.

Q: Huh?

MR. MCCURRY: That didn't work. (Laughter.)

Q: Rewind.

MR. MCCURRY: Rewind. I take a pass -- I think I just took a pass on that question. (Laughter.) They will -- I think they also indicated they're going to come back to it. I mean, they obviously were embarrassed by the fact they don't have the votes for what they had billed as a major element of the Contract for America. But they clearly will want to come back to that, as indicated yesterday that they would.

Q: The Justice Department, I guess, is supposed to decide within two or three days whether or not to have a special prosecutor -- a special counsel for Secretary Cisneros, and as you know they're also looking at the issue, or the issue is being looked at for other people? Does the administration have a position on whether or not -- an overall position on whether or not a Cabinet member should resign if special counsel is named, or is it up to any person thus in that kind of trouble to decide on their own?

MR. MCCURRY: Well, I'd like to check into that, but I think the President would take the general view that people are entitled to a presumption of innocence. And so often in the special prosecutor, special counsel process, there seems to be a presumption of guilt prior to someone getting -- arriving at the facts of the matter.

Q: So Espy is no precedent?

MR. MCCURRY: Each and every one of the cases in which there have been independent prosecutors sought or whether there's consideration, that have different facts associated with it. And lumping them all together is not fair to any of the individuals involved and not fair to the process itself, which needs to have integrity.

Q: I guess I'm looking for clarification. Is the President opposed to a capital gains tax in any form?

MR. MCCURRY: I have to stick with the same answer Leon gave to that.

Q: It wasn't very clear --

MR. MCCURRY: Okay, good. (Laughter.)

Q: Can you find out? Why can't you find out if he is not?

MR. MCCURRY: I'll look into it, if you want to ask me tomorrow, I'll look into it some more.

Q: Mike, to what extent has the White House put a bullet in the National Park Service plans to redo the compound?

MR. MCCURRY: I think with the cooperation of some in this room, in effect, it was well aimed. But not on the one -- on the provision that affects many of you, the working press. I don't want to suggest that the rest of that plan doesn't deserve consideration. I am, frankly, not familiar enough with the rest of the plan, and there are others, are in the White House, who have. But I'll need to look at that.

Q: You're saying it's not sheer idiocy?

MR. MCCURRY: There were parts of it, as it related to many of you, that probably bordered on that description. (Laughter.)

END 1:54 P.M. EST