Press Briefing by Chief of Staff Leon Panetta, O.M.B. Director Alice Rivlin, Secretary of Labor Bob Reich, and Secretary of Education Richard Riley

The Briefing Room

1:40 P.M. EDT

MR. PANETTA: Thank you. What we wanted to do today is to, as we continue our examination of the budgets that have been submitted by the Republicans in both the House and the Senate, that we are reviewing their impact. Let me just remind everyone that there's always a tendency when you look at budgets to just look at numbers. And as always, budgets are not about numbers, because every one of the line items in a budget affects people, they affect families, they affect what our country stands for and what it's against.

Yesterday we raised the concern that the budgets clearly aim at working families and at their parents, and pointed out the cuts on Medicare and Medicaid in particular as representing a real hit on working families, and particularly their parents. Today we're going to focus on children and on our economic future.

The President, from the time he was governor to the present, has continued to believe that education is the key to economic growth in this country, and that if you cut education you are cutting the incomes of people. All of us recognize that education is fundamental to what the American Dream is all about, to giving our children a better life in the future. And as the son of immigrants to this country I guess I'm a example of that. I would not be standing here were it not for the opportunity to get a good education in this country. I think I can say that for the others that are here as well. Education is crucial to economic opportunity and to economic growth. There is nothing that is more important to raising incomes and raising the standards of living in this country than education.

The President has said time and time again that education is the fault line of economic opportunity in this country. And you can see it in the numbers. Everybody knows this. Everyone knows this -- parents, families, anyone who has had a child understands what this is about. Incomes in this country, the gap in average earnings between male high school and college graduates has doubled, from 39 percent in 1979 to 80 percent in 1993. That's a consequence of education. That's what education does.

The President is determined to increase incomes and living standards, and that's what his initiatives have been all about over the last two years since he's been in office. He has sought to improve pre-school, K through 12 education for young children by improving -- strengthening Head Start, by establishing Goals 2000, by implementing Title I reforms. The budgets proposed by the Republicans would cut Head Start, cut Title I and eliminate Goals 2000.

The President has supported the Safe and Drug-free Schools program at a time when it's absolutely essential to educate our children about the dangers of drugs. They -- the Republicans -- in their budget eliminate that program.

The President has increased access to college for kids of middle class families by reducing the cost of college loans, expanding the eligibility for grants, establishing AmeriCorps, the national service program. The Republican budgets increase the cost of education for children, reduce access to Pell Grants, and they would eliminate the AmeriCorps, the national service program.

The President has improved opportunities for young people who do not go to college but try to give them the opportunities through the school-to-work program. The Republicans would eliminate that program.

The President has expanded training opportunities for workers with skill grants, and the Republicans would drastically cut those programs as well.

All of this is of great concern because these programs were largely established through bipartisan support, from both Democrats and Republicans. These have never been viewed as partisan issues. These have always been viewed on the basis that they were good for the country, good for families, good for our children, good for those who really do want to give their children that better life.

The President will not stand by and allow these education reforms to be dismantled. He will continue to work for the appropriate tax incentives that help working families educate their kids and give workers the training they need to expand their opportunities as well.

Let me end with a quote from the President before the American Council of Education back in February, and I quote: "Education is the key to our future. It ought not to be a partisan issue. If there is one thing in the world that ought to unite us on the way to the next century it should be our common commitment to explode the potential of our people."

That's the commitment of the President. He has made it. He will stand by that. And he will not allow Congress to undermine that commitment.

Let me introduce Alice Rivlin. She'll be followed by Dick Riley, the Secretary of Education; and then Bob Reich, Secretary of Labor.

MS. RIVLIN: In evaluating these Republican budgets it's really important to keep in mind the basic objectives of budget policy, of economic policy. The administration believes that the fundamental goal is raising the standard of living of average Americans, growing the middle class. The problem of raising average incomes is the biggest economic problem facing America.

Now, the economy in general is doing well. The recovery has been strong. We've added more than six million new jobs. Unemployment and inflation are both low. But average incomes have not been rising. And the even more worrisome fact is that people with high skills and education have been doing well, while people with low skills and no education beyond high school have been falling behind, not just relatively but absolutely. Hence, the criterion for judging any budget has to be, does it raise future incomes of average people.

Now, deficit reduction does contribute to future income growth. If the government is borrowing less of our nation's savings, more is available for the private sector to invest in factories and equipment and other things that raise productivity and raise wages in the future. And moreover, reducing the deficit means that less federal resources go into debt service. And that's why the Clinton administration has focused on bringing the deficit down. And we agree, the President has made very clear that we must work with the Congress to reduce the deficit further.

But deficit reduction defeats its own purpose if it is accomplished by cuts in public investment in education and skills and technology. In the first two years of the Clinton administration we accomplished two things that were very important to the future of the American economy and to future living standards. We brought the deficit down dramatically, and at the same time, we increased investment in education reform, student aid, training and technology.

Now the Republicans want to reverse these gains. In the name of faster deficit reduction, of balancing the budget by an arbitrary date -- 2002 -- and funding a tax cut for the wealthy, they want to gut investment in skills and education. The Republicans want to cut across the board deeply in discretionary spending -- $475 billion below baseline levels. But particularly, as this chart illustrates, they are cutting into investment in education and training.

The chart illustrates the Clinton administration 1996 budget which increases investment in these programs over the considerable increases in the first two years. And the Republicans on the right -- the Domenici budget cuts this much, and the Kasich budget cuts even below that because he is funding not only deficit reduction, but a large tax cut for the wealthy.

Secretaries Reich and Riley will describe examples of what these cuts mean for important programs in their departments. But let me just remind you of two important programs that are not in their departments -- one is Head Start. The President has proposed expanding this program that everyone agrees works in 1996 with an additional $400 million. This would serve 32,000 more children and further improve the quality of the services they receive.

The Republicans in the House would cut Head Start by $600 million in 1996. They would give even fewer children a head start than currently receive one.

The second is national service. The Republicans simply eliminate the national service program, which has young people out serving in communities all over America and earning credits toward their education.

Of all the places in the budget to cut, these sets of programs seem about the most stupid and the most short-sighted. Educating our children and training our work force is an investment in the future. Cutting this is what the President would call eating our seed corn.

Now let me turn to Mr. Education himself, Secretary Riley.

SECRETARY RILEY: These budget proposals put forth by the Republicans, when it comes to education, are really out of step as far as the thinking and the hopes and the aspirations of American people are concerned. This is clearly no time to cut back on education when the entire economic future of the country is at stake.

Now, I believe that these proposals are extreme and they are clearly short-sighted. They represent a sharp break with the American tradition of bipartisan support for education. This is a very critical and important time for America, and especially American education. We're creating a knowledge-based economy. And these budget proposals go directly against the grain of common-sense thinking about what we need to do to prepare our young people for the coming times.

The American people clearly are pro-education. They want to invest in education. They recognize that there's a direct link between the education deficit and this country's future and the budget deficit. The two are tied together.

Last January, the Wall Street Journal and the NBC poll specifically asked the question about whether there should be cutbacks in my Department of Education. Over 80 percent of the people said no; 70 percent said that the department itself was very necessary in the role it played.

The Republicans came out recently and attacked the school lunch program. That didn't make a lot of sense to Americans. Now they want to tamper with the basic American principle of access to college, helping people who can make the grade get ahead by getting the higher education and being able to participate in this complex economy. The American middle class is what it is today because we've made access to higher education a national priority for over 50 years, since the G.I. Bill.

My department's budget provides critical assistance to help parents and students pay for college -- more than $35 billion in financial assistance, and loans and grants and work study. One-half of all students in college receive some form of aid from the Department of Education. This is in higher education. The House proposal will increase college costs for 4.5 million college students by eliminating the in-school interest subsidy -- and that is real money; up to $3,000 extra of a working class, middle class, and certainly poor family trying to get a student through college.

In proposing to eliminate the very successful trio* programs, the House is telling 700,000 young people, mostly minorities, that they won't get the real help that they need to prepare them for college and to negotiate this new economy. And I ask you, does that make any sense as far as the economic growth of this country.

President Clinton has clearly shown that he is an education-minded president. Leon and Alice mentioned a number of the programs. He wants to protect access to college, and even increase it. And that's why the President wants to target tax cuts to pay for college tuition, and why our direct lending program is so popular on college campuses all across the country. It saves billions and billions of dollars of taxpayer dollars. And that really does help with the deficit without hurting education. And that makes good sense.

The Republicans, on the other hand, want to give a tax cut to the wealthy. They propose, as you know, to give a $189- billion tax cut to the very well-off, half of whom are the wealthiest 10 percent of households in America.

These budget proposals will begin to slam shut the door of opportunity for millions of young Americans who see education as their only way to be part of the American middle class. We need to give our young people hope. And I don't see much hope in these proposals. The message I hear from the Congress to the children and the young people of America: You're on your own.

The American people have always seen a good education as the American way for success. You study hard, you do what your lessons indicate you should do, you keep your nose in the book, you can make it in this great country. I believe in local control of the public schools. I don't believe, however, in gutting the programs that were referred to -- Goals 2000; Educate America Act, which is now actively underway in 47 states and all the territories; people who are with local control, local input, their own reform reaching for the broad national goals; no regulations; technology; Safe and Drug-free Schools; all of the college programs that I referred to.

So I think the question has to be raised: Why now this real attack on education? I'm starting to come to the sad conclusion that in a political season education seems to be becoming a political target. I would think that it -- I would be hopeful that the Republicans who are supporting this proposal would stop and think more about the children of America and less about politics. I urge the Congress to tune into what the American people really want when it comes to education, and stop listening to the political ideologues. We're not educating our young people as Democrats and Republicans and independents, but as Americans. And that is the future of this country.

SECRETARY REICH: On the anniversary of one of this country's greatest victories, the Republican budgets wave the white flag at next century's greatest challenge, and that is to create a first-class competitive work force; to provide opportunities to every single one of our citizens to succeed in a new economy -- a new economy which is very different from the old economy.

Now, 25 years ago it was possible to simply leave high school or even get a high school degree and go directly into a factory job that paid a pretty good wage. But those good factory jobs available to high school graduates, available to people even leaving high school, those are not there anymore, largely due to technology -- robots, computers. We've seen over the last 15 years a huge wave of technology hit these shores. That's good, but it means we've got to be ready.

Globalization has, in effect, accelerated the process of economic change. We are seeing the consequences. That gap that is widening between people who are prepared for the work of the future and people who are not prepared. Workers who have the education and skills -- they're doing all right. Workers who don't have the education, who don't have the skills are on a downward escalator. And what the Republicans are now proposing would make that downward escalator even more precipitous.

Americans are not used to surrendering. Fifty years ago we stood together to defeat fascism. And after winning that war, we won the peace for the next 30 years. Americans grew together as living standards rose for everyone -- rich and poor and in between. We built a middle class that was the envy of the world. But today, instead of growing together we're growing apart. We're growing apart because education, job training, lifelong learning are more important than ever before. That's why the President over the past two years has laid the foundation stones for revolution in education and lifelong learning.

The Republicans want to take us backwards, tt the very time in our nation's history when education, lifelong learning, skills are more important than ever. This is the fight the Clinton administration has been waging. The President's plan for increases in funding for job training, for education, for one-stop career centers, for school-to-work apprenticeships -- at least giving working Americans the possibility of getting ahead, the possibility of breaking out of the cycle of stagnant or declining wages.

The Republicans are planning to cut all that -- 20 percent, 30 percent, 40 percent over the next seven years. We ought to be investing more in people, not investing less in people. Millions of American workers are now caught in the down-draft of corporate restructuring, of defense downsizing, of health care restructuring -- health care workers are going to need a lot of help getting new jobs. Millions more Americans are being challenged as never before by new technologies.

I go around the country a lot as Labor Secretary talking to American workers. I see their disillusionment, I see their frustration. There are good jobs out there that require some skill, they require some training, they require better education than many people have had to date. Forty percent of community college students are adults trying to get that education. But they tell me, we can't afford it. We're losing our jobs. We don't have the ability to get ahead. We need help. That's why the President has decided over the last two years to increase funding for education, for job training, for continuous learning, for skills. The Republicans want to take us directly in the opposite direction.

We are all committed to reducing the deficit. But these cuts are grotesquely misguided, with most of the savings going to the well-off -- people who are already on the other side of the great divide. Education and training are, indeed, the fault line dividing the economic winners from the economic losers in this society. It makes absolutely no sense to take money away from education and training for working Americans and working poor Americans, people who need it the most, and give it in the form of a tax break to people who need the tax break the least. It is simply nonsensical.

Reading these two Republican budget plans is like watching a terrible double feature -- Dumb and Dumber, followed by Clear and Present Danger.

These cuts have serious consequences for real people. I've met these people in the last few months around the country: A former assembly worker in Hartford, who got new skills at a community college to become a numerically controlled tool operator is now earning $12 an hour. A single mother in Kansas City I met just a few weeks ago. She went from being a cashier at the brink of falling into welfare dependency to being a $12 an hour desktop publishing specialist. And in Seattle just a few days ago, a former aerospace worker who acquired new skills and is now learning systems analysis, earning more than he earned before.

These people were helped because we created opportunities for them, pathways for them -- not handouts. This is not a matter of charity; this is not a matter of big public programs. This is a matter of enabling people through direct student loans, through skill grants, through one-stop career centers, through school-to-work apprenticeships to help themselves. This is the American way.

In previous times of turbulence and change, Americans have always banded together. That is why it is especially sad that in this time of turbulence and change, economic turbulence, economic change, we've been presented with a budget that will drive us further apart. They have given up on the ideal of middle class prosperity.

MR. PANETTA: Questions?

Q: For Director Rivlin, please. The administration has said that it wants a balanced budget. You have not offered a budget that does that. Where would you go -- if not here, then where will you go?

MS. RIVLIN: We have said that we're for deficit reduction. We have accomplished a lot of deficit reduction already, and we want to work with the Congress on further deficit reduction. But now it's their turn. They made a lot of promises about how they could get to balance by 2002 and fund a big tax cut at the same time. We're just beginning to see how they would do that, and what we see we don't like. The cuts are in the wrong places.

It's not that we're arguing with deficit reduction -- we're for deficit reduction. But not if it means cutting back on services for older people that they desperately need in Medicare, or as we've been emphasizing this morning, cutting into investment programs that serve the objectives that deficit reduction is supposed to -- namely, growing the economy in the future.

Q: But do when? Do you have a date when you would balance the budget?

MS. RIVLIN: No. We're for further deficit reduction, and we want to work with the Congress on it. We don't think picking an arbitrary date, 2002, is the right way to go about it.

Q: this administration has given up on the idea of deficit reduction?

MS. RIVLIN: No, absolutely not.

Q: the President hasn't said he wanted to balance the budget since early in the campaign. You've offered no road map to get there ever. Can you offer anything besides the phrase that we've said we're for deficit reduction that would in any way show any effort to reach or achieve a balanced budget, or any proof that you feel a balanced budget is economically good for the country?

MS. RIVLIN: At the moment we are looking at what the Republicans have on the table. It is not our turn at the moment to offer -- to go beyond our budget. We thought our budget was a very good budget.

Q: But there's nothing in that that would indicate any desire for a balanced budget.

MS. RIVLIN: The budget does not reduce the deficit in dollar terms, it reduces it as a percent of GDP. But we've made very clear that we want to go beyond the budget and work on further deficit reduction.

MR. PANETTA: I think we've more than established our credibility with regards to deficit reduction, not only in a $500- million deficit reduction plan that was not supported by the Republicans, but also by the additional cuts that we have made, totalling almost $600 billion, plus a health care plan that made very clear that what we've got to do is have cost constraints in that area of health care. If you're looking at entitlements, the one bill is health care. We proposed a broad health care reform bill last that would have involved constraining those costs and helping us reduce the deficit that much more. They rejected that.

We have said very clearly that we are for additional deficit reduction. But we are not going to do it while they want to fund a huge tax cut for the wealthy. We're not going to do it by simply slamming away at Medicare and Medicaid outside of health care reform. And we're not going to do it by simply picking an arbitrary date to balance the budget by. We want to do rational deficit reduction that protects investments in our economic future.

Q: If I could follow with one more question --

MR. PANETTA: Sure.

Q: This gets to the heart of the dispute between you and the congressional Republicans that if you want to balance the budget there's going to have to be a lot of pain. A lot of programs are going to have to be cut and people are going to have to suffer. And the best political way to do that is to make broad cuts across the board. But if you don't want to balance the budget, then you can preserve and protect programs that you like in your constituency --

MR. PANETTA: Well, wait a minute. In our economic plan we froze discretionary spending. We froze it for five years -- '93, '94, '95, '96, '97. A hard freeze on discretionary spending. But at the same time, we were able to increase investments in the areas that we care about for the future. We consolidated programs. We cut programs. We eliminated almost 100 programs and recommended consolidating almost 300 programs. But we invested in the programs that are important to our families and their children.

We put more into education. We put more into job training. We put more into crime and law enforcement. I mean, we were able to put investments there. What their budgets do is they simply blindly slash away at those programs, without looking to the future and without looking to what's important for families in the future. That's the difference.

Q: Secretary Riley said a minute ago that he hoped the Republicans would tune into what the American people really want. I can only assume that you have come here in these presentorials this week and in the predecessors that preceded them to talk about the programs that you think the American people really do want, and I suspect, things being what they are, you have some documentary evidence from public opinion research that buttresses that, because I can't imagine you'd be willing to come out here and face all these questions about whether you're not intransigent and uncooperative and irresponsible if you don't think these are winning arguments. So why do you think these are such winning arguments that will trump criticism of you all as now abandoning the charge that you correctly say you led two years ago?

MR. PANETTA: Look, this is not about polls, and it's not about who's reading what polls or what have you. This is about what's in the interest of working families in this country. I mean, all you have to do -- don't take our word for it, go out and ask the average family, do you care about your education; do you care about providing decent health care for your parents; do you care about the future; do you care about a good job? I mean, those are the questions. Don't ask us, don't just rely on us. Go out and ask the American people what they care about, what is important to their families. And it is the security of knowing that they can given their children a better life.

So what gives their children a better life? It's the help and assistance that they get from programs like this. I mean, this doesn't require a space scientist to understand the importance of these programs when it comes to families. These are important programs, and frankly, the Republicans have endorsed many of these programs in the past because they are important to families.

Right now, unfortunately, they are blindly on a march and not looking to what impacts on families. And that's what we're trying to point out here. Please keep your eye on what hurts American families because that's what these budgets are about.

Q: All four of you used the language today that these cuts are motivated primarily or in large part to give tax breaks to the wealthy. Tonight the Senate Budget Committee will vote, and their plan, which takes another trillion dollars out of -- on top of the deficit reduction you enacted -- is clearly not motivated by that because it doesn't have the tax cut that you guys object to. So Domenici's plan and the Senate Republicans, their idea, in response to Mr. Reich, is that they think that freeing this debt burden will unleash the American economy to do the very things that Secretary Reich spoke about. And it's a different philosophical approach. They don't say they don't care, they say they do care and they have a better way to achieve what you're talking about. Why are you so sure that they're not correct?

SECRETARY REICH: Let me speak to that. We have talked all along about there being two deficits -- one is a budget deficit that does have to be brought down, and we have to bring the budget deficit down in large part to free up savings for capital investment. And that is vitally important to future living standards. But there is a second deficit and it's a deficit in terms of investing in our people. Human capital -- it's a cold-blooded term -- but investments in education and lifelong learning are as important to a modern economy, particularly an information-based economy, a technologically-driven economy, as is capital formation. We cannot abandon one for the sake of the other. We've got to do both.

That is what we have been doing in this administration. To simply slash education and training and lifelong learning -- to slash investments in people and human capital for the sake simply of bringing down the budget deficit, increasing capital formation, physical capital formation, financial capital formation, makes no sense. You've got to do both. And that's what we are doing. That's how you create higher living standards.

MR. PANETTA: And if I could, too -- this raises a good point. Please do not be fooled by the camouflage in the Senate budget plan. And that's what it is. Look at the language there. What they have essentially done is they have set aside a bank to be able to provide a tax cut when they get to the floor. And they've said that. They've said that. The fact is their cuts, whether it's in education or health care, or whatever, what they're doing then is being able to use the debt interest savings and say, oh, don't we have a nice little fund here that we can then give out in tax breaks. So they've basically set it up.

Secondly, there's no question about where the House is in terms of tax cuts. They are standing by their Contract. It is a $350-billion tax cut, largely aimed at the wealthy. I have not heard John Kasich or Newt Gingrich or any of the leadership on the House side say they're going to give in on that one inch. And so the bottom line is when these two come together they're going to have to face a big issue: Are they going to give out huge tax cuts to the wealthy by cutting Medicare and Medicaid and education, or are they going to back away from that?

Q: Mr Panetta, we've heard about your commitment to reducing spending, but I think people want to hear what your feeling is about getting to a balanced budget. And if 2002 is an arbitrary date, is there a better date?

MR. PANETTA: I have always said that it makes sense for us to develop a rational deficit reduction path that leads ultimately to balance, although -- look, I have also said that strict balance is not what I think the economists say is absolutely essential. If we could get to less than one percent of GDP and move on a path that would get us there, I think that's the kind of rational path on deficit reduction that makes sense. You want to get to that area, and then you want to be able to exert discipline at that point.

But to pick a date out of the air as they have in their Contract and then in their amendment to say 2002 is somehow a magic year to do this does not make economic or investment sense in terms of this country.

Q: You've made clear how you feel about the discretionary cuts in both of these plans. How do you feel about the cuts in corporate subsidies, the so-called corporate welfare that the House plan is looking at? I direct that to Secretary Reich and Mr. Panetta.

MR. PANETTA: Frankly, I have seen them put a plugged number in, but I have seen no specifics on what they're recommending on that issue. We're seeing in both of these budgets some plugged numbers that haven't been filled in in terms of specifics, and I can give you a much better read once I know whether they're, in fact, going to move on any specifics.

Look, we have always said, and in our budgets we have said we ought to identify those areas where there are specific subsidies, whether it's in programs or whether it's on the tax side, and be able to look at those as well. We have done that in past budgets and will continue to look at those. But don't be fooled, the bigger problem here is not the $25 billion they're doing there; the bigger problem is the almost $500 billion they're taking out of Medicare and Medicaid.

Q: Mr. Panetta, could I change the subject a little bit to Senator Dole and his criticism -- also some criticism by Mitch McConnell and other Republicans today at the summit -- he says --Dole says, no success; clearly the Congress will be reassessing relations with Russia and reassessing U.S. assistance to Russia. A, is he making a threat; and B, is this presidential politics?

MR. PANETTA: Well, we very much regret the comments of Senator Dole. I think they're spoken more as Candidate Dole than as Majority Leader Dole, because there's always been a tradition in this country that has been honored by both parties in the past that you don't criticize the President when he's abroad, and that politics stops at water's edge. Obviously, that no longer seems to be the case, and I think that's regrettable because, in the future, whoever is president, it's important for both parties to provide support when he's abroad representing this nation.

THE PRESS: Thank you.

END2:20 P.M. EDT