Press Briefing by Mike McCurry

The Briefing Room

2:20 P.M. EST

MR. MCCURRY: All right, ladies and gentlemen, shall we?

Q: Hey, Mike, can you put a more precise time on the release of this information?

MR. MCCURRY: I cannot.

Q: -- negotiations --

MR. MCCURRY: Well, the -- we've arranged some -- tried to be of help so people can understand more about the President's seven-year balanced budget proposal. But the information we've shared, we think needs to be in the custody of the negotiators first. And Mr. Panetta plans to hold a press conference with Senator Daschle and Congressman Gephardt at the conclusion of those meetings. That's -- for my purposes, that's when it would be an appropriate time to make use of the information you got.

Q: Is the White House upset with the slow deployment of the enabling force?

MR. MCCURRY: No, the White House and the Commander in Chief are delighted with the progress that the advance team has been making. There's been some bad weather in the Balkans, but the group that's there doing the advance work and the logistics work that needs to be done for the arrival of the main force has been proceeding satisfactorily.

Q: You haven't made any complaints to the Pentagon?

MR. MCCURRY: There's absolutely no reason to complain.

Q: The enforcement mechanism that you're talking about to ensure a balanced budget in seven years, Mr. Panetta suggested that you would favor tax increases or across-the-board cuts. Is it either/or, is it both, is it a combination? Could you describe this more?

MR. MCCURRY: Mr. Panetta and White House negotiators will be meeting with their congressional counterparts in about 45 minutes. And at the conclusion of their negotiations, they will be holding a press conference and answering questions.

Q: The President today is releasing his third budget in the period of a year. And in this budget he does -- balances the budget in seven years, something he had said just months ago could not be done in a responsible way. Since you're speaking on the record, why is this now possible when in June and July and August it was not possible to --

MR. MCCURRY: Well, it wasn't possible at that time because we were in a negotiation with a congressional majority that we were trying to convince to accept the President's views on a budget proposal he submitted in June. And that proposal sat there month after month ignored by a Republican majority. But we're at the point now where it's the end of the year -- we are well into the fiscal year -- and we've got to get on with business. And the President gave instructions to his negotiators to roll up their sleeves and get on with work. So there are things now that we have to do that under the best of circumstances earlier in this year we would not have done.

Q: Mike, on this embargo -- if all of these numbers have come out from the Hill, from sources on the Hill that reported it, and they're identical to the numbers that were released here on an embargoed basis, what's the theory behind delaying releasing the numbers from here if they're already out there?

MR. MCCURRY: Your news organizations have been able to talk to people on the Hill who have talked to some of our negotiators. Frankly, I've seen wire stories now that have got wrong numbers in them. We tried to help out news organizations here earlier today, but I've learned a valuable lesson: Just save it for later in the day. And we'll do future events like this around 6:00 p.m., 6:30 p.m. at night.

Q: I was under the impression from somebody in the briefing that we had before on the subject of the budget in 10 years versus seven years, that sort of thing. (inaudible) -- hearing from Ms. Tyson and other people that a seven-year budget would contract the economy, it would raise the danger of recession, and a host of other dangers. And these were given as the reasons --

MR. MCCURRY: No, no, no.

Q: -- why you couldn't do it then.

MR. MCCURRY: A seven-year budget, doing some of the things that were proposed by the Republican majority in Congress, we felt quite concerned about the macroeconomic effects of policies like that. Taking $440 billion out of the health care sector, the impact of that, we felt, would have negative consequences for the economy. More importantly, raising taxes on working Americans who live at -- in marginal economic circumstances to begin with, which is bad economic policy in addition to being bad budget policy. So it's not just the number of years, it was the number of years matched to the policies. That's why the President has stressed steadfastly in these discussions that they -- his priorities need to be addressed, because we believe, especially in the area of investments, you'll see throughout the day today that the President's proposals rest on the premise that we have to make investments that will help grow this economy in the future -- investing in people's education, making it easier for them to have job situations when child care is provided. Those are the types of investments that we preserve in our approach to a balanced budget that will protect the economy into the next century.

Q: Mike, would you characterize what Panetta is presenting to the Republicans today as a bottom-line or a fresh starting point, or something else?

MR. MCCURRY: Well, we -- we presented back in June a balanced budget proposal, and it lay dormant for far too long. And in order to break the impasse that exists now, the President instructed his negotiators to come forward with another proposal. But there darned better be some movement on the part of the Republican congressional negotiators now, the President having taken this additional step to try to find common ground on a budget. If there's not, this will be a very short negotiation, I suspect.

Q: Mike, can you clear up the issue on the enforcement mechanism again --

MR. MCCURRY: No.

Q: -- the revenue increase --

MR. MCCURRY: Nope.

Q: Can the President possibly be endorsing a tax increase?

MR. MCCURRY: No, the President is determined to make sure we make good on the deficit track. There are a lot of different ways you could do that. And enforcement mechanisms, as they've existed it the past, have used different devices to address that. We're not ruling in or any particular form of mechanism, but the Chief of Staff is prepared to discuss with Republican negotiators a variety of ways you can make absolutely certain that you reach the deficit targets that are contained in any final agreement. And thus the issue of who scores the final agreement becomes sort of a moot point.

Q: Mike, the Republicans better hurry up and move, or what?

MR. MCCURRY: No, I'm not saying they better hurry up and move; I'm just saying that the President having come forward with a proposal that addresses their concern, which has always been a process concern, do something in a time certain, seven years, we have done that consistent with what the President's priorities have been in developing a budget. And what I'm suggesting now is that they better come forward and address the President's priorities, which they've consistently failed to do. And if they do that, then there will be reason to believe that a good-faith negotiation could lead us to a balanced budget.

Q: I noticed that the -- while he Republicans are refusing to come down on their Medicare and Medicaid tax cut numbers, in your latest plan, the President's not changing his numbers either in those three key areas -- Medicare, Medicaid and tax cuts. The question, obviously is that -- are you not going to change until they change? In order to reach an agreement, Medicare and Medicaid and tax cut numbers are going to have to change someplace.

MR. MCCURRY: Well, the President has gone a long ways towards addressing some of the concerns that members of Congress have expressed. In good faith, he's put forward a proposal that answers the persistent request on the part of the Republican majority for a plan. And he's confident that this is a document that can certainly move this discussion forward, and in fact, move it forward rather quickly.

Q: Wall Street seems to have been expecting for sometime a capital gains tax cut of the nature outlined by the Republicans in their plan, but there is no capital gains tax cut, apparently, in your proposal. Is the President adamantly against approving capital gains tax cut --

MR. MCCURRY: The President has answered that question on prior occasions. I think you know his views on the utility of capital gains tax reductions that are targeted, that stimulate the creation of small business. And I don't believe his views have changed on that.

Q: But that's not in here.

MR. MCCURRY: Well, he's addressed where he is before. He believes there's a better way to provide tax relief to working Americans, and we've done so in the Middle Class Bill of Rights, the features of which most likely will be included in the seven-year proposal as is presented to the negotiators.

Q: Is he satisfied with this -- the cuts where he's had to make --

MR. MCCURRY: He's well satisfied that this represents an effort to move this discussion forward. And he recognizes that -- the President had to make some very difficult choices in the course of agreeing to the proposal laid down today. But he made those difficult choices, which are going to make some of our constituencies and our supporters unhappy in the name of advancing the goal of a balanced budget and in the name of getting this negotiation process moving forward so we don't shut down the government and we move on with the orderly conduct of business. But that's what we pay presidents to do -- to make tough choices.

Q: Mike, just back on the capital gains, again, your last line -- are you eliminating any possibility of a capital gains --

MR. MCCURRY: No, I'm saying that the President's tax relief proposals are clear. We think there are better ways to provide tax relief to Americans who really need tax relief, and those are hard-working, middle-income Americans who don't frequently find themselves in the beneficial position of having a lot of capital gains to deal with. Q: -- that there will not be capital gains in that -- MR. MCCURRY: I'm not going to predict what is in a

final agreement that has to be negotiated between Congress and the President. And I think everyone here knows how Congress -- the majority in Congress feel strongly on the issue of capital gains.

Q: Well, is anything that's come out of the Republicans so far in the last few days that gives you more hope?

MR. MCCURRY: Well, nothing's come out of them in the last couple of days.

Q: In terms of what the --

MR. MCCURRY: They've been sitting waiting for us, and the President has come forward with his proposal in an effort to move the discussions forward.

Q: Has any action of a disciplinary nature befallen any of the staffers who failed to have ink in the pen yesterday?

MR. MCCURRY: No, because it was determined that waving the pen in the air dried the ink in the -- we were trying to think of the name of the little metal piece at the end.

Q: Nib.

MR. MCCURRY: The nib. See, that shows you how fast technology changes. But it's a good endorsement of ball point pens, I think.

Q: Mike, I understand from your perspective while you feel the President has made a good faith effort here. He's indeed moved, as we've all been discussing, a great deal from where he was earlier in the year. But if you were the Republicans, why wouldn't you just sit there thinking that you have priorities, not just process you want to protect, think if he's come this far, let's see how far he'll come by the end of the year and just sit here?

MR. MCCURRY: Well, because -- well, first of all, they have moved on their priorities. We would acknowledge that. They were determined to do things to Medicare, to education, to environmental protection that we felt were not in the best interests of this country. And by agreeing to the language in the continuing resolution, they did move off their effort to really throttle back or wither away the role the federal government would play in very important programs that help the American people. So we acknowledge that they have, in a sense, moved in that sense.

Now, what they need to do is to do exactly what the President has done. The President has now been willing to take that agreement reached in a continuing resolution, that promise, to address the priorities that were contained in the continuing resolution in the time frame specified. We have now put forward a very detailed, comprehensive balanced budget proposal, and it's now up to the Republicans in a sense to do the same. The only thing they've done is to pass a budget in the reconciliation act that failed to meet that test. That bill is history now because it's no longer available. So they need to come forward and do, in a sense, the same thing the President has done, which is to address the question, how do you match these priorities? If they just sit there and wait, then we're going to be back in the situation next week where the federal government shuts down and a third of a million federal workers are going to have to face a holiday period with, you know, the same uncertainty that they faced the recent shutdown with.

Q: Mike, a couple of questions. On the farm bill, it says for -- sorry, I don't know what we're allowed to quote from -- but does the President accept cutting any of the farm subsidies?

MR. MCCURRY: Well, the President has some ideas on agriculture that will be contained in the plan that Mr. Panetta will present to the congressional negotiators.

Q: Is he likely at this point to veto the farm bill as now being proposed, the Republican farm bills that have a cut in the subsidies?

MR. MCCURRY: I don't know what the status of the agriculture -- what is the status of ag appropriations? I'll have to check on what the current status of the agriculture appropriations bill is. We signed that bill, I think. Yes, ag appropriations has already been signed. Now, there are some out-year consequences in the way they do farm subsidy programs, but those will most likely be under discussion.

Q: By how much do you want to increase the minimum wage?

MR. MCCURRY: I can't -- it's consistent with our proposal as we advanced it before. We'll have to -- I forget the incremental amount. It went up incrementally -- went up about 50 cents, I think -- it went up 90 cents in stages. But we'll -- let's pull the paper on that.

Q: Why are you attaching the minimum wage to this budget proposal?

MR. MCCURRY: Because it's -- this is -- we got a question earlier, which was a good question, about what is the macroeconomic effect of federal budget policy. And what are you trying to do to the economy as you take care of the FISC**. And our view is that all of these things connect. Giving working Americans tax relief, as we would do with the Middle Class Bill of Rights, and rewarding those who work -- who are in marginal economic circumstances by raising the minimum wage is part of a coherent approach to the economy that is reflected in the budget policies that we've developed in connection with this proposal. So it fits because it fits as part of our overall economic strategy to reward work and to grow the economy.

Q: The enforcement mechanism that you're exploring, are you concerned that this might be perceived as a back-door tax increase bill?

MR. MCCURRY: No, not necessarily, because, as I said, there are a lot of ways in past budget agreements where you enforce a deficit track. And the congressional negotiators will have to meet with our team negotiating from the White House and develop the best mechanism if that's the approach that they want to pursue.

Q: -- outside said that the President seemed to be in favor of an enforcement mechanism that would go both ways -- that would enforce if your economic assumptions turned out to be worse than expected and would have an effect, as well, if things turned out better than expected. How would that --

MR. MCCURRY: Well, if you -- I mean, you could develop something if the track produced surplus in some years, that you could be in a position to give more tax relief to average working American families. We'd love to be in that position. That's one possibility. But, again, that's -- the mechanism itself will have to be developed by negotiators.

Q: I'm interested in some of the energy-related provisions. I can pretty much guess where the President came down on ANWR, but do you have any feedback about his changing his policy on selling 40 million barrels of oil --

MR. MCCURRY: Well, later -- you'll be able to see later in the day, after it's available for your use, some information on both the strategic petroleum reserve; and you're right on the subject of ANWR. We are quite clear that that -- to open the Arctic National Wildlife Refuge for oil drilling would run contrary to the agreement between Congress and the President in the continuing resolution, that there wouldn't be steps to damage the environment as part of an overall approach to a balanced budget. And that clearly would run contrary to that type of an agreement.

Q: -- President change his policy, though, on selling -- he was opposed to selling --

MR. MCCURRY: You'll have to -- I'll have to defer that question until after the negotiators meet today.

Q: What happens after they get them the CBO figures?

MR. MCCURRY: Well, our hope would be that, as Joe Stiglitz said today, since there have been no consultations formally between CBO and OMB on how you structure economic assumptions and technical assumptions for the drafting of a budget, that once CBO updates its numbers next week that they then agree -- in the consultations required now by law with both outside experts and between OMB and CBO -- that they agree to a set of assumptions that reflect the best educated, expert judgment on where the economy will go.

And, Joe, you know, today went through, you know -- everyone says well, it's easily imagined that the initial Republican reaction on the Hill is going to be, oh, you know, hocus-pocus, these are all numbers that, you know, are cooked up. But the point that the Chair of the Council of Economic Advisors made today is worth going over because it was right on the money.

The OMB has been better at predicting the course of the economy and forecasting the economy in the last three years than has been CBO. The point is to use the best numbers available, to use the best expert advice you can get. In 1993, when the President came to office, the organization that had the best track record was CBO, we used CBO numbers. Now the organization in town that's got the best track record is the OMB. And that seems to be the best place to start in making assumptions about what the economy will do.

And I really do -- you know, since nobody has -- has everyone read this speech, Dr. Stiglitz's speech? Okay, good, then I'll read it for you. Because the point he makes today is that -- and there are three areas that he looked at. One was real GDP growth. The administration projected that real GDP would grow at an average rate of 3.1 percent over the period from the end of '92 up to the third quarter of this year. CBO projected 2.9 percent. In fact, the final number was 3.4 percent. So, in other words, our figure was too conservative, but it was not as pessimistic as the CBO number.

In nominal GDP, which is another key assumption that goes into the budget, the administration expected nominal GDP to rise by about 5.4 percent; CBO expected it to rise 4.6 percent. The final number, 5.3 percent. So, again, you know, we were closer. Our original forecast was more accurate.

On unemployment the administration and CBO both overestimated unemployment because, in fact, employment has been stronger and the economy has been doing better than we had imagined. We had expected unemployment to be about 6.5 percent from a period of the fourth quarter of '92 to the third quarter of '95; CBO thought it was going to be 6.7 percent. It actually averaged 6.2 percent.

On long-term interest rates -- see, next time you guys will read the speech so I won't do this to you -- but we've got it, it's out. It's out and it's available. The administration, on predicting long-term interest rates, which is very key in calculating what the interest burden is going to be, we were more accurate than CBO. The average error rate for us was zero. The average error rate for CBO was .5 percent. So we were much more on the money.

So the point is we use OMB numbers because they're better, not because, you know, we're trying to do something and cooking up a scenario for the budget. They're just flat-out better.

Are you trying to tell me something?

Q: Because you've got Rivlin on your side now.

MR. MCCURRY: Yes, she did a good job there, and now she does a good job here.

The minimum wage -- the President's proposal would increase the minimum wage from $4.25 to $5.15 over two years through two $0.45 cent increases.

Q: Could you repeat that again?

MR. MCCURRY: That was the President's original minimum wage proposal and that has been reflected in the proposal today.

Q: -- $4.25 to $5.15?

MR. MCCURRY: It would go from $4.25 to $5.15 in two increments of $0.45.

THE PRESS: Thank you.

END 2:40 P.M. EST