Press Briefing by National Economic Advisor Gene Sperling and O.M.B. Director Jack Lew

The Roosevelt Room

12:25 P.M. EST

MR. LEW: We wanted to talk about the budget resolution and also what we understand it to be, and then to take some questions.

We believe that the budget resolution that they're planning to take up is fundamentally flawed, that in an effort to promote what we think is an irresponsibly large tax cut, it makes a number of untenable policy decisions. We don't believe that it leaves room for Medicare solvency on prescription drugs and coverage policies such as those that are in the President's budget, and we think it's a real threat to a host of discretionary priorities.

I wanted to spend a few minutes talking about the discretionary issues, and then Gene is going to talk some more about the tax and Medicare issues.

Overall, the discretionary levels that the resolution calls for are $10.7 billion below the 'OO program levels. Now, they've put in defense numbers, which are a little bit higher than the President's budget, which means they've protected defense off the bat. And that requires cuts of $19 billion against 2000 program levels.

They then protected a number of programs within all other discretionary spending -- education, veterans' health and a few others. Everything else that's left is cut by $24 billion, which is a cut of 10 percent from the 2000 program levels. That is a cut that has real consequences. It has consequences in law enforcement, in health care, in nutrition programs. I wanted to give you a few examples, and we're going to give you a document as some more examples.

Program level is not a technical term. Program level means how many kids and women are you serving in the Women and Infant Children program. If you're going to cut 10 percent from the current program level, that means 754,000 women and kids won't get WIC benefits.

And the FBI -- and one could use an example from any of the law enforcement agencies -- cutting program level means cutting people out of the active ranks. It means 1,200 FBI agents, 2,900 personnel overall. In EPA, you would have to shut down 15 out of 31 cleanup sites and you would have to give up 1,000 inspections. In the FAA, you would lose 2,000 air traffic controllers.

Even in the farm program, which is one of the protected areas, they argue the unprotected farm programs would mean a cut of $1.7 billion in farm loans. Now, I think these are just very, very serious consequences. The notion that this is a set of policies which won't cause damage we think is very much wrong. We think it's real damage, and we're going to fight it. We're going to oppose this policy because we think it's wrong.

I think some would argue, oh, it's not going to happen. Well, we don't look at budget resolutions that way. Budget resolutions reflect the amount of resources being given to the Appropriations Committee. The Appropriations Committee has to live within those resources and will have to make these kinds of cuts in order to put together bills that in total meet the budget resolution. This ought to be a debate about the policy that's being called for, and we think that the 10 percent cut program level is very real.

I would just say one other thing and then ask Gene to take over. On the mandatory side, I don't know the precise details. I've heard what you have heard in terms of the descriptions. You may have heard more than I have heard, but there seems to be a notion that there's something in the order of $40 billion set aside for some combination of things, ranging from prescription drugs to farm programs and I think a number of other things.

Just to put it in perspective, in the President's budget, our prescription drug policies, our health care coverage, our Medicare solvency and our farm mandatories are $80 billion. Forty billion as a set-aside doesn't come close to meeting the priorities that we have set forth. And I think the question has to be asked, if you're shrinking the pot, what are you giving up? What are you not going to do? You can't say you're going to do all of it, because it just doesn't fit.

Gene.

MR. SPERLING: Looking beyond the one-year at the five- and ten-year levels, I think there are also very major and serious issues of both fiscal discipline and being straightforward as to what the contents of their package is. They continue to claim that they seek to protect education and protect the Social Security surplus, and yet, they're going to have this large tax cut.

First, we've seen -- I think Bob Greenstein has shown that even just looking at what has been passed so far, that before a single penny has been put away for Medicare or Social Security or education, that they have passed tax cuts that would drain the surplus by $443 billion -- $362 billion in tax provisions in $81 billion in lost interest. That's at least that much. That doesn't include the education, savings account initiative.

On top of that, there is a looming, unanswered question as to how excessive and explosive is the full contents of their tax cut proposal. Are they already draining over half the surplus, and yet have plans for even further excessive tax cuts to come? I think for the Republican leadership to give the American people an honest view of what their fiscal priorities are over the next five, 10 years, they have to be clear what their overall agenda is.

I think that it is -- I think if one looks at the overall agenda, it has come clear that it's an agenda that is geared towards large and explosive tax cuts at the expense of Medicare, Social Security, and a serious commitment to debt reduction. Let me just give an example. Obviously, tomorrow, you will -- or today, you will see the exact numbers on their surplus. But if you assume that they're going up by 2 percent in the Kasich plan that it's being increased by a 2 percent discretionary, they should have an on-budget surplus that, even with, we think, a far too tight discretionary budget, they would still have a surplus of around $73 billion on budget in 2005.

Now, by any definition of the tax cut of the presumptive Republican nominee, that tax cut alone should be about $140 billion, $150 billion in that year alone. Now, this is by anyone's figures. You can look -- there's $483 billion over five years. They claim it starts in 2002. They claim it's 80 percent phased-in by the 4th year, so I'm taking just as they have. If you did 80 percent, that would come out around $120 billion right there, but assuming the phase-in, it's probably more close to $140 billion, $150 billion. But either way, that tax cut alone of the presumptive Republican nominee, would take them $70 billion into the Social Security surplus alone. And that is not counting the unrelated tax cut that have already been passed.

So I think to know whether this is a fundamentally flawed budget or a completely dysfunctional budget that would significantly drain the Social Security surplus, the Republican leadership has to be clear on whether they are putting forth a package that is renouncing the tax cut of the presumptive Republican nominee for president, or whether they are renouncing their commitment to save the Social Security surplus and/or how they would cut another $70 billion, $80 billion in a single year out of defense and education and other defense priorities.

This is not an academic exercise. We're putting a budget resolution to look at what an overall framework is. Both sides are making claims about the long-term fiscal discipline of their initiatives, whether they can pay off the debt in a certain number of years whether they're saving enough for Medicare or Social Security.

I've never seen anything like this year. They kind of -- after two or three years of telling you how large their tax cut's going to be and then having the American public reject it, they're kind of playing hide-and-seek with the true size of their tax cut. They say, just look at this $150-billion tax cut alone, but please don't add it up with anything else. And, we're never telling you when this game is over, when is enough, how far we're going to go.

I think the most basic question is, are we looking at these tax cuts which already we think break the bank and would lead to serious cuts in key priorities? But we don't even know whether this is just the appetizer for a larger meal of excessive tax cuts for upper income Americans that would make the framework they're putting out completely dysfunctional and a misrepresentation of their priorities.

MR. LEW: I'd just note that while we've been here, I think you've gotten a letter that John Podesta sent this morning to Chairman Kasich, which reflects what Gene and I have been saying. I hope you read it very closely and I just commend it to your attention.

Q: Where do your numbers on these cuts come from? Because when you look at the CBO numbers that they put out last week in conjunction with their analysis of your report, it looks like 2000 spending for non-defense discretionary BA, which is what you've been using, is $280 billion for 2000. And they're proposing about $290 billion for 2000. That's just non-defense discretionary.

MR. SPERLING: Right.

Q: So where do you -- what figures do you use --

MR. SPERLING: That they're saying it's $290 billion?

Q: That's the Republican budget's non-defense discretionary BA proposal.

MR. LEW: That is below --

MR. SPERLING: We're agreeing with that.

MR. LEW: But that is below the current service level, and it's actually below a hard freeze level in terms of non-defense spending. I mean, a hard freeze for non-defense is $296 billion.

Q: So, no matter how you measure it, it's less. You can't take the total that they have in the resolution, $596.5 billion, and put $306.8 billion into defense and be left with enough on all other non-defense discretionary.

MR. SPERLING: No, no, but you're saying it's $290 billion. And $296 billion would be a hard freeze, and $309 billion would be an inflation-adjusted freeze, so they're $19 billion below an inflation-adjusted freeze.

MR. LEW: You take $6.4 billion a hard freeze, $19.2 billion below an inflation -- a no real growth freeze.

Q: What is the administration number on the nondiscretionary for your proposal?

MR. LEW: Our budget was --

Q: In non-defense discretionary?

MR. LEW: Our level -- it was a little bit different than what CBO and -- I spent all morning looking at their numbers, so --

MR. SPERLING: It's either $314 billion or $316 billion. While Jack is looking, I do think that the point you go through each -- it seems like you go through the same exercise every year, which is, they impose a budget that would require serious cuts, and then they pick out a few areas where they want to protect themselves, which, of course, makes the cuts in everything else that much deeper.

At first blush, when you hear, oh, well, they say they're going to protect NIH or education, it sounds like, well, you're protecting some of the hot button kind of key issues. But what parts of the government is it that they're going to come out -- I mean, how about several -- just a few major examples of the places they're going to cut 10 percent in real terms? Air traffic safety? FBI? CDC? Agriculture? Other veterans' services? It's just --

MR. LEW: If you put it in contrast with what they're doing in the supplemental appropriations bill, in the supplemental -- give credit to the House Appropriations Committee. They're trying to clean up some of the gimmicks from last year, trying to make the numbers make some sense. There is no way that they're going to be able to write bills within these totals without either spending more money than they say they're spending, or doing very bad things. I think they've reached the limit of what you can do with these kinds of gimmicks without really undermining the whole process and I think the damage of these cuts is very real. And you've got to choose which way you're going to go.

We think that you have to take these numbers very seriously, because what I've heard from the appropriators is they're going to mark up bills that take these numbers very seriously. And if they're going to say otherwise, then they ought to say that before they do a budget resolution, not after.

Q: Mr. Lew, you were whipping through the examples of the places where these aren't just technical terms, they're actual cuts. And I thought I heard you say that under the EPA, their budget would require shutting down 15 out of 31 Superfund sites?

MR. LEW: There wouldn't be enough money to support 31 cleanups.

Q: Okay. So how would you -- again, it sounds like a small point, but why would you lose half of your cleanup sites, when you're only cutting 10 percent out of the budget?

MR. LEW: One can make any number of assumptions on how one spreads a 10-percent reduction in an agency. We're trying to give examples of what that means. If in the alternative, they want to do that much less enforcement, I would have just as clear an example of an unacceptable policy.

Any examples that are done based on a budget resolution require you to make assumptions. And I wouldn't pretend for a moment that the assumptions we make are the same as the exact decisions the appropriations committee would make. I think Gene's point from a moment ago is exactly right -- if these aren't the 10 percent cuts you'd make, which are the 10 percent cuts you'd make? You can't have the same size program with 10 percent fewer real dollars.

Q: So just, then, to clarify, these aren't --

MR. LEW: These are indicative.

Q: Well, these are and these aren't. But it sounds like, you sound like you're saying that these are actual 10 percent, across-the-board cuts. And maybe I'm misunderstanding your premise then.

MR. LEW: The Superfund program would be cut by $143 million if you did a 10-percent cut. And that would eliminate funding for all 15 new federally led cleanups, and 31 ongoing federally led cleanups. I may have actually understated the damage.

Q: Can I get you to explain the 10 percent exactly? How you get to that 10 percent figure?

MR. LEW: Sure. When you take the total that they have of $596.5 billion, the first thing you have to do is pull out the $306.8 billion that they're saying goes to defense. Then there are a number of things which they say they're going to protect, and we have made an assumption about what protection means. And again, this could be something that they want to take issue with, but I think it's the only reasonable assumption we could make.

They say they wanted to protect education, so we said all functions having to do with education would be at the President's budget level. Now, they could say they don't want to be at the President's budget level, and that might give them a little bit more room. But we were trying to give them the benefit of the doubt in terms of what protecting means. NIH and VA medical care, we also assumed that they meant they would want to be at the President's budget level. When you subtract out those dollars from what remained of non-defense discretionary for 2001, it resulted in a $24 billion reduction from the freeze level, which is 10 percent.

And any of these assumptions one could argue with. I don't want to overstate the case. But then you're not really protecting NIH. You're not really protecting VA. If the idea is to protect it at the level we put out, that's what it means.

Q: Wouldn't it be more accurate -- when they say protected, why would they use your level? I mean, wouldn't that be current levels?

MR. LEW: Well, the history of NIH and VA is that they've gone over us, not under us. So we were trying to be fair. I mean, Congress has appropriated more in those areas than we've requested in the past. So we thought to go less than our request would be to suggest that they weren't going to be where they were going to be.

Obviously, in a budget, any budget resolution debate, one has to use these kinds of assumptions. If they would challenge that, then the reduction would come down a percentage point or a percentage and a half. So you're talking about eight and a half or 9 percent instead of 10.

We weren't really trying to skew this. We actually were trying to take our best shot at what it meant to protect education, NIH and --

MR. SPERLING: And we could have said that they're just going to do an across-the-board cut in everything, this is unrealistic. And so we could have gone through each of what that would have meant, to do a 6 or 7 percent cut in education. We took them, obviously, they wouldn't be providing as much services with us if they did less.

But, look, the main point, though, is that -- the main point is that there never is a reply to these, because there can't be a reply, because they are not going to come and tell you, here is the 10 percent, you know, okay, we're going to cut the FBI 10 percent in this way -- what they are going to say is, we're not going to cut the FBI. But then the cut and everything else has to go deeper.

And this game gets played, this game gets played every year with the result being that either draconian cuts are jammed through in some areas because more popular areas get protected in the political process, or you see -- last year, where you have a disturbing amount of gimmicks and slights of hands and misrepresentations to the public.

MR. LEW: A year ago when we looked at their budget resolution, we said we thought it was a blueprint for chaos because we didn't think we could pass appropriations bills that would have those levels of cuts. You know, this year, they are saying, we're going to put a little bit more in. But the little bit doesn't get you to the point where you have acceptable policy levels.

At some point, it's a question of the policy that underlies the numbers, not the numbers themselves. If you really believe that you want to reduce how much we do by way of services we provide, then let's have a debate about that, let's be honest about it and let them stand up and say they want to do less of all this. But if they don't, then they shouldn't be doing a budget resolution that presumes that they can. We think that this is a choice that has to be made.

We're at a crossroads. And if they are going to send their appropriators out to write bills that require whether it is 8-1/2 or 10 percent cuts, we think the results will be very, very bad. And we think they are bad policy and why not have a debate on what the choices are?

MR. SPERLING: We've been through eight budget processes and we go through this agonizing process of seeing how much you can cut in different places and sometimes, you come in and you say, why are you a few billion over current services this year? Well, because we looked at everything we wanted to do, what all the priorities are. And when you have to look at those things, you're putting forward a budget that you know you can live with, detail by detail. What happens here?

There is a political decision made about how large of a tax cut needs to be, how large -- there is a political decision made about how large of a surplus is needed to support a tax cut and then the discretionary baseline is arbitrarily created without any regard to what is truly likely to happen or needed to have the government function or invest in people. And it is done simply to manufacture enough surplus to support a tax cut that's needed for political reasons. And everybody at this table knows that is exactly what happens every year.

Every once in a while, there has been somebody like Chairman Kasich or maybe some of the people in the Reagan administration before, who really had an agenda. They wanted to cut specific government programs, they wanted to eliminate departments, that was part of their explicit agenda. That's not even what's going on here. It is -- we think of it as being the new rosy scenario.

In the past, you inflated your growth numbers to create large enough revenues to support a tax cut that you needed to do for political reasons. Now, your new rosy scenario is you put an unrealistic amount of cuts in domestic priorities so that you can manufacture again an unrealistic amount of revenues to support a tax cut that you know is going to be reckless or infeasible in the future.

MR. LEW: The cuts applied by their long-term path grow substantially from 10 percent. They grow to 19 percent in the out years. I think you reach a point where they become preposterous in terms of the ability to actually implement them and at that point it is, exactly as Gene is saying, it's pretending. It's a rosy scenario so you can have the money available in the projections.

But we know what happens when you do that. You spend the money and then you find out that you didn't get the savings and you end up leaving the path of the fiscal policy, which we think has an awful lot of merit and we should stick to it.

Q: I have another geeky question. They say --

MR. SPERLING: That's okay. It's the right crowd for that.

Q: Within the $280 billion CBO scoring of non-defense discretionary for 2000, they say there is almost $9 billion of one-time domestic spending that they say we don't need to spend it on that stuff -- any more, so that frees up about another $9 billion that they can use on other discretionary programs. Do you contest that or are they saying something that's fair?

MR. SPERLING: I am not going to contest the fact that the -- that there are some things that don't recur from year to year. But one thing that I would kind of commend your attention to is look at the pattern of things that have come up over the last number of years which only mattered for that year. Each year, something has come up. I think to pretend that this is the year when nothing will come up that Congress needs to have that extra resource for, is not terribly realistic. Right now we're working on a sup, and while we're working on the sup things are developing that Congress feels the need to address, some of which we obviously felt a very strong need to address.

I think to say that we've reached the end of special needs is kind of wishful thinking. And that's before you end up with a natural disaster. I mean, there are -- in the defense budget this year, we proposed, and I believe Congress will accept, an increase to cover certain higher costs that they've had. Well, the alternative to not doing that is buying a smaller Defense program. Are they going to advocate buying a smaller Defense program? I don't think so.

Well, that wasn't there when we looked at the projections, and I think that that's about the same size as the census. So these examples, I think, prove less than they appear to.

Q: Gene, can you talk about the $443 billion in tax cuts that they've already passed? What does that include? What does that exclude?

MR. SPERLING: Yes, that includes a $182 billion marriage penalty, and then the House -- and then $123 billion in the minimum wage, of which the main item there is the $79 billion in the estate tax relief. And then there's $103 billion in the bankruptcy bill, including long-term care deductions, small business, $103 billion.

There's a $49 billion in the House. That should add up to more than that. I think that the number comes from just doing the House alone. You do the $182 from the House, the $123 from minimum wage in the House, and then you do the patients in the House, and that will get you to $362. And then you lose $81 billion from the surplus, from debt reduction savings. So that loses a total of $443 billion in surplus. In fairness, Bob Greenstein first put this analysis of adding these up, so that does not duplicate the House and Senate.

If you added on the bankruptcy -- if you assume they were going to do the bankruptcy in the Senate, you would have another $100 billion, and remember -- I mean, nothing has passed on anything else yet -- before a single penny has passed on any major priority, there is anywhere from $400 billion to $500 billion, well over what we believe is half of the honest surplus left committed before we've even talked about the other priorities and before we've even heard whether they're going to accept or renounce the $1.4 trillion or $1.5-trillion tax cut of their presumptive presidential nominee.

Q: Gene, you said marriage penalty, minimum wage --

MR. SPERLING: That is the patients bill of rights.

Q: What was that?

MR. SPERLING: The $49 billion --

Q: You're saying the fair five-year number to use is what, when you total it all up?

MR. SPERLING: That's 10 years.

Q: Those are 10-year numbers?

MR. SPERLING: Those are 10-year numbers.

Q: And what does that break down to?

MR. SPERLING: Oh, if it was five years, that would have been over the surplus. So, $362 billion in tax provisions, and $81 billion in lost interest in the House for a total of $443 billion. That's a 10-year number. And as you remember, the House -- the CBO number for available surplus using a current service-based line was $838 billion. So it would be over half of the surplus available already.

MR. LEW: Without any across-the-board tax cut, without any of the big -- I mean, this is just the small pieces.

MR. SPERLING: Over five years? That is $115 billion.

Q: That includes interest? Did he break that down?

MR. SPERLING: Yes -- $103 billion and $12 billion.

Q: Gene, is it the White House position that until you see this entire picture and understand what's going on, the President's not going to accept any tax cuts from the Republicans of any kind until you understand exactly what they're doing?

MR. SPERLING: I think -- let me say, we are not going to sign any tax cut measures that we think are going to threaten a fiscally responsible framework for dealing with Medicare, Social Security and debt reduction. I'm not going to try to answer every potential hypothetical that could come down the pike. Certainly, we're trying to work out a new markets -- a new community package and other things. I'm not going to -- I can give you our principal, I'm not going to try to answer every hypothetical.

MR. LEW: The purpose of the budget resolution is to try to make these tradeoffs clear, try to put everything on the table and to know where you're going.

I think it's kind of interesting that this budget resolution appears to be designed to blur the choices, to blur what the effect on the discretionary side is, to blur what the real cost of the tax provisions is. And that is not what you tend to do when it all adds up.

MR. SPERLING: Joel Johnson on our staff, his line was, it's like they've taken this huge, trillion-dollar tax cut and they just took out the staples, and they're just kind of handing it to you a page at a time, but they're kind of not telling you how long the book is, ultimately.

Q: -- revenue side of the budget and the non-defensive discretionary side of the budget. There's an enormous chunk of the budget that both the White House and the Republican budget would be unchanged -- that's Social Security, Medicare, in terms of the broad programs. Are you disappointed at all that they did not choose to try and work fundamental reform or broader reforms, other than the prescription drug benefit --

MR. LEW: I don't think they've even put in the resources to deal with the prescription drug benefits and the coverage proposals that we have been advocating. I think that there is a reserve that is not big enough to satisfy all the things that it's being described as being for.

MR. SPERLING: Can I just give a general answer on that? Look, I mean, I think part of this is what your overall fiscal posture should be. We're in a situation -- the country is in a situation right now where we've had a dramatic turnaround in our fiscal situation, and a pretty significant turnaround in our long-term economic outlook.

But we still are talking about large projected surpluses into the future, projections, not things that have materialized in a state where we know that we still have a very large external debt, and that we have significant, long-term deficits in our two main retirement programs for the country.

And the overall perspective is, should your overall framework to be looking at a kind of -- with a first things first approach, with a presumption towards saving what are still projected estimates for dealing with long-term fiscal deficits the country will have to deal with at some point -- Medicare and Social Security and debt reduction, or should one seek to deplete surpluses which may exist, may be bigger, may be smaller; one doesn't know -- and just put off until another day, to another generation, the responsibility to dealing with long-term fiscal imbalances that you know exist now.

I think what President Clinton has had an enormous impact on in fiscal direction in the last two or three years -- from his Social Security first, or first things first approach -- is to put a focus on an orientation toward saving projected long-term surpluses for debt reduction, for dealing with Medicare, Social Security. And I think that it has been a significant achievement that since the summer of '98, there has been a big, almost an emerging consensus to now save the Social Security surpluses, at least theoretically. But you're still seeing budgets that are very risky, that are very explosive, that don't take in account the likely needs of the economy and, therefore, are likely to make even that one area of consensus a false promise on their point.

I cannot see, under these projections -- knowing that Medicare is supposed to become insolvent in the next 10, 20 years; knowing that we still have to deal with Social Security; knowing what the size of the across-the-board tax cut Governor Bush is proposing -- I do not see how one could look at this proposal and possibly believe that it is not going to significantly drain the Social Security surpluses, and be less pro-debt reduction than is being claimed.

MR. LEW: After the experience of the last several years, the notion that we can go from a 10 percent to an 18 percent program cut, and count those savings that flow from those assumptions, just doesn't strike me as being very credible. And if you don't believe it, then you're losing ground from where you were last year in terms of saving these surpluses.

Q: Jack, you mentioned the supplemental. They've added some money to your request. Is that acceptable, the amount where it is now?

MR. LEW: We're obviously early in the process. They have also not funded things that need to be funded. I think we need to continue to work with them on the bill in many regards.

Q: Is this all going to come down again to -- sorry, to October 30th again this year?

MR. SPERLING: Well, we're here.

MR. LEW: We're here, yes. (Laughter.) I think that it's going to be very challenging for the Appropriations Committees to do their work on a timely basis if this budget resolution is what they're given as instructions. I don't think that it reflects what most of the appropriators have said that they need to do their work. It doesn't reflect what we believe they need to do their work. And we are happy to get the work done sooner rather than later, but we're going to be debating policy. We're not debating numbers here. And in the end, we're going to be sitting, trying to get the programs that we think serve the American people funded.

Q: Is this worse than last year's? I mean, you're $25 billion apart on what you're saying in discretionary spending. I mean, how does this rate? It doesn't seem like that much, does it?

MR. LEW: It's a significant gap. And I think I would just reflect on the last number of years that the kinds of decisions you're able to get a consensus for when you're looking at huge deficits is different than the kinds of decisions that Congress or we want to make, separately or together, when you're looking at big surpluses.

It's kind of a different challenge to ask the appropriators to cut very worthy programs when the real reason for cutting the programs is to make room for a tax cut as opposed to putting our fiscal house back in order. And I think that that's the reason this debate needs to be out in the open, about what the real choices are, and not to blur the choices, because you lose the benefits of the fiscal policy if you end up pretending you can have everything. And you do real damage to people if you impose cuts of this magnitude. So something's going to have to give.

MR. SPERLING: I think Jack makes -- I think he makes a good point there, which I think makes their budget very disappointing from my perspective in the following sense. I do think that over the last seven or eight years, there has been more of an ability to get very tight discretionary caps and stay pretty closely with them when the cause was a bipartisan cause to put our fiscal house in order.

I think even for ourselves, we had to look at our '97 Balanced Budget Agreement and say, in light of the fact that we're now in a situation of surpluses, we had to look at our budget, which was far more realistic than theirs, but even ask if we could justify a path that assumed as much tightness in the out-years as our '97 Balanced Budget Agreement did, a path done in the context of having the first balanced budget in decades. So here is where we have gone first and put out a clean budget, a current service budget that is certainly --

Q: Cleaned up the gimmicks?

MR. SPERLING: Cleaned up the gimmicks that they had put in last year's budget. There certainly was a clean shot for them to come forward with a clean, realistic budget. And for them to just come back to the same old same old -- a bad rerun of a bad movie, it's just unnecessary. It was unnecessary and I think will not be in their interest as they get down to the end of the year and are trying to get out of town and are stuck with a very bad, unpopular, painful and unrealistic budget resolution.

MR. LEW: But it's not too late. I mean, this is the beginning of their budget deliberations. We're hoping that they make what we think are more sensible decisions.

Q: Why haven't you used the phrase "risky tax scheme"? Is there significance -- (laughter.)

MR. SPERLING: I used "irresponsibly large." We're trying to just mix it up a little. You know? Golly.

Q: But we like what we're used to. (Laughter.)

MR. SPERLING: You have permission. (Laughter.)

END 1:10 P.M. EST