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Press Briefing by OMB Director Leon Panetta

June 23, 1993

The Briefing Room

5:49 P.M. EDT

MR. PANETTA: The purpose here is we've done a preliminary analysis of the Republican substitute that is currently being debated, I believe, on the Senate floor as we speak. And I wanted to report to you that as a result of our preliminary analysis, that there's bad news and then there's bad news.

The first bad news is that it is basically what we expected in that it rejects the fundamental fairness that we thought was essential to a balanced approach to deficit reduction. What's happened is the Republicans basically stepped back to trickle-down economics. And they have ridden to the rescue of the wealthiest individuals in this country and sacrificed the middle class in the process.

What they've done here essentially is proposed another $100 billion in discretionary reductions, another $50 billion in entitlement reductions, so that they're fully prepared to cut education; to cut transportation; to cut housing assistance; to cut law enforcement officers; to cut the FBI; to cut immigration; to continue to put the burden of this program on farmers and veterans, on retirees, on Social Security recipients. And at the same time that they're prepared to demand that sacrifice from every American in this country, they're saying that those who earn over $200,000 we're going to protect -- they don't have to contribute to this effort to reduce the deficit.

That is the kind of fundamental unfairness that we think the voters rejected in the November election. That's what the '80s were all about. And I think it's essentially what our plan tried to redirect in terms of this country. Basically the plan that was presented by the President said we've got a tremendous problem here in terms of deficit reduction. And in order to meet this $500 billion deficit reduction, we need everyone in this country -- everyone in this country -- to participate in that effort.

The Republicans have said, yes, everyone's going to participate except those who are the most privileged in our society. And I think the public has rejected that, we reject that, and we think the Senate will reject that.

But they also did what we did not expect in this proposal, which is that the Republicans went eyeball to eyeball with the deficit and they blinked. Instead of coming up with $500 billion in deficit reduction, they came up with almost $100 billion, over $100 billion less. They're at about $411 billion, as we understand their proposal.

Now, they argue that at some point they basically meet our deficit target, but the problem is that they add another $100 billion to the national debt in this country. When you don't do $500 billion in deficit reduction, you're essentially saying we're willing to increase the debt in this country by another $100 billion. And that's essentially what they have done here again on the basis that they are trying to protect the most privileged in this society.

Now, the other issue I should point out, and it's something we've heard over the last few days in terms of the attack on the plan, that essentially they were attacking us because we were counting interest savings; because we were counting fees; and because we were counting discretionary savings. And now we find that in their plan, they have counted interest savings; they've counted fees; and they've counted discretionary savings. And they still have come out with $100 billion less in terms of deficit reduction.

So the bottom line is that we think that this plan makes even clearer to the American people why the President's economic plan is really the only game in town. And it's the only game in town because it is fair, it is balanced, demands that every American participate in this effort. And it does it in a progressive way, and it does it in a real way without gimmicks.

I would also mention with regards to the approach they used to achieve their entitlement savings, they used what's called an entitlement cap, which means essentially that they do not make specific recommendations as to how those savings are achieved. And, again, we have always said to the American people if you're going to talk about deficit reduction, be honest with them and tell them how these savings are going to be achieved. The plan that they have presented is not honest with the American people in terms of those specific savings.

So in the end, we think that the plan falls way short, the Republican plan falls way short, of not only achieving legitimate deficit reduction, but it sends the wrong message to the American people. The message is: It's okay to go back to what we did in the '80s; it's okay to go back to trickle-down economics. And that we rejected a long time ago. And, frankly, the purpose of this administration is basically to send us in a new direction. We would welcome Republicans, frankly, if this is all they have to offer, we think that we would welcome them coming over to the Democratic alternative, our plan, and supporting that, because, frankly, it's the only way we're really going to achieve deficit reduction in this country.

Q: Have you gotten any indication of Republican defections?

MR. PANETTA: I would have to believe that some of my Republican friends would have to be very concerned with this kind of approach.

Q: When did you first get the plan? When did you first see it?

MR. PANETTA: We just got copies of it, I guess, based on the release that they made up on Capitol Hill; so we've just taken a look at it. Obviously, OMB and Treasury are going to do a more indepth analysis for tomorrow morning. But by that time it may not be necessary. I don't think the Senate's going to buy this plan.

Q: You call it bad-bad.

MR. PANETTA: Bad, bad.

Q: Where's your attack now?

MR. PANETTA: Pardon me?

Q: Who's going to counteract the bad, bad? How are you going to counteract? What's your plan now to sell this to the American --

MR. PANETTA: Listen, I think, -- one of the problems we've always had in this whole process is trying to get across why we think this plan that the President presented to the country is the right plan for the country. And when they present their alternatives, when Senators Boren and Danforth presented their alternatives and you saw that if you want to do something different you had to dig deeper at Social Security recipients; and when others decided that -- the Republicans now decided they wanted to offer their alternative and the public can see the real meat in their alternative, that helps us, very frankly; because I think the public basically says that the President's plan is fair and it is right and it's the best way to approach deficit reduction. And I think, frankly, I welcome these alternatives. We have always said put up or shut up. They've put up, and I think the end result is, frankly, that it makes our plan look that much better.

Q: Mr. Panetta, why isn't it legitimate for the Republicans to put forward a plan that offers fewer government services but no new taxes? Why isn't that legitimate? I mean, you can disagree with it but why isn't that a legitimate approach to that?

MR. PANETTA: They are free to present whatever proposal they want, and they have. My argument does not go to the fact of whether or not they should have every right to present this alternative. I welcome this alternative. But I think it's wrong for the country and I think it does exactly what we have been fighting against in terms of fair balance to deficit reduction. You cannot continue to place the bulk of the burden for deficit reduction on those in the middle. I mean, if you're going to deal with this debt and the deficit everybody's got a share in it. Everybody's got a share in it. That's been the fundamental message we've tried to send with our plan. And I think the American people understand that. If there's anything they're going to reject is the fact that the Republicans are essentially saying you're the ones that ought to bear the biggest burden on these cuts, and we are going to protect those at the upper income level for some strange argument that somehow we just don't want any taxes whatsoever. That doesn't make any sense to me, and I don't think it makes sense to the American people either. And, frankly, I don't think it makes sense to a lot of good Republicans. I really don't.

Q: Mr. Panetta, what's the state of play on the Senate floor now? Do you have the votes to pass the Senate Finance Committee plan or are you still trying to get them? What's the situation?

MR. PANETTA: I would think that what the Republicans have offered here just gives us that much more momentum for the President's plan. We're working it. It's still going to be a tough vote. But I'm confident that we can win it.

Q: What do you say to Senator Gramm and other Republicans who argue that the wealthiest already do pay their fair share in taxes -- they're paying the most -- the highest rates already; and that if you tax them more, hundreds of thousands of jobs supposedly will be lost and the middle class and the most needy will suffer because of this increase in taxes on the wealthy?

MR. PANETTA: I think the answer to them is the obvious argument that the deficit remains our biggest problem that needs to be confronted. That if we don't deal with the deficit, then we're going to continue to impact on jobs and growth in this country. If we deal with the deficit, we will provide the kind of investment, the kind of low interest rates that are going to help jobs and growth and our economy. That's been the fundamental principle behind reducing the deficit.

To argue that now in the process of dealing with the deficit not every American ought to participate in that effort, I think is to send exactly the wrong kind of message to the American people. I think the wealthy -- frankly, if you want to know the truth, I think the wealthy understand that they, too, have a role to play in the American society. This is not a game of class war. It really isn't. This is a game of fairness. And whether or not everyone in this society -- this democratic society -- is going to share in the sacrifice involved with dealing with the deficit -- that's the fundamental question. And I think when you ask anybody that question, they're going to say we're willing to participate.

Q: What's your prediction now of what's going to happen? And will there be a vote -- final vote tomorrow night?

MR. PANETTA: I think we'll reach hopefully a final vote by tomorrow evening -- late tomorrow evening.

Q: And will it be the President's plan?

MR. PANETTA: They're working pretty good at it and they're working amendments on the Senate floor right now. And I think we had -- frankly, my first thought was that they were going to engage in more debate initially, but they're going right to the amendments, and I think as a result I feel a lot better about the possibility of trying to wrap this up by tomorrow night.

THE PRESS: Thank you.

END6:00 P.M. EDT

William J. Clinton, Press Briefing by OMB Director Leon Panetta Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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