Press Briefing by Chief of Staff Leon Panetta and Gene Sperling

The Briefing Room

4:52 P.M. EST

MR. MCCURRY: Good afternoon, good evening. It's going to be a long evening. As you all know, this is an embargoed briefing. Let me go through the ground rules and the expectations for the next several hours. The Chief of Staff right now on embargoed basis until 6:00 p.m. this evening. That means no wire transmission or use for broadcast or other purposes until after 6:00 p.m. this evening.

We'll give you a run-through on what some of the major elements in the President's address will be. The President's working well on the speech right now, making a lot of progress on it. I expect to come back in here around 6:00 p.m. -- listen, please -- I'll be back around 6:00 p.m. to read you some excerpts that you can use for early filing purposes to go with Mr. Panetta's briefing. We'll also have in a short while probably by the time Leon is done, written fact sheets on some of the major initiatives that are contained in the President's proposal, so that will give you some more to write off of.

Now, the embargo on that, we're treating that as a text that goes in conjunction with the speech text. That's embargoed until 9:00 p.m. There is to be no wire transmission or use of that, other words, until after 6:00 p.m. So if you're doing filing stuff. It's an embargo. Terry Hunt can explain to you if you have any trouble understanding. Do you understand? Okay.

With that, I'm delighted, on an embargoed basis, to present Mr. Panetta.

Q: What's embargoed until 9:00 p.m. and what's embargoed until 6:00 p.m.?

MR. MCCURRY: The paper -- the paper, so you can't quote from the paper or otherwise use the stuff in the paper until 9:00 p.m.

Q: You can put it on the wires at 6:00 p.m.

MR. MCCURRY: You can use what Mr. Panetta tells you right now beginning at 6:00 p.m.

Q: And the quotes you're going to give us, that's right away.

MR. MCCURRY: The excerpts you can use beginning at 6:00 p.m.

Q: And what time will the briefer be here?

MR. MCCURRY: He'll be here shortly. Okay? All clear? Any questions? All set?

Q: At 6:00 p.m., will you have that on paper as well as reading it?

MR. MCCURRY: Not clear. Because what I might do is, we'll see where we are at that point.

Q: When will we get the speech, or does that matter?

MR. PANETTA: Soon.

Q: Soon?

Q: No limo edits?

MR. PANETTA: Not tonight, we hope. We hope.

Q: Is he really going to finish before he sets out for the Hill?

MR. PANETTA: Mike doesn't want to give you this, but I will. I think he's working his way through the draft. The framework is there, he's making some last word changes, but he's in the process of going through it in the theater, which is way ahead of where we were this time last year.

Q: Is it an hour long?

MR. PANETTA: Let me just summarize some of the key areas that he will be addressing tonight as he fulfills his constitutional responsibility to report to the Congress and the country on the state of the Union.

First of all, the President will say tonight that the state of the Union is strong and will refer to our economy and the progress that's being made in our economy, particularly on unemployment, inflation -- the lowest in 27 years, 7.8 million jobs and the reduction in the deficit, as well as the increase in trade. He will point to other areas within the society that have improved as well. But he will also say that this nation must be stronger for the future. And to address that, there are a series of challenges that have to be addressed in order to make our nation stronger for the future. He will call this "the age of possibility" and will talk about, as I said, the fact that this is a time of tremendous change and a time of tremendous challenge.

He will address the budget issue near the front of the speech, saying that he feels that the parties have essentially reached an agreement to balance the budget, to cut government, to provide a responsible tax cut, and he will call on Congress to seize this opportunity, that in fact, sufficient savings are on the table to get us a balanced budget, and we ought not to let that opportunity pass.

He will then address the challenges of the future, and I think this is kind of an overall theme that will appear throughout the speech, which is the need for Americans to face these challenges together -- in their communities, in their families and their businesses, the churches, their schools and in their local state and national governments -- all have a responsibility to try to address the challenges that face this country. He will make a point that the era of big government is over, that government cannot solve all of our problems, but neither can people simply be left on their own without a support system and a community working together to try to address these fundamental challenges.

He will then lay out a series of those challenges, the first being that he will challenge families to, in fact, work together, to stay together, to take responsibility for themselves. We will remind Americans that families are the foundation of American life and will call for the enactment of welfare reform. We will ask businesses and banks to hire workers, to direct capital to those areas of high unemployment. He will propose a new tax incentive to companies that clean up abandoned industrial property, he will discuss teen pregnancy, domestic violence and trial support issues.

The President will also issue a challenge with education -- to renew our schools and expand college opportunity. He'll discuss his proposal to connect schools across the country to an information superhighway --

Q: Is this challenge number 2, or are we still on one?

MR. PANETTA: Two. Education is the second major challenge. He will challenge states to establish tough education standards, to emphasize the need for public school choice, and he will remind parents that they are ultimately their children's primary educators. He will point to the need to expand access to higher education for our younger people and will refer to the steps that have already been taken to try to expand those opportunities.

But he will propose some new steps, including the $1,000 merit scholarship for the top five percent of all high school graduates. He will have a major expansion of the Work Study Program so that about 1 million young Americans can work their way through college.

Q: Is that five percent on grades?

MR. PANETTA: That's correct. Top five percent of all high school graduates. He will urge an expansion of the Work Study Program so that about 1 million Americans can work their way through college by the year 2000 and he will also include the proposal that he has already made to provide a $10,000 tax deduction for college tuition expenses.

The next challenge will be to help every American achieve economic security. The President will talk about the need to make sure that our workers receive additional training. He will refer to the G.I. Bill and the need to pass the G.I. Bill which basically consolidates a number of work training programs into a voucher program.

He will also urge that Congress pass the Kassebaum-Kennedy bill that basically protects health insurance for those who are working, preserves Medicare -- he will argue for preserving Medicare and Medicaid, to raise the minimum wage, to preserve the improvements that we have made in the Earned Income Tax Credit, and to urge that the Congress not cut back on that benefit so that we should not, obviously, raise taxes on working families, and that we build, not weaken on the improvements we have made in our efforts to secure the pensions of working Americans.

He will challenge businesses and employees to work together, to put long-term prosperity ahead of short-term gains, and as workers increase their hours and their productivity, employers should make sure they get the skills they need and share with them the benefit during the good times as well as the burden during the bad times.

The next challenge that the President will discuss is to take back our streets from crime, from gangs and from drugs. He will note the recent successes achieved from the passage of the Crime Bill in community after community. He will ask that we maintain and that a pledge be made to maintain putting 100,000 police on the streets of our towns and cities, to maintain current crime prevention efforts, and to maintain the Brady Bill and the assault weapons ban.

He will announce important initiatives against gangs, including a request that the FBI coordinate a war on gangs that involves juveniles in violent crime. He will say that we must take on the gangs the way we took on the mob, and will announce a new Drug Czar and urge Americans to continue the fight against drugs.

The next challenge that the President will issue is to leave our environment safe and clean for the next generation. He will remind Congress of the bipartisan efforts that have been made over the past more than two decades to clean up the environment. He will remind them that this is a battle that is far from over. And it is fair to say that he will emphasize that Congress ought not to retreat on the commitment to do this. He will challenge business and communities to take the initiative to find less expensive ways of achieving our environmental goals.

The President will also challenge the country to meet our responsibility to lead in the world for freedom and for peace.

Q: That's number six, now?

MR. PANETTA: That's correct. He will speak to the issue of America as peacemaker; while we can't be everywhere, while we can't do everything, we must lead where our values and our interests demand it. He will discuss peace efforts in Bosnia, in Northern Ireland, in the Middle East. He will note our success in freezing North Korea's nuclear program and sharply reducing the nuclear threat following the break-up of the Soviet Union. He'll discuss successes in Haiti and our efforts to expand international markets for exports.

And he will also call on the Senate to ratify the START II Treaty to cut the world's nuclear stockpiles. He will also call for completion of a comprehensive nuclear test ban treaty and Senate approval of the chemical weapons convention.

Lastly, he will issue a challenge for political and governmental reform. He will challenge the Congress to pass the bipartisan McCain-Feingold campaign finance reform bill, and he will call for Congress to pass at long last the line item veto legislation. He will discuss, obviously, his and the Vice President's continuing efforts to reform government so that it works better and costs less.

Now, the fundamental thrust of the speech will be ultimately to ask people to assume their responsibility, to work together to ensure that we have the American Dream for our children in the future. And those are the basic elements.

Q: Leon, the President is heading into a re-election year. When does he declare his re-election, and how much of a political tinge is there to the speech tonight?

MR. PANETTA: He's not doing it tonight.

Q: What's the political message in the speech tonight?

MR. PANETTA: These are the themes that this President has spoken to throughout his presidency. He's basically making the point that these themes have worked, that this country is headed in the right direction and that he wants to continue to put those themes in place for the future.

I think, you know, if people want to draw that conclusion out of it, they might. But I think he's going to do it on the basis that he thinks this is what's right for America. There are competing visions here as to where this country needs to go. The President is basically presenting a vision that says we need to help working families, we need to help them on their jobs, their education, their environment. We need to help them with their health care. It's not going to say this, but it obviously contrasts with the Congress, that is basically undercutting every one of those investments.

He's going to talk about family. He's going to talk about community, as opposed to survival of the fittest mentality, which is what you're seeing in the Congress.

And, lastly, he's going to talk about family values, the common ground values that he's been speaking to; as opposed to some of the extreme values that the Congress is holding these days.

So those are the contrasts that I think the public will draw from this speech as he makes it.

Q: Leon, how does his statement in the speech that the era of big government over square with what sounds like a very ambitious seven-part agenda to prepare the country for the 21st century?

MR. PANETTA: Well, I think what the President is saying is that we have taken successful steps at trying to tighten government, to make it work better, to make it smaller; and, through the Vice President's efforts, to try to make it more responsive.

So it isn't just a question that government needs to be bigger and every problem can be solved simply by government, but government should be there as a partner to communities, to cities, to towns, to individuals, to families -- as a partner in trying to work together to try to deal with these challenges. That government can't walk away from the responsibility to try to deal with some of these challenges. Yes, it has a -- you know, it has a role. It can't answer all of the problems, it can't develop a program to answer all the problems. But working together with communities and with people and with families, we can get this challenge met. That's what this country is all about.

Q: How much of a problem has the subpoena of the First Lady to testify before a grand jury been on the drafting and delivery tonight? Is it hovering over as a serious problem in terms of the President's focusing in on this speech?

MR. PANETTA: Well, I've been at most of the sessions with the President, and I can tell you he's been working steadily with the speech and that issue has not been raised.

Q: Is there any recognition in the speech that this is no ordinary time? I mean, he's coming down that aisle tonight with no budget deal, his White House is under attack and his wife is under attack. Is there anything that's going to sound different about the speech reflecting that?

MR. PANETTA: The President views this as an opportunity not to talk to the members of Congress only, but to talk to the country about where we need to go. This has got to be a positive speech. The President feels he's got to deliver a positive message. This is not a time for beating our breasts and saying, you know, what we can't do. This is a time to really say what we should be able to do for the future.

Q: Will the phrase "middle class" -- well, let me put it this way. In the last draft you saw, was the phrase, "middle class bill of rights" included anywhere that you can recall?

MR. PANETTA: I don't think so.

Q: How about the phrase "new covenant"? Do you recall seeing that?

MR. PANETTA: I don't think so.

Q: When you talk about the G.I. bill, you're talking about the workers bill of rights?

MR. PANETTA: It's the -- yeah, the G.I. bill, the workers -- well --

Q: You mean what he calls the --

MR. PANETTA: What this President has called the G.I. Bill of Rights is the proposal to basically consolidate a number of job training programs and to provide vouchers to individuals.

Q: And one other question. I mean, in the past he's had names for his programs, like the new covenant or -- and is this the seven challenges? (Laughter.) I mean, do you have a --

MR. PANETTA: This is -- this will be the age of possibility speech.

Q: Age of possibility or possibilities, plural?

MR. PANETTA: Possibility.

Q: All right. Now, is General McCaffrey the new Drug Czar, or does this need Senate confirmation --

MR. PANETTA: I think that's a pretty good bet. He does need confirmation.

Q: Leon, will there be any additional resources for the FBI to take on the gangs, or will they do it with what they've got?

MR. PANETTA: I can assure you that one of the areas that the Congress has been very generous with is the funding of crime and law enforcement. And we think that within the resources provided to the Justice Department, they will be more than able to deal with this new challenge.

Q: How many involve new government funding, though? How many of these programs involve new money?

MR. PANETTA: Gene? I don't think that many.

MR. SPERLING: There's probably, you know, maybe four or five that would be called for new funding in the fiscal year '97 budget. The merit, 5 percent getting merit; the education technology --

Q: What was the first one?

Q: Merit scholarships.

MR. PANETTA: Gene Sperling, ladies and gentlemen.

MR. SPERLING: That the top five percent of every high school graduating class would get a $1,000 merit scholarship. That would have new funding for the Fiscal Year '97 budget, it would be --

Q: How much?

MR. SPERLING: -- about $125 million a year. And the education technology fund will also be a matching program and we will be announcing the details on that in the next few days. The President and Vice President may take a special occasion to go into that detail. That builds on all the efforts they've done over the winter and last fall, but that will be a new funding program. And then there is --

Q: Is that K-12?

MR. SPERLING: Yes.

Q: -- 12?

MR. SPERLING: No, he said K to 12. But the details on funding on that we're going to announce in the next several days.

MR. PANETTA: Before -- Gene can go on, but just let me put this in context. We have, we are now proposing or are going to be preparing out '97 budget based on the last offer that we essentially put down with the Republican leaders in the Oval Office. That is a seven-year balanced budget proposal, and it is going to be within those limits that we're going to have to fund these programs. We are not asking in any way to breach the outlines that we basically put on the table.

Q: What is the total aggregate of new funds in your programs?

Q: What are the other three?

MR. SPERLING: The other would be the Work Study Program, increasing the number of people between now and the year 2000 from 700,000 to a million people involved in Work Study. And there would be 125,000 a year going back -- young people who would get the merit scholarships. Education technology, there would be --the Brownsfield, the environmental initiative also to have some funding.

But we -- it's not our intention to drop every single bit of detail on each of these tonight, because obviously it gets lost in the morass, so on several of these we will, as part of roll-out, give out more of the details on over the next several days.

Q: How about an aggregate figure for new spending?

MR. SPERLING: We haven't costed it, but as Leon is saying, it has -- it lives within the plan we have, so it is funded by scaling back on other programs, other baseline projections. So it would be part of our balanced budget package as it has now been projected.

Q: Leon, I know the President wants to be nonconfrontational, but how can he gloss over the deepest impasse between -- and really, he's supposed to be talking to the American people; what's going on here? I mean, he's totally ignoring what is really going on. I mean, there is a tremendous split.

MR. PANETTA: The President is not by any means ignoring that. He's going to talk to the budget, and the differences on the budget, acknowledge that there are differences, but also acknowledge that if they want to roll up their sleeves, we're able to try to achieve a balanced budget that does it in seven years and is scored by the Congressional Budget Office.

In these other areas, he's going to acknowledge that he has some goals -- particularly, as an example, the environment, with regards to a safe and clean environment, but that the Congress has taken steps backwards in many of these areas with regards to the environment.

So in each of these areas, I think there is a contrast to be drawn. But what he's trying to say is this is not a time to look at our divisions; this is not a time to look at where we disagree -- this is a time to try to pull together if we're going to try to solve these problems. I mean, the American people -- I think all of us have to recognize we're in a period where the American people are increasingly cynical about the ability of a President and a Congress to work together, try to solve problems, because there are these dramatic differences.

What he is basically saying to them is, look, the time has come to put some of these differences aside, and try to -- at least try to work with us to get some of these things done. The budget is a good example -- where we can get a balanced budget in seven years scored by the Congressional Budget Office, if they would be willing to set aside their ideological agenda on Medicare and Medicaid and some of these other areas. That's a good example of what the Congress can do to try to have both sides win on the issues that face this country.

Q: Is there any movement on that before Friday?

MR. PANETTA: Well, we continue to urge the leadership to meet with the President. We're going to try to see if we can set up a meeting for Thursday. We tried to set up one last week; they did not come to the meeting. We tried to set up one over the weekend. That did not happen. And we're going to try to set up another meeting this week. We are going to try to continue the effort to try to see if we can get the principals come to an agreement.

Q: To follow on that, is the President tonight going to make a specific request of the Republicans to, a, meet, b, pass a CR, and, c, pass a debt limit extension? And also as far as the debt limit is concerned --

MR. PANETTA: Yes.

Q: -- is the February 26th vote on a debt limit extension that Dole announced today, is that acceptable to the White House?

MR. PANETTA: I think that raises a lot of concerns to postpone the effort at increasing the debt ceiling until February 26th. That, frankly, is too late, because, as Secretary Rubin has said, we are facing essentially a March 1st drop-dead date with regards to the debt ceiling extension. On March 1st, if there is no extension of the debt ceiling, we are not going to be able to make payments on Social Security, on veterans, military retirees, on other programs that serve people in this country. We're not going to be able to make those payments, not to mention the impact that the potential of default can have on interest rates and on our general economy.

This is nothing to play around with. And, frankly, the Congress ought not to leave town until they deal with this issue. This is that serious.

Q: Is he going to make those specific requests in the first three -- how is he going to do that?

MR. PANETTA: Just pretty clearly -- a very direct request that they pass a clean continuing resolution, that we not shut down the government ever again, and that we pass a debt ceiling extension.

Q: Two clarifications --

MR. PANETTA: A clean debt ceiling extension.

Q: The speech was fundamentally finished four hours prior to delivery?

MR. PANETTA: This speech has basically -- I mean, the framework of the speech and the meat of the speech largely was completed last night. He has continued to work on it. He's made changes. He continues to make changes, but the basic framework of the speech is there.

Q: And second, when you say rehearsing in the theater, you mean Family Theater in the Residence --

MR. PANETTA: That's correct.

Q: -- over in the --.

Q: How long is it? One hour, really?

MR. PANETTA: We don't know. (Laughter.)

MR. MCCURRY: I think as to length, the President has just finished. He's taking a break right now. He's going to start in again doing another run-through and I'll give people a better idea as to length. My guess is about an hour, but if that changes I'll let people know.

Q: Can I clarify these numbers? The last -- Leon, the balanced budget that you -- that you're working on for your Fiscal '97 budget, so in effect the President is going to cut domestic spending by $60 or $70 billion additional over seven years to get a balanced budget, and then add back in a couple million dollars for these programs?

MR. MCCURRY: The numbers will reflect the latest proposal adjusted for some of the things he talks about tonight. But the details of that we'll wait for February.

Q: I was trying to ask before when Mr. Panetta came out, these quotes that you're going to be reading at 6:00 p.m., are you doing this in this forum, are you just doing this for notetaking? Are you doing this for broadcasting?

MR. MCCURRY: Well, I'm going to wait and see how we are. I've got to get back over and get a couple of excerpts. My plan here is that you've all got -- now you're going to have some paper coming that's got a little more detail on some of the proposals. I'm trying to give you some quotes from the President from the speech you can use for early edition use, and then we'll see where we are in advanced text after that.

Q: Mike, can you just tick off the initiatives the President is going to describe that he could do administratively to meet these seven --

MR. MCCURRY: I think that will be clear from the paper we have.

Q: Panetta didn't mention the immigration initiative. Is that -- is it going to be in there --

MR. MCCURRY: That is in the -- that is in. I think it's very likely the President will suggest tonight in his speech that he has signed an executive order related to that subject.

Q: Mike, is he going to have words of support for his wife?

MR. MCCURRY: I don't -- I said earlier today that I imagine he would acknowledge his wife somehow, and I don't know exactly how he'll do that. That's not in any of the prepared text he has. I imagine he'll just do that on his own.

Okay -- we'll come back -- as I say, sometime after six just check in here and we'll see what kind of excerpts we've got and then we'll go from there.

THE PRESS: Thank you.

END 5:10

P.M. EST