Press Briefing by National Economic Advisor Gene Sperling and Domestic Policy Advisor Bruce Reed

The Briefing Room

2:00 P.M. EDT

MR. SPERLING: As you know, the President will be making a statement later this afternoon that will be going to some of the key issues that we have been insisting on for this budget and we believe are key to having a sound budget, that investment in the American people.

What we wanted to do right now is Bruce Reed and I just wanted to give you some of the key issues on the education side that are in the President's budget that we feel are essential for having a budget that truly meets the President's priorities in the education and training needs of the American public.

One of them is the Child Literacy Bill. This is very, very close to having the authorization passed. As you remember, the President announced in the '96 campaign the America Reads proposal. We have a $260 million proposal for this year. In the original House bill, they had zero. This is clearly a bipartisan desire across the country to do something about making sure children can read by second or third grade -- all children can. And so one of the key issues --this is one of the key education issues we will be dealing with.

Secondly, as you know, in the Higher Education Bill there was the Gear Up or High Hopes proposal, which allows colleges to have partnerships with middle schools, where they essentially adopt and mentor young kids from sixth, seventh grade all the way to college. We have $140 million proposal for this. In the House initial budget they had zero. Again, this is -- both of these completely unsatisfactory, and both require and deserve significant funding and have bipartisan support.

On education technology there is still a $180 million gap between the President's proposal and what is in the House of Representatives. Our technology literacy challenge, we've requested at $475 million with an additional $75 million to help ensure that in every school in the country there is a master teacher or a teacher who is an expert on education technology, to ensure that type of competence for education technology in every classroom. The total difference there is -- our total request for education technology is $721 million; in the October House bill it is $541, another $180 million dollar gap.

One of the most disturbing things in the House education and training budget was summer jobs. The current budget, which funds up to 530,000 summer jobs -- in the initial House proposal they had zero, which is stunning that they would zero out the program. In their most recent bill that was on the floor, they seemed to have upped that to $300 million, but there is still a $571 million difference there and, most importantly, whether several hundred thousand of disadvantaged youth would be able to have summer jobs. This again has been a program that has existed for many years with bipartisan support.

The Out-of-School Youth Program was one of the new programs in the Work Force Investment Act that was passed with bipartisan support, and we had a signing ceremony here. This is designed to affect all out-of-school youth in high poverty areas, concentrated poverty areas. We have $250 million requests. There is nothing so far. Again, this is a critical issue that needs to be funded.

And finally an issue, let me just -- and Head Start, the request that we had was for $4.66 billion, that's an increase of $305 million. We're still 160 million short on our requests. These are all issues in the appropriations bills. I know they are not -- may not be as glamorous and controversial as some issues, but each of these affects hundreds of thousands, if not millions, of people's lives. Collectively they have a huge impact. Those are the ones Bruce will mention. And these are the education issues that the American people support, why they elected the President twice, and what we need to have in this budget before the President can feel strong enough about it to complete the budget and sign it.

Finally, we have been in a well over a year and a half battle on school construction. Even though there is a dramatic GAO study showing that across this country there is a significant need for new and more modern schools, even though the reports show that demographically there is going to be new buildings made, even though parents everywhere care about having their schools modernized for new technology, we have continually been rebuffed by the Republican majority on this.

We have a proposal, it's a tax cut proposal -- $5 billion over five years, $11 billion over 10 years. It allows for over $22 billion in bonds to states, and in the 100 largest school districts for construction and renovation. This has wide, strong support. There is no reason that this should be opposed constantly. And this will be one of the issues that the President strongly addresses today in his remarks and one of the things that our budget appropriation negotiators are discussing right now on the Hill.

MR. REED: Well, as Gene said, the biggest differences between Democrats and Republicans in these budget negotiations are over education. Let me go over a few more of them.

First, the President's top priority on education that he laid out in this year's State of the Union was his plan to hire 100,000 new teachers to reduce class size to a national average of 18 in grades one through three. Studies show what every parent knows: more teachers means smaller classes, more time for kids, better discipline, and significant learning gains. Neither the House nor the Senate has included our class-size plan in their budget. We believe Congress should not go home to campaign until they've passed a budget that provides communities the funds to reduce class size.

Q: How much is that?

MR. REED: We asked for $1.1 billion in this fiscal year, which is a --

Q: You mean he'll veto the bill unless he gets that?

MR. REED: The President has not issued a veto threat on this specific issue, but we certainly wouldn't rule it out. A second major priority is to dramatically expand after-school programs. The President's budget calls for $200 million, which would provide after-school opportunities for more than 425,000 students. As we all know, most juvenile crime occurs between the hours of 3:00 p.m. and 6:00 p.m. That's when young people get into trouble with drugs and smoking. The House bill only included $60 million. If this Congress is serious about public safety and public education, they'll give us our full request for $200 million.

A third significant issue is over teacher recruitment and teacher standards. Earlier this week the President signed the bipartisan Higher Education Act, which includes a number of improvements in recruitment and teacher preparation. Again, our budget asked for $75 million for these programs; the House budget includes zero. And we're not going to help our kids learn more if we shortchange the training we give their teachers.

Three more funding issues. Goals 2000, which was passed by overwhelming bipartisan majorities in 1994. Republicans in the House ever since have tried to gut that program. This year we asked for $500 million, a modest increase from last year. House Republicans have come in with $246 million, cutting it in half. We should be moving forward on standards, not backwards.

On Title I, which is the major program for improving learning in the basics for low-income kids, we asked for a 6 percent increase. The House is giving us nothing -- no increase that is.

And then finally, in the State Union the President spelled out a new initiative for education opportunity zones, which would give communities around the country a strong incentive to do what Chicago has done, which is end social promotion, provide public school choice, hold schools accountable for results. You would think that this Congress would want to join us in holding schools, teachers, and students accountable for results but apparently not. The House bill doesn't include a single penny for ending social promotion.

There are also some contentious language issues that don't have anything to do with money but are important to us as well. There are four significant education riders that we've raised strong objections about.

The first is a ban on national testing, which would stop the President's plan dead in its tracks. As you may recall, last year the President called for national tests in 4th grade reading and 8th grade math. And last year we turned over development of those tests to an independent, nonpartisan board, which has been making progress. The House wants to stop that, and we're not going to stand for it.

Three other language issues -- there's an effort to essentially block grant Goals 2000. There's a rider that would gut bilingual education. And there are two riders that would weaken the protections for disabled kids and special education that this very same Congress agreed to on a bipartisan basis last year.

Q: Bruce, what's the total of the amount of education programs that the Congress is -- what's the difference between your proposal and their proposal? How much are they denying you that you think you should get?

MR. SPERLING: I think there was about a $2 billion gap in the initial presentation of the House Labor and Education bill in committee. I still think that is about the amount. That, however, does not include the differential between the school construction and the class size. The school construction would make that -- excuse me, class size would make that $3 billion and the school construction is about $5 billion over five, or $1 billion a year.

So I'd say all together about a $4 billion difference in this year's budget, $2 billion of which would be in the traditional Labor and HHS appropriations bill.

Q: So how will you resolve this? Do you have to go back and cut $4 billion in other programs that are in the existing budget? Or do you need to come up with the money for these programs?

MR. SPERLING: In 1996 we were in a similar situation, and Frank Raines and Jack Lew at that time were able to work with the appropriators in finding additional offsets, some from the mandatory side, that could allow for the additional funding while at the same time meeting the pay-as-you-go rules in the sense of everything new being paid for dollar by dollar.

Q: You do not intend to take any money from the surplus for this.

MR. SPERLING: Correct. We do not intend to take any money from the surplus for spending on new initiatives, whether they're ours or theirs. The discussions you've heard before is there has been some debates about what should properly be classified as an emergency. But whatever disputes there may be as to what should properly be classified as an emergency, virtually all of these are clearly not emergencies, and therefore, if they are above the caps in any way -- I mean, if they're above the amount that is allocated in the budget, they have to be paid for by another source.

Q: Well, just on -- a question on non-education issues, how close are you to solving the census, IMF, and the anti-abortion language?

MR. SPERLING: On the IMF we have been in discussions -- Secretary Rubin has been in discussions. We obviously feel it is absolutely essential to get the full funding. We feel there have been some hopeful signs. We support the notion that there should be reforms to the IMF. But they can't be mechanisms that would restrict and limit the ability of funds to flow out and therefore negate the crucial funding increase which the entire world is waiting on this United States Congress for right now.

Q: Do you think it makes any sense to cut off the water from the fire department at the time the fire is burning?

MR. SPERLING: That is a brilliant analogy.

Q: Is the family planning issue -- has that been solved, the family planning language, or is that still a problem that you have to negotiate?

MR. REED: Let me just say, there are a host -- there's about 100 contentious language issues that have been discussed and debated at the staff, and to a lesser degree, at the principal level. But most of the discussions are still going on.

Q: And census also is still not solved?

MR. SPERLING: How the Mexico City is resolved, again, that is still being discussed. But we are hopeful that it will be delinked, that these discussions will delink that from the IMF and that the IMF will be an up-and-down vote on -- will be considered on its own merits.

Q: Is there any possibility that Congress will send the White House a bankruptcy bill that the President can sign?

MR. SPERLING: We have worked very hard on the bankruptcy reform and we were very pleased with the bipartisan spirit that Senator Grassley and Senator Durbin showed in working with the Senate and with us. As a result of that, we had a 97-to-1 bill pass the Senate that Senator Grassley and Senator Durbin showed great leadership on. If that bill were to hit the President's desk, he would sign it.

If there were something close to the Senate bill, in the sense that it showed real balance between creditors and debtors, we would sign the bill. They went into conference, they moved away from the significant protections for debtors that we thought were necessary to be included in the bill. They moved away from some of the reforms that we needed to prevent creditor and predatory abuse in this situation.

We said we could not sign that bill, but we still wanted to work in a bipartisan way. I went up yesterday morning, and we made a counter-offer and said we were willing to continue to negotiate. We have not heard back at this time. So we stand ready to work on and sign a balanced bill. The bill that is going through right now does not meet our test, and we would not sign it.

Q: What's your assessment of the general level of progress today with the Republicans and also, specifically, the progress you've made on IMF and paring back the number of riders over which there's disagreement?

MR. SPERLING: On the IMF, I think there has been a significant amount of good-faith, bipartisan discussion. I think it's too early to tell, but I think there are more hopeful signs than there have been in quite some time --

Q: Today?

MR. SPERLING: -- over the last several days.

But Secretary Rubin is still in negotiations on this issue. I would say that there are still some tough and contentious issues out there, and I would not want to hazard a prediction at this moment as to when they would be resolved.

Q: I'm not asking for a prediction. What's happened today? Has there been progress today, or what's happened?

MR. REED: Discussions. Not progress.

Q: Bowles is going back at 4:00 -- I mean, that kind of stuff.

MR. SPERLING: There is constant discussion. How much progress has been made, I do not know.

Q: Gene, with the President's acknowledgment that he would sign a CR, nobody seems to be talking about a government shutdown. Is that now off the table, not going to happen?

MR. SPERLING: We have always said that a government shut down would not be in anyone's interest. So we clearly stand ready to sign another CR to prevent a government shutdown. What we have said, however, is that we're not going to accept or sign a budget that is inadequate on education and the environment and other critical views just to get out of town and make life easy on any of us.

Our goal -- our job here is to make sure we have a strong bill because each of these provisions, however arcane they may sound, affect hundreds of thousands of people's lives. And the President was elected here to have a very strong education and training agenda, and he's not going to accept a budget that doesn't meet that test.

Q: A question for Bruce if I may -- Bruce, any of these education items that you just mentioned, were any of them to be paid for originally with the tobacco bill money?

MR. REED: Class size was originally to be paid for with tobacco money.

Q: Is it not reasonable to knock that out of the budget, since you didn't get the tobacco money?

MR. REED: First of all, we hold this Congress accountable for not getting the tobacco bill. We still need smaller classes. Let's put this in perspective. We'd like this Congress to get some work done. They killed the tobacco bill. They killed campaign finance reform. They killed the patients' bill of rights. We're not going to let them kill education.

Q: The White House didn't come up with its own tobacco bill. As you well know, is it not the White House's responsibility that today we don't have a tobacco bill and therefore you don't have all the money you want in your budget?

MR. REED: We negotiated a bipartisan bill with Senator McCain and others that reflected the administration's priorities and would have passed if not for a last-ditch effort by the leadership to kill it. So we are more than happy to work with Congress to find the offsets to pay for class size, but they need to get it done.

Q: You say you're not going to let them kill --

MR. SPERLING: Let me just say, this is the traditional way the budget operates. We send up our priorities and we send up specific offsets. As Dan Rostenkowski told us our first year here, sometimes we'll take them, sometimes we'll come up with other ones. But it is common that we have a proposal that people like. They may reject the offset we put forward and then you work in a way to find another offset. We would -- Bruce, I know, would be ready to spend his entire weekend in negotiations on finding the right offset to cover our billion dollars in class size.

Q: Let me just follow up here. You said, we're not going to let them kill education. How are you going to stop them?

MR. REED: Well, we're in negotiations and we're going to insist on a very strong education budget.

Q: Or else? I mean, what's the "or else"?

Q: Why not make a veto threat?

MR. SPERLING: Let me be clear. What we're saying is we can't, in the middle of an entire budget negotiation, pick out any one particular item and say for sure. If this budget --

Q: You just did.

MR. SPERLING: No, we were asked about class size specifically --

Q: They killed the tobacco bill, they killed campaign reform, they killed the patients' bill of rights, we're not going to let them kill education -- your statements.

MR. SPERLING: Right. So what we're saying is that we would not sign, or would veto, a budget that was weak on education. We can't in the middle of this negotiation look at each item alone and make that kind of judgment. But if this bill is not strong on education, if it does not go a long way toward meeting the President's priorities, the President will not sign this budget and the American people would strongly support that.

Q: Gene, can you tell us where you are on U.N. arrears and also if you can declare a victory in the President's overarching goal of having saved the surplus for Social Security?

MR. SPERLING: That's a tough last question. (Laughter.) Let's see if I can summon. The U.N. arrears is certainly one of the issues that is a contentious and important issue to us. It's under discussion. I think that it would be hard to remember another time where a President made such a strong singular impact on setting the fiscal agenda for a year. By last December, as you know, there were several -- dozens probably -- of proposals being developed that would in some way spend the surplus -- either for the transportation bill, as you remember, or for a large tax cut, or for combinations of tax and spend -- of tax cuts and spending. All of them before it even accumulated a surplus, and all of them before we had done anything about our generational deficit on Social Security.

The President's State of the Union, when he declared that the entire surplus should be saved until Social Security was fixed for the 21st century, altered the entire fiscal agenda. And what is really striking is the degree that it has held in its entirety up to this point.

Certainly when we laid down that agenda, that principle, we all knew that the moment of truth would come about a month or so before the election when a tax cut, a tempting tax cut, would be put down with the sole goal of seeking to break the wall on the surplus and open the floodgates; and that it would be very, very difficult for people up for reelection, a month before election, to hold firm to the pledge to save the surplus.

The fact that 182 Democrats and another 11 Republicans held with the President only weeks before an election to save the surplus entirely, and that the support is so strong in the Senate that the majority leader, as far as I can see, is afraid to even bring it up for a vote, I think shows that the President had a complete victory on saving the surplus. And most importantly, the American people have had a victory because it's kept our fiscal discipline strong in a time of a fragile world economy, and it has greatly enhanced the chance that we will have the resources necessary to balance our budget for generations to come and fix our generational deficit through Social Security.

So I think that when Congress goes out, and when a tax cut or large spending initiative that drains the surplus is not passed, that will represent a complete victory for the principle of saving Social Security -- saving the surplus for Social Security.

Q: Gene, how about the ag money? Is there an agreement on agriculture yet?

MR. SPERLING: I do not believe that you can go through on the agreements right now. As with many negotiations, it is often the case that not much is agreed to until virtually everything is agreed to.

END 2:28 P.M. EDT