Press Briefing by Scott McClellan

James S. Brady Press Briefing Room

12:50 P.M. EST

MR. McCLELLAN: Good afternoon, everybody. I want to begin with updating you on a world leader call the President had this morning. The President spoke to Danish Prime Minister Rasmussen. The President called to congratulate Prime Minister Rasmussen on his election victory. The President expressed his appreciation for the Prime Minister's strong leadership and his commitment to strengthening the trans-Atlantic relationship.

The two leaders also discussed the Iraqi elections and their commitment to advancing the democratic process in Iraq. They agreed on the importance of continuing international support in Iraq, while working to train and equip Iraqis to assume greater responsibility and ultimately provide for their own security.

They also welcomed the recent progress in the Middle East and stressed the importance of both parties continuing to move forward toward the President's two-state vision.

The President and Prime Minister discussed the President's upcoming visit to Europe, including the NATO and European Union summits. And the President said he looked forward to seeing Prime Minister Rasmussen soon.

And with that, I will be glad to go to your questions.

Q: Scott, these new prescription drug cost estimates -- when you look at what Congress first thought it was getting into when it first signed the legislation, is this a bait-and-switch?

MR. McCLELLAN: Absolutely not, John. Those -- I think some of the reports today are comparing apples and oranges, so let me back up and talk a little bit about this first.

The President believes it was right to provide seniors with prescription drug coverage and the kind of preventive care that will help improve the quality of health care and make health care more affordable for our seniors. There are some who are intent on undermining the prescription drug coverage that we have provided to our seniors so that they can realize significant savings on their drug costs -- which they're already doing now. I think it appears to be a case of some Democrats being for prescription drug coverage before they were against it.

The overall costs for Medicare are actually lower than our previous projections. That was spelled out very clearly in the budget we released earlier this week. Now, there are some reports I've seen today that are mixing apples and oranges and looking at two different time periods. It is a false comparison to make. But we were very clear with everybody previously on those projections.

Q: When you say that the cost projections are actually lower, you're not talking about prescription drug --

MR. McCLELLAN: Well, the projections for the prescription drug coverage are virtually unchanged from the time period of 2004 to 2013. Let me walk you through this a little bit.

There were some reports about a $1.2 trillion projection for prescription drug coverage over a time period of 2006 to 2015. That is simply not accurate. It does not take into account the $500 billion in savings that will be realized by the federal government. So it's off by, essentially, a half trillion dollars. It does not take into account that states contribute to the cost of the benefit, some $134 billion. It does not include beneficiary premiums that people pay, some $145 billion altogether. And it doesn't take into account that the federal government is saving almost $200 billion on Medicaid, because it will now pay for medicines for low-income seniors through the Medicare program. And so the cost from 2005 -- or 2006 to 2015 is $723 billion.

Q: Let's just take a look at the way that this was sold. Everybody up on --

MR. McCLELLAN: I'll be glad to.

Q: -- the Hill, when they signed onto this deal, thought that the cost was going to be $400 billion. Even some Republicans are surprised at this new figure. When you sold this plan to them, did you hide what the actual costs would be?

MR. McCLELLAN: Absolutely not, John. And all you have to do is go and look at the facts. The facts are that the Congressional Budget Office still stands by that previous projection of $400 billion for the first 10 years of the program. There is now a projection for 2006 to 2015, when you have a fully phased in prescription drug coverage -- and that's the cost I was just referring to -- but the President made it very clear what he was referring to in his previous remarks. We made it very clear. And in terms of the prescription drug coverage for that time period, the projections remain virtually unchanged. If you go and look, the projection from the CMS actuaries for 2004 to 2013 for the prescription drug aspect was about $511 billion. The projection now is about $518 billion, so it's virtually unchanged.

But, again, the overall cost to Medicare, the projections, are coming down from the earlier projections. If you look at the numbers for fiscal year 2006 and look at the budget, it shows that lower overall Medicare cost -- it shows lower overall Medicare cost projections by $7.6 billion, or less -- a reduction of 1.6 percent for 2006, and by $35 billion from the time period of 2006 to 2010. So it's -- that's a 1.7 percent reduction from the previous estimates.

Q: But you're mixing apples and oranges, because we're talking about prescription drugs and you're talking about Medicare as a whole.

MR. McCLELLAN: I think you have to look at the overall costs, as well. The American people should understand what the overall projections are, and the fact that the overall projections are less than they were previously. Obviously, we went through this discussion a year ago, or longer, when we talked about some of the estimates by actuaries. Obviously, different actuaries are going to make different assumptions and have different projections.

Q: But, Scott, one of the big issues from both conservatives and Democrats is that the President really does want to have it all here and that this program, in particular, the prescription drug benefit is unsustainable. That's their term. And it's completely incompatible with the goal of cutting the deficit in half. No matter what you all say you can actually accomplish, with so much not being included here, that it's simply not possible.

MR. McCLELLAN: By bringing in choice and competition to Medicare, you're also addressing some of the cost issues. We had some cost controls that were passed as part of these reforms to Medicare as part of the President's efforts to modernize Medicare. You just heard from the President a short time ago in the Oval Office, where he talked about the importance of addressing this in the future. We're going to need to take additional steps to address some of these issues. But right now, we just passed some historic improvements to Medicare for the first time in its history that will provide seniors with better benefits, more options to choose from, and prescription drug coverage that they have not had before. And so it's going to reduce their cost a lot.

The President stands firmly behind the prescription drug coverage we provided to seniors, and he's not going to let people on the Hill try to take that coverage away from America's seniors.

Q: Will he --

MR. McCLELLAN: Now --

Q: -- veto an effort like --

MR. McCLELLAN: Hang on, hang on one second. Hang on one second.

Q: -- by Senator Gregg to draw back this program? Because Senator Gregg has said -- an ally to the President -- it's not sustainable; we ought to look at limiting the size and the scope of the prescription drug bill. If that effort is made, will he veto such an effort?

MR. McCLELLAN: Actually, what I was just going to come to before you jumped in there was to talk about what -- again, what the President said a minute ago and what we've said previously, that we need to focus on putting these important reforms into place. As you are aware, the prescription drug coverage is not fully in place until 2006, and that's when it takes full effect. Now, we provided a discount card to our seniors so that they could start realizing significant savings on their prescription drug costs -- some 15 to 30 percent. But right now, what we need to do is focus on implementing these reforms. They're an important step for strengthening and modernizing Medicare. And at some point, we're going to have to look at taking additional steps to address this entitlement issue. It's an issue that the President addressed in the Oval, and he has made it very clear that he's firmly committed to doing that.

But we just passed these historic reforms and that's what we need to focus on right now, is implementing those reforms and getting seniors the kind of coverage they need. As the President has often said, he couldn't understand why Medicaid -- I'm sorry, Medicare would fund the heart surgery for seniors, but it wouldn't pay for the medicine that would prevent that from being necessary in the first place.

This legislation that was passed provides seniors with important preventive coverage that will address some of these cost issues.

Q: It's not a debate about the merits of the program, it's just, you know, go for it -- but then don't promise the country that you're going to cut the deficit, too, and keep such a tight rein on these because, clearly, you're not.

MR. McCLELLAN: Actually, David, it's reflected in our budget and I just talked to you about overall cost projections for Medicare over that time period are coming down from what they previously were. So let's be clear with what the facts are and let the American people know what those facts are. I think it's important for them to know the overall picture and give them a complete picture. And there are some reports that have simply got it wrong and made an apples-to-oranges comparison, which I think is inaccurate.

Q: Right, but the facts are also that your budget window goes out to 2009, and these big costs, these gigantic costs in the Medicare prescription drug benefit -- which, as you say, is now capturing the real cost of full participation by the nation's seniors; the big costs of the Social Security transition, which administration officials admit will reach trillions of dollars; the trillion dollar cost of making the President's tax cuts permanent -- those go beyond your budget window in many respects. And the question is, the numbers really don't add up, do they?

MR. McCLELLAN: No, go and look at the budget, Terry. It's a detailed budget and it spells out very clearly -- it includes the tax cuts in the budget. We've been briefing on this, this week and gone through this. Making the tax cuts permanent is important to continuing to see sustained economic growth. The action we took to get our economy growing is working. New jobs are being created. We're seeing a strong economy that's getting stronger, and we've seen 20-some months of new jobs being created.

We need to continue to act to build upon that, and tax relief is important to a growing and strong economy. A strong economy brings in more revenues to the federal government as an important part of reducing the deficit. The President has put forward a deficit reduction plan, and it's based on that and based on exercising responsible spending restraint. And each year in this administration we have worked to slow the growth in non-security discretionary spending significantly, and this budget exercises even greater spending restraint, and we call on Congress to meet the President's budget number that he outlined earlier this week.

Q: But the President's budget reduction plan goes through 2009. We're talking about gigantic costs that will come for his successor and for the country when he leaves office.

MR. McCLELLAN: This is a very good point to make, because this gets into mandatory spending, and in our budget, we provide cost-savings, I think it's of some $134 billion over the next ten years, in mandatory programs. What you're talking about, really, are the mandatory programs, the entitlements, Social Security, Medicare, Medicaid. We are taking steps to strengthen Medicaid. We are slowing the growth in Medicare -- Medicaid spending from about 7.4 percent over the next 10 years to about 7.2 percent and giving states more flexibility so they can cover more people at an affordable cost and getting rid of all the accounting gimmicks and loopholes that people have exploited so that we make sure we're covering those who it was intended to cover, the low-income Americans who rely on Medicaid.

And Social Security. This is a very important debate that we are having right now about the importance of addressing the serious problems facing Social Security. It faces a significant unfunded liability and begins to show shortfalls, beginning in 2018. That's why we need to act this year to address it so that we strengthen it for our children and grandchildren. There's not going to be any changes for those who are now retired or near retirement. The President has made that very clear. But the President is -- and the President made it clear in the Oval Office just a short time ago what we've said previously, that there are going to be additional steps we will need to take to address Medicare, as well. And we remain committed to that.

But right now we need to focus on putting these reforms in place, because they are an important step to addressing some of those cost issues and to making sure that our seniors have the kind of options and coverage that they have waited on for far too long. And we're not going to let people take that away.

Q: Okay, so the bottom line here, as far as I can hear it, is the President does believe we can have it all. We can have the trillion-dollar tax cut, we can have the trillions in transition costs for Social Security, and the Medicare costs -- and we can have that all.

MR. McCLELLAN: That's what budgets are about. Budgets are about setting priorities. And you have to set priorities and make sure that you're meeting those priorities. And then you have to work to hold the line on spending elsewhere. That's why the President, in his budget, proposed 150 programs for either elimination or significantly being scaled back. He wants to make sure that government is focusing on results, and that government is focusing on those programs that work, that the taxpayer dollars are being spent wisely.

We have an obligation to meet, during a time of war -- we must do everything we can to support our troops who are in harm's way. We must do everything we can to support our military. We must do everything we can in this war on terrorism that continues, to protect the homeland. Those are -- that's the number one obligation the President of the United States has, and he will meet that commitment. But he's also outlined, again, a budget that exercises responsible spending restraint and continues to slow the growth in those other discretionary programs, and it starts to take additional steps to address some of the mandatory programs.

I mentioned Medicaid. Social Security -- what we're talking about there is actually bringing forward some of those costs and permanently making it sound so that it doesn't continue to run deficits and grow worse and worse over time.

Q: Scott, what are these additional steps that you're talking about that might be necessary for Medicare?

MR. McCLELLAN: Well, we've talked about some of them before and about some of the cost issues related to it. Now is the time for us to focus on implementing these reforms. That's where we're going to keep our focus. But we're going to continue to talk with Congress about additional steps that we need to take --

Q: Are you talking about limits on what's available?

MR. McCLELLAN: -- that we'll need to take down the road. There's been a lot of issues about the trust funds and how they're separated, and you have two different funds for Medicare, and issues of that nature that we've talked about in the past. There were some cost controls, as I pointed out, passed in this legislation. That's where our focus needs to be right now, is on implementing these important reforms for America's seniors. And that's where we'll keep it.

Q: Scott, can you just explain the Medicaid-Medicare aspect of this, that you suggested, I think, would benefit the deficit situation by a $200-billion savings, because Medicare would be purchasing the drugs more inexpensively through Medicare?

MR. McCLELLAN: I'm talking about the cost savings on the prescription drug side, because this goes directly to paying for medicines for low-income seniors through Medicare that had previously been receiving some coverage through Medicaid.

Q: So that's a savings for Medicaid, not Medicare?

MR. McCLELLAN: On the prescription drug -- I'm sorry?

Q: Well, I thought you --

MR. McCLELLAN: No, no, this is on the prescription drug cost projections for Medicare, a $200-billion savings. That's -- I was pointing out the $500 billion in savings or receipts that are coming in for the Medicare program that offset the number $1.2 trillion that some were throwing out.

Q: Scott, some Republicans on Capitol Hill are saying that they feel snake-bit by this, the even if you compare -- to use your metaphor-- apples-to-apples, $720 billion to $518 billion, whatever it is now --

MR. McCLELLAN: That's not apples-to-apples.

Q: Well, let me just say --

MR. McCLELLAN: Well, but that's not apples-to-apples. Those are different time periods, completely different time periods.

Q: Different time periods -- but that's my question, which is that the time period of this program or of this benefit is 2006 to 2015. So why was that -- why wasn't that always the figure that Congress was given, understanding that that was the time it would be implemented to the time that it would be fully phased in.

MR. McCLELLAN: No, the figures that they were given earlier were the correct figures. These are different time periods that we're talking about. The first 10 years, the projection was, as you referred to, the $534 billion; of that, about $511 billion was the projection for prescription drug costs. And now the projection is about $518 billion. But since the last projection, I think it was the mid-session review back in July, the overall costs for Medicare are less than what was previously projected. And I think you have to look at it in the overall cost of the program, as well.

Q: What's your response, though --

MR. McCLELLAN: But the $723 billion that you're referring to is the time period of 2006 to 2015. You have two years on that, that include when it's fully phased in. But we were very clear before on the time period that we were talking about.

Q: What the Republicans, many of them on Capitol Hill are saying that this is what they warned of when they were a little bit skittish about supporting this in the first place, that what this Republican President was doing was creating a big new entitlement, and that it would only get bigger and bigger. So to those people who are saying, I told you so, what does the President say?

MR. McCLELLAN: Let's be clear about how these news reports came about in a couple of the papers today, or a few --

Q: I'm not talking about the news reports. I'm not talking about the specific numbers. I'm talking about something that you're confirming, which is the $720 billion.

MR. McCLELLAN: But we're talking to the American people, and I think they should hear the full story behind this. There was a Democratic memo that was circulated to reporters. It was very misleading; it was talking about some $900-some-billion in additional cost. And then there's at least one news account that simply got it wrong in the way they described the program in the lead of the article, as well as the headline for the article, suggesting it was $1.2 trillion in additional cost over that time period, and comparing it two different -- comparing two different time periods. Let's be very clear about that.

And last night, the Administrator for the Center for Medicare and Medicaid Services did a conference call with some of those reporters that were asking questions about this democratic memo that was floated, and he set the record straight, in terms of these costs. And they can provide you all this information that I've gone through, as well, and spell it out for you. And I think that they would be glad to do that.

Now, in terms of "many Republicans," I don't know who you're referring to. I haven't seen any comments from "many Republicans" today. But I have seen --

Q: Senator Gregg has said that he wants to go back and --

MR. McCLELLAN: What are you referring to there?

Q: -- revisit this, because it's costing so much.

MR. McCLELLAN: I think that's a previous comment. Let's separate it out from today's stories. So I haven't seen any comments from specific Republicans on today's stories, certainly ones that supported the legislation.

Go ahead.

Q: So you're saying it's not --

MR. McCLELLAN: Well, that's why I'm asking. I mean, who is saying and what are they saying? I mean, the President has made it very clear that it was important that we give seniors prescription drug coverage and it was important that we provide them with the same kind of options and benefits that members of Congress now have through the federal health plans. And that was an important way to strengthen Medicare and modernize it for our seniors. It had not kept up to date with some of the changes in medicine. It now provides preventive care on a number of issues that it previously didn't, so that seniors can get medicines at a much lower cost, and those medicines are intended to help prevent them from needing some of the surgeries or other care that might be much more costly.

Q: Can we just do one more quickly on this before you move on to another --

MR. McCLELLAN: No, but I'll come back to you later. Go ahead, Goyal.

Q: The situation in Nepal is worsening, and do you think President is going to call on the Nepali King to back-roll his powers and restore democracy? The people are crying and --

MR. McCLELLAN: We continue to urge the government of Nepal to get back on the democratic path and to follow the constitution in that country that is based on democracy. And we've made very clear what our concerns are and we will continue to make clear what our concerns are.

Q: I just have a quick question on Karl Rove's new and expanded role. Will he attend National Security Council meetings in this role, and will he participate in the President's daily intelligence briefings?

MR. McCLELLAN: No, on the latter. I don't expect any change in that. It's just like the previous Deputy Chief of Staff; he'll do the same thing that the previous Deputy Chief of Staff --

Q: Well, what is --

MR. McCLELLAN: Well, let me back up, because there is an exception to this. The Deputy Chiefs of Staff essentially represent the Chief of Staff in various meetings and help to make sure that the process for developing policy is flowing smoothly, that it's open and it's fair and that it's moving along.

The way the decision-making process works typically in the White House is that you have deputies' meetings where you'll have deputies attend those meetings and discuss policy ideas that have been discussed at the staff level, that the President has talked about. That will work its way up to the principals, where they'll discuss it. And then it usually goes to the President for his decision, after it's kind of gone through that process.

So in terms of national security issues or foreign policy issues, some of the responsibilities that were previously under one chief of staff -- a deputy chief of staff, are now spread out over, essentially, three people. And Karl will have some responsibilities, like international trade issues and European issues and things of that nature. But Joe Hagin will assume responsibilities for the Chief of Staff's Office when it comes to intelligence matters, counter-proliferation, counter-terrorism, defense issues, homeland security issues. I know there are some issues, I mean, like, immigration, that are going to cross through all of those. But, you know, essentially, Karl will represent the Chief of Staff's Office in those meetings and report to the Chief of Staff about those issues, that I mentioned.

Mike Gerson is going to have some of those issues, as well, where he'll have primary responsibility from the Chief of Staff's Office perspective. They include the compassion agenda, they include advancing democracy and human rights in the world, among other things.

So that's the way it is now; but it's the way it has always been, except some of those responsibilities are now split among three people.

Q: I'm still confused as to what the answer is to the question. When the National Security Council meets, the principles meet, would he attend those meetings?

MR. McCLELLAN: I would not expect -- when you're talking about defense issues or things of that nature, intelligence matters, like that, I would not expect there to be any change. No, I would not expect that. So that's what I was trying to make clear.

I mean, on the Deputy's level, when the National Security Council deputies are meeting to talk about international trade issues or European issues, I would expect that he would be attending those meetings.

Q: Scott, the major deterrent in the --

MR. McCLELLAN: Ivan, go ahead. (Laughter.)

Q: Well, thank you. The major deterrent now in lasting peace between Israel and the Palestinians is Hamas, the terrorist organization that we know is aided and abetted by Iran. Does the President have any specific plans to counter Hamas to try to bring them in line? And does this U.S. general who is aiding in the security situation there have the mandate to aid Israel? And even been going after Hamas leaders, and even using U.S. special forces --

MR. McCLELLAN: Well, a couple of things. First of all, we commend very strongly the historic summit that took place this week where President Abbas and Prime Minister Sharon agreed to, really, a cessation of violence and terrorism. It does not stop there, though. That's an important step on the path to ending terrorism, and that means dismantling terrorist infrastructure and cracking down on the terrorists. We have always made that very clear.

So we commend the strong leadership shown by all the leaders that were at the summit. In addition to the two I mentioned, President Mubarak and King Abdullah provided very strong leadership at this summit. We are going to do everything we can to support the parties in the region as they move forward toward the President's two-state vision. The President has made it very clear that it begins with cracking down on terrorism and building a unified security structure to end violence. And all parties have responsibilities in this regard. We have seen, with the election of President Abbas, someone who has shown a commitment to addressing these security issues and ending violence, and he has shown some strong leadership. So has Prime Minister Sharon. We have a very unique opportunity before us.

General Ward will be there as the security coordinator to help with some of the training and equipping of security forces, and he'll be there to help facilitate and monitor some of the cooperation between Israelis and Palestinians. Obviously, there are some that are going to remain intent on trying to derail the advancement to the two-state vision the President outlined. And those issues need to be addressed, and I think that you've shown [sic] a commitment from the parties in the region to work together to address these issues. And we have made very clear what our views are when it comes to Hamas. You stated them in the beginning of your question.

Q: But does General Ward have a mandate now to go further than just to coordinate and advise?

MR. McCLELLAN: General Ward has the mandate that I think Secretary Rice outlined and that I just described there, and that's what he will do. His focus will be on the security side of things.

Q: Scott, on Iran --

MR. McCLELLAN: Let me go to the back and then I'll come back here. Go ahead.

Q: Does this administration believe the Democratic leaders are now engaged in a deliberate disinformation campaign as the best way to undermine the President's goals and objectives on a number of issues?

MR. McCLELLAN: A deliberate?

Q: Yes.

MR. McCLELLAN: We would certainly hope not. The President has made it very clear that he wants to reach out and work together on our shared priorities. That's what he's going to continue to do. The President has always been one who has sought to elevate the tone and encourage others to offer their ideas for solving problems. We're here to solve the problems of the American people. That's what they elected us to do. We're not here to pass those problems off to future generations. We have some very serious challenges that need to be addressed over the next four years -- Terry was referring to some of those earlier in his question -- and the President wants to work together to address those priorities. That's why he has reached out to Democrats and Democratic leaders and said, let's work together to solve these problems.

Carl.

Q: Is the President -- thanks, Scott -- is the President satisfied that the European negotiators are making adequate, timely headway with Iran?

MR. McCLELLAN: We remain in close contact with the Europeans, the British and the French and the Germans who are in contact with Iran, to get Iran to end its pursuit of nuclear weapons. Everybody, as the President said earlier today, is sending a unified message to Iran. Iran with a nuclear weapon would be a very destabilizing force in the region and in the world. And the President has made very clear what his views are. We remain, as the Vice President talked about over Sunday, supportive of the efforts by the Europeans to get Iran to end its pursuit of nuclear weapons.

Now, time will tell if Iran is serious about doing that. They've made some commitments. They have stated very clearly that -- what their international obligations are. They've stated that they would suspend their reprocessing and enrichment activities. Ultimately, those need to end; that's been our view along. They stated very clearly that they'll

adopt the -- adhere to the additional protocol and that they would fully cooperate with the International Atomic Energy Agency.

We expect Iran to abide by its international obligations and live up to those obligations. Time and again, they have not. And so we will see how serious they are. And you heard from Secretary Rice earlier today talk about how we have long felt that the matter should be referred to the Security Council for consideration and to look at possible action. And that remains our view. Iran needs to abide by its international commitments.

Q: So is the President officially convinced that the European negotiators are adequately insistent?

MR. McCLELLAN: We are in close contact with our European friends. We appreciate their efforts very much, what they are doing. They remain in contact with Iran on these issues to make it clear to Iran that they need to live up to their international obligations and end their pursuit of nuclear weapons. We very much appreciate those efforts, and we'll continue to stay in close contact with them as they move forward. And we will see by Iran's actions, not its words, if they are going to live up to their international obligations.

Thank you.

END 1:21 P.M. EST