Remarks Announcing a Federal Budget Agreement

The President. I am joined here today by the bipartisan leadership of the Congress -- the Speaker of the House, the Senate majority leader, the Senate Republican leader, the President pro tem of the Senate, the House majority leader, and the House Republican leader -- and other members of the budget summit negotiating group. The bipartisan leaders and I have reached agreement on the Federal budget. Over 5 years, it would reduce the projected deficit by $500 billion; that is half a trillion dollars.

The agreement has five basic parts. First, it would save $119 billion in entitlement and mandatory programs.

Second, it would produce 182 billion in discretionary program savings. These savings would come principally from defense. In the next 3 years, defense outlays would be reduced by $67 billion, relative to the projected baseline. All other discretionary programs would be firmly capped at the projected baseline levels; that is, for the next 3 years they would in total be allowed to grow at no more than the inflation rate.

Third, the agreement would increase tax revenues by $134 billion. The largest single increase, single contributor, would be a phased-in increase in the gasoline tax of 5 cents per gallon in the first year and another 5 cents in the following years. I do not welcome any such tax measure, nor do I expect anybody up here does. However, this one does have the virtue not only of contributing to deficit reduction but also, over time, of decreasing America's dependence on foreign oil, an objective whose importance has become increasingly evident in the face of the Iraqi invasion of Kuwait. I am pleased to be able to note that the budget agreement also includes several new incentives to increase domestic exploration and development of oil and gas resources. The combination of these measures should help reduce America's vulnerability to the interruption of supplies of foreign oil imports.

Fourth, the agreement extends the Gramm-Rudman budget discipline for 5 years. In addition, it improves the budget process and substantially strengthens the enforceability of the 5-year budget plan to which we have agreed.

Fifth, this agreement includes important new initiatives to stimulate economic growth: it authorizes new tax incentives for the development of enterprise zones; extends the R&D tax credit; it provides powerful new incentives for productive investment in the kinds of companies that account for most of America's job growth. These incentives include: a new 30-percent credit for R&D; 25-percent deduction for the purchase of new equity; indexing of the basis of new stock in such companies; expansion of expensing of investment in tangible equipment and scientific equipment; a minimum basis rule that encourages investment in new ventures and in companies with high growth potential; and other such incentives.

In addition to these targeted growth incentives I would note that prompt enactment of this entire 5-year deficit reduction package would itself help stimulate long-term economic growth with a half a trillion dollars in real deficit reduction. And let me repeat: The leaders here and I think that these are real deficit reduction figures. Long-term interest rates should be able to come down.

This package should be a strong component of a positive, responsible fiscal and monetary policy. I heartily thank the negotiators who have worked so long and so hard to develop this package. The bipartisan congressional leadership and I have pledged our very best to get this entire package signed into law by October 19th. As any such plan would have to, ours requires that virtually everyone contribute in some way. It is balanced, it is fair, and in my view it is what the United States of America needs at this point in its history. And we are united in our firm determination to see this program enacted.

I do not want to imply that some who have not been in the final negotiations are for every part of this. But I can only speak for my part, and then the top leadership here will speak. But I will simply say: This is priority. This is priority for our nation. This is something that the country is calling out for and world markets are looking for. And so, there will be some tough fights ahead; but I have pledged to the Speaker, to Congressman Gephardt, to Bob Michel on our side, to George Mitchell and Bob Dole and the Senate pro tem leader, Senator Byrd, that I will do everything I can to lay aside partisanship here and to take the case for this deal to the American people in every way I can. Sometimes you don't get it just the way you want, and this is such a time for me, and I expect it's such a time for everybody standing here. But it's time we put the interest of the United States of America first and get this deficit under control.

Mr. Speaker, I am grateful to you, the Democrats, and the Republicans that have seen that the interest of this country come first. Thank you for what you've been doing, and I'd appreciate it if you want to say a few words.

Speaker Foley. Thank you very much, Mr. President. I'll be brief in just echoing what you, yourself, just said, sir, that this is a package that your negotiators and the bipartisan participating negotiators from the House and the Senate -- ranking Republican Members, chairmen, and the leadership on both sides -- have sought to achieve. It's not going to be easy or simple to obtain the votes that are necessary in both the House and the Senate, the majority of both parties and both bodies, that will have to be found to enact this package -- and within the next 3 weeks. But we pledge our efforts with yours to convince our colleagues in the country that this is a strong undergirding of our economic future, our national prosperity, and joint national interest. And in that spirit, we are going to begin today to present to you legislation which will allow the orderly functioning of the Federal Government for the continuation of this next week, in preparing to take the first step to implement this program.

I want to pay a word, if I can, of special thanks to all of my colleagues who have participated in this, and especially to Dick Gephardt, the chairman of these budget negotiations, who, all sides -- Republicans and Democrats, Senators and House Members, and you, yourself -- have spoken eloquently to his patience and leadership. Thank you, sir, for your involvement and your determination to aid in the process of bringing this package and the interests of the country to final achievement.

The President. Now if I might ask Senator Mitchell and then Senator Dole, Congressman Gephardt, and Congressman Michel to speak.

Senator Mitchell. Thank you, Mr. President. Now comes the hard part. It's one thing to get a budget agreement among ourselves for which all involved should be commended. It's another thing to get the votes to pass it through the House and the Senate. That is a task to which we must now commit ourselves.

This agreement is a compromise. Both sides can accurately say that the agreement includes provisions they don't like. Both sides can also accurately say the agreement doesn't include some provisions they think should be included. Cutting the deficit requires difficult choices. But our nation's economic future requires that we make those choices. We have already debated too long. Now we must act decisively.

Senator Dole. Mr. President, thank you very much. And I want to thank my colleagues and again, particularly Dick Gephardt. The nay-sayers and the nitpickers may have a field day because the easy vote in this case is to find something you don't like and vote no. But in my view, we owe more to the American people than finding fault with what I consider to be a good, positive, solid agreement that, in my view, will help the American economy and demonstrate to the American people, who are sometimes somewhat cynical, that the Congress and the President of the United States can work together, and we can look ahead and we can do the right thing for our country. And so, I would hope that my colleagues -- and I speak now to my colleagues -- certainly will study this document very carefully, will give it their best effort, and when the role is called that we'll have a majority of Republicans and Democrats for this outstanding package.

Thank you, Mr. President.

The President. Thank you. Dick?

Representative Gephardt. Thank you, Mr. President. Forty years ago a mountaineer who joined in the first successful climb of Mount Everest explained the success by saying no expedition enjoyed better teamwork. To the Speaker of the House, Congressman Foley; the Senate majority leader, George Mitchell; to the Members of Congress who are here with us on the stage; to the administration and their representatives and the great staffs of all sides who worked so long and so hard with us: You have been heroic as we've made this climb together.

The American people are today asking: Why was this summit necessary, why did it take so long, and what did it achieve? If we are to enact this agreement -- and I think we must -- these questions must be answered persuasively and honestly. For 10 years we have chosen a course together that has created large deficits and limited our capacity to meet the needs of our people and the demands of a very challenging age. Today, we face a weakened economy and high rates of interest and inflation. Tomorrow, in absence of an agreement, massive across-the-board budget cuts would occur.

The alternative to this agreement is fiscal chaos. To meet our responsibility to America's working families, this summit simply had to succeed. What delayed us for months is what has divided us for a decade. The parties to these talks had -- and continue to have -- deep disagreements over values, the role of government, and the fairness of our taxes. But we all made compromise in the national interest.

To bring this process to a successful conclusion, all of us -- the American people and our national leaders -- must accept the responsibilities of the day. And as this debate unfolds I hope this will be said: that we achieved the largest deficit reduction package in our history, that we focused the national debate on whether the tax code will be based on everybody's individual ability to pay. The vital issues -- investing in our people, making our nation competitive, and realizing social justice -- will rise again on the national agenda, and then enactment of this measure will enable us to confront these important issues successfully in the years to come.

I thank you, Mr. President, and I thank all the members of the summit.

The President. Bob?

Representative Michel. Well, thank you, Mr. President, and my colleagues. I support the package wholeheartedly because I was one of the narrower group that, within the last 10 days or so, made some of the final decisions.

There may be some reservations with respect to some of our other summiteers on the platform. I think probably rightly so because we're making decisions that will reach far out, to 5 years. Everyone is entitled to know exactly what we have wrought in the printed word. As a matter of fact, I wasn't privy to the last few lines that were written early this morning.

But, on balance, when I look at what we were originally faced with -- and here we are refraining from increasing marginal rates and not touching the unmentionable out there, Social Security -- and then to have the incentives for growth that I see here and the expenditure caps over the next several years that are real and enforceable, it seems to me that in the alternative so much better that we've done what we've done, and hopefully that in the ensuing days we'll be able to sell a majority of the Members on both sides of the aisle in both Houses to give us the affirmative vote that I think is so imperative that we have before we adjourn.

Thank you, Mr. President.

The President. Well, thank you all very much. And let me conclude by singling out the White House team by name: Secretary Brady and Dick Darman, John Sununu, who stayed in there day in and day out with the Members of Congress. In my view they did an outstanding job, too.

You know, Senator Bentsen said in this meeting -- I hope it's not betraying a confidence -- that he hoped that I would do my level-best to take this case to the American people. And I told him inside what I want to repeat here: I will do everything I can to generate support from the American people for this compromise.

I am convinced that the American people do not want to see us continue to mortgage the futures of their children and their grandchildren. And as I say, compromise is the word here. All of us have had to do that. But to Senator Bentsen I said in there, and I would say it here publicly: I want the American people to understand how important we feel this is. I want them to understand this is real. It is not a phony smoke-and-mirrors deficit-cutting program. And I will do everything in my power to help the leadership, Republican and Democrat, get this passed in the United States Congress.

Thank you all very much for coming.