Remarks and an Exchange With Reporters Following a Meeting With Congressional Leaders

The President. I wanted to just make a brief opening statement and then take a couple of questions. I had the opportunity today to brief the bipartisan leadership group in Congress about the trip to Japan and Korea in terms of what was achieved at the G-7 meeting and what was achieved in the new breakthrough on our trade relations with Japan and the national security issues, reaffirming America's role as a Pacific power and our commitment to the security of Japan, Korea, and our other allies in the region.

I have just come from a bipartisan meeting of House Members and Senators from the States affected by the floods. And I was grateful to see the committee leaders there, even though many were from States not affected by the flood. I think it's fair to say that based on the leadership luncheon, or meeting, and the meeting I just came from, that there is a bipartisan commitment in the Congress to aggressively push the flood relief package. And for that I am grateful to Senator Mitchell and to Senator Dole and to the Speaker and Mr. Gephardt and Mr. Michel and the others. I think there's a real feeling that this is something we ought to do together as a nation. And I appreciate that.

I want to reiterate that we will be aggressively working in the next few days with the Governors and the others in the respective States to work through the practical problems, as well as to get the most up-to-date damage estimates in the event that the bill moving through the Congress needs to be modified in its appropriations amounts.

If there are any questions, I'd be glad to take them.

Disaster Assistance

Q. Mr. President, you've asked Congress for $2.5 billion in disaster relief. And yesterday the Director of FEMA and others have put that figure—[inaudible].

The President. First of all, let me emphasize a couple of things. The Federal Government does not reimburse 100 percent of the losses of these programs. Some of that has to be done from private sources; some of it has to be done from local match. Secondly, the ongoing budgets of many of these Departments, the Agriculture Department, for example, and FEMA, for another, contain funds which will be in the ordinary course of business directed to the area where it's most needed. So some of the ongoing budget will take care of this.

Now, in answer to your specific question, I have consulted with the leadership about that. The 1990 budget bill plainly concede of genuine emergencies being funded outside the budgetary process. And I think it's almost universally acknowledged now that even though we don't have the specific figure, this year's deficit will be quite a bit lower than it was estimated to be in January because we're working so hard at reducing the deficit that interest rates are down and therefore the cost of servicing our debt is down. So I think we can handle this.

I have heard the general principle advanced, it would be nice if we paid for it all with offsets, but I haven't seen any specific suggestions. And in the absence of those, I think we should just take the '90 law and proceed as is. If Senator Mitchell or the Speaker or Mr. Gephardt or anyone else has a different idea, of course, I'd be glad to hear it. The most important thing is that we get the aid out to those folks as quickly as possible.

Economic Program

Q. [Inaudible]—and what advice are you giving to the leaders about how to resolve the—

The President. What was that last question?

Q. What advice are you giving to the leadership about—

The President. Well, first of all, there is a general consensus that we ought to make this the biggest deficit reduction package the country's had, and that means hard numbers and good figures. The number that was adopted in 1990, I think, is now generally conceded was not as firm as it might have been. And also there was a big economic slowdown, and the health care cost increases were greater than originally thought. But I think this is going to be a more solid plan.

How it's resolved is something that the conference will have to work out. I'm going to be giving them some advice, but it won't be inconsistent with what I've said before. I want a very progressive plan. I want the deficit reduction. I want people who can afford to pay, whose taxes went down in the eighties, to pay their fair share now. I very much want some of the incentives in this plan that were in the House bill. I hope some of them can be put back in the Senate bill. I think that it's important that people who work 40 hours a week and have children in the home be able to be lifted out of poverty rather than taxed into it. I think it is very important that we have incentives to grow the high-technology sector of our economy, that's the R&D and the new venture capital gains tax that Senator Bumpers has long championed, along with others. There are several things in there. The empowerment zone issue is very important to me. It goes very closely with the community development bank proposal we made today to generate jobs and growth.

Keep in mind the ultimate purpose of deficit reduction is to improve the economy by getting interest rates down, freeing up tax funds that we would otherwise have to spend on serving the debt, and improving the climate for new jobs. It's also clear that we have to have some investment incentives. People have to take this money that we're going to save through reducing the deficit, turn around and invest it in the economy. And if you raise tax rates on upper income people and then you provide only a very targeted way to in effect lower their tax burden by having them create jobs, then you win either way, because either way you reduce the deficit and you improve the economy. That's what we're going to try to do.

Q. [Inaudible]—part of the reason you supported obviously is for the—[inaudible]. You haven't talked very much about other reasons why you might want—[inaudible]. What are the other reasons—

The President. Well, I think it's sound policy. We have the world's lowest energy levies. And we're trying to promote conservation and a pure and cleaner environment, which is the reason we proposed it in the first place. But it was proposed, obviously, to help close the gap to meet our deficit reduction targets also. And the conferees know how I feel about it.

But the number one thing is we have got to produce a growing economy. And the deficit reduction package is absolutely critical to that. Let me back up and say this is the first time in 10 years plus, the first time since 1981 an American President has gone to a meeting of the world's seven great industrial powers and not been criticized because of the American budget deficit. This time the statement complimented the United States for taking aggressive action to bring down the deficit and acknowledged the responsibility of other nations to try to help us grow the global economy. That would not have happened if the House and the Senate hadn't passed versions of this deficit reduction package.

And that is the central message out there. People think, who have observed things for years, that we are doing something serious to change the climate in Washington, to improve the economy, and to move us off dead center. I don't want to say too much to prejudge the enormously difficult work the conferees have to do to reconcile the differences between the Senate and the House version. I want to see how they can do. And I will give them my advice, but I think the more, right now, they can be left free to do their work and consult with me, the better off we'll be.

Disaster Assistance

Q. Mr. President, a follow-up on both the numbers. On the flood bill, you all sent up a package of $2.5 billion but concede it will go much higher. Now, the new numbers are $5 billion, as high as $10 billion. Are you all working with a new number?

The President. Those numbers are numbers for estimated aggregate damage in the area. Let me say again, point one, the Federal Government has never compensated natural disasters a dollar-for-dollar for every kind of disaster loss. There are some personal losses, for example, that you can only have low-interest loans for, the actual out-of-pocket costs of which are less than the loan. There are other costs that have to be matched by State and local government, although the Federal Government has the power under certain extreme circumstances to waive some or all of it. There are other losses that simply aren't covered by any Federal law. So there is a big distinction to be drawn between the aggregate loss and what is normally compensable by our Federal programs. The second thing I want to emphasize in this, that some of these losses can be covered by the ongoing programs in the Federal Government. And I guess I should add a final point, which is that we won't know the total dimensions of the Federal-excuse me, the agricultural losses, until very near the beginning of the next fiscal year. So some of them may come in the next fiscal year as well.

Thank you very much.