Remarks to Business Leaders on the Federal Budget Agreement

Thank you very, very much for coming over. I met this morning with the Republican Members of the Congress to underscore the necessity for quick and decisive action on the budget agreement through the bipartisan leadership in both Houses. And I again am calling on the Congress to act, and act soon, on this vital legislation. Tonight I'm going to take the case for this budget agreement to the American people on a national television address at 9 p.m.

But to you all I want to say I appreciate the past support. I know that there are provisions in this that cause different people different problems, and I understand all that. And I will say, in achieving this agreement, everybody has had to compromise. I did it because the country, frankly, is at stake here. And every once in a while in one's Presidency, I think it dawns on the incumbent of the Oval Office that you're not going to get it exactly your own way. In this case, my party does not control both Houses of the Congress. But as I look at the ever-increasing deficits, I think it is time we do something and do something serious.

And with that philosophy has emerged this budget agreement. And I don't want to sound sanctimonious about this, but I was elected to govern. I was elected to make things happen. And we're trying to do that in the international scene, and where now it's time to come and do something on the domestic scene that will benefit all Americans.

I think -- respecting the differences that do exist not only in this room but in the Congress -- I think we all realize the time has come to get America's fiscal house in order. And I honestly believe -- and this is what I came over to tell you -- that this compromise is a major step towards this goal. By 1955 [1995] it will bring government spending as a percentage of gross national product to its lowest level since 1966.

And let me tell you what the budget agreement will do. Overview: The 5-year bipartisan budget compromise will boost our economic vitality in the long run. It will give small- and medium-sized business a shot in the arm and create jobs. It will reduce the deficit by $500 billion, the single biggest cut ever agreed to, and that is the prerequisite for bringing real interest rates down. I believe firmly that if we get this agreement through without watering it down that interest rates will come down.

The budget agreement raises the prospect of a long-term healthy economy. It raises the potential for growth. It raises America's ability to compete. But it does not raise personal income tax rates. I was able, with the help of the negotiators -- or put it this way: They did all the heavy lifting on it but held the line on tax rates, which is something that I feel strongly about.

On the growth incentive side, the agreement includes incentives for oil and gas development. If there ever was a time when we needed to become less dependent on foreign oil, it's now, and I think these incentives can help in that direction. Incentives for the development of enterprise zones to create jobs and opportunity and, specifically, to keep small business competitive.

So, there are small business incentives that I'd like to ask you to look at very carefully: a 30-percent research and experimentation credit, tax indexing for individuals who buy stock in small corporations, a tax deduction for investment in small corporations, and an expanded ability for small businesses to expense certain scientific equipment.

On the domestic cuts -- and here I think everybody in this room, whether you agree with me or not, knows that I wanted to get a capital gains cut. I also wanted to hold the line on tax rates. We're half successful, but we have some incentives here that I think will accomplish some of what I had in mind when I spoke about the growth in jobs and opportunity that would come from capital gains. So, look hard at these incentives.

Domestic cuts: The agreement will cut the projected Federal deficit by half a trillion dollars, with nearly $120 billion in real and enforceable spending cuts on entitlement and mandatory programs. And I'll ask -- John and the others here are well equipped to give you the details on this. But we feel these are real and enforceable spending cuts, and they do have teeth. For the first time, they will be guaranteed in law. No smoke or mirrors in this category here.

Now, let me just say, if we do not reform entitlements to bring their growth under control, as this agreement does, we'll never be able to solve the whole problem of the deficit. America's going to be unable to invest in the future because the entire budget would be gobbled up by entitlements and also interest on this ever-increasing debt.

On military cuts: Although the defense budget is cut by $67 billion over 3 years, and then more over 5, the Persian Gulf forces will still get the backing that they deserve to accomplish their mission. And frankly, I am one who happens to believe we need a strong defense and have always supported defense spending. I think everyone in this room is realistic in that defense was going to take a hit, but it comes out better than I thought it would. And of course, this is causing strains on some who disagree as to whether we ought to have a strong defense spending or not. But here's one where these negotiators have done an extraordinarily good job.

On budget reform: The budget discipline of Gramm-Rudman will be extended for 5 years, and the agreement includes substantial budget-process reform. Once again, I didn't get everything I wanted. I've gone around calling for a line-item veto. That one never got out of the chutes, frankly. But I still would like to have it. It's not part of it, but we do have some substantial budget-process reform.

Now, if Congress spends the money it doesn't have, then a minisequester will come into effect and will cut it for them. So, for the next 5 years, all discretionary spending by Congress is capped.

And for the first time, mandatory entitlements, which have been the biggest source of spending growth, will be subject to a sequester to keep their growth under control. New entitlements will be subject to a pay-as-you-go system; they can't grow without offsetting cuts or revenues to cover their cost.

The budget is tough; it really is. It is fair, and again, it really is. It is a solid package to boost economic growth and solve long-term problems without having the burden fall entirely on any one group. The time has come to move beyond the narrow interests and put the broad interests of the United States first.

Most importantly, this budget agreement is our last, best chance to get the Federal budget deficit under control. To all the people that disagree and the people on the sidelines that are rushing out and having their press conferences and the critics, let me say this: You can pick the package apart, but you cannot realistically put a better package together.

Again, the philosophy that I was elected on runs out of gas in terms of votes in the United States Congress. And I think everybody here -- and I've had enormous support for the various men and women in this room, strong support, who support me on difficult calls on veto overrides. But to get something done, to have something positive happen and have it happen in anything like timely fashion, I will say once again, there's been some compromise here. But we've tried in many ways, through single pieces of legislation, to get some of my philosophical underpinning for the economy put into effect. And we've tried hard, with the help, as I say, of people here. And we've simply failed because the votes aren't there. But here's a package that I think preserves much of what I believe. I've had to give some. We've taken some. And I just came over to strongly urge your support.

I'm grateful to the Vice President for his advocacy of this program up on the Hill. He did a superb job yesterday. I want to give a vote of confidence to all sitting up at the head table here -- the dais or whatever we call it -- who worked so hard on this. But John Sununu and Nick Brady and Dick Darman spent endless hours, endless hours, trying to hammer out the best possible deal; and I think they've done exactly that.

So, it has my enthusiastic support. Again I would like those who have reservations to look hard at it, to study it, to consider the fact that alternatives have been tried and we weren't able to get them through. And then I would like to ask your strong support for this package. The country is at stake here, and we need you. We need you bad.

So, thank you all very much. And now for the experts. Thank you.