Statement by Press Secretary Fitzwater on the President's Meeting With House Republican Leaders

The President met for nearly an hour and a half this morning with Republican congressional leaders of the committees of the House of Representatives to discuss the budget. This group parallels the Senate Republican ranking committee members that the President met with on Tuesday.

The President said: "The country needs a 5-year, $500 billion deficit reduction program to be enacted this month. The largest portion of that deficit reduction program must come from spending less, not taxing more. The savings must be real -- no smoke, no mirrors -- and the savings must be enforceable. And in signing the short-term continuing resolution, I stated these and other tests that a reconciliation bill must meet. I will not sign a reconciliation bill that fails these tests."

The President addressed the issue of tax rates, the bubble, and capital gains:

"We have been willing to explore a compromise if it were balanced and fair; that is, if the capital gains incentive were really strong and the rate change helped those in the bubble.

"Over a month ago, I authorized my negotiators at Andrews to explore such an option -- up to 31 percent on the rate in trade for a 15-percent capital gains tax -- if it could be part of an otherwise satisfactory $500 billion package. They were unable to negotiate such a compromise. Indeed, the idea was opposed not only by Democrats but also by some of the same Republicans who now favor it.

"I do not believe such a compromise is now possible. Indeed, I'm quite concerned that pursuing it in the current context may not only fail, it may legitimize something farther to the left that we cannot accept.

"In any case, I will not tolerate `bursting the bubble' by raising rates to 33 percent. I believe that would mean far more than just `taxing the rich.' It would start us back on the path toward higher income tax rates for everyone. I cannot accept that."

The President pointed out that the administration supported the bipartisan budget agreement, and he still feels it is a sound basis for agreement.

The President said the ball is now in Congress' court. He said that if Congress fails to pass a satisfactory reconciliation bill by October 19th, he will withhold his signature from any business-as-usual continuing resolution.