Press Briefing by Mickey Kantor, Secretary of Commerce Dr. Joseph Stiglitz, Chair of the President's Council of Economic Advisers, Franklin Raines, Director of the Office of Management and Budget, Laura Tyson, National Economic Adviser

The Briefing Room

11:12 A.M. EDT

MR. MCCURRY: This looks more like your crowd than my crowd.

Good morning, everybody. As the President indicated at the end of his remarks a short while ago, the U.S. Census Bureau today has released several reports, including a report on money income in the United States and poverty in the United States. The results, as the President indicated, are really quite extraordinary. To talk about them, I've invited Secretary of Commerce Mickey Kantor here. He has to leave. He has a scheduled appointment in a short while with the Chinese Trade Minister, Wu Yi. Dr. Joe Stiglitz, the Chair of the President's Council of Economic Advisers, also has some points to make about the report. And he'll take questions. Frank Raines, Director of the Office of Management and Budget, is here. We had hoped to have Dr. Laura Tyson, the President's National Economic Adviser, here, but she's actually meeting with Minister Wu at this very moment.

So, Mickey, it's a pleasure to have you here. Thanks for coming.

SECRETARY KANTOR: Thank you, Michael.

Q: Are there going to be any presidential debates?

Q: Yes, what's the latest on the debates?

SECRETARY KANTOR: I'm here to talk about income and poverty in the United States, and if we could hold that for a more appropriate time.

Q: This is appropriate.

SECRETARY KANTOR: Today's economic news demonstrates clearly and in a straightforward manner that the American people are moving ahead in our economy for the first time in years. These two reports came out this morning, prepared by the Bureau of the Census as part of the Department of Commerce. This is the annual study of income and poverty done every year at this time. It tells us that in 1995 the income of our households rose and that the poverty rate and the number of people in poverty fell for the first time in six years.

The Clinton administration has turned the trend around as America's income is rising again. The median income of American households rose by almost $900 after inflation -- let me say that again, after inflation -- to over $34,000 in 1995, following an increase in 1994, as well. That's a 2.7 percent gain after inflation during 1995. This is the largest increase in median family income since 1986 -- that's 10 years ago. We haven't had two consecutive increases in the median household income since 1989, and the median income of families headed by women rose by five percent, or by over $1,800.

The poverty rate fell in 1994 from 15.1 percent to 14.5 percent and in 1995 fell again to 13.8 percent. That's the largest, largest two-year decline since 1973; that's 23 years ago. That's the largest one-year decline since 1984.

There are now 3 million fewer poor people in America than there were two years ago -- 3 million fewer poor people in America than two years ago. Thank you. I'm sure that Chairman Stiglitz and Frank Raines will have some comments, and I think Laura Tyson will be joining you in a few minutes. Thank you very much.

Q: Fifteen million people are below the poverty level.

Q: I've never known you to run from the microphone, Mr. Secretary. (Laughter.)

CHAIRMAN STIGLITZ: He had a meeting; he really did.

Q: Did you have a statement, or can --

CHAIRMAN STIGLITZ: Yes. Let me begin with a statement and then --

Q: What can you tell us about the debates? (Laughter.)

CHAIRMAN STIGLITZ: No, I can't -- no, I can't tell you about the debates. (Laughter.)

Today's report contains some dramatic news about living standards in the United States. For the past two decades, inequality had been rising and median incomes have been stagnating. In particular, from 1989 until 1993, median household income fell substantially and poverty rates rose. Nineteen ninety-four, 1995 marked not just a slowing down in those trends, but a clear reversal.

Today's data for 1995 solidified our confidence that poverty is down sharply and incomes are rising. And the improvement is broad-based, affecting all segments of our economy -- blacks and whites, young and old, male and female, single and married households, and those at the top, as well as the bottom, of income distribution. In fact, some of the largest percentage gains were experienced by those at the bottom. Let me review a few of the highlights, and some of these were touched upon by Secretary Kantor.

First, on household income: real median household income increased by almost $1,000, the largest increase since 1986, with even larger relative income gains for blacks and female-headed households. Households at all income levels experienced gains in 1995 with 20 percent of households with the lowest incomes experiencing almost a five percent increase. Income growth in 1994 was similarly broad-based with large gains at lower incomes.

To contrast this, between 1979 and 1993, incomes for the lowest-income households fell by almost eight percent. Reflecting the disproportionate gains in incomes for low-income households, income inequality fell significantly in 1995. The decline in the common measure of inequality, the GINI coefficient, was the largest since 1968. The poverty rate is another important measure of inequality, and the poverty rate fell to 13.8 percent. This was down significantly from 14.5 percent in 1994, and from 15.1 percent in 1993.

The one-year decline is the largest since 1984, and the two-year decline is the largest since 1973. The declines in the number of children in poverty and the black poverty rate were even larger: one percentage point for children and 1.3 percentage points for blacks. In fact, the black poverty rate fell below 30 percent for the first time since 1959, when the current data series begins.

Similarly, the elderly poverty rate fell to its lowest level, down 1.2 percentage points from 11.7 percent to 10.5 percent. In fact, elderly poverty was lower than that for the adult population as a whole for the third year in a row, and a major reversal from the pattern over the previous 20 years.

In conclusion, the numbers released today illustrate the benefits of continued economic growth with low inflation. These numbers show clearly that we are finally beginning to share the benefits of growth with all segments of the population. This was an important goal of President Clinton, and we will continue to work to sustain these gains.

Q: How many people are still on poverty in terms of millions, not percentage?

CHAIRMAN STIGLITZ: The number of people in poverty?

Q: Below the poverty level.

CHAIRMAN STIGLITZ: Below the poverty level.

Q: What is the poverty level these days, $15,000?

CHAIRMAN STIGLITZ: What is the exact number -- $15.5? It's adjusted every year for inflation and so, as you say, it keeps going up.

Q: Now, $15.5 is the answer to which question?

CHAIRMAN STIGLITZ: Fifteen five is the poverty level.

MR. RAINES: There are 36 million people in poverty in 1995, a drop from 38 million in the prior year.

Q: Give me that again?

MR. RAINES: In 1995, 36.43 million people in poverty, in 1994 was 38.06 million in poverty. So it was a 1.6-million-person drop over -- in the one year. So it's --

Q: And how did the level change between those two years, or was it $15.5 thousand --

MR. RAINES: It goes up for inflation. It's a function of cause. So this is in real terms. In real terms, there's a real difference for people. It isn't just an artifact of the poverty rate going up.

Q: What was the dollar amount for '94?

MR. RAINES: Of the poverty line? I don't have that here.

CHAIRMAN STIGLITZ: All our data is expressed in constant 1995 dollars, so it doesn't -- the tables don't --

MR. RAINES: We can get that for you. I just don't have it off the top of my head.

CHAIRMAN STIGLITZ: We can get that for you -- but the tables already have the inflation built into the numbers as they're expressed.

Q: Joe, how does this survey define income, first of all; and, second of all, is it before tax or after tax?

CHAIRMAN STIGLITZ: These are before-tax numbers. There's a whole series in this book, "Poverty in the United States." And the other book is "Money Income in the United States." There actually are something like 15 different definitions. So if you want to ask --

Q: So the median income would --

CHAIRMAN STIGLITZ: All these incomes are incomes before tax.

Q: And these are salaries and wages, or --

CHAIRMAN STIGLITZ: No, these are comprehensive. These are comprehensive measures of income. They include all the sources of --

Q: Do you know what the bottom line is? The point is, the President raised taxes. We know state and local taxes are higher. So are people actually taking home more money, or are they just getting more in the gross?

MR. RAINES: No, for these -- the people affected by these numbers there was, in fact, not an increase in taxes but a decrease in taxes. In fact, these numbers do not include the EITC. If they did include the EITC, then the number of people in poverty would be 3.7 million lower. So that from the standpoint of the tax policy, the biggest item that was in the President's tax program, affecting the most people, was the EITC. For people at the upper income who did see increases in their taxes, their income also has gone up. So the income gains have been across the board. The biggest impact, obviously, in these numbers is showing up for people at the median and below.

Q: In terms of the median income, are people taking home more money now?

MR. RAINES: We'd have to get you -- the Census does not do this on an after-tax basis, but based on the structural change in the tax code, if you're talking about the median family or below, the answer I think is yes.

CHAIRMAN STIGLITZ: They're taking home more.

MR. RAINES: For people who are very high income, their take home is more now than it was last year. But they in fact did see that they were paying higher taxes. But that was a very small group of people at the very top of the income.

Q: Does it have relationship, now these figures, to the signing of the welfare reform bill, the repeal bill?

MR. RAINES: Well, what it does show is that having a strong economy goes a long way to making things like welfare reform work, because we're seeing a decline in poverty in female-headed households, which is quite extraordinary, we're seeing a decline in the number of people in poverty, so the number of people who would be seeking welfare would be lower. And we've seen declines in actual welfare population. And you could debate whether is that happening because people are being pushed off of welfare or is their income growing and growing them out. What this data seems to indicate is that because of their higher incomes fewer people are having to sign up.

CHAIRMAN STIGLITZ: The single number there that is most related is the fact that female-headed households had their real income -- their median real income went up by 4.5 percent. So they were doing better. And that is consistent -- as I say, consistent with the fact that welfare rolls are down.

Q: What is the relationship between these income numbers and the level of inflation now and the potential level of inflation in the economy?

CHAIRMAN STIGLITZ: See, all these numbers are adjusted for inflation. The one aspect of this that may be relevant is, if there is a slight bias in the measurement of inflation that some people have suggested that would mean that real incomes are actually going up higher than these numbers would suggest. So that improvements are even better than these numbers.

MR. RAINES: But I think part of what you may be getting to is that what's clear is that because we've got low influence now, this improvement is not occurring because of an inflating of the economy. This is real growth going on in the economy at a steady rate that is now showing up throughout the income range. So this is not the result of a booming economy that's being kept going by inflation and that in a blooming economy, people say, well, then, even the lowest income will be sucked in. This is a very steady expansion of the economy that is benefitting people up and down the income stream.

Q: Just a housekeeping question. The sheet of paper we've been given saying "Census Bureau Report on Income," is this from the Census Bureau, or is this White House --

MR. RAINES: No, that's here. That's a White House Document. This is our summary of that. It's just a helpful summary for you.

CHAIRMAN STIGLITZ: To draw your attention to something you might --

Q: -- the second line says on the right track -- (laughter.)

Q: That should have been your clue.

DR. TYSON: The Census Bureau is doing one, too.

Q: Incomes are no longer stagnating. Why? Is the employer suddenly getting more generous, why is income suddenly going up?

CHAIRMAN STIGLITZ: Well, there are a number of factors that go into this. There is evidence that real wages are beginning to rise, that productivity is increasing, and one of the good things about productivity increasing is that you can get increases in real wages without inflationary pressures. And so, I often describe this as sort of this golden situation where wages are increasing faster than inflation, so real wages are going up, but not so fast that they're putting inflationary pressures that would lead to kinds of interest rate increases that would dampen economic growth.

MR. RAINES: And you've seen some of these numbers in the shorter series that have indicated that real wages may be rising. This is the first one that looks back over a whole period of a year and says, in fact, it happened. It wasn't just showing up in one survey.

DR. TYSON: We have a group of cracker jack research people over here, and we have been able to come up with the answer to the question of the poverty line in 1994 and 1995. Nineteen ninety-four -- this is for a family of four, size matters here -- $15,141. And then for a family of four in 1995, $15,569. And you can see that these are long reports, and we've only just gotten them ourselves. So we're doing the work as you ask the question.

Q: Mr. Kantor talked about the poverty rate going from 15.1 to 14.5, to 13.8. What is the poverty rate? That's a percentage of what to what?

CHAIRMAN STIGLITZ: There's this level that was determined a long time ago that said, basically, people who are below this level really can't live in a way that's decent.

MR. RAINES: Of total population.

CHAIRMAN STIGLITZ: And it's a fraction of the total population that lie -- whose income lies below that. And if you're doing it on families, it's a fraction of families that lie below that. And that number is adjusted for family size. That's why when Laura mentioned -- she said it was a family of four; there would be a different level if you were a single person.

Q: So is 13.8 a whole bunch of single people, or is it the --

CHAIRMAN STIGLITZ: It's households, so -- and it takes account some households at one person, some people are two-people households, and it's looking at that ratio for households.

Q: But it doesn't include EITC or transfer --

DR. TYSON: No, but you know what? You can. There's actually a very -- in the "Poverty In The United States" document, if you go back to Table C-3, there's a long table which actually gives poverty status of families by very different income categories. That is income characterization, so you actually can include capital gains, exclude capital gains, money income before taxes, money income after taxes, money income with EITC, so that you actually can do the calculations in a variety --

MR. RAINES: The one thing is that this is the traditional measure. If you add EITC, you add non-cash -- the numbers only get better.

DR. TYSON: They get better.

MR. RAINES: They don't go the other way. Everything else gets added in, and you drive the numbers down. I mean, it's just a function that is showing that actually these programs do good for people.

Q: Do these numbers dampen your argument for the need for a middle income tax cut?

MR. RAINES: Dampen?

Q: Well, I mean, does this -- how does this square with your continued argument that --

MR. RAINES: Now, remember, the President's proposals with regard to a tax cut, particularly the ones aimed at families, are how to further increase disposable income of people. And what this is showing is that the economy is providing a very strong base and that the impact of the taxes, particularly for children, will definitely go into improving the ability of the family to support themselves and not simply be remedial, because the economy has not provided them with sufficient income.

So what it does is say, you're going to have a real impact from it. You're not simply making up for the lag in earnings.

Q: The economy is growing and in effect the median average -- the median household is bringing --

CHAIRMAN STIGLITZ: A very large proportion of the tax cuts are focussed at trying to keep the economy growing by, for instance, having funds that are targeted to education, which are an important ingredient to maintaining economic growth. The other aspect is that there was a significant decline in real median income between 1979 to 1993, and we are in the process of making up for that. But that was a significant decline.

Q: Where are we compared to the '79 level, how close? How far are we down from that level of median family income in '95 dollars?

DR. TYSON: Which year do you want?

Q: Either '79 or '89, whichever.

DR. TYSON: In '79 the median household, four person, in real terms, that is 1995 dollars, $33,901. By 1995 it was $34,076. So it's a slight improvement. That's a very long period of time. I think that gets right to the issue of the fact that what we are saying here is there was a long period when there was no sustained increase in median family income in real purchasing power terms. We seem to have been turning a corner on that because we're in a sustained period of expansion now. The numbers in '94 and '95 show improvement after a period of sustained decline from '89, in particular, to '93.

This is a time to continue on the economic course we're on. And there is really no argument here for not continuing with the commitment to middle income tax relief as part of that course.

Q: Is it possible to tell how this increase would compare to, say, the same period in other recoveries?

CHAIRMAN STIGLITZ: Yes, we've done an analysis of that, trying to use business cycle variables to predict what the increase was going to be, and we had expected a modest increase. This is stronger than we had expected. By the same token, the strength of the economy in 1996 would indicate that this year things are even better in a significant way.

MR. MCCURRY: Last question.

Q: While you're here, Mr. Raines, could I ask you a question on appropriations? I understand you sent around a letter to the Departments about shutdown preparations and Senator Daschle is talking about the need for a C.R., as opposed to getting an omnibus bill done. Can you talk about the prospect for how long a C.R. would be needed and whether you anticipate that they would be able to get their work done next week or what?

MR. RAINES: Well, it's our hope that we'll be able to get an omnibus bill done without the need for any interim C.R. And the memorandum I sent out was basically routine. We're coming near the end of the fiscal year. We have some appropriations bills that haven't been approved. And people need to begin to think about what to do in the, we hope, unlikely event that we would need to do something. But our hope is that between now and then that we can get it done. We don't see any reason why it can't be done.

Q: Now the first, do you mean, of October?

MR. RAINES: By the first. We see no reason why the Congress can't complete its work and complete work on the omnibus appropriations bill. So we're available, we'll be working. And we just hope that we could wrap it up.

Q: Can you talk about the last remaining stumbling blocks. What are the largest stumbling blocks left, as far as the administration is concerned?

MR. RAINES: Well, we have I think six appropriation bills that aren't done. So that's a lot of work to get done between now and then. We have communicated very clearly to them what our expectations are. And we, frankly, have been waiting for them to complete their work so that we can go forward and begin negotiations with the chief of staff and myself and the members on the Hill to get it done. So we're working every day at it but, quite frankly, we can't go forward until they finish determining what their position is. When they are ready we'll be ready to move forward.

Q: Well, have they indicated to you how it's going in terms of the Republican Congress?

MR. RAINES: We think the indications we've gotten have been quite favorable in many respects in that they are honoring the President's commitments and priorities and to a very substantial degree. As you know, we requested from them about $6.5 billion of additions to the appropriations bills that they have been working on, mainly focus on the President's priorities on education and training, the environment. And we have seen indications of responsiveness and we find that very encouraging.

We hope that that will continue through all the bills. And if it does, then I think we will be able to finish the government's business in good time. If, for some reason, that responsiveness were to stop, then I think we've got to deal with next week. And I think it would be our preference not to have to do that, but if it's necessary to get it right, all of us will be here next week.

Q: Thank you.

MR. MCCURRY: I want to thank Dr. Stiglitz in particular for being in something other than a holding pattern. Nice to have you here.

END 11:35 A.M. EDT