Press Briefing by Ari Fleischer

12:12 P.M. EDT

MR. FLEISCHER: Good afternoon and welcome to the White House Briefing Room. I have a lengthy series of personnel announcements that I'll make, and then I'll be happy to take Questions.

The President intends to nominate William Duffy, Jr. to be United States attorney for the northern district of Georgia. The President intends to nominate Maxwell Wood to be United States attorney for the middle district of Georgia. The President intends to nominate Edward Kubo Jr. to be United States attorney for the district of Hawaii. The President intends to nominate Steven Colloton to be United States attorney for the southern district of Iowa.

The President intends to nominate Donald W. Washington to be United States attorney for the western district of Louisiana. The President intends to nominate Thomas DiBiagio to be United States attorney for the district of Maryland. The President intends to nominate Jeffrey Gilbert Collins to be United States attorney for the eastern district of Michigan. The President intends to nominate Gregory Gordon Lockhart to be United States attorney for the southern district of Ohio.

The President intends to nominate Sheldon J. Sperling to be United States Attorney for the eastern district of Oklahoma. The President intends to nominate Mary Beth Buchanan to be United States attorney for the western district of Pennsylvania. The President intends to nominate Daniel G. Bogden to be United States attorney for the district of Nevada.

Penultimately, the President intends to nominate Peter W. Hall to be United States attorney for the district of Vermont. And, finally, the President intends to nominate Thomas E. Johnston to be United States attorney for the northern district of West Virginia.

And with that, I'm more than happy to take questions.

Q: For the record -- I know you touched on it this morning -- tell us now exactly why we're conducting biological warfare research, which, I grant, was started with the Clinton administration only for vaccines, antidotes, not for biological warfare. And you should go on the record.

MR. FLEISCHER: Helen, countering the threat of biological weapons is an administration priority and has been a priority of the United States government for a number of years. Unfortunately, the biological weapons threat around the world

is growing and it presents a real challenge to the United States, particularly a challenge in terms of protecting our men and women in the Armed Forces.

And as a result, we have a broad defense -- bio-defense capability, that includes medical countermeasures, detectors and protective systems, all of which are designed to protect American citizenry and American servicemen and women. The program is fully in accordance with the Biological Weapons Convention, and is designed at providing defensive measures to protect our population and our servicemen and women.

Q: And it has nothing to do with our rejection of this provision for enforcement and inspection measures?

MR. FLEISCHER: It is not related at all to the protocol, and it is allowable and fully permissible under the Biological Weapons Convention, which the United States supports.

Q: Wouldn't it have been allowed under the protocol?

MR. FLEISCHER: I have no information on that, Ron, because it has nothing to do with the protocol.

Q: What do you hope to get -- what is the purpose of the meetings with Lott and Daschle today?

MR. FLEISCHER: The President this afternoon will be meeting with Minority Leader Lott and Majority Leader Daschle to talk about the fall agenda and the President's hopes that progress can be made on a host of legislative priorities that focus on the economy, education, opportunities and security -- security meaning health security, Social Security, and national security.

It's a very busy fall agenda, but there are a lot of strong prospects for bipartisan accomplishment. And that's why the President will meet with these two leaders.

Q: What impact, legislatively and politically on the President, will the limping economy and the vanishing surpluses have?

MR. FLEISCHER: I think what the American people want to know is, is there a plan to deal with these problems. And I think the American people take comfort in knowing that the President does have a plan, he has put it into effect. It's centered around the stimulus for the economy of a tax relief package, the first part of which went into effect on July 1st when people, particularly those in the 15 percent bracket, received a lower income tax bracket rate; through the rebate checks of $300 and $600, which are only now making their way into the economy; and additional stimulus from tax relief, which is planned on January 1, 2002, as income tax rates come down again for all segments of society.

The President will also call on Senator Daschle today and others to support trade promotion authority. Many of the best-paying jobs in America are trade-related jobs, and it's very important for Congress to send a signal that they, too, care about the economy, and that's why trade promotion authority is important.

Q: But it's far from clear that the tax cut is going to jump-start the economy. You all have been talking about it for ite a while. Monetary policy -- that was always -- there was fiscal and monetary policy together, and the economy is still in a doldrum. The one tangible thing you can say is that the budget surplus is all but gone, and there's a lot of question about how you can pay for everything you want to do.

MR. FLEISCHER: Actually, you know, one of the most tangible things you can say is point to the estimators in the private sector who, across the political spectrum, whether they are Democratic or Republican private sector estimators, believe the tax cut will have a stimulative effect on the economy. And when they look at their models, they have actually added to growth as a result of the tax cut. So whatever growth will take place in this third arter and fourth arter, they believe it will be augmented directly as a result of the stimulus. And I think there's no question or debate about that.

But on the question of the surplus, the size of the surplus and whether that will dry up the money, again I just want to go over the numbers, because the proof is in the pudding in the President's budget. And both the congressional CBO, which is nonpartisan, and the Office of Management and Budget agree that under the estimates they have, Social Security will not be tapped in 2002. There is plenty of room for growth, to have reasonable spending increases in the President's budget, while still leaving Social Security in surplus and the operating budget in the surplus.

In fact, if you just take a look at how much money the government spent last year, compared to how much they'll spend in 2002, under the administration's budget, the amount of spending will grow by $107 billion. Spending in 2001 was $1.8 billion -- $1.8 trillion. In 2002, it's $1.9 trillion. So built into the budget is growth and spending at reasonable levels. If Congress goes beyond those reasonable levels, and spends too much, then it risks Social Security, and it can have a detrimental effect on the economy.

Q: The Senate Minority Leader plans to ask for the President's support of capital gains tax cut. Does the President think a capital gains tax would stimulate the economy?

MR. FLEISCHER: Well, the President looks forward to talking to Senator Lott about that topic, as well as a number of other topics, and listening to the Senator on ideas about the fall agenda and beyond. I think it's fair to say that economists, depending on how a capital gains tax cut is structured, do believe it can have a positive effect on the economy. It's early -- very early for the administration, in terms of its budget cycle for next year. Any ideas he hears now will be discussed within the White House.

And this fall, there will be a process in place between the White House and the government agencies to decide what will go into the President's budget, which he would submit to the Congress in sometime, most likely winter of 2002. That would be the budget for 2003.

Q: Ari, can you describe the phone call that the President apparently got from Senator Gramm?

MR. FLEISCHER: He has not talked to Senator Gramm.

Q: Will this discussion with Senator Daschle this afternoon -- will this be sort of an intense discussion, or is it just two potential fighters feeling each other out?

MR. FLEISCHER: This is part of their regular consultation. They -- I'm sorry?

Q: Are they coming to each other with a lot of numbers?

MR. FLEISCHER: I think they'll come to each other the same way they have throughout the year, that they're going to meet to talk about all of the issues that are pending before the two of them, and Senator Daschle has been very forthright about his desire to have bipartisan accomplishment. The President is heartened to hear that, and that will be the same spirit in which the President receives the Majority Leader.

Q: I guess what I'm driving at, is this the first negotiating session of them trying to get the budget bills passed? Appropriations bill?

MR. FLEISCHER: I don't think -- no, you can't refer to this as a negotiating session. Its point is much broader. The President has been encouraged by the manner in which Congress has taken up the appropriations bill so far. They actually so far have been adhering to the spending limits now that were agreed to in the budget resolution, and that's a big contrast to last year. And that's a very helpful sign and hopeful sign that budget integrity has been restored to the process and that they'll honor the spending limits.

Q: Ari, the Republican view on a minimum wage bill had been that it would be unfair to do it without some tax breaks for business to ease whatever pain might ensue. Is that the current White House view?

MR. FLEISCHER: We're going to look very carefully to work with the Congress on a minimum wage bill to make certain that it is fair. And the President does, as you know, support increases in the minimum wage. But there are talks on the Hill about attaching other items to it, and that all depends on what items they decide they want to attach.

Q: And if I can follow up. But the thing they wanted to attach was a tax break -- would be a further revenue loser, and there does not appear to be any room in the budget at this point for a further tax cut.

MR. FLEISCHER: Well, as I indicated, that's one reason why the administration is willing to hear specific ideas from people on the Hill if they want to attach anything to it. And one of the factors that goes into having a tight budget is it will force restraint on all parties -- not to engage in excessive spending, and also to review carefully any tax proposals to make sure that they're meritorious and that they led to growth.

Q: But isn't that the advantage, then, to a cap gains tax cut because it would be scored as revenue gainer and would actually increase the amount of money available and would either allow you to do another tax cut or at least bring in more money?

MR. FLEISCHER: There is no question, economically speaking, that that has been the history of capital gains tax cuts, that they do lead to a short-term boost in revenue. And estimators will differ about the long-term effects, whether they lose money or gain money over a sustained period of time. But it's another reason why the President will welcome the opportunity to listen to leaders on the Hill and hear their ideas.

But the President also will remind people on the Hill that fundamentals are now in place for the economy to come back as a result of the steps that the administration and the Congress took together to create economic growth. The current downturn began in the summer of 2000; here we are entering the fall of 2001. Historically, downturns last of one year, one and a arter. It's unusual for them to go much beyond one and a half years.

The combination of the Federal Reserve interest rates cuts, in concert with the tax cuts, which are now making their way through the economy, leads the President to believe that all the fundamentals are in place for the economy to come back and come back nicely.

Q: Over the weekend, I believe, Conrad had also said that capital gains could be a stimulative measure, and as you know, Senator Lott has suggested only a two-year, not a permanent, but a two-year short-term capital gains cut which, arguably, might not need revenue to gain revenue. Is the White House more amenable to a short-term capital gains cut than trying to do something permanent?

MR. FLEISCHER: Well, my previous answer covers that. That's more of a component or a subset of the question on capital gains, and I'd refer you back to what I just said about capital gains.

Q: And also, in your concern for the economy, why does -- or does the White House feel that funding that -- if you fund legislative priorities by using the Social Security surplus, that would have an adverse effect on the economy? Do you believe that, or don't you?

MR. FLEISCHER: Well, I think -- nobody has said it would have an adverse effect on the economy. Funding projects out of Social Security is something the President said that he wanted to avoid doing and he pledged not to do. But the President's broader point is that if Congress were to, once again, violate a budget agreement that it, itself, made, and go beyond the spending they agreed to, it's another sign that Congress is once again returning to the old ways of too much spending. And that would be a risk for the economy.

Q: But didn't he also say that you could use that in times of war or recession, and his own OMB Director last year -- last week -- said it would not be unprecedented to even dip into it with the growth rate of less than 1 percent? It doesn't even have to be a recession.

MR. FLEISCHER: Well, under, actually -- this gets technical, but under the rules of the Gramm-Rudman-Hollings Emergency Reduction Act, as you know, if you have two consecutive arters of less than 1 percent growth, not less than zero percent growth, but less than 1 percent growth, it does have an effect on caps and targets on Capitol Hill. So I think that's what Director Daniels was referring to. But that's not what the President was talking about when the President talks about tapping Social Security only in the case of war or recession.

Q: This morning -- just for the record, because I know you dealt with it this morning -- will there be a joint press conference with President Bush and President Fox? And two, who will do the readout of the meetings that are held tomorrow?

MR. FLEISCHER: There will be a background briefing today by a senior administration official. Tomorrow, Dr. Condoleezza Rice will do an on-the-record, on-camera briefing following the Oval Office meeting, as well as the meeting of the Cabinet groups that are meeting together. And then, also on Thursday you can anticipate President Fox and President Bush having some type of departure remarks before they leave the South Lawn for Toledo, Ohio.

Q: Will they take some questions?

MR. FLEISCHER: I think it's likely they may take a question or two.

Q: Will the photo op be open to scribblers tomorrow? Will the press be in -- will anybody besides photographers be in the photo op tomorrow?

MR. FLEISCHER: I'll have to review tomorrow's schedule. I don't remember exactly, Ron, on that.

Q: Would the President reject appropriations measures as they add up and do end up dipping into the Social Security Trust Fund?

MR. FLEISCHER: Well, there's no doubt that the President has told Congress they need to adhere to the budget agreement that they had made. If Congress adheres to those spending limits, then according to both OMB and CBO, it would not present any problems for Social Security in '02.

Q: Exactly. Which is why I'm asking what if they don't adhere to those spending limits? What's he going to do --

MR. FLEISCHER: The President has made it clear that he will veto any bills that bust the budget and spend too much. The President will protect Social Security and will protect the economy.

Q: Going back to this -- I know it's logistical, but I think it's been traditional that when there's a foreign head of state here for a state visit, that there is a joint news conference where both leaders take several questions. Why are you guys not doing that?

MR. FLEISCHER: Well, I've indicated they're going to have departure statements where they will take a couple questions, likely take a couple questions.

Q: It's not the same as a news conference, though. Is there a reason why you don't want to have a regular traditional news conference?

MR. FLEISCHER: You know, I think we're just using phraseology here. I think you've seen other news events where each person took three questions, something along those lines. So we're still working with our Mexican counterparts on exactly how the arrangements will be made for departure statements.

Q: Well, would you anticipate that it would follow that model, where each side gets approximately three questions apiece?

MR. FLEISCHER: I anticipate it will be just as I indicated, that they will have departure statements and take a couple questions on departure. I'm not prepared yet to speculate on the exact number of questions they will take.

Q: Also, Ari, given the new surplus numbers, is the President considering preparing to back out of his education or military spending re ests for FY 2002, or at the very least finding new offsets for the spending?

MR. FLEISCHER: That's why I went to the trouble of citing page 40 in the President's Office of Management and Budget Midsession Review. And it's very important to realize that the reason government spends money is not because it has a surplus, but because it has spending projections that build the increases into the budget.

For example, under the President's budget for 2001 to 2002, defense spending is projected to go up from $303 billion to $330 billion. That's a $27-billion increase in just that year. And we still have a $2 billion surplus outside of Social Security. Education funding built into the President's budget is slated to go up from $64.2 billion to $75.5 billion for education, training, employment and social services. So there are spending increases to fund the vital priorities that the President has identified in defense and education, for example, are built into a budget that increases.

After those increases are taken into account, then you have a surplus. And it's called a surplus because it's not needed because it's on top of the existing priorities. So the President's budget makes plenty of room to fund vital government programs at a healthy rate of growth while still leaving a surplus. The only threat to the surplus is if Congress would go too far and spend too much.

Q: So there will be no -- you don't think there's any need to pare those programs back, given that there are going to be a lot of other new spending re ests, the appropriations process has its own momentum?

MR. FLEISCHER: Well, these are the President's priorities and this is what he believes in.

But I want to disabuse people of that notion that just because the surplus has been reduced to the second-largest surplus in history, there isn't room for increased funding on vital government priorities. The surplus exists only after those spending increases are taken into effect and are made part and partial of the existing budget. The surplus is not necessary beyond that to have money to spend because it's already been built into the spending projections.

David.

Q: When you say the surplus is not needed, does that mean that the White House no longer considers debt reduction --

MR. FLEISCHER: No, I said the surplus is not needed beyond that to take into account the spending increases as part of the budget. I'm not saying the surplus is not needed.

Q: You would consider debt reduction a need and a high priority, still?

MR. FLEISCHER: As a matter of fact, it will be, under the existing budget, debt will be reduced by more than $100 billion this year. But don't turn the meaning of my words. I didn't say the surplus was not necessary. I said the surplus is not -- spending doesn't derive from a surplus; spending derives from the decisions somebody makes after those decisions are made to increase education, increase defense. What remains is the surplus. And the government still remains with the second largest surplus in history, and expect it to get larger next year.

Q: That's the Social Security surplus, it's not the non-Social Security surplus.

MR. FLEISCHER: It's both, of course.

Q: But it's a non-Social Security surplus. You have maybe $2 billion this year and --

MR. FLEISCHER: Well, the unified surplus is the second- largest in history. The unified surplus is the second-largest surplus in history. And David's point is it's as the result of a unified surplus that we're able to reduce so much debt.

Q: But your platform had been that the Social Security surplus is off limits for any other kind of spending, so only the non-Social Security surplus is what you can use to fund your legislative priorities, right?

MR. FLEISCHER: And that has been done.

Q: You're confident there will be enough in there to fund everything you want?

MR. FLEISCHER: Well, just as I indicated, spending will go from $1.8 trillion to $1.9 trillion from '01 to '02. After accounting for $100 billion increase in spending, the government still has a surplus in its operating accounts after spending, an additional $100 billion on important government priorities.

Q: That surplus is $2 billion this year, $1 billion the next year -- that's not a lot of wiggle room, and it sounds like you're saying my way or the highway, either it's my priorities and Congress really doesn't get a share in saying what to do with that tiny extra surplus. And if they step over the line, it's their fault.

MR. FLEISCHER: Well, the President will always work with the Congress to help meet his priorities. But not a lot of wiggle --

Q: To meet his priorities.

MR. FLEISCHER: But not a lot of wiggle room means that Congress has a fiscal straitjacket imposed upon itself. Not a bad outcome.

Q: On trade promotion authority, there have been suggestions from many in the Senate, I think including Daschle, that it might be a good idea to vote on that next year, while the House does it this year. Is that what he's going to do today, insist to Daschle --

MR. FLEISCHER: On which issue?

Q: -- on trade promotion authority. Is he going to insist that the Senate should finish that bill this year as well?

MR. FLEISCHER: The President believes that Congress should take up trade promotion authority and pass it this fall. The President thinks failure to pass trade promotion authority this fall would be a retreat from the United States' role in the world. That would hurt the economy and it would be an unwise delay that could hinder their chances of getting trade promotion authority passed. And I think you're going to see action in the House of Representatives this fall, and once the House acts, I think it might be very hard for the Senate to drag its feet on an item that important.

Q: Speaking of the U.S. role in the world, when is the next task force meeting on energy and environment and getting the agenda together for the Marrakech meeting, or a Kyoto alternative?

MR. FLEISCHER: The Cabinet-level work group has been continuing its efforts working on an alternative to Kyoto or ideas for what to present. As you know, there is no hard deadline about when they are going to have the results done, whether it would be before or after Marrakech.

Q: When is the next meeting?

MR. FLEISCHER: I'll have to get back to you on specific dates.

Q: On stem cell research, Senator Kennedy is having meetings on that. There's a question of there not being enough stem cell lines that are viable. What if there aren't enough viable stem cell lines? Will the White House consider changing its position?

MR. FLEISCHER: The President welcomes the congressional focus on stem cell. The White House looks forward to Congress reviewing the same issues that the President looked at in terms of how to advance science and lead to medical breakthroughs in a way that represents the moral fiber of our nation -- people who are concerned about research that comes at the price of destroying embryos.

So I think it's highly likely that Congress is going to get itself into the very same issues that the President looked at and saw, that there are two very important sides here. And from the President's point of view, what's foremost important for Congress to remember is that under what President Bush announced, for the first time we are now a nation that is going to spend federal research dollars on stem cell research.

It was previously prohibited, and according to the National Institute of Health, there are some 60 to 64 lines that can receive funding for stem cell research, which is a dramatic step forward from where our nation was just one year ago, in advancing the cause of science, and research in whether or not there is hope for breakthroughs in disease.

Q: Two international ones, please. On the Durban Conference, why do you think the groups meeting in Durban have been so harsh on Israel, but they have not, to my knowledge, criticized any other countries, such as Sudan, Afghanistan, Iran, IraQ: , or some of the others?

MR. FLEISCHER: Well, I would hesitate to assign motive, but it is an unfortunate throwback to the old days where these conferences worked in a counterproductive fashion. This has been a lost opportunity for America and for people throughout the world who are concerned about racism. And it's unfortunate that people in this conference brought it to the point where America and Israel had no choice but to leave the conference. And this has been a lost opportunity for people throughout the world who are concerned about racism.

Q: If I could just follow up, you wouldn't call what happened there motivated by anti-Semitism?

MR. FLEISCHER: Oh, I think there's no question that in a conference that should have been dedicated to fighting intolerance, the language that it has chosen to use in describing Israel is laced with intolerance.

Q: On the situation with the Afghan refugees in the Indian Ocean, do you have any thoughts on that, on the conduct of the various countries involved?

MR. FLEISCHER: I've got nothing to offer on that right now, at this moment.

Q: Ari, the following statement was directed to the presidency. ote: We have an 18-year-old son. We are trying to teach him to be responsible for his actions. You need role models. And my question: The President would not disagree with that, would he, that the Presidents and governors need to be good role models?

MR. FLEISCHER: I think he would appreciate, given the questioner, the context of the question. (Laughter.)

Q: Okay. It was a statement made by Governor Glendening about President Clinton. And Maryland's Republican Chairman, Michael Steele, has just called on Governor Glendening and his staffer, Jennifer Crawford, "whose salary the Governor has increased nearly $32,000 in less than three years, should reimburse the state treasury for the expenses they incurred on official trips while carrying on their clandestine personal relationship." And to ote my question: since the President spoke out on the ethical problems of Little League baseball -- (laughter) -- surely, Ari, the President won't fail to support this great GOP chairman and his concern about taxpayers' money being used by this married Governor for salary hiking and travel for his mistress, will he, Ari?

MR. FLEISCHER: Lester, I have nothing further to report since you asked the question last week.

Q: Well, I mean, this is a different thing. This is a thing that was directed towards the President. Now, surely if he's going to speak out on Little League, he's surely going to speak out on Big Maryland. There's more money involved in this, more misuse of money.

MR. FLEISCHER: I have not heard the President speak out on that topic.

Q: Ari, since the U.S. team in China now have failed to convince the Chinese not to sell missile technology to Pakistan or other countries, and the tensions are there on the two countries, and Chinese and Pakistan company, if China fails again to fulfill its promises, that means that sanctions can go beyond companies to the countries?

MR. FLEISCHER: Well, as you know, the United States acted in accordance with the law in sanctioning the Chinese company that provided technology to Pakistan. There is no question that the law is clear on that matter, and that any foreign entity that is involved in the transfer of controlled ballistic missile technology to what is called non-missile technology control regime countries -- and that's what happened in this case -- must be sanctioned. And the President followed the law in that matter.

And this is an indication of what the President has previously said, that in our dealings with China there are going to be aspects that are very positive that we will continue to develop, and we will. Those typically center around trade and trade-related issues. But other issues that involve proliferation of weaponry, or involve human rights abuses, the United States will continue to act and continue to speak out.

Q: Are there any reactions from those two countries?

MR. FLEISCHER: You may want to check with State on the reaction.

Q: Hey, Ari, I know there's going to be a background briefing, but on the record, there's been a lot said in the last few days sort of tamping down expectations on this meeting. President Fox himself, in a series of interviews yesterday, suggested that. Is the President looking at this as basically a symbolic opportunity to underscore the friendship -- two countries, little more than that?

MR. FLEISCHER: Well, the President is looking forward to the meeting to underscore the friendship between the United States and Mexico, which is far from symbolic. It's real, and it's tangential, and it's helped the American people, it's helped the American economy, and it's helped the Mexican people in their economy as well. I think it's a reflection that President Bush, having come from a border state, grown up in Texas and been Governor of Texas, has a very deep and personal appreciation for the importance that Mexico plays in the American way of life.

So he looks forward to welcoming the President of Mexico to the United States, for his first-ever state visit. And that's the context in which President Fox will be received.

Q: Does he agree with President Fox's assessment that any kind of meaningful immigration reform is going to be four to six years off?

MR. FLEISCHER: Well, I'm not sure exactly what the number of years will be. That very well may be the case. But what's important from President Bush's point of view is to continue to make progress and do so immediately. And that's why he has directed Secretary Powell and General Ashcroft to be working on this initiative, and how to welcome immigrants to the United States in a legal, humane and safe way. And it will take additional work.

Q: Ari, is it your view on this, there were much higher expectations when this first came up a few months ago. Have there been things that you would point to that have slowed down the process on this? Is it political opposition on Capitol Hill? What's the problem here?

MR. FLEISCHER: I think it's a reflection of the complicated nature of immigration issues, that all good intentions are also met by a very interesting reality on the ground, involving the rights of people to come to the United States and the obligations on people to come here legally, while recognizing that America has benefitted nicely from millions of people who have come here, who pay taxes here and are contributing to the American economy.

Thank you.

END 12:38 P.M. EDT