PRESIDENT CLINTON'S 1999 STATEMENTS

PRESIDENT CLINTON'S 2000 STATEMENTS

1. Remarks by the President in Addressing the Future of Entitlements Conference, Bryn Mawr, Penn.,-- December 13, 1993

Ladies and gentlemen, it's a pleasure for me to be here. I have looked forward to this conference with great anticipation for some time. I want to thank Congresswoman Margolies-Mezvinsky for getting this together and for inviting me here. I thank President McPherson and this wonderful institution for hosting us. (Applause.) I'm delighted that Speaker Foley and Congressman Penny are here for the Congress; and Senator Kerrey and Senator Walker, your own senator, are here to talk about these important issues.

I want to also thank all the people who helped to put this conference together and to all the people in our administration who were invited and are here participating. We pretty much shut the town down in Washington today and just sort of came up here to Pennsylvania to talk about entitlements. (Laughter and applause.)

This is a very serious subject, worthy of the kind of thoughtful attention that it will be given today. I hope there will be a great national discussion of the issues that we discuss today, and I hope that this will be the beginning of a debate that will carry through for the next several years.

I ran for President because I thought our nation was going in the wrong direction economically, and that our society was coming apart when it ought to be coming together. I wanted to work hard to create jobs and raise incomes for the vast mass of Americans; and to try to bring our country back together by restoring the bonds of family and civility and community, without which we cannot hope to pass the American dream on to the students who are here at Bryn Mawr or the students who will come
behind.

To do this, we must all -- without regard to party or philosophy -- at least agree to face the real problems of this country: 20 years of stagnant wages; 30 years of family decline, concentrated heavily among the poor; 12 years in which our debt has quadrupled, but investment in our future has lagged leaving us with twin deficits, a massive budget deficit and a less publicized investment deficit -- the gap between what we need to invest to compete and win, and what we are receiving in terms of new skills and new opportunities.

These things are linked. Creating jobs in growth requires that we bring down both the budget deficit and the investment deficit. High government deficits keep invest --interest rates high, they crowd out private demands for capital, they take more government money to service the debt. All this tends to reduce investment, productivity, jobs and ultimately, living standards.

The deficit increased so dramatically over the last 12 years because of things that happened on the spending side and on the revenue side. Defense increased dramatically until 1987, but it's been coming down since then quite sharply. However, the place of defense, as we'll see later, has been more than overtaken by an explosion in health care cost going up for the government at roughly three times the rate of inflation. Interest on the debt is obviously increased more when interest rates were high than now, but always when the accumulated national debt goes up. And the larger number of poor people in our country has inevitably led to greater spending on programs that are targeted to the poor.

On the revenue side, the tax cut of 1981 wound up being roughly twice the percentage of our income that was originally proposed by President Reagan as the President and the Congress entered into a bidding war. And then in 1986 we adopted indexing, a principle that is clearly fair, but reduced the rate of growth of federal revenues by adjusting people's taxes downward as inflation pushed their incomes upward. And finally, a prolonged period of very slow growth has clearly reduced government revenues and added to the deficit.

If you look at this chart, you will see that we inherited a deficit that was projected to be actually -- when I took office, for the fiscal year that ended at the end of September -- above $300 billion. It was obvious that -- and it was headed upward. This was the line -- the blue line here is what I found when I became President. It was clear that something had to be done. I asked the Congress to pass the largest deficit reduction package in history. It had $255 billion in real enforceable spending reductions from hundreds of programs. Now, let's make it clear what you mean. When you hear the word spending reductions or cuts in Washington terms, it can mean two things. One is a reduction in the rate of increase in government spending from the previous five-year budget, which is still an increase in spending, but not as much as it would have been had the new reduction not taken place.

The second thing it might mean is what you mean when you say cut, which is you spend less than you did before you used the word. (Laughter.) And it is important to know which one you're talking about. However, both are good in terms of reducing the deficit over a five-year period. We not only reduced the rate of increase, but actually adopted hundreds of cuts this year. The budget year that started on October 1st has less spending than the previous year in 342 separate accounts of the federal budget.

Adjusted for inflation, this means a discretionary spending cut of 12 percent over the next five years, more than was done under the previous two administrations. If this continues, according to the Wall Street Journal, then by 1998, discretionary spending -- that is the non-entitlement spending and discounting interest on the debt, the things that we make decisions on every year -- will be less than 7 percent of our annual income; about half the level it was in the 1960s.

In addition to the discretionary spending cuts, our budget did reduce entitlements, making reductions in agricultural subsidies, asking upper-income recipients of Social Security to pay more tax on their income, lowering reimbursements to Medicare providers, making other adjustments in Medicaid and in veterans' benefits. Now, all these cuts are already on the books. We are also cutting -- with the help of the Vice President's National Performance Review -- over 250,000 positions from the federal payrolls, largely by attrition and early retirement over the next five years. We're finally attempting to reform the system in ways that will permit us to save billions of more dollars in discretionary spending through reform of personnel budgeting and, most importantly, procurement systems -- if the Congress will authorize all three of those systematic reforms.

We also passed some taxes -- a modest 4.3 cents-a-gallon gas tax which, so far, has been barely felt because we have the lowest price in oil in many, many years so the price of gasoline has actually dropped since the gas tax was put on. We also asked the top 1.2 percent of Americans to pay higher income taxes because their incomes went up the most and their taxes dropped the most in the previous 12 years. The corporate income tax on corporations with incomes above $10 million a year was raised. Middle-class families will pay slightly less taxes because, again, of the adjustments for inflation. And taxes were cut for 15 million families who worked for very modest wages as a dramatic incentive to get them to continue to chose work over welfare.

When Congresswoman Mezvinsky and her colleagues voted for this economic plan, they voted for your economic future, for lower deficits, higher growth and for better jobs. They did vote to cut spending. They did not vote to raise taxes on the middle class. And, frankly, the kinds of radio ads that have been -- this is the only political thing I'm going to say today (laughter) -- but the kind of radio ads that have been run against here in this district do not serve the public interest because they do not tell the truth. (Applause.)

If somebody wants to say that we should not have raised income taxes on the top 1.2 percent of the American people, let them advertise that on the radio. If someone wants to say that the corporate income taxes above $10 million a year in income should not have been raised, let them advertise that on the radio. If someone wants to say that the gas tax was unfair, let them advertise that on the radio. But do not try to tell the American people there were no budget cuts and they paid all the tax increases, because that is simply not true. And we have a lot of work to do in this country and a lot of honest disagreements to have, we need not expend our energy on other things. And if you don't believe that read the front page of the Wall Street Journal this morning. That is hardly the House organ of my administration. (Laughter.)

Read the front page of the Wall Street Journal this morning talking about the unprecedented cuts that this budget made. It does not do anybody any good to continue to assert things about that economic plan that are not true. The markets had it figured out. That's why interest rates are down and investment is up. That's why inflation is down and more jobs have come into this economy in the last 10 months than in the previous four years. The markets figured it out. All the smoke and mirrors and radio ads in the world couldn't confuse the people that had to make investment decisions and read the fine print. (Applause.)

That's the good news. Now let's talk about the continuing problems, the real problems. The economic plan which the Congress adopted represents the red line. That's how much less the deficit will be. And the aggregate amount between these two lines is how much less our total debt will be by 1998. The yellow line represents where we can go, by conservative estimates, if the health care plan is adopted. You still have an operating deficit, and the national debt will still increase by this amount, but not by that amount.

So we are clearly better off with the economic plan. We will have to make further cuts, by the way, to meet this red line. We're not done with that. We will be better off still if we do something about health care -- I'll say more about that in a minute -- but there is still more to be done. The debt of this country now is over $4 billion. That means our accumulated debt is more than two-thirds our annual income. It is important that the debt, as a percentage of our annual income, go down. It is way too high, much higher than it has been outside of war time.

It is important that the annual deficit, as a percentage of our income, go down. It will go down under this plan, but we can do more to try to reduce the aggregate debt and the deficit as a percentage of our income. Both of them are too high.

Now, let's look at the next chart here. I think you all have it out in the audience. This chart just basically shows where you money goes. When you pay federal taxes, or when the government -- on your behalf -- borrows money, in debt, we spend 47.4 percent in entitlements -- that is what we're here to talk about today -- about 21 percent on defense, it's going down, as you'll see in a minute; about 18 percent on non-defense, discretionary, which is being held constant; and about 14 percent in interest on the national debt.

Let's look at the next chart now. This chart gives you an idea of which spending categories are headed in which direction. Average annual real growth -- now, I want to tell you what this means. I haven't lived in Washington very long so I still use ordinary meanings for words. (Laughter.) When you see real on a government chart, that means adjusted for inflation. (Laughter.) You'll never find that in a dictionary, but that is what it means. In other words, these are the numbers adjusted for inflation at a projected inflation growth of more or less three and a half percent a year. If you look at that you see defense is going down. Frankly, we're reducing it as much as I think we responsibly can; and, in fact, more than we responsibly can unless Congress will pass the procurement reform so the Defense Department can buy what it needs for our national defense at more efficient prices. But I hope that will happen.

Other entitlements -- we'll come to that in a minute what those other entitlements are -- they're also going down relative to inflation. That is basically the entitlements for the poor and the veterans' benefits and agriculture benefits.

Non-defense discretionary is a little under zero, as you see. That's all the investments for education, for training, for technology, for defense conversion, for you-name-it, anything for infrastructure, for roads; anything we spend money on that we have an option not to spend money on that -- we'll come back to that -- is going down relative to inflation. If there were no inflation numbers here, it would actually be just a tiny bit above the line, but it is functionally zero. For all practical purposes, if I want to increase the amount of money, for example, we spend on Head Start in Pennsylvania by a million dollars, we have to cut something else by a million dollars. We are not increasing the aggregate amount of this kind of discretionary spending. Net interests will go up and, again, this is adjusted for inflation, so it is continuing to rise because the amount of the debt is continuing to rise.

Social Security will go up, again, adjusted for inflation. This is about -- this is the population increase, effectively, in Social Security. There aren't new benefits being added, so there will be a couple of percent growth in population between now and 1998. So it will go up by the amount of increasing numbers of people on Social Security.

And look what happens to health entitlement. It's going up more than twice as much as Social Security, more than three times as much as net interest, and everything else is going down. Now that's what's happening. Let's go on to the next chart.

As the chart shows here, this is the new revenues we're getting in this year. Now, the new revenues include the tax increases that we just talked about. They're about 40 percent of that revenue growth. The rest of it's just ordinary increases in tax revenues to the government coming from increasing employment or increasing incomes. So it's -- every year -- and inflation -- so every year we get some revenue growth. This revenue chart is about 60 percent ordinary revenue growth, 40 percent new taxes. As you can see, the whole thing goes to deficit reduction, interest increases and entitlement increases. That's where the money went. Eighty percent of the new revenues, including taxes and revenue growth went to deficit reduction and interest increases; 20 percent of it went to entitlement increases. As you can see, that does not leave a great deal of room for any kind of future investments.

This is something that presumably both Senator Kerrey and Congressman Penny will talk about today. But there is, I think it's fair to say, a broad consensus in the Congress among Republicans and Democrats, among liberals and conservatives, that there are some things on which we are not spending enough money to get us to the 21st century. We have put ourselves in a box after the last -- trying to work our way out of this deficit business, so that we do not have the flexibility to make those kind of growth-oriented investments in the public sector.


That is a dilemma. So we have two continuing dilemmas, if you will -- one, we still got a deficit and a debt problem; two, there are things which literally over 80 percent of the Congress -- both parties -- would agree we should invest more in that we simply cannot invest more in because of the problem we have with the budget.
Could we go on now into the next chart? Let's go into the next chart.

Now, this gives you a picture of entitlement spending. And I know Alice Rivlin talked about this a little before -- and she knows a lot more about it than I ever will -- but I think it's worth going back over because this is an entitlements conference. So it's worth focusing on what an entitlement is. And when you hear people use that term, what they are.

So look at this. These entitlement programs are programs that provide benefits for people that have certain characteristics. People who meet the test of eligibility for the program get it, notwithstanding some previously budgeted amount for that program. That's why they're called entitlements.

For example, someone who has paid into the Social Security Trust Fund, along with his or her employer, who is 65 becomes "entitled" to Social Security. You just go to the Social Security office with the documents that prove you're eligible and you're going to get the check no matter how many other people qualify for Social Security. Since it's hard to know in advance exactly how many people will apply for benefits, Congress doesn't set aside a specific amount of money as it does for the discretionary spending programs. Instead, it simply directs to Treasury to make payments to everybody who applies and qualifies for the benefits under the laws.

There are two main kinds of entitlements. And you can just see by looking up here what they are. They are the contributory entitlements; that is, you're entitled to something because you paid into it. It's contract oriented. Social Security is a contributory entitlement. Medicare is a contributory entitlement. Federal retirement is a contributory entitlement. You did the work, you put the money aside, you get it back.

Then there are the entitlements for those in need, or entitlements that are in a special category because you can't predict how much is going to be needed every year. The entitlements for those in need would include AFDC, supplemental security income, the Medicaid program, medical care for the poor. Agriculture is in a separate category. It has been treated as an entitlement partly because it's so caught up in the global economy, it's impossible to predict from year to year how much of the support subsidies will be needed.

Now, the contributory retirements are sometimes called middle-class entitlements because they benefit everybody. The middle class, or Mr. Peterson will tell you in a few minutes, the upper-middle-class or the wealthy -- if you pay in, you get it back plus a cost of living increase. Now, the poor people's entitlement, I said, are mostly in the category of like AFDC and food stamps and Medicaid. But let me show you something about these entitlements, because most people, I think, don't know this. Social Security is 43 percent of the total. Medicare is 18 percent, Medicaid is 11 percent, federal retirement is 8 percent, unemployment is 5 percent -- obviously it goes up or down, depending on what the unemployment rate is and how long people are unemployed. Food stamps are 4 percent, other is 11 percent. In the other you have agriculture, veterans, supplemental security income -- which is for lower-income elderly people -- and AFDC. The welfare program of this 11 percent is 2 percent. The average monthly welfare benefit in America is actually lower today, adjusted for inflation, than it was 20 years ago. The program is more expensive because there are more poor people. But I think it's quite interesting to point that out. Most people are surprised to know that the welfare budget is about two percent of the entitlements, or about one percent of the overall federal budget.

Now, the entitlement programs for the needy, as you can see, make up about 12 percent of the whole budget; or about a quarter of the entitlement spending. The biggest entitlements are Social Security and Medicare. They are about 61 percent of the total. When you add federal civilian retirement and military retirement, you've got over two-thirds of the retirements there -- of the entitlements there.

Now, I think it's important to point out, just in passing, that behind every one of these entitlements there's a person. That's why it's so controversial when they're debated in Congress. It's not just organized interest groups, there are people who believe they are literally entitled to receive something back that they paid into. It is the middle-class entitlements, that have united us and brought us together, that also have the strongest constituencies and provoke the biggest controversies when we get into dealing with this. And these programs are also very important in human terms. And I just might mention, too, the -- if you look at Medicare, before Medicare, there was a good chance that Americans, when they got older, would need charity care, would simply do without health care. Today nearly 34 million people go to see a doctor, or get medical care because of the Medicare program.

Social Security has changed, literally, what it means to be old. In the beginning of 1985, for the first time in our history, the percentage of our elderly people who were above the poverty line was better than the percentage of the population as a whole. In other words, the poverty rate for the elderly was lower than the poverty rate of the general population.

It is very difficult to say that this was a bad thing. That was -- I argue -- a good thing. We should not view this whole program, in other words, as welfare. It is not a welfare program. Does that mean that there should be no changes in it? No. It just means that we should be very sensitive about the fact that this is something that has worked. Because of these programs, we are a healthier people. We are a more unified country. We treat out elderly with greater dignity by having allowed them to earn a decent retirement and to maintain a middle-class standard of living, independent of whatever their children are required to do, and to make them more independent over the long run. This is a huge deal in a country where the fastest growing group of people, in percentage terms, are people over 80 years of age. (Applause.) This is a big deal. (Applause.)

Now, I recommended exposing more of the incomes of the top 10 or 12 percent of Social Security recipients, somewhere in that range, to taxation, and Congress adopted a modified version of that plan. That was an entitlements move. I thought it was an appropriate thing to do because a lot of people in upper-income levels, by definition, have other sources of income, too, and will get back what they paid into Social Security plus reasonable interest growth in a reasonably short period of time, so I thought it was fair to do that.

We recommended upper-income people pay more for Medicare benefits. I think that is reasonable to do because the Medicare payment itself only covers a small percentage of the total cost of Medicare. Where I think we should draw the line, however, is in trying to have happen to the elderly middle class what is happening to the non-elderly middle class. All over the world today, and certainly in all the advanced countries of the
world, the middle class is under assault. Earnings inequality has increased in the last 12 years. It is becoming very difficult for working people to sustain a middle-class way of life. We are going to have to all change. We've got to change our government policies. People are going to have to acquire much higher levels of skill and be committed to training for a lifetime. There are a lot of things that have to be done. But the general policy point, I think, is valid. We do not want to deal with a problem like the deficit which is aggravated because middle-class people's incomes have stagnated by having the same sort of income stagnation for the middle-class elderly.

So I think there are things we can do to deal with this. They will be discussed later. We did some things to deal with the entitlements in the last budget. But let us not say that it was a bad thing to dramatically reduce poverty among elderly people, or that it is a bad thing for our consumer economy to maintain a large number of middle-class people in their retirement years. That means that we have to have honest, specific and clear discussions of this, as unencumbered as possible by these sort of rhetorical bombs flying in the air from the left and the right.

Just talking it through and listening to each other and asking ourselves what will be the practical impact of proposed change A, B or C; and will we all be more secure, will our children and our grandchildren be better off; will this help to stabilize and increase the middle class ballast of our society? And I think we are on the verge, perhaps, of having that discussion in no small measure because of this kind of conference.

Now, let's go on and let's look at what I think the real problem in the entitlements is, is clearly the danger signal for the long run. Let's look at the next chart. As you can see, 20 years ago health spending and entitlements -- Medicare and Medicaid -- 13 percent of the total; 1983, 19 percent of the total; 1993, 30 percent of the total; 2003, 43 percent of the total. Keep in mind -- and this is with the number of elderly people going up like crazy, so the population of people drawing Social Security is going way up, right? And still, look at that.

So, clearly, that is the portion of government spending that is out of control. That is the portion of entitlement spending that is out of control. Now let me just illustrate it by a couple more charts, real quickly. Let's go to the next one.

Non-defense discretionary outlays are going down as a percent of our income. Social Security outlays as a percentage of our income is solid, stable here. It could go up some in the next century, is projected to when all the baby boomers go in. I heard Ms. Rivlin refer to that as the President's generation. (Laughter.) I am the oldest of the baby-boomers.

But still, you see, it's a stable as a percentage of the gross national product. And the Congress, in 1983, after the Bipartisan commission on Social Security made recommendations for fixing Social Security, attempted to keep this number stable by gradually raising the retirement from 65 yo 67, by about a month a year over a prolonged period of time starting just in the next century.

Now let's go on to the last one. This chart shows you that unlike Social Security and discretionary spending, medical spending is going up like a rocket. Medicare and Medicaid have tripled since 1982. Medicare and Medicaid will soon cost more than Social Security. And next year for the first time -- in large measure because Medicaid is a state-federal matching program, so that every state has to put in money along with the federal government -- next year, for the first time, states will spend more money on health care than education. And since we -- and since I supported this, I see other present and former governors around this table -- in the 1980s we said to the national government, "You've got a problem with the deficit, we'll spend more on education. You do what you have to do to deal with your other problems." This is a very serious danger signal. If you want the states to spend more educating people, getting children to the point where they can compete, training the work force -- to have the states all of the sudden spending more on health care than education is a very serious danger signal for the distribution of responsibilities between the state and the federal government.

Now, we have some options. If we want to control Medicare and Medicaid spending, basically we have some options. And to be fair, again I want to say during the 1980s under the Reagan and Bush administration -- the two administrations and the United States Congress did try to cooperate on several things to control Medicare and Medicaid spending. They took total pricing controls away from hospitals and doctors. They tried to do a number of things. But what happened? If you control the price of a given product in this environment, what happens? Providers can provide more products, I mean, more of the same product, right? You increase the volume if you lower the price, and the money still goes up. That's one problem. Secondly, poverty increased in the '80s and is continuing to increase among the poor and the -- both the idle and the working poor -- and that drives the Medicaid budget up. So controlling unit prices didn't work. The other thing you could argue that we could do is to try to control the categories within Medicare and Medicaid; basically, just spend less. In other words, even though they're entitlements, just say we are going to spend less on certain categories by both controlling volume and price. Is there a problem with that? Yes there is. What is it? Any doctor or hospital will tell you that there has been a lot of cost shifting in this health care system, and it's one of the causes of rising prices and inefficiency. Cost shifting largely occurs in two ways -- when hospitals have to care for people who don't have any insurance, or when they provide government funded health care at less than their cost of providing the service, they shift the cost onto the private sector.

So we could bring this deficit down -- we could do this -- I want to -- let's 'fess up, we could do this. We could just cut how much we're going to spend on Medicare and Medicaid, even though it's an entitlement, in terms of price per unit and volume. We can just take 'er down. But if we do that, what will happen? Those costs will be shifted by the health care providers to the people who already are providing insurance; with the impact that it will be a hidden tax increase on businesses and on employees. Employees will probably see it in not getting pay raises they otherwise would have gotten. Businesses will see it in spending more on health insurance premiums and having less to reinvest in the business or to take in profits. I don't think it is fair thing to do. That is why our administration has argued that if you really want to solve this problem, you have to go back and have comprehensive health care reform. This is the only country in the world that doesn't find a way to solve that issue, that doesn't give -- the only advanced nation, that is -- that doesn't give basic health care to all its citizens within a framework that controls costs in the public and private sector.

We're spending 14.5 percent of our income on health care. Nobody else is over ten; Germany and Japan are at nine. The health outcomes of other countries are roughly similar to ours. We can't get down to where they are because we spend more on technology and more on, basically, costly treatments than other countries do, and more on medical research. And that's fine. And we can't get down to where they do because we have more violence and higher rates of AIDS and other very expensive diseases than other countries. But we could do better. And unless we do better in an overall way, in my judgement, we are going to be in trouble.

Now we had a nonpartisan analysis by the respected firm of Lewin-VHI last week about our health care plan. This company does research on the economics of health care for businesses, unions, consumer groups. It includes people who served in the Reagan and Bush administrations as budget and health officials. They say that our plan will reduce the deficit. We think it will reduce it even more than they will. I won't get into the details of that today. We're here to talk about entitlements. The point I want to make is I believe you don't entitlement control, you don't get ultimate deficit control unless you do something about Medicare and Medicaid. I believe you don't get that done just by cutting Medicare and Medicaid unless you want to hurt the private sector. Therefore, I think we have to have some sort of health reform. That's what I believe. You have to decide if you believe that, but I think it's important. (Applause.)

Let me just close with this. This is the lead editorial in this morning's Washington Post. It says -- on the entitlements mess -- and it says as follows: "Nor have all the entitlements been badly behaved in recent years in terms of costs. The health care programs are the budget busters. By contrast Social Security costs have risen in "stately fashion" with population and inflation. And the costs of all the other entitlements taken together, including those that support the poor has declined in real terms" -- remember what "real" means in Washington, less than the rate of inflation. "The real federal budget problem" -- that's the normal word "real". Here they mean real like you do. (Laughter.) "The real federal budget problem isn't entitlements, it's health care."

So I say to you we can talk about these other entitlements and we should. As we talk about them, let us not make our middle-class squeeze problem worse than it is already. That's one of the profound problems that is driving this country. One of the reasons that Senator Wofford is in the Senate today, is because of the anxieties of middle-class workers in Pennsylvania.

Let us continue to work on this deficit. Let us realize the deficit is too big and the debt is much too large as a percentage of our gross national product. Let us realize that there are two problems with it. One is the deficit and the other is we aren't investing enough. But on the entitlements issue, I would argue the real culprit is health care costs, and we can only address it if we have comprehensive health care reform.

And let me close by saying one more time, if Marge Mezvinsky hadn't voted for that budget, we wouldn't be here celebrating economic progress or talking about entitlements. We'd still be back in Washington throwing mudballs at each other. And I respect her for that and I'm glad to be here today. (Applause.)

6. REMARKS BY THE PRESIDENT ON SUBMISSION OF 1999 BUDGET-- February 2, 1998

East Room 10:44 A.M. EST

THE PRESIDENT: Thank you very much for that warm welcome. Good morning. Thank you, Mr. Vice President, Mr. Bowles, members of our economic team, members of the Cabinet and administration. And I thank the large number of members of Congress who have come here today, and others, all of you here for the submission of the first balanced budget in 30 years, one that will truly strengthen our nation for the 21st century.

This budget marks the end of an era, an end to decades of deficits that have shackled our economy, paralyzed our politics, and held our people back. It can mark the beginning of a new era of opportunity for a new American Century.

Consider what has been achieved in so short a time. In the 12 years before I took office, trickle-down economics led to an explosion in the federal deficit which quadrupled our national debt in only 12 years. Government deficits soaked up trillions of dollars in capital that should have been used for productive investment. Massive deficits led to high interest rates that slowed growth. And massive deficits also paralyzed the Congress in their attempts to invest in our future, as we spent more and more and more of the taxpayers' dollars just to pay interest on the debt we had run up.

The new economy was being held back by old political ideas and arrangements. The deficit was more than an economic reality; it was a powerful symbol that government had simply failed to meet its most basic obligations. And doing something about the deficit was one of the reasons I ran for President in 1992.

The day I took office, the deficit was projected to be about $300 billion for that year. For five years, beginning in 1993, as the Vice President said, the Congress and the American people have worked tirelessly to put our economic house in order. We have worked hard here to put our fiscal house in order. The government is the smallest it's been in 35 years. And deficit reduction has given us lower interest rates, higher investment, and, I might add, lower unemployment, more taxpayers, and more funds to invest in America's future.

That is the gamble we took in 1993 -- a gamble now that I thought was not such a gamble at all. But it did, as the Vice President said, cost several members of Congress their jobs. Wherever they are today -- wherever they are -- I hope they know and remember that we passed that budget in '93 by one vote in the Senate and by one vote in the House and we did not have a vote to spare. And everybody that stood up, and especially those who lost their seats, can know they gave 14 million Americans jobs that would not have been there otherwise and a brighter future for all the American people, and I'm very grateful for that. (Applause.)

I also want to point out, as the Vice President did, that the job to be finished and to eliminate the structural deficit, came with a balanced budget agreement last year. And we should applaud all those in both parties who were part of that. Because it will not only enable us to achieve a balanced budget, it will enable us to maintain a balanced budget long into the future if we stay with the disciplined framework that was embraced last year by very large majorities in both Houses of both parties. And that is very important. It's one thing to get the deficit down, another thing to hold it there. And that balanced budget agreement will not only go from a much smaller deficit down to balance, but also will hold it there if we stay with the discipline. We have not done all this work to let it go.

Now, I believe, if we will stay with the plan, we can balance the budget without further cuts. Indeed, the balanced budget I submitted shows we can balance the budget and still hire 100,000 new teachers and modernize 5,000 schools. We can balance the budget and allow hundreds of thousands of middle-aged Americans who have no health insurance through no fault of their own to buy into Medicare. We can balance the budget and still extend child care to a million more children. And above all we can balance the budget and save Social Security first. (Applause.)

In other words, it is obvious that you can have a smaller government but a more progressive one that gives you a more stronger America. We've done more than simply balance the budget, more than just line up numbers on a ledger. We have restored the balance of the values in our policy, restored the balance of confidence of between government and the public. Now, we'll have a balanced budget not only next year but as far as the eye can see.

We have to use this opportunity to build a stronger America. And let's just talk about that. First and foremost, we project that the budget will not only balance, it will actually run a surplus of $9.5 billion next year and over $200 billion over the next five years -- fully $1 trillion over the next 10 years. This budget reserves that surplus -- I want to say it again -- this budget reserves that surplus, saving it until we have taken the steps necessary to strengthen Social Security into the next century.

One of the reasons that balancing the budget has been hard is that we have insisted on a balanced budget that honors our values. Finding a way to reduce red ink without shrinking the circle of opportunity has been at the heart of our efforts. And when we started, most people said you couldn't do it. They said there is no way to cut the rest of government enough to reduce the deficit and increase investment in important areas. But that is an important achievement as well.

Now it is most important of all that we balance the budget while renewing our commitment to save Social Security. When I left Washington last week and went to Champaign, Illinois, and La Crosse, Wisconsin, I was moved by the strength and depth of the American people's priority for the surplus they created. I think they want us to save Social Security first, as well. And I hope all of you, and members of Congress in both parties, will support that.

We have a great opportunity now to take action now to avert a crisis in the Social Security system. We have a great opportunity now to be able to tell all these young people who are shadowing their Cabinet and administration leaders that Social Security will be there for them when they retire. We have a great opportunity, those of us in the baby boom generation, to tell our own children that when we retire and start drawing Social Security, it isn't going to bankrupt them to take care of us and undermine their ability to take care of their own children. We need to do this.

We don't need to take any shortcuts, we don't need to take any short-term benefits. Before we do anything with that surplus, let's save Social Security first. (Applause.)

The budget continues our efforts at education reform. As I said, it enables us to hire 100,000 new teachers working with states to reduce class size to an average of 18 in the 1st, 2nd, and 3rd grades, and to help modernize or build 5,000 schools. It helps to give our parents the tools they need to meet their responsibilities at home and at work, among other things allowing people between the ages of 55 and 65 who lose their health insurance to buy into the Medicare program.

It includes a breakthrough investment in child care through tax credits, vouchers for states, scholarships for care givers. It will help America to meet its obligations in international leadership -- meet our obligations to stabilize the world's financial markets, to pay our dues to the United Nations, to continue our support of our military so that our men and women in uniform can continue to do the job for us.

It will provide tax cuts in research and development to help meet the challenge of global climate change in a way that enables us to grow the economy while actually improving the environment. It continues to support our urban empowerment strategy, bringing more private sector investments to our hardest-pressed cities and neighborhoods while continuing to put 100,000 police officers on the streets and giving our children something to do after school, so more of them can stay out of trouble and on a path to success.

It will lead to future generations the gift of scientific and medical advances. The 21st Century Research Fund, the largest funding increases ever for the National Institute of Health, the National Science Foundation, and the National Cancer Institute, will speed the progress of biomedical breakthroughs in the fight against many of our deadliest diseases.

The budget funds these initiatives by continued cuts in government programs, by closing unwarranted tax loopholes, and from the passage of tobacco legislation, which, as every passing day shows, is critically important to the future of our children and therefore of our country. (Applause.)

This budget meets the test I set out before Congress last week: no new spending initiatives, no new tax cuts unless they can actually be accomplished without adding a dime to the deficit. For more than two centuries, Americans have strengthened our nation at every critical moment with confidence, unity, a determination to meet every challenge. For too long the budget deficit, a worsening crime wave, the seemingly unsolvable welfare difficulties -- they all seemed to challenge our innate American confidence. In the past five years, the American people have met these challenges and have moved to master them. Now we have a chance, in a period of peace and prosperity with renewed confidence, to build for the future. That's what this balanced budget does.

Now, it is -- I am going to close my remarks now, by asking the Vice President to give me a magic marker so that I can be the first person to actually certify what the budget will say for the coming year. Even we can do this. I am technologically challenged, therefore, we're not doing this on a computer. (Laughter and applause.)

END 10:55 A.M. EST

7. REMARKS BY THE PRESIDENT ON SOCIAL SECURITY -- February 9, 1998

Gaston Hall, Georgetown University, Washington, D.C.

10:53 A.M. EST

THE PRESIDENT: Thank you very much. Special thanks to those of you who had to wait all night to get in. (Laughter.) Hope you won't be disappointed. (Laughter.)

Mr. Vice President, Father O'Donovan, to all the groups here who are concerned with Social Security, especially to Congressman Penny and the Concord Coalition, and John Rother and the AARP, I thank you all for being here.

I thank Senator Bob Kerrey, who when he cast the decisive vote for our budget in 1993 said that he would do so only if I were also committed to dealing with the long-term structural problems of Social Security, to heal the deficit there as well. I thank Gene Sperling and the members of my staff who worked with us on this. And thank you, Mannone Butler, for embodying what this struggle is all about. Weren't you proud of her? She did a great job I think. Thank you very much. (Applause.)

When I first ran for President six and a half years ago now, I came to this hall to set out my vision for 21st century America, and a strategy for achieving it. Often in the years since I have come back here to discuss our nation's most demanding challenges. And on many occasions, but none more relevant than today, I have recalled the assertion of my freshman professor in the history of civilizations course, Carroll Quigley, that the distinguishing characteristic of Western civilization in general and the United States of America in particular is what he called future preference -- the idea that the future can be better than the present or the past; that each of us has a personal, moral responsibility to work to make it so, to plan for it, to work for it, to invest for it.

There is no better example of that principle for the strength of America than the opportunity and the duty all of us as Americans have now to save Social Security for the 21st century. So today I return to discuss what we have to do to achieve that and why it is so important.

You know, there was a recent poll which said that young people in the generation of the students here felt it was far more likely that they would see a UFO than that they would draw Social Security. (Laughter.) And others may think that it's a long way off, as Mannone said, and the Vice President said he thought it was a long way off.

A couple of days ago I went to New Mexico to visit our national labs -- you may have seen the story. And our national labs at Los Alamos and Sandia and Lawrence Livermore, where we do a lot of the research that not only helps us to preserve the security of our smaller and smaller nuclear arsenal, but helps us to deal with our environmental questions and a lot of other fascinating challenges of the future. But anyway, after I finished this, I had lunch with a few of my friends, including a man that I went to Georgetown with. And at the end of the lunch, he whipped out this photo and gave it to me, and we were sitting in a park together, about a week after I graduated in 1968. And I looked at that photo and I said, my goodness, where did all the time go? It seems like it was yesterday to me.

I say that to make this point: It may seem a long way away from the time you now -- where you are until you will need retirement. It may seem a long way away before most of your parents need retirement -- but it isn't. And great societies plan over long periods of time so that individual lives can flower and take root and take form. And that is what we have to do today.

Social Security is a lot more than a line in the budget. It reflects some of our deepest values -- the duties we owe to our parents, the duties we owe to each other when we're differently situated in life, the duties we owe to our children and our grandchildren. Indeed, it reflects our determination to move forward across the generations and across the income divides in our country, as one America.

Social Security has been there for America's parents in the 20th century, and I am determined that we will have that kind of security for the American people in the 21st century. We are entering this new millennium, the new century, with restored confidence -- the Information Age, a growing global economy, they're changing the way we live and work. And the scope and pace of change, well, it may seem commonplace to those of you who have grown up with it, but to people my age it is still truly astonishing. And I can tell you, it is without historical precedent.

For a long time our country failed to come to grips with those changes and we paid the price in a stagnant economy and increasing inequality among our working families, in higher child poverty, in record welfare rolls, higher crime rates, other deepening social problems. Before the present era we had only run budget deficits, and the deficit I think came to symbolize what was amiss with the way we were dealing with the changes in the world. We had only run budget deficits for sound economic reasons -- either because there were some overwhelming need to invest or because there was a recession that required stimulation of the economy, or because there was a national emergency like war. The idea that we would just simply have a structural deficit and run one year in and year out was unheard of. But that is exactly what has happened throughout your lifetime.

And it got so bad in the 1980s that between 1981 and 1992 the total debt of the country was quadrupled -- quadrupled -- in a 12-year period, over and above the previous 200 years. That raised interest rates. It took more and more tax money away from investments in education, for example, or the environment to pay interest on the debt. It slowed economic growth and it definitely compromised your future.

Five years ago I determined that we had to set a different course, to move past the debate that was then paralyzing Washington and, frankly, didn't have much to do with the real world, between those who said government was the enemy, those who said government was the solution and as long as you can fight about something, then you don't have to get down to the nitty-gritty of dealing with the real problems.

When the British Prime Minister was here last week, Tony Blair, we stressed that we both think, and many other leaders increasingly around the world are beginning to think that this debate is fruitless and that there has to be a third way -- that 21st century government, Information Age government, must be smaller, must be less bureaucratic, must be fiscally disciplined and focus on being a catalyst for new ideas and giving you and all other Americans the tools they need to make the most of their own lives.

For five years we have reduced the size of the deficit, reduced the size of government, dramatically reduced the budget deficit by over 90 percent, but continued to invest in your future. And in very dramatic ways that's changed the experience of going to college.

Student loans that are guaranteed by the government have been made less expensive and easier to repay. There are hundreds of thousands of more Pell Grant scholarships, 300,000 more work-study slots. AmeriCorps has allowed 100,000 young people to earn money for college while serving in their community. There are now tax-free IRA accounts for college education. Last year we enacted the HOPE Scholarship, which is a $1,500 tax credit for the first two years of college. And then there's a lifetime learning tax credit for junior and senior years for graduate schools and for adults who have to go back for further training. For the first time in history, while reducing the deficit by 90 percent, we can honestly say if you're willing to work for it, whatever your circumstances, you can go on to college in the United States, and that is a very important achievement.

Now, all of these things have worked together to give us the strongest economy in a generation -- almost 15 million new jobs, the lowest unemployment rate in 24 years, the lowest inflation rate in 30 years, the highest homeownership in history, average incomes rising again. I've submitted to Congress for 1999 the first balanced budget in 30 years. All that is a remarkable achievement. But, as I said, we have to be thinking about the future. And all of you know to a greater or lesser degree of specificity, every one of you know that the Social Security system is not sound for the long-term, so that all of these achievements -- the economic achievements, our increasing social coherence and cohesion, our increasing efforts to reduce poverty among our youngest children -- all of them are threatened by the looming fiscal crisis in Social Security.

Today I want to talk about what it is and how we propose to deal with it. And as the Vice President said, we should use the economic good times. That old saying that you don't wait for a rainy day to fix the roof is good for us today; it's very sunny outside. And on this sunny day, we should deal with Social Security.

In very specific terms, we've got a great opportunity because it is projected that we stay with the present budget plan, that taking account of the fact that we won't always have the greatest economic times as we've had now -- there will be times when the economy will grow faster, times when it will grow slower, we may recessions -- but structurally, we have eliminated the deficit, so that over time we should have a balanced budget, and over time, most times we should be running a surplus now if we stay with the discipline we have now over the next couple of decades.

Now, if that's so, it is now estimated that with normal ups and downs in economic growth, over the next 10 years, after 30 years of deficits, that the United States will have a budget surplus in somewhere in the range of a trillion dollars in the aggregate over the next 10 years. I have said before we spend a penny of that on new programs or tax cuts, we should save Social Security first. I think it should be the driving principle of this year's work in the United States Congress -- do not have a tax cut, do not have a spending program that deals with that surplus -- save Social Security first.

That is our obligation to you and, frankly, to ourselves. And let me explain that. This fiscal crisis in Social Security affects every generation. We now know that the Social Security trust fund is fine for another few decades. But if it gets in trouble and we don't deal with it, then it not only affects the generation of the baby boomers and whether they'll have enough to live on when they retire, it raises the question of whether they will have enough to live on by unfairly burdening their children and, therefore, unfairly burdening their children's ability to raise their grandchildren. That would be unconscionable, especially since, if you move now, we can do less and have a bigger impact, especially since we now have the budget surplus.

Let me back up just a minute, mostly for the benefit of the young people in the audience, to talk a little bit about the importance of this effort. It's hard for even people in my generation to understand this, much less yours. But early in this century, to be old meant to be poor. To be old meant to be poor. The vast majority of people over 65 in America early in this century were living in poverty. Their reward for a lifetime of work, for doing right by their children, for helping with their grandchildren, unless their kids could take care of them, was living in poverty.

If you ever have a chance you ought to read some of the books that have thousands of letters that older people sent to President Roosevelt, begging him, in the words of one typical letter writer, to eliminate -- and I quote -- "the stark terror of penniless, helpless old age." That's what prompted President Roosevelt to launch the Social Security system in 1935, to create what he called the cornerstone of a civilized society.

Now, for more than half a century Social Security has been a dramatic success. If you just look at the first chart over here on the right, you will see that in 1959 -- I don't see as well as I once did -- (laughter) -- the poverty rate among seniors was still 35 percent. As recently as 1959, still over a third of seniors lived in poverty. By 1979, it had dropped to 15.2 percent. By 1996, it had dropped to 10.8 percent.

To give you an idea of the profound success of the program over the last 30 years -- as you know, there have been increasing number of children being raised in single-parent households, where the incomes are not so high -- the child poverty rate in America is almost twice that. But no one can begrudge that. So the first thing we need to say is, Social Security has succeeded in ending the stark terror of a penniless old age. And that is a terrific achievement for the American society.

Now, it's also known, however, that the changes that are underway today will place great stresses on the Social Security safety net. The baby boomers are getting grey. When my generation retires -- and I'm the oldest of the baby boomers; I was born in 1946, I'm 51 -- and the generation is normally held to run for the 18 years after that, that's normally what people mean when they talk about the baby boomers -- it will dramatically change the ratio of workers to earners, aggravated by increasing early retirements and other things, offset by gradual increase in the Social Security retirement age enacted back in 1983. So if you look at that, that's the second chart here.

In 1960, there were 5.1 Americans working for every one person drawing Social Security. In 1997, there's still 3.3 people working for every one person drawing Social Security. In 2030, the year after the Social Security trust fund supposedly will go broke unless we change something, at present projected retirement rates -- that is, the presently projected retirement age and same rates -- there will be two people working for every one person drawing Social Security.

Now, if you look at that plus the present investment patterns of the funds of which are designed to secure 100 percent security and, therefore, get a somewhat lower return in return for 100 percent security for the investments, that's what will cause the problem. So if you look at the presently projected retirement and the presently projected returns, that will cause the problem.

It's very important you understand this. Once you understand this, you realize this is not an episode from the X Files, and you're not more likely to see a UFO if you do certain specific things. On the other hand, if you don't do anything, one of two things will happen -- either it will go broke and you won't ever get it; or if we wait too long to fix it, the burden on society of taking care of our generation's Social Security obligations will lower your income and lower your ability to take care of your children to a degree most of us who are your parents think would be horribly wrong and unfair to you and unfair to the future prospects of the United States.

So what's the bottom line? You can see it. Today, we're actually taking in a lot more money from Social Security taxes enacted in 1983 than we're spending out. Because we've run deficits, none of that money has been saved for Social Security. Now, if you look at this little chart here, from 1999 forward we'll be able to save that money -- or a lot of it, anyway. We'll be able to save a lot of it that will go into pure surplus in the budget. It can be invested. But other things will have to be done, as well. That will not be enough.

And if nothing is done by 2029, there will be a deficit in the Social Security trust fund, which will either require -- if you just wait until then -- a huge tax increase in the payroll tax, or just about a 25 percent cut in Social Security benefits. And let me say today, Social Security -- I want to put that in, too, because I want you all to start thinking about this -- Social Security was conceived as giving a floor for life. It is not enough to sustain the standard of living of almost any retiree retiring today.

So you also will have to make provisions for your own retirement savings, and you should start early when you go out and go to work, with a 401(k) plan or whatever. But this is what is going to happen unless we change. if we change now we can make a big difference.

I should also point out that Social Security also goes to the spouses of people when their widowed. Social Security also goes to the disabled. There's a Social Security disability program. Cassandra Wilkins, who's here with us, who the Vice President recognized, ran the Social Security disability program for me when I was governor. It's a very important program. But all of these things should be seen in terms of these economic realities.

Now, again I say, if we act soon, less is more. If we can develop a consensus as a country to act soon we can take relatively modest steps in any number of directions to run this 2029 number well out into the future in ways that will keep Social Security's role in providing some retirement security to people without unfairly burdening your generation and your ability to raise your children to do that. And I can tell you, I have had countless talks with baby boomers of all income groups and I haven't found a single person in my generation who is not absolutely determined to fix this in a way that does not unfairly burden your generation. But we have to start now.

We have to join together and face the facts. We have to rise above partisanship, just the way we did when we forced the historic balanced budget agreement. This is -- as you can well see, this is reducible to stark mathematical terms. This need not become a partisan debate. Oh, there ought to be a debate, a good debate on what the best way to invest the funds are. There ought to be a good debate on what the best trade-offs are between the changes that will have to be made. But it ought to be done with a view toward making America stronger and, again, preserving the ties that bind us across the generations.

I have asked the America Association of Retired Persons, the AARP, a leading voice for older Americans, and the Concord Coalition, a leading voice for fiscal discipline, to organize a series of four nonpartisan regional forums this year. The Vice President and I will participate. I hope the Republican and Democratic leadership will also participate. I was encouraged that Speaker Gingrich said the other day that he felt we should save the surplus until we had fixed the Social Security first.

The first forum, which will set out before the American people the full nature of the problem -- essentially, what I'm doing with you today with a few more details -- will be in Kansas City on April 7th. Then in subsequent ones we will hear from a variety of experts and average citizens across all ages. It is very important to me that this debate involve young people -- very important, because you have a huge stake in it and you need to imagine where you will be and what kind of investment patterns you think are fair for you and how you think this is going to play out over the next 20, 30, 40 years. We want people of all ages involved in this.

This national call also will spread to every corner of the country, to every member of Congress. There are other private groups which have to play a role. The Pew Charitable Trust has launched a vital public information campaign -- Americans Discuss Social Security. On March 21st, I will help kick off the first of many of their town hall meetings and teleconferences.

Now, when we go out across the country and share the information and get people's ideas -- then, at the end of the year in December, I will convene a historic White House Conference on Social Security. And then, in a year, I will call together the Republican and Democratic leaders of the House and Senate to begin drafting comprehensive, bipartisan landmark legislation to save the Social Security system.

This national effort will require the best of our people -- and I think it will get the best of our people. It will ask us to plan for the future. It will ask us to be open to new ideas, not to be hide bound and believe that we can see the future through the prism of the past. But it will ask us to hold on to the old values that lifted our senior citizen from the burden of abject poverty to the dignity of a deserved good, solid old age.

Keep in mind, most of you who are sitting out here can look forward to a life expectancy well into your 80s. Most of you, by the time you get to be my age, if you live to be my age, your life expectancy will probably be by then 90 or more. We're going to have to rethink this whole thing. But we have to do it with a view towards preserving the principles and the integrity of our society, binding us together across the generations and across the income divides.

We can do this. President Roosevelt often called us to the spirit of bold, persistent experimentation. We will have to do that. But he also reminded us that our greatest challenges we can only meet as one nation. And we must remember that. With our increasing diversity, and the way we work and live, and our racial and ethnic and other backgrounds -- religious backgrounds -- we still have to be, when it comes to treating people with dignity and fulfilling our obligations to one another, one nation.

Acting today for the future is in some ways the oldest of American traditions. It's what Thomas Jefferson did when he purchased the Louisiana Territory and sent Lewis and Clark on their famous expedition. It's what Abraham Lincoln did when at the height of the Civil War, he and the Congress took the time to establish a system of land grant colleges, which revolutionized the future of America. It's what we Americans did when, in the depths of the Depression, when people were only concerned about the moment, and 25 percent of the American people were out of work, our Congress and our President still took the time to establish a Social Security system, that could only take flower and have full impact long after they were gone.

That is what we do when we do best -- what Professor Quigley called "future preference." What I prefer is a future in which my generation can retire, those who are not as fortunate as me can retire in dignity, but we can do it in a way that does not burden you and your ability to raise our grandchildren. Because I believe the best days of this country lie ahead of us if we fulfill our responsibilities today for tomorrow.

Thank you very much. (Applause.)

9. REMARKS BY THE PRESIDENT IN SATELLITE ADDRESS TO PEW CHARITABLE TRUSTS' "AMERICANS DISCUSS SOCIAL SECURITY" -- March 21, 1998

THE PRESIDENT: Thank you. I'd also like to thank Rebecca Rimel. And I'm delighted to join the Pew Charitable Trusts and all of you for this important discussion of Social Security. The Pew Trust has done a great service to the country for making this possible. We have to discuss how we can ensure that one of the greatest achievements of this 20th century continues to serve our people very well into the next.

Before I start, let me tell you about -- a little bit about my upcoming visit to Africa. Because tomorrow, I'm going to embark on the most extensive trip ever taken to that continent by an American President, where I hope to introduce Americans to a new Africa -- a place where democracy and free markets are taking hold. I hope all of you will follow my travels closely.

These are good times for America. We have 15 million new jobs, the lowest unemployment in 24 years, the lowest core inflation in 30 years, the highest homeownership in our history. Last month, I was pleased to present the first balanced budget in a generation. Indeed, we can now look forward to $1 trillion of surpluses over the next decade. But I don't believe we should spend a penny of this surplus until we have saved Social Security first for the 21st century.

I am very pleased with the strong support the American people have shown for this meeting and for meeting this challenge. I thank "Americans Discuss Social Security" for leading the way. For 60 years, Social Security has meant more than a monthly check in the mail. It reflects our deepest values -- our respect for our parents, our belief that all Americans deserve to retire with dignity.

We can't break this solemn compact between the generations. And if we act soon -- and responsibly -- we can strengthen Social Security in ways that won't unfairly burden any generation. So I challenge my own generation to act now to protect our children, to ensure that Social Security will be there for them after a lifetime of hard work. And I challenge young people to do their part, as well, to get involved in our national effort to strengthen Social Security for the 21st century.

In the coming months, the Vice President and I will attend a series of nonpartisan forums to help reach a national consensus on how to go forward. In December, I'll convene a White House Conference on Social Security, with a view to early 1999, when I hope and believe we can craft historic, bipartisan legislation to save Social Security.

In the darkest days of the Great Depression, Americans had the courage to commit to a daring plan whose impact would not be fully known for a generation. In the midst of these prosperous times, we must strengthen that commitment for generations yet to come. Your views will be vital to our work here in Washington, and I look forward to hearing your comments.

Thank you very much.

* * * * *

THE PRESIDENT: Let me try to respond a little bit to what all the folks said. Obviously, I don't know in the previous meetings exactly how much information was out there and how much not. And we're in the process, as I said, of a year-long dialogue. But let me just offer a couple of observations.

In 1983, there was a bipartisan commission to deal with the problem in Social Security. And they came up with a whole set of changes which included, very slowly over a period of years, raising the retirement age to 67 for people drawing full Social Security benefits --which will happen sometime in the next century -- because the average life expectancy is much longer. When Social Security was enacted and the retirement age was 65, the average American did not live to be 65 years old. So that happened.

Then there was an increase in the payroll tax back in '83, and it was estimated that for a period of time Social Security would bring in more money than it paid out, and that the money could safely be pledged, in effect, to buy government bonds, to finance the deficit. And that's what has essentially happened. Now, I've done my best to try to turn that situation around by getting us back to balance and now moving us into surplus so that we can recover some of these funds in the future to deal with the long-term challenge of Social Security.

But here's the basic problem -- which I'm sure you understand. In 2029, all the baby boomers will be 65 or over. Most of them will be in the retirement system. At that time, if we continue to work at present rates, retire at present rates and grow our population at present rates, there will be only about two people working for every one person drawing. Even today, very few people can actually live on only their Social Security income. But it's important to remember that if we didn't have Social Security income, nearly half the seniors in this country would not be above the poverty line.

So the trick is how to make this system last beyond 2029 without having undue new tax burdens on younger people who are trying to raise their children; what options are out there for doing that; and how can we also make it easier, as many of you said, to save for your own retirement. The one think I think is very important is that young people understand especially what the realities are. I mean, I saw a survey the other day that said that some people -- a lot of people in their 20s thought it was more likely that they would see a UFO than that they would ever draw Social Security. Now, that's not accurate. We can easily save this system. And we may be able to do a number of things, including some of the things that some of you suggested that would give a higher rate of return on the investment.

But under presently conceivable circumstances, no matter what we do with the Social Security system, Americans should be saving more for their own retirement. So we're working very hard right now to make it easier, for example, for more people in small businesses and more self-employed people to take out 401(k) plans; to take those plans with them when they move jobs; to have a system that would guarantee the security of that kind of retirement savings. And we've done a number of things in the last two years -- there is some more legislation before Congress now. And some of you in these hearings may have even greater ideas about what we can do to make it easier for people to save for their own retirement.

But I always tell people that we actually have two things we have to do. We have to secure the safety, the soundness and the salvation of Social Security into the 21st century and look at all the options that have been raised here by you. But we also have to educate the American people that they must save more for their own retirement; and then we have to make it easier for them to do so and to succeed in doing so.

The last point I'd like to make is this: because of the reductions in the deficit, the reduction in interest rates, we may have already added a few years to the life of the Social Security trust fund. We can put a lot of years on the life of the fund, we can stabilize the fund. And now that we've eliminated these chronic, huge deficits of the last decade and a half, we can set this thing right. And if we act now-- meaning early next year -- with the support of the American people across party lines and regional lines and income lines, we can make modest changes today that will have a huge impact in the next century.

So the last thing I'd like to say to all of you is, one of you said that you wanted us to do what we needed to do in a hurry and in a non-partisan, fair way. That's the message I think that all of us need to hear -- all the members of Congress, all the members of our administration. We do not need to put this off. Many people are afraid that anything you do to Social Security is political dynamite. I think it's worse dynamite to walk away from a problem when we can solve it with discipline, modest, far-sighted actions now that will have a huge impact 20 and 30 years from now.

So I thank you. I was profoundly impressed by what you had to say, and I wish I had more time to go through all your questions. I know in two hours, Ken Apfel, our Social Security Administrator, will be on this program and he'll be able maybe to pick up some of the more specific questions you asked me and others that you doubtless will have for him.

And again let me thank the Pew Charitable Trust. This is a wonderful public service.

11. ADDRESS BY THE PRESIDENT TO A NATIONAL FORUM ON SOCIAL SECURITY --April 7, 1998

Penn Valley Community College
Kansas City, Missouri

11:25 A.M. CDT

THE PRESIDENT: Thank you very much, ladies and gentlemen. Good morning. Thank you, Governor Carnahan, for your leadership on so many areas and your friendship. I'd like to thank the leaders of this fine institution for welcoming us here and for the mission they perform every day. I thank Senators Kerrey and Santorum for their concern, longstanding, for Social Security reform and their presence here, and Representatives Hulshof and Pomeroy, who are participating in the program, and Representative McCarthy, and also Representative David Dreier from California, who is a native of Kansas City, who are here.

I thank the members of our administration who have come who will be participating: the Director of the Office of Management and Budget, Frank Raines; the Deputy Secretary of the Treasury, Larry Summers; the Director of the National Economic Council, Gene Sperling; and the Administrator of Social Security, Ken Apfel.

Attorney General Nixon, Treasurer Graeber, Insurance Commissioner Sebelius, thank you all for being here. Mayor Cleaver, thank you for hosting us. I don't know if Mayor Marinovich is here or not, but if she is, hello. (Laughter.)

I'd also like to thank the leaders of the AARP, including Horace Deets, and the leaders of the Concord Coalition, including Martha Phillips, for their hosting of this forum. The AARP has long been a leading voice for the elderly, the Concord Coalition long a leading voice for fiscal responsibility over the long run, and their willingness to work together is very important. I'd also like to thank the Speaker of the House, the Senate Majority Leader, and the House and Senate Democratic leaders for nominating and being represented here today by the members of Congress who are on the program.

As the Governor said, this is a good time for America and a time of great hope. Our economy is the strongest in a generation. Many of our social problems are on the mend. Our leadership in the world is unrivalled. Within the next year, we will have a balanced budget. And where once there were deficits projected as far as the eye can see, we now have projected surpluses as far as the eye can see -- a trillion dollars' worth over the next decade.

But this sunlit moment is not a time to rest. Instead, it is a rare opportunity to prepare our nation for the challenges and the opportunities of the 21st century -- or in the words of the old saying, to fix the roof while the sun is shining. In the coming century, the aging of our society will present both great challenges and great opportunities. I hope to live to be one of those people and so, to me, it's a high-class problem.

But because a higher percentage of our people will be both older and retired, perhaps our greatest opportunity and our greatest obligation at this moment is to save Social Security. In the State of the Union address, I called on Congress to set aside every penny of any surplus until we had dealt with Social Security first. Both parties in both chambers of Congress have joined in this call. That is the good news.

Today we turn to the business at hand -- building public awareness of the nature and scope of the problem, and building public consensus for the best changes. Clearly, we will strengthen Social Security and reform it only if we reach across lines of party, philosophy, and generation. And that is one reason for the broad representation of age groups in this audience today. We have to have open minds and generous spirits. And we all have to be willing to listen and to learn.

For too long, politicians have called Social Security the "third rail" of American politics. That's Washington language for, it's above serious debate. This year we must prove them wrong. This conference, with its wide participation, is a good start. On the political calendar, 1998 is an election year. But on the Social Security calendar, we must resolve to make it an education year, when we come to grips with the problems of the system and come together to find the answers.

This issues is complicated, so we need the best ideas -- whatever their source. The issue is controversial, so we have to have a national consensus on both the nature of the problem and the direction we must take.

That's why I've asked all the members of Congress to also host town hall meetings in their own districts. I'll be talking with several of them by satellite later today. And we'll hold more additional forums like this one around the country. In December, there will be a White House Conference on Social Security. In January, I intend to convene the leaders of Congress to draft a plan to save it. With this effort we can forge a national consensus, and we must.

For 60 years, Social Security has meant more than an ID number on a tax form, more than even a monthly check in the mail. It reflects our deepest values, the duties we owe to our parents, to each other, to our children and grandchildren, to those who misfortune strikes, to our ideals as one America.

Missouri's native son, Mark Twain, once said, "I've come loaded with statistics, for I've noticed a man can't prove anything without statistics." So I thought we would begin today with a few statistics. Today, as the first chart shows, 44 million Americans depend upon Social Security, and for two-thirds of our senior citizens it is the main source of income. For 18 percent of our seniors it is the only source of income.

But Social Security is more than just a retirement program. Today you can see that more than one in three of the beneficiaries are not retirees. They are children and spouses of working people who die in their prime. They are men and women who become disabled, or their children.

So Social Security is also a life insurance policy, and a disability policy, as well as a rock-solid guarantee of support and old age. That is why we have to act with care as we make needed repairs to the program occasioned by the huge growth in retirees.

Since its enactment over 60 years ago, Social Security has changed the face of America. When President Roosevelt signed the bill creating the Social Security system, most seniors in America were poor. A typical elderly person sent a letter to FDR begging him to eliminate "the stark terror of penniless old age." Since then, the elderly poverty rate has dropped sharply. You can look here and see that in 1959 the poverty rate was over 35 percent for retirees. In 1979, it had dropped to 15.2 percent. In 1996, the poverty rate is down below 11 percent.

Now, there's something else I want to say about this. Even though most seniors need other sources of income in addition to Social Security to maintain a comfortable lifestyle: if Social Security did not exist, today half of all American retirees would be living in poverty -- 60 percent of all women. Fifteen million American seniors have been lifted out of poverty through the Social Security system.

Today the system is sound, but the demographic crisis looming is clear. The baby boomers -- 76 million of us -- are now looking ahead to their retirement. And people, clearly, are living longer, so that by 2030, there will be twice as many elderly as there are today.

All these trends will impose heavy strains on the system. Let's look at the next chart here. You can see that in 1960, which wasn't so long ago, there were over five people working for every person drawing Social Security. In 1997, last year, there were over three people --3.3 people -- working for every person drawing. But by 2030, because of the increasing average age, if present birthrates and immigration rates and retirement rates continue, there will be only two people working for every person drawing Social Security.

Now, here's the bottom line. The Social Security Trust Fund is sufficient to pay all the obligations of Social Security -- both retirement and disability -- until 2029, after which it will no longer cover those obligations. Payroll contributions will only be enough to cover 75 cents on the dollar of current benefits.

If we act now, we can ensure strong retirement benefits for the baby boom generation without placing an undue burden on our children and grandchildren. And we can do it, if we act now, with changes that will be far simpler and easier than if we wait until the problem is closer at hand. For example, a $100 billion of the budget surplus, if used for Social Security, would add a year or more to the solvency of the Trust Fund with no other changes being made. Other changes, which could be made, can be phased in over time, and keep in mind, small changes decided on now can have huge impacts 30 years from now.

So how should we judge the proposals to change the Social Security system? Here are principles that I believe we should follow, and they're on the next chart here. I believe, first of all, we have to reform Social Security in a way that strengthens and protects a guarantee for the 21st century. We should not abandon a basic program that has been one of the greatest successes in our country's history.

Second, we should maintain universality and fairness. For half a century, this has been a progressive guarantee for citizens; we have to keep it that way. It was not until 1985 that the poverty rate among seniors was lower than the poverty rate for the population of America as a whole. It is an astonishing achievement of our society that it is now so much lower, and we should not give it up.

Third, Social Security must provide a benefit that people can count on. Regardless of the ups and downs of the economy or the financial markets, we have to provide a solid and dependable foundation of retirement security.

Fourth, Social Security must continue to provide financial security for disabled and low income beneficiaries. We can never forget the one in three Social Security beneficiaries who are not retirees.

And fifth, anything we do to strengthen Social Security now must maintain our hard-won fiscal discipline. It is the source of much of the prosperity we enjoy today.

Now, these are the principles that will guide me as we work to forge a consensus. I hope they're ones that all of you can also embrace. This national effort will call on the best of our people. It will require us to rise above partisanship. It will require us to plan for the future, to consider new ideas, to engage in what President Roosevelt once called "bold, persistent experimentation." It will remind us that there are some challenges that we can only meet as one nation acting through our national government, just as there are others we can better meet as individuals, families, communities.

This is also a challenge for every generation. To the older Americans here today, let me say, you have nothing to worry about. For you Social Security is as strong as every. To the younger people here today who may believe that you will never see a Social Security check -- indeed, I saw a poll which purported to be serious that said that Americans in their twenties thought it was more likely they would see a U.F.O. than that they would every draw Social Security. (Laughter.) That skepticism may have been well founded in the past, but just as we put our fiscal house in order, we can and must put Social Security in
order.

And above all, to my fellow baby boomers, let me say that none of us wants our own retirement to be a burden to our children and to their efforts to raise our grandchildren. It would be unconscionable if we failed to act, and act now, as one nation renewing the ties that bind us across the generations.

Thank you very much. (Applause.)

END 11:39 A.M. CDT

ADDITIONAL REMARKS BY THE PRESIDENT

Penn Valley Community College
Kansas City, Missouri

1:20 P.M. CDT

THE PRESIDENT: Good afternoon. Thank you, Ken. As Ken said, I'm speaking to you from Kansas City, where we're talking about what we must do as a nation to strengthen Social Security for the 21st century, and
I'm looking forward to continuing to talk with you today.

Let me begin by thanking Representatives Bob Borski, Ben Cardin, Nancy Johnson, Jim Kolbe, and Jerry Weller for holding these town meetings across our nation. For each of you lawmakers, these forums
are not the only way you've worked to strengthen Social Security. Representatives Borski and Cardin are cosponsors of key legislation to establish the Save Social Security First Reserve Fund. Representative Borski supports saving any budgetary surplus for investment in Social Security, and I know Representative Cardin does
as well.

Now, Representative Johnson has been a strong advocate for SocialSecurity beneficiaries. She has urged her fellow members of Congress to continue to act with fiscal restraint as they debate what to do with the budget surplus. Representative Kolbe is one of our foremost experts on retirement and pension policy and is the sponsor of a resolution to establish a joint commission on Social Security reform. And Representative Weller has been a powerful voice for protecting the Social Security trust fund and was an original cosponsor of the Social Security Preservation Act.

Together, all of you are proving that we can work in a bipartisan way to make sure that Social Security is as solid for our children as it was for our parents, and I thank you for that.

As you know, this year, working together with Congress, we'll be balancing the budget for the first time in 30 years. We have a right to be proud of that achievement, but we must also build on it. In the State of the Union, I called on Congress to set aside every penny of any budget surplus until we save Social Security first. Social Security is deeply woven into our nation's social fabric. For 60 years, it's meant more than an ID number on a tax form, even more than a monthly check in the mail. It reflects our deepest values and the duties we owe to one another.

Today 44 million Americans depend upon Social Security. For two-thirds of our seniors, it's the main source of income. And one in three beneficiaries are non-retirees. Social Security is life insurance and disability benefits as well as a rock-solid foundation of retirement security.

Today Social Security is sound, but a demographic crisis looms if we fail to act. For over the next 30 years, 76 million baby boomers will retire. By 2030 there will be twice as many elderly Americans as there are today. If we don't act now, by then payroll contributions will only cover 75 percent of benefits. That's why I've challenged our nation to act now to strengthen Social Security for the 21st century.

Here are the principles, I want to follow for meeting this challenge. First, any reform should strengthen and protect Social Security for the 21st century. We can't abandon the basic core program that's been one of the great successes of our nation's history.

Second, we must maintain the universality and the fairness of Social Security. For a half-century this program has been a progressive guarantee for citizens. We have to keep it that way.

Third, Social Security must provide a benefit people can count on. Regardless of the ups and downs of the economy or the financial markets, we must make certain that Social Security will provide a foundation of
retirement security.

Fourth, Social Security must continue to provide financial security for disabled and low income beneficiaries. We can never forget the one out of three Social Security beneficiaries who aren't retirees.

And fifth, any strengthening of Social Security must maintain America's hard-won fiscal discipline, one of the main reasons we're enjoying our prosperity today.

These are the five principles that will guide me on Social Security, principles by which I'll judge all possible proposals. They're principles I believe can and should guide us all as we work to forge a national consensus for reform.

Above all, I know that we can strengthen Social Security only if we reach across the lines of party, philosophy, and generation with open minds and generous spirits. For too long, politicians have called Social Security the third rail of American politics. That's Washington language for, you can't really discuss any changes seriously. This year we have to prove them wrong.

I know that on the political calendar 1998 is an election year. But on the Social Security calendar, let's all resolve to make 1998 an education year, a year we come to grips with the problems of the system and come together to find the answers. These forums are a very hopeful beginning, and I'm pleased to have had this chance to start this vitally important dialogue with all of you today. This December we'll host a White House conference on Social Security, and in January I'll convene the leaders of Congress to draft a plan to save Social Security for the 21st century.

I'm confident we'll meet this challenge as Americans always do -- by working together, honoring our values, and preserving the solemn compact between generations that helped to build our nation.

Now I'd like to turn the discussion over to Congressman Borski. Bob, take it away. (Applause.)

* * * * *

THE PRESIDENT: Thank you very much, Congressman. Let me try to go back over some of what all of you said. First of all, Congressman Cardin talked about the need to increase private saving; some others did. Congressman Borski talked about the fact that there were still some people on Social Security living in poverty.

Let me try to address those things together, along with some of the other concerns which were mentioned. It is true that there are still about 11 percent of our elderly people in America living in poverty. But it's important to recognize that that's a lower percentage than in the overall population in America, and that it's just been since 1985 that the poverty rate among seniors was lower than the overall poverty rate.

Now, what can we do to make it better? There have to be other sources of income. There have to be other sources of private savings. And that is -- of course, the possibility that some part of that could come out of Social Security reform is one of the things were discussing.

But over and above that, I'd like to point out that Congress has done a lot of work with our administration over the last five years, first of all to save 8.5 million pensions that were underwater when I took office, to stabilize 40 million others, and to make it increasingly more attractive for employees on modest wages and for small business employers to take out 401(k) plans, and then to make it easier for people to move from job to job and take their 401(k) with them. We've also dramatically expanded the availability of IRAs.

So we've tried to do some things already to help increase the ability and the attractiveness of saving, over and above Social Security. I don't think, no matter what we do with Social Security, the American people are going to have to be sensitized, the younger generation is, to do more to save for their own retirement.

On the other hand, I think it would be a great mistake, even for the youngest members of these audiences today, to believe that we shouldn't preserve Social Security as a universal guarantee, because without Social Security today almost half the seniors in America would be living in poverty, even though most seniors have income over and above that. So the trick is to save Social Security, but also to have more income coming to people from private savings.

Now, let me mention just one or two other things. Nancy Johnson talked about wanting -- made one Medicare statement about annual physicals. I believe that more and more, as people live to older ages and are healthier, we'll have to do more preventive care within the Medicare program. Nancy, you know, we've worked hard to deal with -- to have more mammographies, for example. We're doing other preventive screening now. I think the more of that we do, the more we're going to save over the long run. And, more importantly, we'll improve the length and the quality of life.

And she said, people want to know whether the seniors can count on Social Security. The answer to that is, absolutely yes. The Social Security trust fund, according to Mr. Apfel, who has got a legal responsibility to tell the truth about it, is stable until 2029. In 2029, shortly thereafter, the taxes coming in will only cover about 75 percent of our obligations. One of the reasons we want to move now is that by making relatively modest changes now we can extend the life of the Social Security trust way out beyond 2029.

Can young people, the high school students here, look forward to drawing Social Security? The answer to that is, they certainly can if we do our jobs here in the next several months. You know, a few years ago, I can understand your skepticism because we were running huge deficits, we were projected to have $300 billion a year deficits as far as the eye can see. Now we're going to have a balanced budget sometime in the next year, and it's projected we'll have a trillion dollars in surpluses over the next decade -- more than enough money, if we do some other things to fix the Social Security system for the younger people listening here today.

But I want to say again, no matter what we do to Social Security, those of you who are 16, 17, 20, and 21, I know it's hard to think about the end of your life, your later years when you're that age, but you will have to do more, through your employer or through your own individual efforts, to save for your own retirement over and above Social Security if you want to maintain your standard of living when you retire.

Now, Mr. Kolbe asked a couple of questions about rasing the retirement age, and then Mr. Weller asked about specific plans. Let me say, I don't want to dodge any of that, but I think all those proposals should be out there on the table. And I think that the most important thing now is if I advocate a specific plan right now, then all the debate will be about that. The first thing we've got to do is to get the American people solidly lined up behind change. Let's stick with these basic principles I've outlined, and I want to encourage other people to come forward with their ideas. In December, we'll all sit down, come up with our -- we'll all put our various ideas on the table, and we'll begin hammering out a plan that we can present in January.

I still hear some new ideas almost every week coming from Democratic and Republican members of Congress and private citizens that I think should be aired. If I put a specific plan on the table now, it will undermine and weaken debate, not strengthen it.

I do agree with those of you who say it ought to be possible for us to save Social Security without a payroll tax increase. I don't think we ought to automatically rule out any ideas over the next 30 to 50 years, as some would do, but I think that we plainly know that we can do this and provide for increased strength of the system without a payroll tax increase, given current assumptions. So I believe that will be possible.

Now, let me just answer one last question. You asked about rating the Social Security fund. Let me say that that just depends on how you look at. The Social Security trust fund is basically a guarantee that certain obligations will be paid out to retirees, including the COLA, as well as to the disabled and to those who are the survivors who are eligible to be paid under it.

Now, in 1983, when the Social Security reforms were passed, it is true that the government was collecting more in Social Security taxes than were needed in any given year to pay for that. So rather than raise other taxes to pay for other governmental expenses, the rest of the government borrowed and gave a bond to the Social Security trust fund, with the full faith and credit of the United States behind it, a legal obligation to pay back the money with interest to the Social Security trust fund when it was needed to pay out. And so there is no reason to believe that all the money that's been taken out since 1983 will not be paid back in as soon as it's needed to meet the legal obligations of the Social Security trust fund.

By doing that, by borrowing that money and paying it back, we didn't do anything to affect the obligations of the fund to pay Social Security recipients in the future. But we did keep the government from borrowing more money out in the private sector, competing with the private sector for money, and running interest rates up. So I think on balance it's been a safe and sound thing to do, and I do not believe that the raid has occurred on the Social Security trust fund. It would be a raid if the money were not paid back when it's due to be paid to you, but the money will be paid back when it's due to be paid to you.

And that's one of the things that we have to make sure is never interfered with, the legal obligation of the United States government to replenish that trust fund and pay back the money when it's needed for the recipients.

Thank you very much. (Applause.)

END 1:44 P.M. CDT

THE PRESIDENT: Five and a half years ago, America chose a new course of fiscal discipline and ecOnomic growth, balancing our budget and investing in our people. Holding fast to that course, our people have built the strongest economy in a generation.

The success of this strategy cannot be cause for complacency, however. Instead, it offers us an opportunity and an obligation to act boldly to strengthen our nation for the new century. Above all, we can harness our unsurpassed prosperity to uphold our duty to our parents, to our children and to each other through Social Security and Medicare.

I've just been briefed by the four Social Security and Medicare trustees for the administration: Secretaries Rubin, Shalala, Herman and Social Security Commissioner Ken Apfel. The trustees have issued their annual report on the future financial health of these vital programs.

The trustees have told us today that the Balanced Budget Act I signed into law last year has significantly improved the financial future for Medicare. The unprecedented reforms included in that law have cut the so-called 75-year deficit of Medicare in half -- even as we have extended new preventive benefits, provided more health choices for Medicare beneficiaries, and instituted other reforms that extended the life of the Medicare trust fund for a decade.

In fact, because of the bipartisan steps taken last year, the long-term prognosis for Medicare is stronger than it has been in over a decade. A bipartisan commission is now at work to craft further steps to strengthen the complex program into the 21st century. I look forward to their recommendations.

The trustees also report that the strength of our economy has led to modest improvements in the outlook for Social Security. They project that economic growth today will extend the solvency of the Social Security trust fund by three more years, now to 2032.

Today's report is encouraging. It shows we can honor our values and meet our most fundamental obligations, even as we balance the budget. However, these modest improvements only underscore the fundamental challenge we face. We must act to make certain that Social Security is as strong for our children as it has been for our parents.

Above all, let me say again, we must save every penny of any budget surplus of any size until we have strengthened Social Security. I've been heartened by the support this approach has received from lawmakers from both parties. But as estimates of the possible surplus have grown, the demand for new tax and spending initiatives that could upend our fiscal discipline have grown as well. Fiscal responsibility created our prosperity. Fiscal irresponsibility could undercut it. So I will resist any proposals that would squander the budget surplus, whether on new spending programs or new tax cuts, until Social Security is strengthened for the long-term. Once more I will insist that we save Social Security first.

In the coming months we will work to build public awareness of the nature and scope of the challenge, and to build public consensus for solutions. We must proceed with care, remembering that Social Security offers our people not only a guarantee of retirement security, but also a life insurance and a disability insurance policy as well.

Any changes we make now will be far easier than if we wait until the problems of Social Security are at hand. We will strengthen Social Security only if we reach across lines of party philosophy and generation, as we did when we drafted last year's balanced budget. And if we make this year a year of education on Social Security, I'm confident we will come together to take the necessary steps next year.

Finally, let me say that as we continue to take the necessary steps to sustain the growth of our economy, we must look ahead to the challenges that remain. Today, once again, I have asked Congress to strengthen America's commitment to the International Monetary Fund and the U.N. In this new era, the health of our economy will be deeply affected by the health of the world economy, and the security of the United States is clearly affected by the security of the rest of the world. Failure to act on these matters will put at risk both global economic stability, which will affect our own, and the prosperity that has widened the opportunity that we have enjoyed in this country -- the very prosperity which has made possible the progress on Social Security and Medicare that I announced today.

We've got a real opportunity here, and a rare one, to act today to provide for our children's tomorrows. We should seize the moment, and I'm confident that we will.

Thank you.

Q Mr. President, Newt Gingrich says your administration postures more and achieves less than any administration in America history. How do you respond?

THE PRESIDENT: Well, I think the achievements speak for themselves. And he said a lot of things last night that I don't think it would serve any useful purpose for me to respond to. There is enough negative political talk in Washington every single day without the President adding to it. I want to focus on the challenges facing our country, and that's what I intend to do.

Q Mr. President, he also said that you should tell your supporters to stop attacking the independent counsel, Ken Starr.

THE PRESIDENT: I don't have -- I've already told you, Mr. Gingrich said a lot of things last night that I don't think deserve a response, and I think it would not serve the American public well for me to waste my time doing it. I think I need to be focused on the public issues that affect them, and that's what I intend to do.

Q Do you have any thought of firing Ken Starr? I mean, he made that suggestion.

THE PRESIDENT: Of hiring him?

Q Firing him, sir. (Laughter.) He said, if you want, you could do it in the morning. I mean, have you ever thought of that?

THE PRESIDENT: First of all, that's not what the statute says.

Q I'm just quoting him, sir.

THE PRESIDENT: I know, but I don't want to respond to what he said.

Q Are you concerned that the Canadian Prime Minister's visit is undermining your efforts to isolate Castro?

Q -- tax cuts --

THE PRESIDENT: Wait, wait, I'll take both, but -- go ahead.

Q Are you concerned that the Canadian Prime Minister's visit to Cuba is undermining your efforts to isolate Castro?

THE PRESIDENT: Well, Canada and most other countries in the world do not agree with the extent of our embargo. But Canada has been a good, loyal ally in the cause of human rights. And I talked to the Prime Minister at some length both on the telephone and when I saw him about the importance of advocating a human rights agenda, and I believe that he will do that. I think he will push for democracy and human rights in Cuba. And if he does that effectively and makes that case, the same case that President Cardoso of Brazil made when we were in Chile -- when he said that it would be possible for Cuba to preserve its social contract in health care and education and still make the transition to democracy, and that's what they should be working on now -- then it could serve our common goal. We can have different approaches to a common goal and I think we do have a common goal.

Go ahead, Helen, I'm sorry.

Q I was asking, are you threatening a veto for any tax cuts?

THE PRESIDENT: I tried to make it clear that I will do my best to stop any legislation that does not honor the principle of saving Social Security first.

There are lots of good ideas out there that deserve to be evaluated in the coming months about what we should do to promote long-term security and stability for not only our parents, but the younger generation, and secure Social Security, and they all ought to be debated. But when we move we ought to move in the context of Social Security reform.

Then, after that's out of the way, we can see what the Treasury looks like and what else should be done. But I think we need to deal with Social Security first. And I still believe that a majority of members of both Houses in Congress and both parties believe that. I hope they do and I hope they'll stick with it.

Q Do you have any ideas of how to save it?

THE PRESIDENT: Well, sure I do. But as I said in the first forum -- and I think I've been proved right -- you see Senator Moynihan's got a proposal out there, Senator Kerrey's got a proposal out there, there are many proposals that have been offered by various Republican members of the Congress. It is important for me to keep this process going and get these ideas out there. And if I were to actually take a position now, it would undermine debate and public education and immediately focus on the specific piece of legislation, which I think is the worst thing we can do.

We know -- every survey of American opinion shows that there's a far different level of understanding about this issues today even than there was a year ago. Nearly everybody knows that something substantial, really substantial, has to be done to reform the Social Security system to accommodate the baby boom generation and then, subsequent, the generations after that. And yet there is a dramatic difference of opinion across the age lines about what exactly should be done and what the facts are.

So we have to -- we really need to continue this effort we're making in this calendar year to educate the public and to get all the ideas out there, and to encourage all the proposals to be viewed against the backdrop of how it fits into the overall scheme of things. And then I think what you'll see is -- and what I certainly hope you'll see -- is very rapid action early next year. I have a plan. We're going to end up in December with a conference here, we're going to meet with the leaders of both parties in Congress, and I'm going to do my best to hammer out a plan, which then will be a centerpiece of what I recommend to the American people and the Congress early next year.

Q Mr. President, on the Iraqi report at the U.N. --

Q May I ask on the U.N. and the IMF, sir? Despite what you said, it seems unlikely Congress will pass funding this year. Can you spell out in more detail what you think will happen if there's not funding? Do you have any other mechanism to give --

THE PRESIDENT: Well, let me just make it clear that Secretary Rubin has done a good job, I think, managing a difficult situation. But let's just look at Asia, for example. There's been a lot of talk about whether the IMF should be active in Asia, what it should be doing. The United States has had a good deal of success over the last five years by exercising economic leadership to open more markets to American products and services on terms that were fair not only to ourselves, but to our trading partners. About a third of our economic growth has come as a result of that increase in trade. Just under a third of our exports are going to Asia. Now, I think, therefore, it is clear that it is in our long-term interest for the IMF to be involved in trying to stabilize those Asian economies and help them to recover.

In our personal interest, how can we expect to be the leader of the world and also to benefit, personally, economically, from a system that we won't contribute to, and we won't pay our fair share on? I think, virtually, every American now believes -- or at least a huge majority -- when it comes to the United Nations that in this interdependent world we should share responsibilities. I think people liked it when we shared responsibilities in Haiti, when we shared responsibilities in Bosnia.

And we're saying to the world, yes, we want to continue to lead the world toward peace and freedom; we understand this is an important part of our security and our prosperity; but we're having a little political spat in the United States, and we don't think we ought to pay our dues to the U.N. We think that different rules apply to us, and we have a right not to pay our way, so we can have this fight over an issue that is unrelated to our U.N. responsibilities or our IMF responsibilities.

I don't think that is a responsible, mature message to send to the world by the leading country in the world. I think that if we want to lead, we ought to lead and we ought to lead by example by paying our way. That's what I believe. And I hope that I'll be able to prevail upon the Congress to make some progress in that direction.

Thank you.

16. REMARKS BY THE PRESIDENT TO SAVER SUMMIT -- June 4, 1998
Hyatt Regency Hotel, Washington, D.C.

THE PRESIDENT: First let me say a special word of thanks to the members of Congress who are here and especially those who sponsored the legislation which created this summit. I thank Governor Allen and Secretary Herman for doing their sort of bipartisan introduction thing. I couldn't help wondering what all of us looked like up here to all of you. (Laughter.) I bet we look like a bunch of school boys in the spelling bee dying for the recess bell. (Laughter.) But this has actually been better -- it's been enlightening for me.

The most encouraging thing of all that was said to me, from a purely selfish point of view was when the speaker said, if I got to be 50 I could look forward to living another 30 years. Yesterday I was in Cleveland and I went to an elementary school to see some work that some of the AmeriCorps volunteers are doing, and I was shaking hands with all these little kids. And it really is true that they say the darndest things. And this young boy was six or seven years old, maybe, a little bitty boy, and he said, "Are you the real President?" And I said, yes. And he said, "And you're not dead yet?" (Laughter.) And I realized -- I didn't know what he meant. First I thought he'd been reading the local newspaper here. (Laughter.) And then I realized that to him the President was George Washington or Abraham Lincoln and he actually thought it was a qualification of the job that you had to be deceased to hold it. (Laughter.) It was an amazing encounter. (Laughter.) But now, I've been reminded of the actuarial tables and I'm ready to go back to work. (Laughter.)

Let me say just a couple of words by way of introduction. Most of what should be said has already been said, and very eloquently. And I thank all the previous speakers. But I would like to make one point that has been alluded to, but I want to try to drive it home.

We're living in a time where we have the lowest unemployment rate in 28 years, the lowest welfare roles in 27 years, the lowest crime rates in 25 years, the lowest inflation rate in 32 years, the smallest government in 35 years, and the highest home ownership in history. And we're about to have a balanced budget and a surplus for the first time in 29 years. This has given this country enormous self-confidence. We know that when we work together we do get things done. We do not know when we'll have a time like this again.

All of our reading of human history teaches us that nothing ever stays the same forever. If we can't deal with this issue now, when will we ever deal with it? We have an obligation to deal with this challenge, and deal with it now. And we have an opportunity to do so. (Applause.)

The balanced budget has freed up capital. It's led to an increase in -- the efforts in fiscal responsibility have led to a significant increase in our national savings rate, even as individual savings have gone down. And that's been very good to this point because it's enabled us to have lower interest rates, higher investment, and higher growth. And you see here the relationship between savings and investment and growth, which has already been alluded to. So we've had an increase in net national savings and a decline in the budget rate and it's led to more growth.

But the problem is that we have to have more personal savings as well. And we have to deal with the problems presented especially by Social Security and with the fact that there are 50 million Americans without private pensions, and by the fact that very few people are doing any savings above Social Security in whatever pension they have or don't have for their own retirement. So this is a deeply personal issue that Senator Lott, I thought, grippingly discussed, and it's also a big issue for our country.

We have the opportunity and the obligation, I believe, to deal with a lot of our other long-term challenges, but a lot of our other long-term challenges affect our children and affect children who have a poverty rate much higher, almost twice as high, as senior citizens. Unless we deal with this issue, unless we nail down Social Security for the 21st century and stabilize it, and unless we deal with the need for more private pension coverage, and unless we deal with the need for more savings, it will also -- make no mistake about it -- it will impair in a direct financial way our ability to fulfill our responsibilities to our children who are living in difficult circumstances and now we can help to chart a different future, and eventually it will undermine the self-confidence we're now enjoying and it will make people very short-sighted again when we could be dealing with these issues that will shape the future 10, 20, 30, 50 years from now. So I think it's a very, very important thing.

And the answer to Senator Lott's question, let's begin with Social Security. And I want to thank him for what he said and for what he said to me in private, and to both the Speaker and Senator Lott and the other Democratic leaders of the Congress. I believe, while I think this savers summit should keep meeting, I don't believe we should wait until all of your meetings here in advance to deal with the Social Security issue. The demographics are too clear.

We now have until 2032 before it starts to run a deficit, but that's very misleading. With modest changes now, we can have huge impacts later. If you wait, the closer you wait, the more dramatic the changes you have to make just to pay the bills. So my view is that we should continue to have these forums around the country, these bipartisan forums; we should continue to solicit advice; but our goal ought to be to have the Congress take up Social Security reform as the first order of business early next year and finish in the first half of 1999, saving Social Security for the 21st century, so that we baby boomers do not bankrupt our children in their ability to raise our grandchildren. And my commitment is to try to get that done on that timetable. (Applause.)

In order to do it, I have to say I still believe that we have to resist two temptations with the budget surplus. The first temptation is to say, well, it's large and projected to be growing -- and maybe I've just been in executive positions too long in public life, but those projections don't mean a lot because sometimes they don't pan out.

Now, we've been real lucky for the last five years, all our projects have been too conservative and we've done better than we've projected. But I think the first thing we have to do is to resist the tendency to spend the surplus on spending our tax cuts until we have dealt with the Social Security issue. The second thing I think we have to do is to resist the temptation to take one thing, even it seems like a very good thing to a large number of people, like the individual accounts, and deal with that without knowing how you're going to deal with the whole system. So what my view is -- that we ought to say that we're going to pass comprehensive reform. And I don't rule in or out any ideas here on that. That's not my purpose. And I solicit all of your ideas.

But I just think it would be a big mistake, knowing what the magnitude of the money we're talking about is, to miss this chance to say we're going to hold on to this surplus until we pass comprehensive reform. Then if there is money over and above that after we do this --I hope in early 1999 -- we can have a wonderful, old-fashioned American political debate about what the best way to proceed is -- whether we should cut taxes, invest the money, pay down the debt -- we can have that debate. But I think we should commit ourselves again to the idea that saving Social Security first is the right policy for America and the right thing for the 21st century. And I hope we will do that. (Applause.)

Now, let me say, in addition to that, we have some very specific proposals which I think respond at least in part to the concerns which were raised by earlier speakers on pension matters. The Vice President mentioned the Retirement Protection Act, which passed, I believe, with an almost unanimous vote in Congress in late 1994, to protect the pension benefits of more than 41 million workers. But I want to build on that.

In the balanced budget proposal that I have presented to Congress, I proposed to offer tax credits to small businesses who start pension plans to help them deal with the problems, the costs that you mentioned of starting the programs up and getting the advice. It could work, I think, in the first year, about $1,000 for small business, which should cover the costs involved in the start-up.

It would encourage employers who don't provide pension plans to give workers the option of contributing to IRAs through payroll deductions, the budget would. The budget also cuts the vesting period for 401(k)s from five years to three years. Eventually -- I'll make a prediction -- it may not happen in our time here, but eventually we will have to figure out how to have people paying, investing continuously, no matter how frequently they change jobs, because, if you look at all modern advanced societies, you have a higher and higher percentage of people doing part-time work, you have a higher and higher percentage of people doing more than one job, and you have more rapid turnover. You have a very high rate of vitality and activity in the business community. It means a lot of places being started, but the more businesses that start, the more you're going to have that also won't go on, that won't make it.

And in the increasingly churning, dynamic world, we are going to have to focus very carefully on that. This is something I believe, by the way, that I think the Saver Summit could really work on in the years ahead because of the congressional legislation, you know, having you meet again in a couple of years and then again in a couple of years after that. But for right now -- we know enough now to know we can preserve financial stability in a responsible way and cut this vesting period from five to three years. And I hope very much that we'll be able to do that in the budget discussions with the legislation that passes this year.

Finally, there's an easy to administer, defined benefit plan that's part of our budget proposal, and I hope the Congress will pass that.

Also, in an effort to encourage more workers to enroll in the 401(k)s that are already available to them, we have made it clear that employers can automatically enroll workers in the 401(k) plan unless the workers themselves choose to opt out. Now, currently, most companies require the employees to opt in to the 401(k) plans, a process that takes some time and some paperwork. Companies that have cut out the paperwork with automatic enrollment policies that then the employees can opt out of report participation rates of about 90 percent, as compared to an overall participation rate of 67 percent for companies offering 401(k)s. So that's something that you will discuss. It sounds like a small thing, but it's one thing that can really affect a very large number of people in getting them into the business of saving for their own retirement.

Let me just say, lastly, we all know we have to do more about personal savings. We have worked together in a bipartisan way to expand the availability of IRAs and the attractiveness of them so that people could invest in IRAs and then withdraw tax free if the money were used for education purposes or health emergencies or other things of that kind. But we need, clearly, to do more. And this is an area where, quite apart from the 401(k) issues and the pension areas, I invite you to give your best ideas to the administration and to the Congress.

Because -- let me just give you an idea of what a difference it could make. A person who could afford to save $5 a day for 40 years would have $300,000 by the time he or she retired, at just a modest return, above and beyond Social Security and pension. Young people have a unique opportunity. If we can get it into their minds early, if you save $2,000 a year beginning at age 25 and you retire at 65, you have $328,000. If you wait until you're 45 to start, you only have $78,000. So that really matters.

And let me finally say that -- let me end where I began. This is a moment of real self-confidence for our country. People have the emotional space to think about the long-term. If you just think about your own businesses, your own families, raising your kids; if your child is sick and you're really worried, and you're child is 10 years old, it's hard to work up the emotional space to think about where your child is going to college and how much it will cost. If you think you can't pay the electric bill at your business, it's pretty hard to think about whether you're going to buy a piece of expensive equipment next year that will make you productive five years from now.

Events intrude on nations just as they do on people in their individual, personal, and business lives. We have been given a gift, and we have to use it. This is a wonderful moment, but it is a moment of responsibility that we dare not squander.

Some of you probably know this, but it makes the point, finally, that if we have a saving nation, it means we have a nation of people who think about the future and who believe in it. When Benjamin Franklin died -- you know, a penny saved is a penny earned -- he left 2,000 pound sterling to the cities of Boston and Philadelphia, with only one caveat -- nobody could spend any of it for 200 years. By 1990, the 2000 pound sterling had matured into $6.5 million -- quite conservatively invested.

By leaving that money to people 200 generations removed from himself and his family -- I mean, 200 years removed -- Benjamin Franklin made a simple, powerful, eloquent statement that he believed in the promise of America, he believed in the future of America, and he was prepared to contribute to it in a truly astonishing way. Well, we don't have to ask the American people to save for 200 years, but we do have to make sure they can think about tomorrow and prepare for it. And this is a magic moment to do it.

Thank you very much. (Applause.)

What about having the government do it? What about having everybody have an account -- a number, in effect, attached to their name for this money, but having some public source invest this money? Congressman Castle asked a question, as well as Congressman Price, and I think Mr. Weber in North Dakota asked this question.

Now, the virtue of that is that if the government were making these investments, you could do two things. Number one, you'd have much lower administrative costs. Number two, you could protect people who retire in the bad years, because you would average the benefits. And as I said, as we know, over any 30- or 40-year period -- and the average person will work 40 years -- the average rate of returns are higher. So you could always reap the average rate of return.

Now, if you were a particularly brilliant investor, you'd get less than you would have if you'd done it own your own, but on the other hand, you wouldn't get burned. And if you happen to be among unfortunate people who retired in a long period where the market wasn't doing well, like it was in between 1966 and 1982, you'd still be held harmless for that because of the overall performance of the market.

People worry about having the government invest that much money. There may be a way to set up an independent board immunized from political pressure to do it, but sill, that would be a whole lot of money coming from, in effect, one source, going into the stock market.

So we're looking at the experience of Canada and some other countries to see what we can learn about that. And we're also looking at the experience of Chile, as a place where they've used individual accounts, to see what the pluses and minuses are.

I think -- what I would like to say is, if we go down this road, we need to make sure that behind this there's still a rock-solid guarantee of a threshold retirement that people will be able to survive on. And then we can debate the relative merits of these individual accounts versus individual guarantees within these bigger units. But I think I've given you the main arguments, pro and con, of both the individual accounts and the government units -- government investment -- I'm sorry.

Let me just add one thing, if I might, because I think it was Mr. Weber who talked about a lot of -- either that or Congressman Pomeroy talked about a lot of the people in North Dakota that depend upon Social Security have very modest incomes from the farm or from other sources. One kind of modified proposal that has been debated is the question of whether, instead of dedicating a percentage of payroll to an individual account we should use the surpluses over the next several years to guarantee workers, let's say, $500 a year.

If you did that, obviously, as a percentage of income -- and that would amount to quite a bit after a few years of getting that $500 check in an investment account -- obviously, as a percentage of income, the impact on lower-wage workers would be far greater than the impact on higher-income workers, because the $500, and then the $1,000, and then the $1,500 and $2,000 and so on would be a much bigger percentage of a lower-wage worker's income than just giving everybody one percent of payroll. So the dollars would be much bigger if your payroll was bigger.

So that's another thing we've been asked to consider by various people, whether or not the fairest way to do it would be to just give a cash grant into the account of each Social Security-covered person who is paying in. And that's also being debated. And you all may have an opinion about that you want to forward to us.

* * * * *

THE PRESIDENT: I would also emphasize -- and, again, I don't want to further complicate this discussion -- but I believe we have to do two things. I think we have to reform Social Security in a way that makes it viable and available for the baby boom generation when all of us get into retirement age, and it doesn't bankrupt our children or our children's ability to raise our grandchildren.

But over and above that, we have to do some other things, which a number of the members of Congress who are here in New Mexico and out there at these forums have been interested in -- to increase the options for retirement savings beyond Social Security. Right now, Social Security is responsible for lifting about half the American senior population out of poverty, who would be in poverty without it.

But most seniors do not rely solely on Social Security. And more and more seniors, as we live longer, will need other sources of income, as well. So we're going to work hard on this, but we're also working on legislation to provide other avenues of retirement savings over and above this.

Thank you very much, all of you, for joining us. Commissioner Apfel and I are going to go back to work here in Albuquerque and we're going to try to listen to the arguments of these experts on the questions you've asked: Should the government invest in private securities, in the stock market, or should Social Security funds be invested in the stock market? And if so, should it be done by a public entity or should it be done by individuals with individual accounts?

And we'll try to get the pros and cons out and make sure they're widely publicized, and we welcome your views, as well. Thank you.

END 11:55 A.M. MDT

20. RADIO ADDRESS BY THE PRESIDENT TO THE NATION - October 24, 1998

Audio clip of President's remarks

THE PRESIDENT: Good morning. Yesterday, after nine days of difficult negotiations on Maryland's Eastern Shore, Israeli and Palestinian leaders signed an agreement that restores hope for peace in the Middle East. It strengthens security, increases cooperation against terrorism, and brings both sides closer to the day when they can live together as free people.

Keeping the peace process on track will require continued courage by Israelis and Palestinians in the months ahead. But this agreement shows what is possible when the will for peace is strong. And I'm proud that, together, we were able to make real progress. America will continue to work for a just and lasting peace in this land that is holy for so many people throughout the world. Now, I'd like to talk with you about an historic opportunity we face here at home. Ten days from now, the American people will head to the polls for one of the most important elections in recent years. You will help select a Congress that will determine whether we seize this moment of prosperity to save Social Security for the 21st century.

Earlier this month we celebrated America's first budget surplus in 29 years. But even before the black ink was dry, some in Congress were determined to squander our surplus on an unwise election year tax plan. But we turned back these efforts. The balanced budget I signed this week protects our hard-won surplus until we save Social Security first. As a result, the new Congress will have the best chance ever to ensure that the baby boomers can retire in dignity, without imposing unfair burdens on our children.

As we begin the process of reform, I have proposed five core principles to guide our way: First, we have to reform Social Security in a way that strengthens and protects the system for the 21st century. We simply cannot abandon a program that represents one of our country's greatest successes.

Second, we should maintain universality and fairness. Third, Social Security must provide a benefit people can count on, regardless of the ups and downs of the economy or the financial markets. Fourth, Social Security must continue to provide protection for disabled and low-income Americans. And finally, any reforms we adopt
must maintain our fiscal discipline.

Today I'm proud to announce the next important step we'll take in putting these principles to work. On December 8th and 9th, we'll hold the first-ever White HouseConference on Social Security to help pave the way toward a bipartisan solution early next year.

Unfortunately, some in Congress already may be backing away from this historic opportunity. Just last week, the Senate Majority Leader said he may not be willing to join me in our efforts to save Social Security. That would be a grave mistake. As with so many other long-term challenges, if we act now, it will be far, far easier to resolve the problem than if we wait until a crisis is close at hand. I believe we must save Social Security and do it next year.

I pledge to work with anyone from any party who is serious about this task. We cannot let partisanship derail our best opportunity to strengthen Social Security for the 21st
century.

For more than 60 years now, Social Security has formed the sacred bond between the generations. In the words of one elderly woman three generations ago, "it is a precious shield against the terror of penniless, helpless, old age."

If the Congress you elect in 10 days chooses progress, it can strengthen that shield for generations to come. But if it chooses partisanship, this historic opportunity will be lost. You have the power to shape a Congress that will keep our Social Security system as strong for our children as it was for our parents. You have the power to elect a Congress pledged to save Social Security first.

Thanks for listening.

Think about what we got out of Molly being able to live her life under the circumstances and raise her children. Think about what society got out of that. Think about what society is going to get out of Tyra Brown because she was not abandoned when her mother suddenly passed away at the age of 15. And we were all sitting there watching her talk, just feeling better being Americans, weren't we, every one of us. Don't you think it was worth it to take care of her -- help her grandmother take care of her for three years? We all got something out of that, and she's got 60 years or more of giving back to society, that we're all going to benefit from that.

So I think as we -- we identified, all of us, with each one of these panelists as they talked to us about their lives. And so I'll say again, none of this lets us off the hook for making the hard decisions, but it ought to make us determined to be more sensitive to how they affect women, number one; and determined not to let the surplus go, in case we need it to fill in the patches of the decisions to make sure that we can have more stories like this 10, 20, 30, 40 years from now.

Thank you very much. (Applause.)

Woodside, New York
1:43 P.M. EST

THE PRESIDENT: Thank you very much for the warm welcome. Thank you, Monseigneur Finnerty, for greeting me when I came through the door of St. Sebastian. Thank you, my longtime friend Claire Shulman (phonetic), for being here. Thank you, Joe Crowley, for presenting yourself as a candidate for Congress.

He got good marks from Chuck Schumer as an athlete, and you must have noticed that he's quite a large man. I told him that next January I'd like him to be one of the whips in the Congress to get the votes gathered up, because I think people would be reluctant to say no to him. (Applause.)

I love coming to Queens. I never will forget the first time I came out here when I was running for President in 1992, and Harold Ickes was helping me. And he said, we're going to go out to Queens and we're going to meet with the Queens County Democratic Committee. And Congressman Tom Manton is the chairman of the committee. And he said, I think we can get them to be for you.

I said, now, why in the world would they endorse me? Most of those people have probably never thought about Arkansas, much less been there. And he said, yes, but they're a lot like you out there in Queens. You'll be right at home. You'll like that.

So we got on the subway and there was a television camera or two with me. And no one in New York knew who I was at the time, so they probably thought we were filming a commercial or something. We were on the subway banging everybody around, and then we got off and took a beautiful walk to the place where we had the committee meeting. And Tom had already convened the committee, and I walked up the stairs, and at length they introduced me.

And it was a setting sort of like this, and I was coming in from the back and we walked down the middle of the aisle. And I got about halfway down the aisle and there was this real tall African American man standing there on the aisle, a member of the Democratic Committee in this county. And he put his arm around me and he said, hey, Governor. He said, don't worry about this. He said, I was born in Hope, Arkansas, too. You're going to be just fine. (Laughter and applause.)

Tom Manton has been taking care of me ever since. And I want you to know that he has done a wonderful job in Congress and I appreciate what he did for you and for New York and for our country. And I will miss him very much. Thank you, friend. Thank you. (Applause.)

You know, on the way out here we were standing out in the hall and I first met Gert and we started laughing about John Glenn going up in space yesterday. And she said she thought that was a fine thing for a young man like him to be doing. (Laughter.) I want you to hold that thought, because I'm coming back to it. (Laughter.) There's a real reason why we're here today.

And finally let me thank Chuck and Iris Schumer for their friendship to me. I was in their home in 1992 over in Brooklyn. And I met their friends and relatives and the people with whom they worship. It was quite an exciting day for me. I have been proud of the campaign that they have made together with their family and friends -- starting out against overwhelming odds, bravely soldiering on, and, I'd say, doing right well on this eve of another election.

I'd like to ask all of you to think about something as New Yorkers, as well as Americans. New York at extraordinary times has given this country extraordinary leadership in the United States Senate. New York gave the American people Robert Wagner and Herbert Layman (phonetic) and Jacob Javitz and Pat Moynihan in the United States Senate. New York gave the American people Robert Kennedy in the United States Senate.

And once Robert Kennedy said, and I quote: "There is no basic inconsistency between ideals and realistic possibilities." I've worked with Chuck Schumer a lot. He's an idealist who is always struggling to get something done. And the longer I serve as your President, believe it or not, and in spite of everything, the more idealistic I am about America, what it stands for, what it means, and what it can do; but the more determined I am that every day should be used to turn ideals into action. (Applause.)

When it comes to education or Social Security or health care, when it comes to all those ideas, I can think of no person with whom I have worked in these last six years in the entire Congress who I think has more ability to turn ideals into action than Chuck Schumer. And that is one reason I am very proud to be here by his side and in support of him today.

Now, let me say also to all of you, this is not an ordinary election. I want you to go vote Tuesday, even if you are not going to cast your ballot the way I want you to. I hope you will, however. But I want you to go, because in this election we're going to choose the Congress of the 21st century. Really, the decisions that will be made, a lot of them in the next couple of years, will shape the way we as a people will live for far more than the next two years.

For six years, since the people of New York gave the Vice President and me and Hillary and our whole team a chance to serve, we've turned the country's economic policy around. We've changed our social policy. We have essentially tried to make America work again so that we could take advantage of these incredible changes that are going on in the world and have a very strong economy, but make sure we kept a human face on it -- that we gave everybody a chance to benefit from his or her labors, and that we took care of those who through no fault of their own needed a little help to get by, and that we tried to bring the country together instead of driving it apart.

And after six years, we saw again today that our economy grew at 3.3 percent in the last quarter. We've had the lowest unemployment rate in 28 years, nearly 17 million new jobs, the lowest percentage of Americans on welfare in 29 years, the first balanced budget, as you heard Chuck say, in 29 years, and a surplus. For the first time in history, last week, thanks in part to the heroic efforts of New York's Secretary of Housing and Urban Development, Andrew Cuomo, we announced a year and a half ahead of time that we had met our goal. Now over two-thirds of the American people live in their own homes for the first time in the history of the United States. So we are moving in the right direction. That is a good thing. (Applause.)

And as I told somebody, we had also reduced the size of the federal bureaucracy so that the federal government is now the smallest it was since the last time John Glenn went around the Earth.

Now, I thank Tom for what he said. Our administration has tried to be a force for peace and freedom around the world. We've worked hard to help the Irish reconcile with one another. We're working hard to promote peace in the Middle East, and we had a big breakthrough there last week on this day -- we announced it on this day last week. If I seem a little slow of speech today, you'll have to forgive me, but on that last day I was up 39 hours without sleep. And the real way we made the agreement was I was the last one standing -- (laughter) -- and so they finally agreed so they could go to bed. (Laughter.)

I say that because America has unique responsibilities and unique opportunities. Today I announced a program that I believe will help us to keep the world economy growing and to roll back some of the financial turmoil you read about that's engulfing the rest of the world. Now, that's a big deal because a quarter of our growth in the last six years has come from our ability to sell what we have to sell to other people. So that more and more, the success of every American business -- even small businesses here in Queens -- will be indirectly affected, at least, by the success of our friends and neighbors throughout the world.

Now, against that background, at this golden moment for our country, I think we have to look ahead to the future and say, well, what are we going to do with the first surplus in 29 years? What are we going to do with the lowest unemployment rate in 29 years? What are we going to do with this time when we seem to be doing pretty well, but a lot of our friends are in trouble around the world. What are we going to do with all those neighborhoods in New York City and elsewhere which haven't yet felt the economic recovery of the last six years?

Shall we just sort of relax and enjoy it, which means that at midterm elections half the people just stay home? Or shall we instead look ahead to the future and say, you know, times like this don't come along very often. Those of you out here who've seen a lot of years, how many periods in American history have we had like this? Not many in your lifetime. Not many. And nothing lasts forever. So that when you have these times like this, it is terribly important that we as Americans look to the future and take on our real challenges.

To me, that's the most important decision the American people have to make. Do you want to think big, think about what America should be like for your children, your grandchildren, your great grandchildren. What can we do now when we are strong to give that kind of America to the Americans of the 21st century.

That's what this whole saving Social Security issue is about. When I heard Gert talking about it, I thought, you know, Social Security for us has become even more than a check in the mail -- even though fully one-half the seniors in America would be in poverty today without it. Even though most people have some other source of income in addition to their Social Security, nonetheless, if there were no Social Security, half the seniors in the country would be in poverty without it -- instead of the 11 percent, which is the actual rate today. It's a huge deal. We're talking about untold millions of lives changed.

But in addition to the money, it is the symbol of our determination to honor family, to honor the contributions of those who went before us, to honor the proposition that in America we want to reward people who are good at what they're doing. We don't begrudge the athletes their success, the businesspeople their success. But we know that a country is great because of the great mass of people who get up every day, work their hearts out, obey the law, pay their taxes, raise their kids, and build up neighborhoods. And they should be a part of our prosperity. We don't believe in leaving people behind who do their part for America. And Social Security symbolizes that.

Now, what's the issue here? Why is Social Security in trouble? First of all, if you're getting a check now, relax, you're going to be fine. That's not the issue. The issue is this: we are living longer. The baby boomers are coming up for retirement, and those of you who gave birth to baby boomers know that until this crowd started school last year -- this crowd of children in school -- the baby boomers were the largest American generation ever, and larger than our children.

So that when we retire, the baby boomers, there will only be about two people working for every one person drawing Social Security. To give you an idea, today there are more than three people working -- about three and a half people working for every one person drawing Social Security. In addition to that, there will be more and more and more women retiring and living on Social Security because women, on balance, have a longer life expectancy. And they are less likely to have pensions or personal savings. For 25 percent of the women on Social Security, it's the only income they receive.

Now, when the 75 million baby boomers retire and when there are only two people on Social Security for every one person --two people working for every one person drawing -- we will in about 20 years start having to pay out of the Social Security trust fund, as provided by law, benefits, because the annual income won't be enough to cover the annual outgo. Then in about 34 years, even the trust fund won't be enough to cover the benefit.

Here's what this is all about. If we start now and make some modest changes now that don't have to affect people on Social Security at all, and if we use this money that we have in the surplus -- which I think I should add was produced entirely by the Social Security tax itself -- then we can make modest changes and preserve Social Security in the 21st century in a way that will accommodate the changing population patterns and still make sure it's there for the people who need it.

If we do not do that, if we say, well, heck, we waited 29 years for this surplus, let's take the money and run, let's have a little fun, give me a tax cut, give me a new program, give me this, give me that -- before we know whether we need this money to save Social Security -- and keep in mind it was produced by the Social Security tax -- and we miss this opportunity, then what's going to happen? Sooner or later, within a few years -- keep in mind, every year that goes by the problem is only going to get tougher, it's not going to get easier, because you have less time to fix a big problem -- then sooner or later we'll be forced with the choice of either saying, well, I'm sorry, we can't do this so we're just going to have to cut benefits 22 percent, in which case a lot of seniors will be in deep trouble. Or we'll say, our conscience won't let us live with ourselves so we're going to raise the taxes 22 percent -- and that's a whopping tax increase -- and keep in mind the payroll taxes paid by small businesses in years where they make money and years when they don't make any money. The payroll taxes paid by people on modest incomes as well as by wealthy people.

And if we did that, we'd be saying, okay, we didn't fix this when we had a chance back in 1999, and because we didn't do it now we're going to have to lower the standard of living of our children and their ability to raise our grandchildren because we didn't do the right thing.

Now, the generation that got us through World War II and built the greatest middle class in history and was educated by the GI Bill knows that America should do right by the future. This is a huge issue.

For a long time I thought that this would be a completely bipartisan issue. All year long we had forums around the country, Democrats and Republicans together, talking about these ideas, honestly debating what the options were. But then the leadership in the House of the other party wanted to have a huge and permanent tax cut right before the election -- disproportionately benefitting upper income people like me -- before we did anything to fix Social Security and before we knew what it would cost.

Well, we beat that. Thanks to Chuck Schumer and Tom Manton and a lot of other people, we rolled that back. But just the other day they reaffirmed their desire to do that, to deplete this surplus before we know how much we need for Social Security. And the Majority Leader in the Senate said that he might not even want to work with me on fixing Social Security.

So I say to you, I did not come here to trouble you about your Social Security. Your Social Security is okay. If we don't do anything, you'll be fine. But if you believe it's been a good thing and if you want it there for the baby boomers, for your children, and if you want your children to be able to retire without having to undermine the incomes and the standard of living of your grandchildren, then I implore you to speak with a loud and clear voice and say, look, we have lived a long life and sometimes you can't do the easy thing. We shouldn't take the money and run. We should save the money, save the surplus, and fix Social Security. If there's anything left over, then we can talk about what to do about it. But we cannot endanger this fundamental compact between the generations that has helped to make America what it is today. Save Social Security first. (Applause.)

That's the big reason I wanted to come here, the big reason I'm proud to stand with Chuck Schumer. There are other things. You heard -- I think it was Tom who said we voted in this budget -- we got one of our most important ideas in this budget: to hire 100,000 teachers to take class size down to an average of 18 in the early grades. But if you go around New York, you will see a lot of school buildings with rooms that can't be used. If you go to Florida, where I was yesterday -- I went to a little town in Florida not very long ago, a small town. I went to one elementary school, there were 12 trailers out back -- one school, 12 trailers to accommodate all the extra kids.

So one of the things we didn't succeed in doing in this election -- and again I ask you to think about your grandchildren and your great-grandchildren -- if we're going to have more teachers and smaller classes, they have to have someplace to teach. That means we have to build schools where we need them and we have to repair schools where we have them.

We have school buildings in the cities of this country -- like New York and Philadelphia and Chicago -- that are priceless buildings. No one could afford to build such buildings today. They're great buildings, but they've been allowed to fall into such disrepair that they can't even be hooked up to the Internet. And all this work we're doing to bring our kids into the modern age is not possible.

So that's another big issue that I think is important. And I thank Chuck Schumer and Tom Manton for their support for building and repairing 5,000 schools. And we need to do that next year.

We've tried to get a patients' bill of rights passed for a year, and the health insurance companies persuaded the majority in Congress to beat us. But, you know, Chuck talked about Medicare. We have the same challenges in Medicare, by the way, we do in Social Security. But one of the things that bothers me is more and more Americans are in managed care plans and HMOs. Now, that can be good if they just save money that would have otherwise have been wasted. Don't forget, six years ago inflation in health care costs was going up at three times the rate of inflation. And for elderly people that was a really troubling thing, since you use more health care. It was going to bankrupt the country.

So to manage the system better is a good thing. But to manage the system only to save money without regard to whether it's good for health care is not a good thing. Doctors, not accountants, should ultimately make health care decisions. (Applause.)

We're trying to pass this patients' bill of rights that simply says, look, we believe very strongly that we should have a law which says every person should have a right to see a specialist if his or her doctor recommends it; that every person in an accident should have a right to go to the nearest emergency room, not one halfway across New York City just because that's the one that's covered by the plan; that if a person is in a treatment -- a chemotherapy treatment or a young woman being by an obstetrician, who's pregnant, and their employer changes health care plans, well, you ought to be able to keep the doctor you're dealing with until the treatment is over, until the baby is born; and that your medical records ought to be private.

Now, this is something that affects Americans of all ages, but disproportionately seniors who are in managed care plans. A lot of seniors want to go into managed care plans -- Medicaid, Medicare -- because they give prescription drugs which otherwise aren't covered. There are a lot of good things. But in the end everybody ought to have those rights, those basic rights. And that's a big issue in this election that affects you and your children and your grandchildren.

So finally let me just say that there are a lot of things out here that you have to think about. And I've been urging the American people to vote and hoping we can get a little more balance in this Congress so that we can have people like Chuck Schumer who will put Social Security first, who will pass a patients' bill of rights, who will make it possible for us to modernize and build our schools; in short, who will be thinking about the long term.

The temptation is great for people just to pass -- they say, gosh, things are going so well, why is the President so agitated? Because my job is to think for all the American people about next year and five years and 10 years and 20 years down the road. And I would argue that those of you who are senior citizens, your job is to think for all the American people about next year and 10 years and 20 years down the road.

We were sitting here talking about John Glenn going up 36 years ago, and Tom Manton said, I remember when he went the first time and it seems like it was yesterday. Doesn't it to you, the ones that remember it? It seems like it was yesterday.

I remember once I met a man who is a friend of mine, who was 76 at the time, at an airport in Little Rock, and he looked terribly sad. And I said, why are you so sad? He said, well, my sister just died and I'm here to meet some family members. And he said, when you came up to me, Bill -- he said, I was thinking about when we were five years old. He was 75. And he put his hand on my shoulder and he said, let me tell you something, it doesn't take long to live a life.

And all of you know that. We all are given our share of time here. We all try to make the best we can. We all try to build our families and build our lives, enjoy our friends, pursue our faiths. America is the greatest country in the world for giving us that chance.

All we all owe back to America is good citizenship. So I ask you, please, at this golden moment for our country, stand up for the proposition that we should save the Social Security system before we throw this money that we've worked six years to build up; stand up for the proposition that every person ought to have decent integrity in their health care system; stand up for the proposition that children you and I may never know should have a world-class education in the 21st century.

I ask you for that and for your help for this good man, Chuck Schumer, and for all people who are always thinking about America's tomorrows.

Thank you and God bless you. (Applause.)

25. REMARKS BY THE PRESIDENT ON MEDICARE FRAUD -- December 7, 1998

Room 450
Old Executive Office Building 12:50 P.M. EST

THE PRESIDENT: Thank you. I would like to welcome you all here today and thank Margaret Dixon for those fine remarks. I thank Deborah Briceland-Betts for representing the Older Women's League so well, and Nancy Ann Min-Deparle for the great job she does as our HCFA Administrator. I welcome our friend, George Korpius and representatives from the National Council of Senior Citizens.

And I want to say a special word of appreciation to Senator Tom Harkin, who has been on top of this issue for a very, very long time, and has long needed more support from administrations. And we certainly tried to give him ours, but he has been a real trailblazer and we thank him.

I'd like to also thank, as others have, the HHS and especially June Gibbs Brown, the Inspector General; and Mike Mangano, the Deputy Inspector General, who is here today.

I'd also like to say one other word about Senator Gore, Sr., who was mentioned by Nancy Ann. Al Gore, Sr. was a leader in the development and the passage of the original Medicare bill over 30 years ago. And that is one of the many, many things we remember him for at this time of his passing.

For more than 30 years now, Medicare has been more than a government program. It has been a way that we could honor our obligations to our parents and our grandparents; an expression of the old profound American belief that the bonds of mutual love and support among the generations must remain strong. Any threat, therefore, to the integrity of Medicare is a threat to these bonds. And that is one of the main reasons that our administration has worked so hard to strengthen Medicare.

The balanced budget bill I signed last year extended the life of the Medicare Trust Fund for a decade. We also established a commission currently working to help Medicare meet the needs of the baby boom generation and the rising costs that inevitably come as we all live longer and longer and require more health care.

It is a troubling financial problem, but as a social matter it is a happy challenge. It is what I would call a high-class problem that we are all living longer and longer. But it does present us with certain real challenges which we have to face, and I look forward to getting the report from Senator Breaux and the Medicare Commission, and the working on a bipartisan basis with the next Congress to resolve this important matter.

Today, I'm announcing additional steps to strengthen Medicare by fighting the threat of Medicare fraud. Every year, Medicare is cheated out of billions of dollars, money that translates into higher taxes on working Americans, higher copayments in premiums for elderly Medicare recipients. This has become, as I said, especially significant as we grow older and more and more of us become eligible for Medicare.

I'm proud of what we have already done to fight fraud and abuse and waste. Since 1993, we've assigned more federal prosecutors and FBI agents to fight health care fraud. We've increased prosecutions by over 60 percent, convictions by 240 percent, saved $20 billion in health care claims. Money that would have lined the pockets of scam artists now is helping to preserve the Medicare Trust Fund and to provide high-quality, affordable health care.

But there is still more we can do. The private sector health care contractors that are responsible for fighting waste, fraud and abuse too often are not living up to their responsibilities. We recently learned that one-fourth of those contractors have never reported a single case of fraud, even though the Inspector General is quite certain that fraud is pervasive in this area.

Therefore, we are using new authority we fought for to create new weapons in the fight against fraud. Beginning this spring we will empower new, specialized contractors, Medicare fraud hunters, who will focus on waste, fraud and abuse. These new fraud hunters, by tracking down scams and waste, can bring real savings to Medicare and strengthen the system for the 21st century.

I'm also requiring all Medicare contractors to notify the government immediately when they learn of any evidence of fraud, so that we can detect patterns of fraud quickly and take swift action to stop them. And I'm asking HCFA to report back to me early next year with a comprehensive plan to fight waste, fraud and abuse further in the Medicare program.

In the fight against Medicare fraud, Congress must also do its part. And I am encouraged by the bipartisan oversight hearings being held in Chicago this week by Senators Collins and Durbin. When it returns next year I'll ask Congress to pass legislation that can save Medicare another $2 billion over the next five years. First, legislation that will allow us to empower our new fraud hunters to spot overpayments and keep crooked medical service providers from getting into the Medicare system to start with.

Second, the legislation will allow Medicare to pay much lower rates for prescription medications. Under current law Medicare loses hundreds of millions of dollars each year by paying as much as 10 times more than the private sector does for certain drugs. It's just wrong.

Third, the legislation will force private insurers to pay claims that they are legally responsible for, so that Medicare does not get stuck with the bill. This happens more often than you would think.

Fourth, legislation will allow us to crack down on medical providers, particularly those claiming to deliver mental health care who bill for services they never, in fact, provide, a large and, unfortunately, growing problem, according to our recent reports.

By passing these common-sense measures to fight Medicare waste and fraud, Congress can do more than help save taxpayers' money. It can demonstrate a bipartisan desire to preserve and strengthen Medicare for the future. If we took these actions now, we can help to assure that the system that has served our parents and grandparents so well will be there to serve our children and grandchildren well into the 21st century.

Thanks to the advocates who are here -- Senator Harkin and others -- I'm confident that is exactly what we will do next year.

Thank you very much, and happy holidays. (Applause.)

26. REMARKS BY THE PRESIDENT IN OPENING WHITE HOUSE CONFERENCE ON SOCIAL SECURITY-- December 8, 1998

(President's Letter to Conference participants -- in Adobe PDF format)

Marriott Wardman Park Hotel
Washington. D.C.

8:50 A.M. EST

THE PRESIDENT: Good morning, ladies and gentlemen. Let me begin by welcoming all of you and acknowledging Senators Daschle and Santorum, Congressman Gephardt and Congressman Shaw, who will speak, and the very, very large delegation we have from the United States Congress, members of both parties right out here to my left. I thank you all for coming.

I think the fact that we have such a large representation from the Congress, as well as leaders of various organizations of people throughout the United States and people concerned about the Social Security issue, is a testament to the profound importance of this issue and the commitment of the American people to do something about it.

I thank Secretary Rubin, Secretary Herman, Secretary Daley, and Gene Sperling, Jack Lew, Ken Apfel, and John Podesta, representing the administration, for their presence here.

This is the first ever White House Conference on Social Security. There are all of you here in Washington, plus thousands of people watching at 60 satellite sites in all 50 states.

I'd also like to apologize for my early departure. I had hoped to be here for as much of this conference as I could, but, as all of you know, there is a service in Tennessee today for the father of our Vice President, former United States Senator Albert Gore, Sr., who was a true, great public servant. He and his generation built the entire postwar order from Medicare to the interstate highway system, both of which he himself had a personal role in creating. They were civic institutions that have helped save our nation and our world in the half-century since.

Now it is our turn to be builders, to renew the institutions that have made America strong. In this time, America faces no more important challenge than the need to save Social Security for the 21st century. Social Security is and must remain a rock-solid guarantee. It is a sacred trust among the generations, between parents and children, grandparents and grandchildren; between those in retirement and those at work, between the able-bodied and the disabled. It embodies our obligations to one another and our deepest values as Americans.

This year, I and a lot of people in this room, a lot of members of Congress, have spent a lot of time listening to the American people and speaking with them about Social Security. This White House Conference, a gathering of lawmakers, experts, Americans from all walks of life, marks an important step in the direction of saving Social Security for the 21st century.

We'll hear a lot of ideas expressed about what course we should take. Let me shock you by saying I think there will be some differences of opinion expressed in this room. But we should begin this process on common ground, agreeing above all on the importance of acting and acting now, while we can, during prosperous and productive times that Americans have worked so hard to achieve.

Our economy is indeed a powerful engine of prosperity. In its wide wake it creates something every bit as important as jobs and growth -- the opportunity to do something meaningful for America's future and the confidence that we can actually do it -- an opportunity to save Social Security for the 21st century. I hope history will record that we seized this opportunity.

Earlier this year I said we should reserve any surplus until we save Social Security first. We have done so. We should take the next step and act now. It is more than an opportunity; it is a solemn responsibility -- to take the achievement of past generations, the Americans who, according to President Roosevelt, had a rendezvous with destiny, and to renew the social contract for a new era.

Through war and peace, from recession to expansion, our nation has fulfilled its obligation to older Americans. It is hard, thankfully, to remember the time when growing old often meant growing poor. It seems impossible to believe, but in many cases, retirement meant being relegated to a rest home and the degradation of dependence. The normal aches and pains were accompanied by the unbearable pain of becoming a burden to one's children.

That's why Social Security continues to offer much hope, much confidence, much peace of mind. It is one of the most important and ambitious undertakings in our nation's entire lifetime.

President Roosevelt said, there is no tragedy in growing old, but there is tragedy in growing old without means of support. Soon we will face a rising challenge in providing that support, as every one of you knows. Before too long, there will only be about two people working for every one person eligible to draw Social Security. As our panelists will discuss, we are actually going to have many, many older Americans.

Just last night Hillary and I were discussing a recent health report that infant mortality last year dropped to an all-time low and the life expectancy of Americans rose to an all-time high, over 76 years. Some would argue that this problem we have with Social Security is, therefore, a high-class problem. I know that the older I get, the more high-class the problem looks to me.

It is, nonetheless, a significant challenge: 75 million baby boomers retiring during the next two decades. By 2013, what Social Security takes in will no longer be enough to fund what it pays out. That's just 15 years away. Then we'll have to use the proceeds from the trust fund. By 2032, just 34 years away, the money Social Security takes in will only be enough to pay 72 percent of benefits.

Now, there are many ways to deal with this, but there is only one way to get it done. Let me say to all the people on all sides of this debate, the only way we can save Social Security and avoid what I think is a result that none of us want, which is either a dramatic cut in the standard of living of retirees in America, a dramatic increase in the taxes on working Americans and the lowering of the standard of living of the children and grandchildren of the baby boomers -- the only way we can avoid that is by working together, putting progress ahead of partisanship, placing the long-term interest of the nation first.

Already some are predicting that we are simply incapable of doing this in Washington. I am determined to prove them wrong. I hope everyone of you are determined to do so as well. (Applause.)

What does this mean? It means, first of all, not that we should forget about what we think is right. It means each of us should articulate what we think is right, and those who believe they disagree should listen to them. We should all listen to people who have different opinions; they might be right and we might be wrong.

Secondly, it means that our differences cannot take the form of personal attacks. This is a complex issue and I have found that on this issue most people believe what they really believe -- we do not need to let our differences disintegrate into personal attacks.

Third, in the end all of us in some sense will have to sacrifice our sense of the perfect to work together for the common good. There is in this process no room for rancor. The stakes are too high, the issues far too important. It's not about politics, it's about doing right by young Americans and older Americans and the future of America.

The whole point of this conference is to open honest debate and to build consensus, not to shoot down ideas or insist that one side or the other has to go first. Secretary Riley, our Secretary of Education, said that one of his greatest lessons from South Carolina politics was the old saying that I'm for change and you are, too; you go first. (Laughter.)

I'm prepared to do whatever it takes to move us forward. But let's agree, we have to march together. That's the only path to the finish line. Our ears, our minds must remain open to any good idea and to any person of goodwill.

In judging any proposal I believe we should be guided by five principles. First, as I have said, we must strengthen and protect the guarantee of Social Security for the 21st century. Second, we must maintain universality and fairness. Later panelists will discuss the impact of reform on different groups. The First Lady was scheduled to discuss the special impact on women, who on average live longer than men, so depend on Social Security more.

Now, keep in mind that only 4.6 percent of elderly married women are living in poverty. For elderly single women, the number is about 20 percent. Those who think we can wait should never forget that fact either. When we judge any plan to save Social Security we need to ask whether it cuts the poverty rate among single elderly women and other groups in our population that are still at significant risk. (Applause.)

I must say, I have been quite impressed that proposals that span the conventional ideological spectrum have shown a sensitivity to this and to taking vulnerable people out of poverty and giving them the secure retirement they deserve.

Third, I believe we must construct a system where Social Security can be counted on regardless of the ups and downs of the economy or the markets. Fourth, Social Security must continue to provide financial security for disabled and low income beneficiaries. One in three Social Security beneficiaries are not retirees, and we must never forget that.

And fifth, any proposal must maintain our hard-won fiscal discipline. It has helped to fuel the prosperity Americans enjoy today. That is, after all, what gives us the chance to do this in at least a less painful manner.

I look forward to transforming these ideas into action. Let us begin firm in our faith that Social Security can bind our people not only across generational divides, but across party lines.

Let me say, too, in that regard, I am grateful for the presence here of Senator Santorum and Congressman Shaw from the Republican majority, and the Minority Leader, Senator Daschle; and Congressman Gephardt. I thank you very much for your presence here. And now I'd like to turn it over to them to make some opening remarks so we can get on with the work of this conference.

Let me say this before I sit down. You have to decide that we are going to do this. You have to tell these members of Congress that you will support them if they act. If you come here representing a particular point of view and you know these members of Congress agree with you, you should ask them to defend your point of view, but to be willing in the end to make a decision that will deal with the problem. This will only get harder, every single year we avoid resolving this it will get harder and harder and harder. And everybody's favorite idea will have a less beneficial impact the longer we wait. Now is the time to do this.

Thank you very much. (Applause.)

27. REMARKS BY THE PRESIDENT AT SOCIAL SECURITY AND Y2K EVENT --December 28, 1998

Room 450 -- Old Executive Office Building

10:35 A.M. EST

THE PRESIDENT: Let me say, one of the things that she might have told you is that before she volunteered for the National Council of Senior Citizens for 20 years, she was an employee until 1972, when she retired, of the Bureau of Engraving and Printing. Therefore, she worked for the Treasury Department. And on New Year's Eve, she will be 90 years old. (Applause.)

Ladies and gentlemen, before I get into my remarks, because this is the only opportunity I will have to appear before the press today, I think I should say a few words about an incident early this morning over the skies of Iraq, where American and British air crews were enforcing a no-fly zone in Northern Iraq. They were fired on by Iraq surface-to-air missiles. They took evasive action, returned fire on the missile site, and returned safely to their base in Turkey.

We enforce two no-fly zones in Iraq, one in the North, established in 1991; another in the South, established in 1992, which now stretches from the southern suburbs of Baghdad down to the Kuwaiti border. The no-fly zones have been and will remain an important part of our containment policy. Because we effectively control the skies over much of Iraq, Saddam has been unable to use air power to repress his own people or to lash out again at his neighbors. Our pilots have the authority to protect themselves if they're threatened or attacked. They took appropriate action today in responding to Iraq's actions.

Once again, I want to tell you I am very proud of the work they do, the risks they take, the skill and the professionalism with which they do it. They attacked because they were attacked. And they did the appropriate thing. We will continue to enforce the no-fly zones.

Now, let me say, this is a very happy announcement today. And I want to thank Secretary Rubin -- who most people associate with saving the economy, not saving Social Security, but that's an important part of his job, too. I want to thank Kathy Adams, who is one of the those people in the government that makes it go and never gets enough credit for it. So I'm delighted to see her up here and through her, all the other people who work every day to make America work.

I've already told you about Pauline Johnson Jones. And I want to say, too, I have been very moved by how passionate Ken Apfel has been about making sure that this problem got solved, and today we saw that he has a vested interest in it -- (laughter.) He doesn't want his father to cut him out of his will -- (laughter) -- and everybody always needs to be in better stead with their in-laws. (Laughter.)

You know, this Y2K problem is a stunning problem -- oh, one other thing. I want to acknowledge the presence here in the audience of the member of Congress from Guam, Congressman Robert Underwood, his wife and their five children. They're here; we're delighted to see all of them. We're delighted that they're here with us in this cold weather, instead of on warm and sunny Guam today.

We just heard that the new millennium is only 368 days away. And we want it to be a carefree celebration. The reason we're here today is to announce that on New Year's Day 2000, and on every day that follows, people like Pauline can rest easy because the millennium bug will not delay the payment of Social Security checks by a single day.

The Social Security system is now 100 percent compliant with our standards and safeguards for the year 2000. To make absolutely certain, the system has been tested and validated by a panel of independent experts; the system works, it is secure. And therefore, older Americans can feel more secure.

I thank all those who are responsible. This is a good day for America. Thank you very much. (Applause.)

The Social Security Administration and the Financial Management Service can be proud. The Social Security Agency was the very first one to start work on the Y2K problem; it's been a leader and a model ever since. They couldn't have done it, these two agencies, if they hadn't worked as a team. Social Security generates the Social Security payments; the Financial Management Services issues those payments. They are in this together.

Indeed, we're all in this together. This involves not just federal agencies, but every one who depends upon a computer, which is every one directly or indirectly. Federal and state governments and local governments, businesses large and small, the year 2000 problem reveals the connections between all of us.

We also, I want to point out, have been working very hard with other countries -- Sally Katzen just told me that there was a meeting at the United Nations recently where we met with representatives of 120 other countries who are all now working together to solve this, because, as all of you know, a lot of our economy is tied up with economic endeavors throughout the world, so even a problem a long way from our shores can have ramifications within our borders. And of course, we don't want any of our friends and neighbors hurt by this change, either.

People are meeting this challenge, but I think a lot of people can still hardly imagine what caused this. I mean, computers, after all, are supposed to save us time, right? And I was describing this Y2K problem to Hillary, and she got so technophobic that I gave her a little digital alarm clock for Christmas and she gave it back to me after I talked to her about it, and she said, why don't you just go get me one that winds up that I can change in my hand. (Laughter.)

It happened, you know, because in the older computers the memory put on the chip was precious and much more limited than the phenomenal capacity of computer chips today, so that, in effect, they were all programmed, these older computers, just to change the last two digits on the four numbers of any date. And so what would happen is, when you get to the year 2000, it would show 1900 instead of 2000, because there is no provision for the 19 to go to 20, because of the limitations of memory in the older computer chips. The problem is, obviously, that a lot of new computers are also interconnected with older computers and a lot of people can't even be sure what chips are in what computers and what links are there. That's what makes this labor-saving device of the computer present the most labor-intensive problem imaginable. Retired people have had to come back -- people with skills in working with the old computers have had to come back to help all kinds of businesses figure out how to unravel this problem. It sounds so simple, but it is so mammoth because you have to identify what computers and what chips are where and what the interconnections are.

And so it's an enormous, enormous effort, and we really, all of us, are so indebted to these people who have been recognized today with these two agencies, and to others all across the country who are working on this problem in the public and in the private sectors.

I say again, the American people don't know who -- or didn't before today -- know who Kathy Adams was. They don't know any of the people who are working with her. But when they get the checks for the first Social Security payment in the new millennium, it will be because of them. And I would just ask the American people today to be very sensitive, because there are people like Kathy Adams working in all these agencies, in state and local government and all these businesses throughout the country, and they need to be encouraged. And those who have not yet undertaken this task need to get on it and get on it now because we just have a little more than a year to get the job done.

Now, we have made sure that Social Security checks will keep coming in the year 2000. I'd also like to say that after we got the computer problem behind us, we have to continue to focus on the larger issue, the policy issue, which is to make sure the Social Security checks keep coming throughout the 21st century. All of you know that at present rates of contribution and payment, present rates of retirement, present rates of aging and birth and immigration, we estimate that the Social Security trust fund will be exhausted in about 34 years. We have typically tried to keep the life of the trust fund at about 75 years to make sure it was absolutely stable. Thirty-four years seems like a long time away -- I suppose the younger you are, the further away it seems. It doesn't seem so far to me now, because things that happened 34 years ago are implanted in my mind as if they occurred only yesterday.

But we are going to face early next year a great challenge of fashioning a bipartisan solution to save Social Security for the 21st century. I tell everybody it is a formidable problem, but it will only get worse if we delay it. And it is a high-class problem -- we have this problem because we're living longer. The average life expectancy of the American people, as reported just a few weeks ago, exceeds 76 years. And that is a high-class problem. We should be grateful for this problem.

When Social Security was established and there was no early retirement at 62, and you couldn't draw until '65, the average male life expectancy in America was 56 -- in the 1930s. So we've gone from 56 to over 76, and of course, for women it's a couple of years higher. And as Pauline says, women are especially dependent on Social Security for reasons that I think would be obvious to anyone, and therefore, have a particularly large stake in our resolving this problem in a prompt and appropriate way.

Now, in the last year -- in this year, 1998 -- I have gone around the country and held these bipartisan forums. Members of Congress in both Houses and both parties have taken a special interest and have been very good to attend these forums. Just a few days ago, we had a two-day first White House Conference on Social Security. The second day I went over to Blair House and met with nearly 50 members of Congress from both parties and both Houses. It was an astonishing outpouring of genuine interest.

Now, I don't want to minimize the problems, and they're different from the Y2K problem. The Y2K problem, you know what to do to fix it once you identify it. Here we've identified it and there are obvious differences about what should be done to fix Social Security for the 21st century. But we all know that there are basically only three options: We can raise taxes again, which no one wants to do because the payroll tax is regressive. Over half the American people who are working pay more payroll tax than income tax today. We can cut benefits and it might be all right for someone like me who has a good retirement plan, but it's not a very good idea for someone like Pauline. Or we can work together to try to find some way to increase the rate of return. And there are a number of options that we are discussing.

The point I want to make to all of you is that we have the same obligation to fix the system in policy terms for the 21st century that these fine people we honor today have discharged in fixing the Y2K problem. And if we approach it with the same can-do attitude and the same determination to reach a result, we can achieve that.

So today we celebrate and I hope the celebration that we have today will steel our determination to make sure that people like Pauline can be making this speech 50 years from now.

Thank you very much, and happy New Year. (Applause.)