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 Home > News & Policies > September 2001
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For Immediate Release
Office of the Press Secretary
September 7, 2001

Press Briefing Index
Topic Page
Unemployment, Economy 1-5; 8; 16-18
Migration 5
Budget 5-6; 9
Prescription Drugs, Medicare 6-8
Gao, Energy Plan 9-13
Northern Ireland 13
Nursing Home Inspections 13-15
EPA 15-16
Taxes 18-19
Week Ahead 19
the White House
Office of the Press Secretary
Immediate Release September 7, 2001
Press Briefing
Ari Fleischer
the James S. Brady Briefing Room

12:22 P.M. EDT

     MR. FLEISCHER:  Good afternoon.  I have an opening statement and then, if you would, at the end, I want to make sure I get to the week ahead.

     The President is very concerned about the rise in unemployment, as was announced today.  As President Bush indicated on Labor Day, for any one person who was out of a job, their unemployment rate is 100 percent.  And he is concerned about anything that would indicate that Americans are being laid off, and he has a plan in place to address this issue.

     The plan was agreed to by congressional Republicans and Democrats, an overwhelming bipartisan vote, particularly in the United States Senate. And the President believes very much that the stimulative effect of the tax cut, in combination with the series of interest rates cuts undertaken by the Federal Reserve will give the economy the boost it needs so that Americans can have the jobs they need.

     And with that, I'd be more than happy to take any questions.

     Q    On that point, the Democrats are saying that the budgetary projections with deficits that are projected are now becoming their own drag on the economy, that they are prolonging the slow down in economic growth and threatening future growth and, in fact, these deficit projections in the budget may have their own part in creating these higher unemployment numbers.  How do you respond to that?

     MR. FLEISCHER:  Well, I think it's just the contrary.  Most private sector experts have said directly that the stimulative effect of the tax cut will add to economic growth.  So I think there is little support for what the Democrats have said.

     The fact of the matter is, the existence of surplus results from growth.  And the President believes the most important thing for the nation is to pursue growth policies that bring about jobs for Americans and also bring about surpluses for the government, keeping in mind that even with the economic slowdown that is now about 14 months old, the surplus is the second largest in American history.

     Q    So you disagree that these on-budget deficit projections are having any drag on the economy?

     MR. FLEISCHER:  The surplus is created as a result of growth.  And growth is created as a result of the decisions the government makes, which are reflected in the budget.  And in this case, the decision by the President, as well as the Congress and the many Democrats who supported the tax relief package, will help create an environment in which growth will take place as a result of the stimulative effect of a tax cut which is only now going into the effect in the economy.

     Q    But on that particular point, that they're arguing that the projection of on-budget deficits are having a drag on the economy, do you disagree, and why?

     MR. FLEISCHER:  Well, number one, there is no projection of on-budget deficits.  The administration projects that there will be on-budget surpluses.  And, frankly, if you take a look at it from a pure economic point of view, the only surplus that matters from an economic point of view in terms of growth is how much money comes into the government and how much is spent.  And on that question, the federal government has the second largest surplus in history.

     Q    Well, isn't that mostly for Social Security --

     MR. FLEISCHER:  Each dollar that comes in is measured against how much goes out.  And when it's measured in that effect, the government has the second largest surplus in history.

     Q    So you still believe, then, that this surplus -- on-budget, off-budget -- is still an imaginary red line, and that the only true deficit is one --

     MR. FLEISCHER:  No, it's a real line.

     Q    But the only true deficit, though, is when both the on-budget and the Social Security surplus --

     MR. FLEISCHER:  Well, the Democrats are saying that markets react to on-budget, off-budget.  Each dollar is economically viewed as the same. But from President Bush's point of view, it's a governmental priority, and he will continue to push for it, to protect Social Security.  And his budget protects it.

     Q    So then, again, the only true deficit projection that would have an impact on the market were if both the on-budget and the off-budget surpluses were exhausted?

     MR. FLEISCHER:  Well, again, the key to budget surpluses is growth. And the President's plans create an environment in which growth takes place.  And the budget is the reflection of the decisions that policy makers make.  And in this case, it's the tax cut that will help drive the economy.

     Q    Ari, you said that the President has a plan in place to address this issue, and that the plan will give the economy the boost it needs.  Is the President really confident that no additional measures will be necessary to move the economy forward, or to help people that are going out of work in a number nearing 5 percent now?

     MR. FLEISCHER:  The President is confident that the plan that is in place will work.  And let me remind you that that plan is only now beginning to be felt in the economy.  And the plan is a three-part plan in the short term, and our nation has only experienced, now, about one and a half parts of that three-part plan:  the rate cut across-the-board that went into effect on July 1st provided a small boost; the rebate checks that are now being felt throughout the economy provide a significant boost.  And there will be the additional stimulative effect of an across-the-board tax cut for all Americans that goes into effect on January 1st.

     That, combined with the fact that the Federal Reserve Board has cut interest rates for now a sustained period of time, provides the nation with a unique moment for both tax policy and Federal Reserve policy are kicking in at just at the moment the nation needs it most.

     Q    Just to follow up on that, Ari, how much time should the Congress -- will the White House, and should the public allow to pass in the current economic distress that's being felt before thinking that perhaps some additional measure beyond what the President has proposed or different from what the President has proposed should be attempted?

     MR. FLEISCHER:  The best advice of the economists, private sector and public sector, even taking into account rising unemployment has been that the economy is projected to come back late this year and into next.

     Q    Well, Ari, the text plan that did pass was originally touted as an insurance policy, itself.  So what's wrong with another insurance policy like the capital gains tax cut?

     MR. FLEISCHER:  Because the President is satisfied at this time that this insurance policy will work.

     Q    So you're not worried that by supporting a capital gains tax cut that it would feed charges that the tax plan of the Bush administration is friendly to the wealthy and so forth?

     MR. FLEISCHER:  No, and actually, the President is open-minded on the question of a capital gains tax cut.

     Q    Yet, he President appears to be closed-minded to the idea of spending any money from the Social Security surplus.  Why would he do that if he believes in the stimulative effect of a tax cut if there are many economists who believe that you can stimulate the economy similarly with spending?

     MR. FLEISCHER:  Because that money was paid into Social Security by workers, and it was promised by the government to be held for Social Security, and the President thinks that promise should be kept, and his budgets keep the promise, he's dedicated to keeping the promise, and the promise will be kept unless Congress overspends.

     Q    Does this have any impact at all on your projections -- this, and slower-than-expected economic growth in the most recent figures?  Does it change in any way the projections that the administration had over the next year or two?  And did officials here anticipate that unemployment would reach this level, or is this a surprise?

     MR. FLEISCHER:  Unemployment, as you know, is a lagging economic indicator.  In private markets there was talk for the last several months that the unemployment rate, they were surprised the unemployment rate did not inch up.  But from President Bush's point of view, whether the unemployment rate is 4.5 percent or 4.9 percent, any one American who loses a job has 100 percent unemployment.  And that's why his focus will remain, like a laser beam, on growth, on improving the economy.  And that way the government and the country can enjoy surpluses bigger than the second largest, which we currently enjoy, and as well as giving a stimulative effect to the economy.

     Q    I understand that he feels the pain of anyone who's unemployed, but what I was asking really was whether or not your economic advisors anticipated this and, if not, does it change any of the projections you had?

     MR. FLEISCHER:  Actually, if you recall, I believe Mr. Lindsey gave an interview sometime in the spring or early summer in which he did indicate that he projected a rise in unemployment.

     Q    And was that included in your projection?

     MR. FLEISCHER:  That is clearly included in the projections for the mid-session review.

     Q    Ari, would you respond to this ruling about the discount cards and what the administration --

     MR. FLEISCHER:  Do you want to stay on that topic, or do you want me to come to that?  Did you have something on that?

     Q    I have a follow on the unemployment, actually.

     MR. FLEISCHER:  Go ahead.  And then, Paula, I think you're on that topic and then, David, I'll be happy to take that.

     Q    Thank you, Ari.  The President, yesterday, called migration, linked that to an employment issue.  He said it's an employment issue.  He said there are employers who can't find people to work.  I'm wondering whether the new unemployment numbers make it more difficult to sell that line politically?

     MR. FLEISCHER:  It does not change the President's belief and the principle belief that America must be a nation that welcomes people, and that we need to welcome people, and that we need to welcome people in a manner that is legal, safe and humane.

     Q    Ari, when the House Minority Leader came out after meeting with the President, he invited the President to either come forward with a new budget or with some new budget ideas, because he said the current budget basically does not accurately reflect current or future economic conditions.  Would the White House entertain doing anything at all in terms of modifying its budget?

     And, also, I just need to clarify what you said this morning in terms of how you define a surplus, because regardless of how you define a surplus, don't the appropriators have to base their requests for spending on the budget resolution?  And if things like the military come outside of that budget resolution, don't you have to abide by the pay-go rule, which means that you've got to find a way to pay for it?

     MR. FLEISCHER:  Okay, on the first question, I don't think it should surprise anybody that the people who voted against the budget would like the President to submit a new budget.  They had their best shot, they voted, and they lost.  There was a bipartisan majority that supported the budget, that passed the budget, and allowed the budget to be signed into law.  So the President stands with the bipartisan majority that expressed its will and passed the budget.

     On the technical question of pay-go, the rules are simple.  It's defined by the Gramm-Rudman-Hollings Emergency Deficit Reduction Act, which dates back to the '80s, at a time when there were deficits.  Now we're in an era where there are surpluses.  We have the second largest, as I've indicated.  It's projected to be even larger next year and into the out-years as far as the eye can see.  The economic changes, the slowdown has not changed that long-term outlook.

     To answer your technical question, under that law, any time there are two consecutive quarters of less than 1 percent growth, it affects such issues as sequesters, it affects such issues as the caps that are placed on spending.

     Q    Reaction to this ruling on the discount cards and what the administration would do next?

     MR. FLEISCHER:  Well, the President is disappointed by this stay.  The President is dedicated to getting senior citizens prescription drugs and prescriptio