Press Briefing by Ari Fleischer (Text Only)

MR. FLEISCHER: Happy Friday at the White House. A special welcome today to the press corps. The President this morning began with his usual round of intelligence briefings, followed by an FBI briefing, and then he had a meeting with the National Security Council. Then the President made remarks to the recipients of the 2001 Presidential Early Career Awards for Scientists and Engineers, at which he promoted the importance of science and technology research.

In approximately one hour, the President is going to have the first meeting with the Corporate Fraud Task Force. The Corporate Fraud Task Force met earlier this morning at the Department of Justice. The President has invited them over to the White House to give a report on their actions. The President views this as an important priority to put into effect the words of his Tuesday speech, to crack down on corporate corruption, and to prosecute people who are involved in fraud and wrongdoing in corporate America.

Following the meeting, the President will depart for Camp David, where at Camp David the President will make a visit to a nearby Camp Greentop, which is the home to some disabled children and adults who live in the Camp David area.

One final statement, then I'll be happy to take questions. The House of Representatives has begun a series of votes on legislation that is vitally important to this country to protect the homeland. And this is a reference to the creation of the President's request for a Cabinet-level Department of Homeland Security.

The President is pleased with the pace of congressional action, and he is confident in the outcome of what the Congress will do to create a Department of Homeland Security along the lines of that which he proposed. The President is confident the measure will move forward, and he believes that Congress will join him to put the country before turf, and to do what is right, so our nation can have a Department of Homeland Security that puts the protection of the American people first and foremost.

Q If the Senate should pass a bill on guns in the cockpit, the way that the House has, would the President veto it? Would the President veto the bill as passed by the House?

MR. FLEISCHER: John, the President's view is that what is important is to provide the maximum safety for passengers in the air, and that's why under his proposals the Transportation Security Administration has beefed-up screening, has reinforced cockpit doors, and has taken a series of measures to improve safety. The President relies on the judgments of the experts about whether or not allowing pilots to be armed comports with the safety requirements the President seeks. So there's no change in the President's position from what he's talked about before.

MR. FLEISCHER: The President makes his decisions based on what he believes promote the most safety aboard an aircraft. And based on the advice he's got from his advisors, he believes that arming pilots in the manner described does not promote safety.

Q What does the President want to hear from members of the task force, and what will he tell them he wants them to do?

MR. FLEISCHER: Well, the task force has a vital function. The task force function is to obtain information, to prosecute, to arrest and to imprison corporate executives who engage in fraud and corruption. It's a very important part of restoring confidence in the economy, and giving the American people faith that this government will take every action necessary against people who cook the books or change the numbers, in any type of fraudulent way. And the government is serious about this. I think corporate America knows the government is serious about this. And the President is looking forward to hearing this first report from the task force.

MR. FLEISCHER: In the President's meeting? They're going to be coming out and talking to the press right afterwards. You'll have your chance.

Q Well, you know we always like to have pictures of the President actually in his first meeting with the Corporate Fraud Task Force.

MR. FLEISCHER: I understand, and you will have access to the people who will be in the meeting.

Q Ari, there are larger issues in the economy besides the corporate corruption scandal that's been dominating the news. One of them is the number of people who have been long-term unemployed, that is more than 26 weeks, is at a historic high right now. And I'm wondering two things. Does the President have a broader economic plan to spur the economy more, beyond the corporate accounting issues, and would he support the extension on unemployment bill that has been pushed right now, mostly by the New York delegation?

MR. FLEISCHER: One, remind me at the end of this, I would like to give the week ahead. The President will be giving a speech in Alabama on Monday on the economy, and he'll be sharing with the public some of his thoughts about the strength of the economy and some of the underlying factors and fundamental strengths that are found in the economy. There was additional good economic news reported this morning in retail sales. So that's something I'll touch on at the end of the briefing.

Q How anxious is the White House to get some kind of bill on corporate governance signed, given that the markets seem to be indifferent at best to what the President has said so far, and to what lawmakers are talking about?

MR. FLEISCHER: Well, the President in March announced his 10-point proposal that began this whole congressional effort. The President is pleased the House responded very quickly and is pleased the Senate now has begun to take action. This is important, and that's why the President proposed it, and that's why the President went to Wall Street and made additional proposals that have now been incorporated into the Senate legislation.

And so the House has passed a tough measure, the Senate is working on a tough measure, and the President looks forward to signing into law a tough measure.

MR. FLEISCHER: Well, you're making the assumption that the only factor that influences markets are speeches given by leaders in Washington. And I think most people who follow markets will tell you that's just not true. Markets react to values, markets react to economics, markets react to fundamental issues that seldom have anything to do with speeches that people give in Washington, D.C.

Q But you're defending the fact that the market didn't respond to the President's speech on Tuesday, or you did earlier today.

MR. FLEISCHER: I just point out the facts, that after the President's speech Tuesday, the market went up 28 points, and only an hour and a half after the President's speech Monday -- Tuesday, did the market decline. That's for those of you who, as Washington political reporters, have some type of savvy about knowing what makes markets go up and down. There seem to be a trend in Washington to attribute market behavior, per your question, to speeches given by leaders in Washington. My point is, that's not the case.

Q But wasn't the purpose of the speech to encourage and reassure the public and investors?

MR. FLEISCHER: Bill, the President does not give speeches to impact the market on a day by day basis. The President gives speeches to impact the country and the fundamentals of policy that drive the economy and that give people hope for the outlook in the economy, short-term as well as long-term. The President leaves market guessing to others.

Q Is there any change in the President's position, or does he still have some reservations with the Sarbanes bill, even though an amendment recently passed that I think he thinks is too strict by 97-0 was --

MR. FLEISCHER: The President's position on the Sarbanes legislation is exactly what I described to you two days ago, when -- throughout this -- the period of time the Senate has debated the bill. The President believes in the goals of the Sarbanes bill. As he has said, the Sarbanes bill and the Oxley bill in the House are very close to each other. The House bill is a tough bill, the Senate bill is a tough bill. And he's looking forward to signing a tough bill into law.

Q Ari, Congressman Waxman from the House wrote a letter to the President today in which he says: you have a rare opportunity to exemplify the standards our nation needs; if you donate all or a portion of the profits from the sale of your Harken stock to an appropriate charity focused on the needs of displaced workers, it would be an effective reform. Would the President consider anything like that?

MR. FLEISCHER: I haven't seen the letter, so I don't comment on things I haven't seen.

Q Ari, the President is going to be meeting very shortly with his task force on corporate reform or corporate corrections or whatever. Is he willing to listen to their point of view, as far as more stringent law coming out of Capitol Hill?

MR. FLEISCHER: The purpose of the task force is not to write law, the purpose of the task force is to prosecute people who engage in fraud and wrongdoing. That's what this task force is set up to do.

Q I'm sure that the members are very qualified to have opinions on something that should be part of the law, which they will have to uphold.

MR. FLEISCHER: The purpose of the task force is different. This task force includes law enforcement officials. These are the front line prosecutors. These are U.S. attorneys. These are the investigative agencies of the federal government who -- whose purview and responsibility is to obtain information about criminal wrongdoing, and then to prosecute and imprison people.

Q The budget deficit, I know you can't get specific numbers, but some Democrats are already criticizing the administration on the methodology of coming up with the budget deficit number, particularly the dynamic scoring, saying that it's cooking the books. Is there any reaction to that?

MR. FLEISCHER: Given the fact that the numbers haven't been released, it's kind of hard to know how anybody could be critical of the process by which the numbers are arrived at or what the numbers are. There will be an announcement at 2:30 p.m., later today. But if they're talking about any of the scoring conventions, I don't know what they're referring to. They haven't seen the budget numbers yet.

Q Two questions. One, Secretary of State is again going to India and Pakistan, later this month. Is this something with the knowledge of the President, or if so, if he's carrying any special message this time, because tension looks like -- in public, there is no tension, but on the border, the tensions are there.

MR. FLEISCHER: Well, as has been indicated many times before, the situation on the border between India and Pakistan remains a concern for this administration. Through the very act of diplomacy and some of the personal efforts of the President and the Secretary of State and numerous other diplomats, tensions have indeed been reduced tremendously between India and Pakistan.

However, it remains one of the world's most volatile, dangerous regions. It's an area the administration is going to remain actively and consistently engaged in, hence the Secretary's trip.

Q And second -- if I can follow up, please? Over 132 Pakistanis were deported recently to Pakistan. Is this -- what role the White House played in this, because I remember in New York, General Musharraf brought this issue with President Bush, and also Pakistan ambassador with the State Department officials. So they were arrested in connection with 9/11.

MR. FLEISCHER: The Justice Department would be the proper place to ask any questions about deportations.

Q Two questions, Ari. First, just following-up on the position on legislation now moving through the House and the Senate. If I understood right, when we had a background briefing after the President's speech, and we asked whether the President would sign the legislation that at the time was currently in the Senate, including the Leahy amendment, we were told it was a hypothetical question, and so forth.

Q And it remains one. It may, by Friday, have become slightly less hypothetical, however, and if that's the case, in your formulation, that there are both tough bills in the House, tough bills in the Senate, and the President looks forward to signing a tough bill, is that a way of indicating to us that he will sign whatever it is that comes out of this process?

MR. FLEISCHER: No, David, as a general rule, and you've heard this on numerous issues, and this issue is included in it, the White House will not indicate as a bill moves through the House, moves through the Senate, until it reaches conference, whether it is something it will sign or not. Typically, much of the work that determines whether or not legislation has met the President's final approval is done in the conference committee.

To indicate prior to the conference committee, it would be a process issue that would not serve the interests of the Congress or the President. Allow the Congress to do its work. Congress is working hard and working well on this issue. Let the Senate finish and then hopefully this will be one conference where the Congress is able to move and move quickly, so the President will be in a position to judge the bill, and hopefully sign it.

Q My other question, are you aware of any change now underway or being contemplated about our economic interchanges with Pakistan that would allow Pakistan to have greater exports or economic interchange with the United States?

Q Ari, going back to the deficit, without bothering to get into figures, what would you say to Democrats who do say that this higher deficit is in part stemming from the tax cuts? And also, what would your argument be to them who would argue against the dynamic scoring accounting?

MR. FLEISCHER: Number one, the President would like to thank the many Democrats in the Senate, the 12 Democrats, representing almost a quarter of all Senate Democrats, who voted for this tax cut, which helped give growth to the economy last year.

Last fall, if you remember, at the time the tax cut was enacted into law, the economy was in recession. The first quarter of this year, the economy grew by more than 6 percentage points, in good part spurred by the tax cut. It was a perfectly timed tax cut. The factors that have contributed mostly to the decline in the size of the surplus are the fact that we went into a recession as a nation in March of 2001, as well as the fact that we were a nation that went to war in September of 2001, which led to a large amount of increase in federal spending for homeland security and for the defensive needs of our nation -- properly so. And so those are the two factors that contributed.

The final factor that's contributed to the change in the numbers is the fact that capital gains revenues are down as a result of the stock market change. The change in the stock market, particularly in the technology-heavy NASDAQ began in March of 2000.

Q What would you say to Democrats who argue they don't want to see a dynamic scoring?

MR. FLEISCHER: There is a perennial internal congressional issue involved in dynamic scoring. This is nothing new. And Congress has put together a task force to take a look at the question of dynamic scoring, as is their right and their purview. And the President leaves the scoring decisions to the Congressional Budget Office and the Joint Committee on Taxation, where Congress has invested that authority -- properly so.

Q What would you say to the argument that they would sort of compare this to an Andersen type of accounting?

MR. FLEISCHER: The point on dynamics -- let me give you an example on something that is dynamic scoring. And if the Democrats want to call this Enron, then I think everybody will understand how much politics there can be in Washington, D.C.

If somebody sells products for a living -- let's say there's a grocery store on the corner that sells cans of soup. If they mark their soup down from $1 to 75 cents, some would say, you've just lost 25 cents. Others would say, because you marked down the price and you're having a sale, you get to sell more of it, you actually make more money. That's why businesses have sales, by marking down prices -- they actually do lead to making more money. The argument there being, when you cut taxes, it promotes growth just as we've seen with the tax cut that was enacted with the help of those Democrats last year -- it, indeed, has promoted growth.

And so I think that's an argument that some people in Washington just want to play politics. There's a little consternation inside the Democratic Caucus because they're so badly split on the question of cutting taxes. There are certain Democrats who are just begging, trying to find a way to raise taxes; they've said it, and then they've instantly retreated from saying it. There are deep splits within the Democrats on the tax issue.

Q Ari, with warnings of new terrorist acts in the United States and with Congress foot-dragging and altering the President's homeland security agency, does he plan to appeal to the American people to force congressional action before the August recess?

MR. FLEISCHER: Well, as I indicated, the President is pleased with the pace of congressional action on homeland security. There were a series of votes this week, all of which are non-binding in various, in effect, subcommittees, that will then report their recommendations to, in this case, the committee of jurisdiction. And the President is confident that the committee of jurisdiction is going to put the nation ahead of turf, will do what is right to create a strong Department of Homeland Security. It is a national priority. We remain a nation at war. We remain a nation that has enemies who are threatening the United States and it is an important matter for Congress to act on.

But Congress has done the responsible thing here. It is acting quickly and the President is confident in the ultimate outcome.

Q Can you explain why you think it's appropriate that the President wasn't interviewed on the Harken -- by the SEC, on the Harken situation?

MR. FLEISCHER: I think just as with any type of review of facts and of allegations, when the reviewers determine that the facts and the allegations don't hold up there's no need for an interview. The President would have been willing to have been interviewed if that was the case, he has said so. But I think it underscores exactly what has been discussed many times here, that there is no "there" there. It's all been looked into, the Securities and Exchange Commission has looked into this issue extensively and exhaustively and made the determination there was no "there" there.

Q But how do you react to the fact that the Securities experts say that this kind of lack of interview is highly unusual in this kind of case? I mean, if it had been someone else, there probably would have been an interview.

MR. FLEISCHER: I think it's all been looked at and explored by the Securities and Exchange Commission. And I think if that was the case, if somebody is suggesting that the actions of the Securities and Exchange Commission at the time they looked on this were somehow wrong actions, don't you think the administration that succeeded that administration might have looked at it differently if they had different people at the helm? Obviously, they made no changes to it because it was based on good judgment and the careful, considered judgment of the career people at the Securities and Exchange Commission. That's why in Washington you can go around in circles and circles and circles at a time when an old issue arises out of politics. And, again, there's no "there" there.

MR. FLEISCHER: Lester, you are standing in your row, and that means you're the last call. But if you would like to grab a seat somewhere, you will of course be called on.

Q Regardless of whether it was an old issue, Ari, the President did come out on Monday and field dozens of questions about the topic. We haven't seen the Vice President in the same way, come out and field those kinds of questions about his own accounting practices, his own stock practices. Is the President suggesting to him, regardless of whether it's old, it's been investigated, that he, too, come out, face the press, the American people and take questions on it?

MR. FLEISCHER: Let me put it to you this way. After a week of noise about nothing, people are seeing a scandal-seeking Washington that's out of touch with a solution-seeking nation. And that's what this President is focused on: solving the problems that have been created, that have been growing up for a considerable number of years as a result of the bubble in the markets and the corporate excesses that took place as a result of that; and targeting the wrongdoers and people who engage in fraud so that the country can have confidence in the free enterprise system and those people who are responsible in corporate America. And most of corporate America agrees with that, the American people agree with that. And that's where the President's focus is and shall be.

Q Thank you. On the so-called International Criminal Court, Ari. Does the U.S. still maintain its threat to pull out of peacekeeping activities if necessary? And would the U.S. consider a reduction in funding for the U.N.?

MR. FLEISCHER: We are continuing to have diplomatic conversations at the United Nations about resolution to the impasse over the International Criminal Court. I assure you that the President's determination to protect America's peacekeepers and America's diplomats from other nations that would impose their sovereignty over America's is continuing. That will not change.

We look to find a solution to. And as you know, the United States has done its part, and will continue to do its part in bringing war criminals to justice, no matter where they are. That's why the United States supported the ICTY, the International Criminal Tribunal, that operated to prosecute Slobodan Milosevic and others in Serbia and the former Yugoslavian republics who engaged in war crimes.

America's commitment to fight war crimes remains undiminished. America's commitment to do it right remains in place.

Q Are you optimistic? It doesn't seem to be going very well at the U.N. right now.

MR. FLEISCHER: This is the nature of diplomacy. These talks often become long and intricate. And these are the things that diplomats engage in. They enjoy doing their jobs, talking to each other over tables at great length, and that's what we're witnessing.

Q Ari, the Leahy bill to create a targeted statute of a criminal fraud produced a rare moment of unanimity in the Senate, a 97-0 vote. Is the White House still playing hard to get on this?

MR. FLEISCHER: Well, again, the Senate has taken action on many of the items that the President asked the Senate to take action on by similar votes. For example, in the President's speech up in New York, he asked Congress to double the maximum prison term for mail fraud and wire fraud from five to 10 years. He asked Congress to strengthen the laws that criminalize document shredding and other forms of obstruction of justice. He asked to strengthen the ability of the SEC to freeze improper payments to corporate executives while a company is under investigation. He asked the U.S. Sentencing Commission to consider enhancing prison time for criminal fraud, and finally empower the SEC by administrative action to bar directors and officers from continued service if they engage in serious misconduct.

The Senate has taken action on those measures. This is why I said to you, the House has passed a tough bill, the Senate is working on a tough bill. The ultimate test of the Congress always comes after the House and the Senate act. Will they go the conference committee, work together, and send something to the President quickly? He hopes so, and he'll work to make that happen.

MR. FLEISCHER: Lester, as long as you're standing in that aisle, you get called on last.

Q Are you saying that all of these things have now been approved by Congress, or by the Senate?

MR. FLEISCHER: Again, as I indicated, as the bills move through the House, move through the Senate, what President does indicate whether he will sign it at that time? The real work of the Congress often begins in the conference committee, after they do the hard work at House passage, the hard work at Senate passage. The key test typically comes as it gets to a conference committee. And the President is fully prepared to work with the Congress in the conference so that this can be signed into law.

Q Now, a group of Democrats had a news conference on the Hill today, including Senator Daschle and Representative Gephardt, in which they said, the administration has a, "secret plan to privatize Social Security," that they are filing a discharge position, and want a vote on this plan or the plans proposed to the President by the commission before the election.

MR. FLEISCHER: You know, again, I think at a time like this, people are looking to people in Washington to work together. Remarks by one party suggesting other parties have secret plans are disappointing. There are 80 million Americans who own stock in our country, or mutual funds. They are a piece of a growing pie, and they want their nest eggs to grow, and they want to have comfortable retirement years. They're invested for those reasons. I think it's fair to say that these 80 million people are looking to Washington, D.C, and the leaders for solutions and not sniping. They're looking to their leaders for bipartisanship and not bickering. And that's what the President is going to focus on.

Q But the proposals for -- though they characterize it as privatizing the entire system out of the recommendations wherefore private accounts within the overall system, nevertheless --

MR. FLEISCHER: On the timing of what's before the Congress, the President does of course believe that younger workers, who right now are going to receive no money for their Social Security taxes that are taken out of their paycheck, deserve to have more options, and on a voluntary basis, if they chose, to put their money in the stock market, he thinks that is appropriate for those younger workers to have that right under Social Security. But I think if you look at the congressional calendar, they have not been able to take action on many of the issues in which the House of Representatives passed legislation last year, let alone be able to take up something new.

Q I have two tax shelter questions. One is related to the Ways and Means bill that came out yesterday, out of committee. And I just wondered if the administration believes it's strong enough, in terms of preventing companies from reincorporating overseas to avoid paying taxes?

Q And also, the corporate -- in addition to the corporate inversion part of that bill, there's also one addressing a WTO ruling.

MR. FLEISCHER: Let me take that. We'll get back to you on both the WTO FSC ruling, as well as corporate inversions.

Q And the other tax shelter question, does the administration believe it was appropriate for the IRS to release the names of clients at KPMG in its court ruling, court filings? As you know KPMG is under investigation for --

MR. FLEISCHER: That's the first I've heard of that, so I don't have anything for you on it.

Q On corporate fraud, does the President plan to meet regularly with the task force? I mean, how hands on does he plan to be in this --

MR. FLEISCHER: My anticipation, from this point forward, is that the President will remain in close contact, will receive briefings about the task force activities, and will meet with them as often as is necessary.

be the Office of Cabinet Affairs as the principal point of liaison with all the government agencies.

MR. FLEISCHER: That's a very good beginning to a question. (Laughter.) I really want to hear where this is going. (Laughter.)

Q I would like to know, do you believe maybe it's possible terrorists are trying to enter illegally to United States can be hiring the services of alien smugglers south of border?

MR. FLEISCHER: I'm not going to comment on anything specific about what they may or may not be doing. But there is a seriousness here, involving people who still are seeking to illegally, or even if they can legally enter our borders for the purpose of bringing harm to the American people. This issue has not gone away. This remains a very serious and troubling matter. The United States is doing everything in its powers through the enforcement of our borders to the agreements we reached in Canada two weeks ago to have a pushed out perimeter of the United States border through greater international cooperation, to stop anybody from coming to our country for those purposes.

The fundamental problem that we face is we don't know what we don't know. And that's why we continue to work so hard to protect this country. And this is also why it's important for the Congress to take action to create the Department of Homeland Security, so we can afford every protection to this country and to the American people.

Q Senator Lott just endorsed the Sarbanes bill. Is this train leaving the station without the President on board?

MR. FLEISCHER: Well, again, I think -- once again, the House has passed a tough bill, the Senate is working on a tough bill, and the President is looking forward to signing a tough bill.

Q -- disappointed that so many Republican leaders are now endorsing a bill that the President has not endorsed?

MR. FLEISCHER: Well, given the fact that this bill carries so much of the President's proposals in it, it's not surprising that Republicans are supporting the President on this.

Q This might amount to the warm-up act for Lester -- (laughter) -- but Senator Byrd on the floor, on the Senate floor today apparently called OMB Director Daniels a little Caesar and a bigmouth who has mangled, mauled and murdered the appropriations process. I'm wondering, is the President at all tired of Senator Byrd dressing down his economic team?

MR. FLEISCHER: The President knows that there will always be people in Congress who want to spend more of the taxpayer dollars on bigger government and on more pork spending. And the President knows that the taxpayers are grateful to have a distinguished leader like Mitch Daniels at the helm, whose job is to protect the taxpayer's money.

Q Thank you. I've heard almost no White House objection to the El-Al Israeli security officer who shot and killed that Arab murderer in the L.A. airport. And since an overwhelming majority of the President's fellow Republicans in the House just voted in favor of stopping the disarmament of our airline pilots, my question is, is there any chance the President will now stop listening to Democrats Mineta and Magaw and give our pilots the same right as that Israeli security officer in the L.A. airport?

MR. FLEISCHER: Lester, you must have been so busy marching up and down the aisle, you missed Mr. Cochran's question, which was the same question with a little bit different --

Q No, they are not. In keeping with the President's statement that we are at war, not only with terrorists but those countries that harbor terrorists, wouldn't that be more clearly demonstrated if we had U.S. special forces join the most recent Israeli army occupation, which has resulted in no more suicide bombing?

Q The New York Times -- a New York Times columnist again has accused the administration, the FBI of being very lethargic in the search for the culprit for the anthrax deaths, and so forth. Is the President surprised there's been no discernable progress in this search?

MR. FLEISCHER: Well, if you remember, Helen, the case of the Unibomber, for example, there are investigations which take a long time to get to. Often it's because of the abilities or the cunningness of the person or persons who are responsible for carrying out these acts. And the FBI, in the President's judgment, is doing everything it possibly can to determine who is behind last fall's anthrax attacks.

On Monday morning, the President will travel to Birmingham, Alabama, to participate in a roundtable discussion and make remarks on the economy. That afternoon, the President will attend a Bob Riley for Governor luncheon, before returning to Washington, D.C.

On Tuesday, there are no publicly scheduled events. On Wednesday, the President and Mrs. Bush will welcome the President and First Lady of Poland to the White House. That morning the two Presidents will meet in the Oval Office before participating in a press availability in the East Room. On Wednesday evening, the President and Mrs. Bush will host a state dinner for their guests, and the First Lady of -- that will be followed by entertainment in the East Room.

On Thursday, the President will invite the President of Poland to travel with him to Michigan, where the two Presidents will make remarks and attend a luncheon with Polish-American leaders, before returning to Washington.

And on Friday, the President will travel to Fort Drum, New York, where he'll make remarks to troops and families before heading to Camp David for the weekend.

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