Press Briefing by Ari Fleischer (Text Only)

MR. FLEISCHER: Good afternoon. Let me give you a report on the President's day. And then I have a statement to make. The President began this morning with a CIA briefing, which was followed by an FBI briefing. And then the President, in the East Room earlier today, signed into law legislation to fight corporate corruption and to have more accountability and honesty in record-keeping for businesses. And then, later this afternoon in the East Room, the President will make remarks to launch a USA Freedom Corps public service advertising campaign to extol the values of having more people volunteer to serve AmeriCorps, Freedom Corps and the Peace Corps.

This week marks the Senate's last week in session before they recess for the August break, and there are several major items that the President hopes the Senate will be able to conclude action on before they go home. The President calls on the Senate to pass trade promotion authority so that he can have the authority that previous Presidents have had, which has been lacking for the last 10 years. The President looks forward to action on that and hopes he'll be able to sign that into law as a result of passage this week.

The President also calls on the Senate to pass the defense appropriations bill. It's important while our nation is at war to put defense first. The President is disappointed that the Senate is not going to be able to take action on homeland security this week. The President wishes that the Senate would have been able to get to that this week. Perhaps they will change their minds, but the President is disappointed in the postponement of homeland security in the Senate.

And on prescription drugs, the President supports getting prescription drugs to our nation's seniors, and the President is looking at what the Senate does on that. The tripartisan bill is the one that most reflects the President's thinking.

And finally, there is a longstanding tradition in the Senate as recess approaches, the Senate accelerates its pace on nominations. And Senator Daschle has made a commitment to do that this week, and the President is very pleased by Senator Daschle's commitment. There are presently 50 nominees who have passed out of committee and are only waiting a vote on the floor of the Senate. These include nominees to be Deputy Secretary of Energy, Deputy Director of the Federal Emergency Management Agency, two circuit judges, nine district judges, and nine ambassadors. The President urges the Senate to take action on these 50 awaiting nominees and he expects that the Senate will do so.

MR. FLEISCHER: The President focuses on protecting our country, and protecting our country from whatever the source may be. And particularly in the case of Iraq, the President has, in his State of the Union, referred to Iraq as part of the axis of evil, and for good reason, given the behavior of Iraq toward its neighbors, its belligerent manner, the way it's attacked Kuwait, the war it fought with Iran, its use of chemical weapons against its own people. And that's why the President has, with the support of the American people, said --

Q And what right does the President have to take the United States into an attack on a country which has not provoked it? I mean, you're going back a long way to find some reasons. And I don't think they're accepted by the American people, because you haven't explained it.

MR. FLEISCHER: Well, I'm not going to accept the premise that the President is going to attack Iraq.

MR. FLEISCHER: The President has not given any such indication. The President has said he will protect the American people. But I think that your read of the American people is not where the country is when it comes to wanting action to protect themselves against the dangers that Iraq poses.

MR. FLEISCHER: I'm not going to go too far down this hypothetical line of reasoning. But I will refer you to the speeches the President has given on it, and you can hear for yourself.

Q All he said is we need a regime change. And as for weapons of mass destruction, he can -- I can name you 10 countries that have them, including the U.S.

MR. FLEISCHER: Well, I think you've seen a variety of economic statistics and data come out, most of it good, some of it not good, much of it in recent -- in terms of consumer confidence, reflecting the market's drop in the last month or so. And so some of that is to be expected as a follow-on to the market.

Of course, as the President has noted and as he said in his remarks today, that many of the measures that make up the strength of the economy are solid, and that includes low inflation, low interest rates, growth, the growth in the economy for the first quarter in excess of six percentage points. Tomorrow, there will be new figures released for what the economy grew in the second quarter -- I think it's tomorrow or maybe Thursday we get the newest GDP figures for second quarter growth. And so there are plenty of signs to look to in the economy to see the strength that the President sees.

Unemployment, by historical standards, is rather low, as well. And so these are all the factors that drive economies. But there's no question that there are some worrisome signs like consumer confidence. And this is why the President has called on the Congress to complete its action, so Congress can take its responsibility to help give the economy an even bigger boost. There are several measures of economic activity that are pending in the Congress, several measures that can boost the country's economy, and that's why the President wants the Congress to pass them, because he's ready to sign them.

MR. FLEISCHER: Well, the timing is not up to the President; the timing, of course, is up to the leadership of the Senate, at this point. The House was able to get it done and they passed the homeland security bill very much along the lines of what the President asked for, and they did so in a huge overwhelming bipartisan vote.

The Senate -- maybe they'll be able to get to it this week, they appear to be saying they can't. If they don't get to it this week, we'll see what the calendar looks like in September. But the President has referred before to the very many things that the Senate has to do when they come back. Now, if they don't do homeland security this week and they wait until the fall, that means the Senate will have to take action on human cloning ban, terrorism insurance, welfare reform, the treaty of Moscow, the homeland security legislation, in addition to all the appropriation measures this fall. It's a very crowded calendar, particularly in a fall where Congress gets back a little bit after Labor Day and then, as is tradition in election years, they're going to go home early.

Q What about the hearings that are going on today on investment banking? Does the President have any position on whether there should be regulation on the investment banks?

MR. FLEISCHER: That was contained in the legislation today calling for a study, and that's what the President just signed into law.

Q Ari, why, again, no individual company CEOs at today's event? I know the head of the Business Roundtable, Richard Grasso, from the New York Stock Exchange, but no individual company CEOs there. What message does that send?

MR. FLEISCHER: If you looked at the room, most of the people in there were United States senators, United States congressmen, members of the Cabinet, the members of the task force; so, many people in the government who worked on the legislation. The head of the Business Roundtable was there representing CEOs. It's a message that's important for them to hear, and I think it's fair to say they heard it. And the Business Roundtable is their representative.

Q Not every CEO, but several prominent ones who are so close to the White House?

MR. FLEISCHER: Well, the ones -- I think you had representatives of the New York Stock Exchange were there, NASDAQ was there, the head of the Business Roundtable -- who is no shrinking violet when it comes to representing corporations -- was there.

Q But on homeland security, can you say to the American people, to any of the workers that would work in this new department, that they are not at risk of losing their jobs by going into this new department, because of the extra power the agency wants to have to hire, fire and transfer employees around?

MR. FLEISCHER: No, and I think one of the reasons that the House of Representatives voted in such a bipartisan way for the bill is because they realize this is good for the country, good for the country's protection and it's good for the workers. I think the workers are at risk of gain, as a result of now being able to receive raises for doing good jobs.

Typically, in the bureaucratic structure that many of these agencies are bound to as a result of these rules, they can't get a pay raise unless everybody in their same level gets a pay raise. There's very little incentive for a manager to be able to give an individual a pay raise. Or, if necessary, to take disciplinary action against an individual.

And that's the type of management flexibility that the private sector has that Congress passed now for the screeners at airports that the President thinks is helpful for homeland security, as well.

MR. FLEISCHER: Sorry, we're going to try to keep it to two follow-ups, so people in the back can get questions.

MR. FLEISCHER: Well, the President is concerned about corporations in America who take advantage, set up operations outside of America in an effort to lower their taxes. That's not good for America; that's not good for workers; and it's something that the President has proposed legislation on that's been sent up to the Hill.

Treasury Department unveiled a comprehensive plan earlier this year that the Ways and Means Committee has already reviewed in a hearing, and the President is hopeful that Congress will be able to pass this this fall. It makes sense. And if you want, I'd be happy to get into the substance of it with you. It's one of the most complicated aspects of tax law. I think it's -- this involves provisions of Section 163(j) of the Internal Revenue code, and it's one of the -- (laughter) -- that one. I'd be more than happy to get into discussions with you about this topic. I remember it fondly.

Q I'm not sure I'm going to get that in the story. I have an unrelated follow, please?

MR. FLEISCHER: Unrelated to 163(j). (Laughter.) Is this a different section of the code?

MR. FLEISCHER: Well, what led to this is the President's belief, as he put in the State of the Union, that America is such a force for good around the world, and yet we hear messages from other nations that they don't see what the American people see in our country, that the President thinks it's important to share information, to listen to other countries, and to provide that information so they can listen to us. And so, as a result, the President does believe better coordination of international communications will help America to explain what we do and why we do it around the world. It's important to share the truth about America and American values with other nations in the world.

So the White House will be working very closely with the Office of Public Diplomacy at the State Department to help share that word with other nations in the world.

MR. FLEISCHER: Well, Goyle, I'd have to check the records. But if I recall, in several of the meetings that the President has had here, he has had representatives of the Hindu faith meet with him, along with other members in some of the faith-based meetings that the President has had. And the President, I think owing in great part to his own religious beliefs and to America's tradition of being a welcoming, tolerant nation that brings all into our community of faith, that's a message the President gives. When he talks about any one religion, that applies to all religion.

Q And my second question is, last week, according to a report issued by the U.S. government that there were several American Taliban, or so-called Taliban, who fought in Kashmir and in Afghanistan. What is the President going to do in the future that all this doesn't happen in the future, that Americans are becoming -- are joining Taliban or al Qaeda?

MR. FLEISCHER: Obviously it's the President's hope that nobody would be so foolish as to fight against the United States. In the case of John Walker Lindh, he's paying for his crime. And I would just leave it at that. That's what the President hopes.

Q Do you know how many more are there, and here, or maybe in Afghanistan, or with al Qaeda?

MR. FLEISCHER: That's a tripling of the margin the last time the House passed it. (Laughter.)

Q From one to three, right. The President went up to lobby for it, got it through. The Senate approved its fast track legislation in May, by a 66-30 vote. My question is, does the White House expect the Senate to pass it, and to pass it this week, as you have asked for twice today?

MR. FLEISCHER: The President is hopeful that the Senate will pass it this week. It's very important that the Senate pass it this week, because again, how crowded can the highways be in the fall, if the Senate puts off action? The traffic jam is going to be so big, it's going to be hard to get things done. So the President hopes the Senate will pass it this week. And the word out of the Senate looks promising. Again, this is -- the Senate leadership makes these determinations. I don't try to guess what votes will be. It is the history of the House and the Senate that the Senate has been a place of much more bipartisan support for trade promotion authority than the House in recent years.

MR. FLEISCHER: Let me just say this: Brazil is an important friend and ally. And the President and this administration have great confidence in Brazil and its economic team. Brazil has demonstrated its ability to use international monetary assistance effectively, and they have sound economic policies that are in place. The United States will continue to support international financial assistance to Brazil. And that's the President's position, and that's the position of the administration, including the Secretary, of course.

MR. FLEISCHER: After -- if trade promotion authority passes this week, and if the Senate is able to pass Defense appropriations this week, here are the remaining items that are important for next fall. Of course, completion of action on homeland security is an important priority. Other issues -- and I'm just going to walk through several of them -- the President would like to see completion of the conference on a patient bill of rights. Both the House and Senate have passed legislation that would give people more rights in dealing with their HMOs. The President would like to see that enacted into law, along with getting prescription drugs for seniors. Those are all important issues the President has addressed before.

The faith-based initiative, which brings hope and help to people who are lower income -- we're working very diligently this week with the Senate on that, and we'll continue to work with the Senate, to see if they can get that passed into law. Pension protections, so people can have more protections and more rights, to have their retirement nest eggs secured for their retirement years, has passed the House; we hope it will be able to pass in the Senate.

Terrorism insurance, a crucial piece of legislation to help create jobs for America's workers, particularly in the construction trades, particularly in New York City, particularly in larger urban areas, where people are having a difficult time getting terrorism insurance. Again, this is pending in the Congress; the President hopes it will be enacted into law.

Energy legislation remains an important part, especially long-term, of economic vitality. Both the House and the Senate have passed energy bills. This, too, is in a conference committee and the President hopes it will pass. Legislation to ban human cloning, that's passed in the House; we're waiting to see if any action can be taken in the Senate. Welfare reform is another issue that's passed in the House, and the Senate has yet to act. The President hopes the Senate will be able to act. And the Senate also, very importantly, has to pass legislation -- the President hopes to be able to do it this fall -- to ratify the Treaty of Moscow, which is a reduction in offensive weapons for the United States.

So, as you can see, the highway is jammed with cars, and if the Senate waits much longer, it's going to be a traffic jam that's going to result in not all the cars being able to arrive at their final destination. It's a busy agenda. History does show, however, that as Congress reaches deadlines, Congress does accelerate its schedule, and the President hopes that will be the case again.

Q You mentioned the growth figures due out this week. Are you expecting some positive numbers out of those?

MR. FLEISCHER: Well, it's going to work with the department of -- the State Department's Department of Public Diplomacy -- Office of Public Diplomacy. That will be the principal group that they work with, but it will be interagency. And I think, depending on the issue -- for example, if you're talking about trade, you could anticipate a role for the Department of Commerce. This, too, is part of America abroad and the products abroad. The National Security Council, as you know, has a coordinating role in a variety of agencies, depending on the issue. And I think that's basically how the Office of Global Communications is going to work. Depending on the issue, it will involve different agencies, all of which play a role abroad. But it primarily is going to work with the Department of State.

MR. FLEISCHER: No, it's not above the Department of State. The Department of State has the lead in public diplomacy around the world. But it's a White House coordinating body, to work shoulder to shoulder with the State Department on this.

Q Are the Cabinet meetings still on the schedule tomorrow? If so, what's that about?

MR. FLEISCHER: Yes. The Cabinet meeting tomorrow is going to focus on some -- focus on the economy, and I'll have to take a look at the rest of the agenda and fill you in on that tomorrow morning. I just don't have the agenda for tomorrow's meeting with me.

MR. FLEISCHER: Well, I think it will be effective by virtue of the fact that the Securities and Exchange Commission is now going to have more authority and more through the Independent Accounting Board to oversee the accounting industry; more authority, more ability to police the books and make sure that they're accurate.

And that's what this is all about. This has been a crisis in which the American people did not know that they could read a financial statement and believe that it was honest and accurate. And as a result of this legislation, as a result of the SEC's order for recertification, I think the American people are going to see they can have more faith, more accuracy, and more reliability in the records of America's corporations. And the corporate leaders certainly have been put on notice that if they violate the law, this government will prosecute them.

Q What's the measure, though, that you would use to gauge the effectiveness? How will you know that this bill was effective?

MR. FLEISCHER: As a result of having more accuracy on the records and on the books.

Q Some people in the administration have said that this bill that was signed this morning may actually do more harm than good. Harvey Pitt said he doesn't believe we need legislation. Larry Lindsey has said he was concerned about overlapping jurisdictions, and O'Neill said -- Secretary O'Neill said that he was worried about an unaccountable private body making decisions. Does the President share some of these concerns?

MR. FLEISCHER: I think those quotes are before the legislation moved and was changed to accommodate the President's requests. For example, on overlapping jurisdiction, when the Senate voted on that measure, they changed the overlapping jurisdiction so that the SEC would have more oversight of the independent accounting board. So those quotes are part of the process as the administration gave its advice to the Congress as the bill was formulated and the Congress accepted those amendments that the President proposed.

If you remember, the Senate accepted some five specific policies the President proposed in New York City and amended its bill to reflect those. So that's been included in the legislation.

Q President Fox is traveling to Texas on August 26 to 28. I would like to know what the White House -- how the White House sees that visit and if there will be any possibility for President Fox to get in touch with President Bush, maybe at least over the phone?

MR. FLEISCHER: Well, one, you're asking me about something we haven't announced yet, so how in the world could I discuss President Fox's visit with President Bush late this August that we haven't announced? (Laughter.) But the President always looks forward to welcoming foreign leaders to his ranch. He and President Fox have a very close friendship and relationship. And without confirming the meeting, we will have more to say about it as it approaches. (Laughter.)

Q Ari, lots of money managers and analysts on Wall Street think that the price-to-earning ratios are still too high and that the market could fall further yet, that we're not out of this bear market that we've been in. Is the President at all concerned that, if that happens, it will further erode investor confidence, things will kind of spiral in a way that could ultimately slow down the economic recovery?

MR. FLEISCHER: Dick, I'm not going to speculate about potential future directions in markets, whether they'll go up or whether they're going to go down. As the President indicated, markets react to fundamentals, react to values. And those are decisions that markets make.

MR. FLEISCHER: I'll just leave it at where I said earlier. The President is disappointed if the Senate is not able to take up homeland security this week. They do have a busy agenda of other items that also are important. But homeland security is a priority for this country, it's a priority for the House. The President believes -- he knows it's a priority for the Senate, as well. If they don't do it this week, the President will be disappointed, but it means they'll have unfinished business that they'll have to attend to this fall.

Q On the corporate inversion issue, you keep referring to the Treasury report, which you hope will be somehow enacted this fall. But to the best of my knowledge, that report does not address the issue of debarring federal contractors that reincorporate overseas. So does the White House have a position on that specific issue? That report focuses on corporate debt and how there is tax treatment of debt.

MR. FLEISCHER: The core of the problem is the tax code, itself, which has led to this behavior. And that's why there's a concern in Congress, as it led to a sentiment about disbarring, disbarring if people do something they shouldn't do.

The best way to stop people from doing this is to change the law dealing with corporate inversions. And so global firms would not be able to strip earnings from their United States subsidiaries in order to avoid U.S. taxes. One of the simplest ways for a foreign-based company to reduce U.S. tax on income from U.S. operations is through deductions for interest payments on intra-company debt. The Treasury proposal would restrict the United States of intra-company debt for tax avoidance purposes by substantially revising Section 163(j) of the code in an effort to get at the core issue, which is the misuse of the law to avoid paying U.S. taxes. And the President thinks the best way to stop this once and for all is to change the law. And that's why he's called on Congress to do it.

Q So you're saying that it wouldn't be necessary to debar federal contractors that continued to do this?

MR. FLEISCHER: Well, certainly, if it's illegal there's no question of disbarring, they won't be able to do it anymore. And the President thinks the best course is to treat the root cause, not just the symptoms.

Q Yes, Ari, two questions. First, on Adelphia, the individuals were charged criminally, but the company was only charged in a civil fraud case by the SEC. Why wasn't the company charged with a criminal charge, as the individuals were?

MR. FLEISCHER: Any decisions made about prosecutions, I would refer you to the entities making those. Those are not White House matters.

MR. FLEISCHER: That's correct. I noted the arrests, and I referred people to the Justice Department for the details about the specific charges.

corporations that get in trouble because of crimes, like WorldCom, run to court to clear bankruptcy without any trouble; this law would create hurdles for individuals to do the same. Why does the President -- why is the President going to sign this law, since it creates this double standard?

MR. FLEISCHER: This has been an issue that the Congress has debated and went through many of those same questions themselves, and they arrived at what the Congress thought, and the President agrees was a helpful compromise, that protects the rights of individuals, that is consumer related. But at the same time, it makes certain that people who go bankrupt can't walk away without paying any of their debts.

And so this is a classic balance in question about how to make certain that people who go bankrupt do pay for their debts, but to do so in a way that doesn't give people an incentive to have their debts forgiven, otherwise, creating more incentives for people to go bankrupt.

Q But corporations are going bankrupt, and there are no hurdles for them created by this law.

MR. FLEISCHER: No, I think the laws also cover corporations, and their obligations to repay debt. That's part of the laws that are on the books today, too.

Q A Princeton University admissions officer has been caught intruding a confidential Internet message of the President's alma mater, Yale, in search, among others, of the record of the President's niece, Lauren. And this intruder has been merely suspended with pay. What was the President's reaction to this? And a Bush policy is that anybody from the Bush administration caught intruding a confidential Princeton Internet message would be fired, isn't' that true, Ari?

MR. FLEISCHER: Actually, Lester, this is not something I've talked to the President about, so I don't know what his reflections are.

Q Both the L.A. Weekly, as well as WorldNet Daily report that our government is ignoring or hiding an Oklahoma City connection between Zaccarias Moussaoui and 9/11 skyjacker Mohammed Atta because it might raise questions about the rush to close the books on the Murrah Building bombing, which was charged exclusively to Timothy McVeigh and Terry Nichols. And my question: Will the President ask the FBI to investigate reports that McVeigh and several Iraqi were guests at a motel just outside Oklahoma City just before the Murrah Building bombing in 1995?

MR. FLEISCHER: Lester, I'm not aware of any of these reports, and these matters and handled by the investigators.

Q I'd be glad to send you statements on that, if you would take that question and get back to me, Ari.

MR. FLEISCHER: No, of course, the President has long called for permanent tax cuts. What I went through is the status of the major bills that are actually pending in the Congress. Nothing has passed -- well, legislation has passed in the House, but it's not moving in the Senate to make several of the tax cuts permanent. The President would like to see that done.

But what I walked through is what is actually practical and reasonable, that the Congress very well may get done. And these are issues that if they do -- look, this has already been 18 months of a lot of accomplishment for the American people. When you take a look at what has already been signed into law in the first 18 months of President Bush's term, given the fact, especially, that he began with a Senate and a House of his party, and then the Senate flipped parties, how much work has actually been done, how many laws have been enacted into law, and how many now have potential to be enacted into law -- particularly if the Senate this week is able to finish trade promotion authority.

There's a lot of good work going on that people in both parties can be proud of over this 18-month period that will stretch into a two-year period. If the Senate and the House are able to complete -- continue this progress this fall, this is going to be a Congress that a lot of people are going to look back on and be very proud of.

Q You are acknowledging, though, that getting these tax cuts made permanent is not realistic this fall?

MR. FLEISCHER: Well, this fall, I'm not aware of any movement in the Senate to make that happen. But you never know; we'll see what happens in the Senate. But walking through the list of what is actually pending, I think you have a more realistic snapshot of what is potential for this fall. Don't get me wrong, if the Senate switched back, I think it would be likely we could get some of these things enacted this fall.

Alex, you have a late-breaking news bulletin? You were sitting here and then you were sitting there.

Q The Brazil issue. Over the weekend, the Treasury Secretary made some undiplomatic remarks about Latin America. Yesterday, Treasury had to backtrack them. Today, you've backtracked them further. My question is, Mr. O'Neill appears to be fairly gaffe-prone. Do you still have confidence in him, and why do you have confidence in him when he makes remarks that send other countries' financial markets into a tailspin?

MR. FLEISCHER: I think I've explained the position of the administration on this, and you've heard it before, and that's the President's view.

Thank you. And one last item, I do want to draw everybody's attention to the fact that this month marks Helen's 60th year here in Washington, D.C. (Applause.) And I would like to invite everybody, on behalf of the press, to join the press and to join our staff downstairs for a little get-together for Helen.

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