Corrected (J.C. Watts) Telephone conference interview on the budget agreement
                              THE WHITE HOUSE

                       Office of the Press Secretary
For Immediate Release                 December 15, 2000

                        WITH OMB DIRECTOR JACK LEW,
                            ON BUDGET AGREEMENT

4:25 P.M. EST

          Q    What's the situation on AMTRAK?

          MS. MATHEWS:  As we understand it, it's currently not in.

          Q    On sea lions, can you describe the agreement?

          Q    Yes -- how did you satisfy Ted Stevens?

          MS. MATHEWS:  On sea lions, there were a couple sort of core
things that we were concerned about and it had to do with implementation of
the Endangered Species Act in preserving the Secretary of Commerce
authority.  And when I mention the Endangered Species Act, there are really
two things that are the frame of that with regard to this issue.  And one
is ensuring that the biological opinion stands -- and that's the thing that
people talk about that we issued on November 30th this year, and the
regulations that are associated with it.

          And what we have done in this agreement is we have done both of
those things -- the biological opinion will stand; the Secretary's
authority is there.  He will put forward regulation that will afford the
communities the opportunities to fish.  Right now they can't fish until
there are regulations that talk about how can you fish in a way that helps
the sea lion, in its simplest form.

          But what we did do -- and this is getting to the question that we
were just asked about how do you help, why is this good for Mr. Stevens --
we were able to maximize the fishing that would occur especially among
small boats.  And the way that we have done that is by -- there is a
transition period where the Secretary will put in place regulations that
are consistent with the biological opinion, getting back to our --

          Q    How long is the transition period?

          MS. MATHEWS:  It is over a period of time.  But what's most
important here is the 1999 season which starts January 20th, because
there's a National Academy of Science study that's going to come out that
will revise everything.  So the real focus of what everyone is talking
about here is the '99 season.  And what we have said is we would protect
incomes, fishing incomes, and harvesting at '99 levels, because prices have
gone up some and there would have been more -- the prices have gone up
some, what you'll do is you'll have reduced fishing.

          And the other thing is the large boats that can go further out in
the water -- this has to do with protecting areas that are closer to land
rather than further.  And so the people that will have the hardest time
with this are the small boat people, and I think we've put in place
something that will be okay.

          From Stevens' perspective, there is certainty that there will be
fishing, because in the measure that we agreed on, the legislative measure,
it says that we will put out the regs.

          Q    What was the big concern?  I've heard several different
versions of this.  What was your concern in the biological opinion about
this area?

          MS. MATHEWS:  Our concern was -- the way the Endangered Species
Act worked is once a biological opinion is issued, basically the biological
opinion says there's a relationship between the fish that we're talking
about and the sea lions.  And so then it talks about some suggested ways to
implement and make that better.  And so that's the way the Endangered
Species Act works, and that's why we were so concerned about it.

          Q    So the concern was not enough fish for the sea lions, is
that it?

          MS. MATHEWS:  Yes.  The sea lions feed on the fish.

          Q    And Stevens' contingent was that the sea lions were not
dying off because there weren't enough fish, but because there was a number
of killer whales who were just going through the population.

          MS. MATHEWS:  That's correct.

          Q    Do you agree with his assessment?

          MS. MATHEWS:  Our biological opinion, which is based in science
and has now led to the lifting of the court injunction which previously
existed, we believe that there is a relationship between these fish and the
stellar sea lion, and that there's a scientific basis for that.

          Q    How would the legislation protect fishing incomes?

          MS. MATHEWS:  It is legislated.

          Q    So does that mean like a welfare program, or what?

          MS. MATHEWS:  No.  While there is some economic assistance money,
what it does is it says that the regulations -- and in terms of the
Chairman, there are certainty of fishing and there is certainty of the
nature of the regs.  The regs that we will issue, the Secretary of Commerce
will issue regs to guide how this is done in a way that preserves that.

          Q    How much money is being provided in economic assistance?

          MS. MATHEWS:  I'm going to apologize because that was not -- $50

          Q    Per year?

          MS. MATHEWS:  Yes.

          Q    How many years?

          MS. MATHEWS:  It's just one, this is a one-time thing, because as
I mentioned, when the National Academy of Science study comes out, you're
going to be in a place -- that is going to assist with this whole process,
and most likely you'll have issuance of new regs and rules when you have
that additional scientific --

          Q    When will you issue the rules?

          MS. MATHEWS:  We will issue them before January 20th, so that the
season can start.  That's the key.

          Q    Could you say the economic number again please?

          MS. MATHEWS:  There are two different numbers.  There are sea
lion protection measures and, in other words, there is money that's going
to be spent to help the sea lion and protect it -- things like population
counts, studying predator-prey relationships -- we're going to study what
Stevens has talked about, other marine mammals that might be eating the sea
lion.  We're going to spend money looking into those questions.

          Q    How much?

          MS. MATHEWS:  $20 million for the stellar sea lion.

          Q    $20 million to find out if killer whales are causing the

          MS. MATHEWS:  The $20 million is to implement a coordinated
comprehensive research and recovery program for the stellar sea lion.  I
was giving you some --

          Q    Isn't that what the National Academy of Science is doing?

          MS. MATHEWS:  They're doing a study; this is to implement that.
An effort, a research and recovery program for the stellar sea lion.
Depending on what things we decide to do to help the sea lion --

          Q    How is it different from what the NAS is doing?

          MS. MATHEWS:  Because this will have money to take action to help
the sea lion.  The study is a part of it, but not all of it.

          Q    That's $20 million for research and $50 million in economic
assistance for the fishermen?

          MS. MATHEWS:  To say that it's research is too limited.

          Q    Well, $20 million for whatever you just described, plus $50
million additionally.

          MS. MATHEWS:  That's right, for economic disaster relief -- $30
million for economic disaster relief -- $50 million in total; $30 million
for economic disaster relief and $20 million for sea lion protection

          Q    And is the $30 million for the fishermen?

          MS. MATHEWS:  It is made available to the Secretary of Commerce
to make direct payments to the Southwest Alaska Municipal Conference,
distribute to fishing communities, business community development programs,
individuals and other entities.

          Q    The whole $50 million, or $30 million?

          MS. MATHEWS:  The $30 million.

          Q    And then the other $20 million goes straight to the

          MS. MATHEWS:  Yes.

          MR. LEW:  Obviously there are a lot of questions and I want to
answer all of them, but from our perspective, the overall of this bill
really warrants a little bit of attention.

          If you look at the funding levels in education, both year to year
and over the eight years, it really represents a remarkable commitment to
investing in the future.  This bill increases Department of Education
funding by $6.6 billion; that's 18 percent from last year.  And the funds
in the bill go towards shoring up and expanding successful programs and
increasing funding for new programs and some new ones, as well.

          If you look at Head Start at $933 million, this enabled us to
double funding since 1993.  Our school repair initiative is a new program.
There is $1.2 billion available for school renovation.  We've expanded last
year's initiative, the past two years' initiative to hire teachers to
reduce class size, making that program continue and grow.

          In areas of early childhood education, in addition to Head Start,
there's a full $2 billion of funding for the child care initiative which
was committed to last year -- it wasn't funded last year, it's is now
funded.  The after-school program is just about doubled from last year's
level, which will provide opportunities for families to provide for better
environments for their children to learn and grow from the early years on.

          If you look overall at this bill -- and Gene is on and can go
into many of the specifics like the Pell Grant level, which is increased to
an historic level; the increase in GEAR-UP funding which will allow that
program to continue to grow -- this really represents an historic
commitment to education.

          And if you look over the eight years of the Clinton-Gore
administration, for many of these programs that were small and growing,
they're now established and successful programs.  I think you have to look
at the eight years because the eight years represent commitment not just to
funding specific programs, but doing it in the context of an overall
balanced fiscal program.  We've shown that you can be on a path towards
paying down, eliminating national debt, and still invest in priorities that
will build us a better future by educating our kids.

          If I could switch a minute to health care.  In health care,
everyone has paid attention to the research funding levels.  They're very
important, I don't mean to diminish them.  But you have to look beyond that
at some of the initiatives of this bill which are going to give programs a
chance to grow.

          There are some new programs like family care-givers --

          Q    Is that in the Medicaid --

          MR. LEW:  No, these are discretionary still.  I'll get to
Medicare and Medicaid in just a second.  I was going to point out family
care-givers and health care access, where in the case of family
care-givers, it's a new commitment to an important program that will help
with families that have the burden of taking care of sick family members,
and health care access increasing substantially, from $40 million to $140
million.  The funding for this new program which we think has a very, very
good future in terms of providing a new model of health care around the

          On Medicare and Medicaid, I think Chris Jennings is on -- I'll
just very briefly point out that there are expansions of coverage both in
terms of coverage for the CHIP program, CHIP outreach for families that are
moving from welfare to work; for particular populations like people with
Lou Gehrig's disease in the Medicare program and a number of other cases of
preventive coverage.

          We also in the provider area have improved on the provisions that
were in the bill that originally passed.  There's now accountability in the
HMO language, which Chris can go into some detail on.  And we've expanded
the coverage of the provider provision to go to some areas that really need
it badly, like home care and some other areas that Chris can go into in
more detail.

          I can give you the overall of this bill -- the New Markets
initiative that Gene will be able to address; the immigration expansion
that Maria has addressed; the Medicare-Medicaid expansion that Chris will
be talking about; and these investments in education and health care on the
discretionary side that I've been talking about.  This represents a
remarkable accomplishment and investment in the future of the country, and
one that we're very proud of.

          Q    It went pretty quickly once you started negotiating.  Why
was this so hard to get into a serious negotiation?

          MR. LEW:  We've been negotiating this bill for quite a long time,
and I think we've proven that when we get into serious negotiations we can
produce good results for the country.  There were some different views as
to how this bill should be handled.  I think you'll have to ask on the
Republican side what motivated different parts of them.  We always wanted a
bill, and a good bill, from the time the President sent his budget forward
through the negotiations of the fall, through the negotiations that were
completed today -- our objective was clear.  It was to invest in the
future, to invest in education and health care, and to do it in a fiscally
responsible way that leaves the kind of path for paying down the debt.

          Q    Jack, I'm just wondering when you're going to do something
publicly about this.  Are you going to hold a ceremony with the leadership,
et cetera?

          MR. LEW:  Well, we just reached an agreement finally this
afternoon.  Congress will be voting on it.  I think many members of
Congress have plans to be elsewhere.  We haven't actually had time to talk
about a ceremony yet.

          Q    Are you worried -- could this thing still stall over AMTRAK?

          MR. LEW:  I think that there's certainly going to be some debate
on various things in the bill, but we're hopeful that the bill will pass.

          Q    Do you have a position on the AMTRAK?

          MR. LEW:  Well, obviously we're supportive of the provision.  It
was part of a larger tax bill and we were disappointed that it wasn't
possible to get it done here.  Obviously when most of the tax bill was
dropped we were very pleased to be able to keep the New Markets initiative
in.  Gene can talk about that in some detail.  But obviously, there are a
lot of other things that did not get done, and AMTRAK was one of the things
we supported.

          Q    Does this really derail AMTRAK or was this more of an
authorization --

          MR. LEW:  This was a provision that would have provided tax
treatment to subsidize AMTRAK bonds.  And it would have enhanced the
viability of the rail investment in a significant way.

          MR. SPERLING:  This is Gene.  Before people jump off, let me just
say we are overjoyed at the passage of the New Markets Community Renewal
Act.  This was an historic effort to provide capital incentives for jobs
and entrepreneurialism in poor areas across the country.  It is a
significant example of bipartisanship, with the President, Speaker of the
House joining hands.  It's over $25 billion in tax incentives that will
leverage well over -- tens of billions of dollars more in private sector
investment.  It will have the President's New Markets tax cut which
provides a 30-percent equity tax cut for investments in poor areas.  There
will also be now 40 employment zones strengthened and expanded, plus 40 new
renewal communities acts.

          There's also a dramatic increase in the private activity bonds
and the low income housing tax credit is significantly accelerated.  Again,
it was a significant bipartisan effort with many people from Charlie Rangel
to J.C. Watts having significant authorship of this provision.  The other
thing -- obviously you remember the President spent over two years on this,
including three national trips promoting more investment in this, one of
which he was joined by Speaker Hastert on.

          I just also wanted to say that these were -- emphasize one thing
Jack said -- in this budget is the largest increase ever in Pell Grants, in
after-school, in Head Start, and in school construction -- the largest
increases ever.  I think if you look at Head Start, it's now gone from $2.8
billion to $6.2 billion, more than doubled; $3.4 billion increase.

          Q    Over what period of time?

          MR. SPERLING:  Since we came in.  So I would encourage people to
look at the eight-year progress chart, because what it really shows is that
year by year, budget battle by budget battle, there's been a dramatic
increase in the federal investment in children in education under President
Clinton's leadership.  And you could -- from the $3.4 billion more in Head
Start, $4.5 billion more in special education, obviously -- $8 billion more
in education tax incentives per year; $1.6 billion more in class size
reduction; $846 million more in after-school; $849 million more in
education technology -- it's worth looking through to see how much these
budget battles on education have accumulated to over an eight-year period
-- really the most dramatic expansion in investing in children and
education probably in any eight-year period.

          Q    Is that a zero capital gains rate on the renewal community?

          MR. SPERLING:  Yes, that is.  There is a zero capital gains rate
in the renewal communities that is modeled off the DC provision.  And
there's also a zero capital gains rate in the empowerment zones for
investments that are rolled over.  So, in other words, you can roll over
capital gains in the empowerment zones.  Both obviously have very
significant wage credits, as well.

          We were only given a one-year extension of the DC tax incentives,
but the Speaker made a public commitment to fight for a larger extension
next year.  But for DC, we also had extension to 2003 of the popular
home-buyers tax credit, to the end of 2003 for the District.

          Q    What was the overall increase in education spending over the
eight-year period, percentage-wise?

          MR. SPERLING:  I have kind of the selected programs --

          MS. MATHEWS:  I don't actually have the overall --

          MR. LEW:  We can get that for you.  We have it program by

          Q    How did the lame duck dynamic affect the end here?  Did you
feel that being in the post-election bargaining situation weakened your

          MR. LEW:  I think that what we've said all along remained true in
a lame duck, which is that when you're fighting to invest in education, to
invest in the future, programs that have strong public support because they
move the country in the right direction, that the policy is what drives
things forward.

          The President had a program that he put forward not just this
year, but for the past eight years.  But this year in his budget and the
State of the Union, we stuck by it; members of Congress stuck by it; and
the public stuck by it.  And I think the result is that we've enacted on a
bipartisan basis enormous increases in programs that are consistent with
the policy of fiscal discipline.

          I think it's important that the two go together, because we make
choices when we have a surplus and this is one of the things that this
year's budget has chosen to do -- has invested the surplus, investing in
our people in ways that will pay off in huge dividends for many years to

          I think if you look at the lame duck, if we were in a different
situation there would have been different dynamics, it would have come back
to the same fundamental fact which is that if you're putting forward
policies that are good policies, that are popular policies, the process can
work.  And we're just pleased that we were able to bring it together on a
bipartisan basis to get it done.

          Q    Well, you did make a bunch of compromises; obviously both
sides did.  You made some compromises on, some give on the sea lions,
environmental issue.  You cut $5 billion from the overall totals where
things stood before the election.  You clearly didn't give the Latinos all
they wanted.  There's a whole series of compromises.

          MR. LEW:  If you look at this omnibus package, at any omnibus
package there's give-and-take on both sides.  Are there things that were
compromised?  Yes.  But if you look at the result, the result is dramatic
increases and substantially enacting the President's proposals in the
important areas that we've been talking about.

          And if you look beyond the Labor-HHS bill, it's true in the
Commerce-Justice bill as well, where we're investing in closing the digital
divide; where we're investing in civil rights enforcement; where we're
investing in legal services to make sure that all Americans have access to
justice.  These are the things that the President and the Vice President
stand for; it's what the budget stood for; it's what the American people
believe in.  And were successful in getting it.

          Were there compromises?  Yes.  But honorable compromise is part
of our process.  We've always believed that it was better to have an
honorable compromise and accomplish a great deal.  The process didn't
always work smoothly, but in the end it produced very, very good results.

          MR. SPERLING:  It was an honorable compromise on both sides.
Clearly they had to fight many in their own party in agreeing to very
dramatic increases in many of the President's top education priorities, and
New Markets renewal communities initiative literally rose from the dead in
the last few days, coming through as the only significant tax incentive in
this initiative.  So there was honorable compromise on both sides.

          MR. LEW:  I'm going to have to jump off, but if there are further
questions, I'm sure you can take them.

          MS. MATHEWS:  The only thing I would mention -- one of the things
that didn't happen because of the way this all evolved is the
Commerce-Justice-State bill -- because it was sort of negotiated, then kind
of put on hold because of the open issues that were non-appropriations
related, like immigration -- one of the things I think is important there
-- a number of things kind of didn't sort of get noticed there.  For
example, our peacekeeping money -- we got the full request of $835 million.
That's our U.N. peacekeeping money, which is a very, very big deal.

          Things like our fighting terrorism money is also in that bill.
There was a billion dollars for the Department of State embassy security.
And while those are not the things that are always publicly focused on,
they're a large part of what was really important that occurred in these

          Q    The CJS was done, right?

          MS. MATHEWS:  It was done because we basically had agreement that
until everything was done we would not publicly talk about the bill.  We
never were afforded an opportunity on either side, and it was an agreement
we made that we wouldn't talk about it.

          Q    That's not part of the package?

          MS. MATHEWS:  It is, it is.  CJS -- it's an omnibus with two
different parts and that all has to do with different vehicles.  But in
this you will have what Gene mentioned --

          Q    But CJS has already been passed.

          MS. MATHEWS:  But it will be part of the entire package that
moves.  It is being dropped into the DC bill.  And it depends on how
they're going to do the titles exactly which bill will move.

          Q    We're going to have separate bills here or separate

          MS. MATHEWS:  I think they're going to figure out the best way to
move these things, all the vehicles --

          Q    I thought CJS has already been passed for the House and the

          MS. MATHEWS:  It had been passed in a form that was unacceptable.
And there have been alterations to it, some technical changes as well as
changes for us -- we view immigration as part of CJS.  So the question is
how they're technically going to put the bills together.

          The other thing -- I just got the number for the question that
was raised about the Department of Education in FY93 and FY2001, and what
percentage increased.  In 1993, it was $23.9 billion; in FY01 it's $42.1
billion -- that's a 77-percent increase.

          MR. SPERLING:  The reason why, though, you will hear us talk
about essentially doubling education is that in addition to that, there is
$8 billion more per year in tax cuts, and $3.4 billion more in Head Start.
Both of those we think of as education.  So when you add that $7.9 billion
in tax cuts, you get another $11.3 billion.  And you can see it goes from
$23.9 billion to $53.4 billion, a doubling -- more than doubling.

          Thank you.

                            END       4:55 P.M. EST

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