Press Briefing by Gene Sperling and Martin Baily (9/26/00)
                              THE WHITE HOUSE

                       Office of the Press Secretary

Immediate Release               September 26, 2000

                              PRESS BRIEFING
                        CHAIRMAN OF THE PRESIDENT'S

                     The James S. Brady Briefing Room

1:55 P.M. EDT

     MR. SIEWERT:  Mr. Sperling and Martin Baily are here to brief on the
President's announcement today of the new numbers on income and poverty.
Without further ado, I will let them take the stage.

     DR. BAILY:  Thank you.  The numbers that were released today by the
Census Bureau really are remarkable.  There are many, many striking numbers
within the release that they put out.  I'm going to mention some of them
and say a little bit about what might be the reason or the background
behind those numbers, and then turn over to Gene.

     Looking at poverty, the decline in poverty in just this last year was
2.2 million; as the decline has been 7 million since 1993.  For African
Americans, the poverty rate is the lowest on record going back to 1959, and
the decline in the poverty rate between 1998 and 1999 was the largest
one-year percentage decline in the poverty rate.

     The Hispanic poverty rate is the lowest since 1979, and again, is the
largest percentage decline.  Asian and Pacific islanders have the lowest
poverty rate on record.  The poverty rate for children is the lowest since
1979 and again, also, the largest one-year percentage decline going back
until 1966.

     One of the striking things in this report is what's happened in
central cities, which, as you know, is an area where poverty has been
concentrated.  The decline in poverty in central cities was also the
largest percentage point decline, from 18.5 percent to 16.4 percent.

     In fact, just over 80 percent of the total decline in poverty occurred
in central cities, even though only 41 percent of the poverty was located
there.  So inner cities have benefitted dramatically in this '98, '99

     That obviously suggests that there's more to be done in terms of
combatting rural poverty, but it's encouraging that the central cities
which have been, unfortunately, a center of poverty, have improved so much
during that year.

     Turning to income, media household income, again adjusted for
inflation, reached the highest level ever for the United States.  This is
true for every one of the demographic groups that the Census Bureau breaks
out:  for whites, for African Americans, for Hispanics, for Asian and
Pacific islanders the overall household income went up 2.7 percent.

     All of the minority groups, in fact, experienced the biggest gains on
record.  African American households gained almost $2,000 in that one year,
'98-'99.  That's a 7.7 percent increase in their household income.
Hispanics gained almost $1,800, a 6.1 percent increase.  Asian and Pacific
islanders, there was a 7.4 increase.  So, really, these groups did
extraordinarily well in that last year.  Central cities' median household
income was up 6.4 percent, again reflecting what I mentioned earlier, the
decline in poverty that took place.

     Looking at income distribution, overall income inequality stayed about
the same, but, in fact, in the '98 and '99 period, the bottom fifth of the
income distribution actually saw the largest increase in real household
income -- 5.4 percent.

     Now, I think just to put this in context, we hear a lot and at the
Council we've been talking a lot about the new economy, how that's based in
a lot of the new technologies.  We've seen a tremendous increase in the
stock market valuation, which has allowed the wealthiest to do well and
many middle income families to do well also.

     But I think what's striking about these numbers is it shows that the
economic progress is not just restricted to Silicon Valley or to the stock
market.  It means that median family incomes and minority incomes are
rising substantially, too.  It's really encouraging to see the benefits
going across the board, so that the lowest quintile among the income groups
actually had the largest gain in income.

     Now, why is that?  I think a big reason is that we've kept this
expansion going.  One of the things that you learn, looking back at
economic history is that as expansions continue, and unemployment stays
low, that's when people at the bottom really begin to benefit.  That's when
you see the best gains in median income.  As you know, we now have the
longest expansion on record.  This one has exceeded the others, so we've
been able to keep this expansion going, and therefore reach people in the
middle and those at the bottom.

     There have also been, of course, policies that have contributed to
this.  The EITC, that Gene is going to talk some more about the direct
effects, but obviously that encourages people to enter the work force and
to improve their living standards.  The education and training policies;
minimum wage increases have been important.  And certainly, one would
suggest that some of the empowerment zones have also been helpful in
improving the situation for inner cities.

     So in short, this is a very encouraging report.  It suggests that the
policies that are being followed, the fiscal discipline and so on which
have kept this expansion going, are really helping all Americans, and that
some of the specific policies are also helping.

     So this is a very good sign, and a sign that the policies we have, I
think, are the right policies.  Thank you.

     MR. SPERLING:  Let me just follow up Martin's presentation with three
additional points.  We are very proud that the distribution of this growth
has been so evenly balanced, and as Martin said, in this last year it was
the bottom 20 percent that saw the largest gains.  They had 5.4 percent
income gain.

     The same holds true when you look over the last five, six years.  From
1993 to '99, every single income quintile, every 20 percent, has seen their
income grow between 13 and 16 percent.  But the highest growth takes place
in the bottom 20 percent.  Their growth rate was 16.3 percent.  Now, that
is a dramatic turnaround from what happened in the 12 years prior to
President Clinton being in the White House.

     During that period of time, what you saw was very uneven income
growth.  In fact, the top 20 percent had exceptional income growth of 26.4
percent.  But the bottom 20 percent actually lost income; they went down
4.4 percent.  And in the middle, there was almost not growth at all,
virtually stagnant income growth.

     So, compare a situation were over 12 years, the bottom 20 percent lost
ground, the middle basically stayed completely even in terms of their
purchasing power, and only the top 20 percent saw significant gains.  And
they were significant at 26.4 percent.

     Now, look at these last five years in which the bottom 20 percent
grew.  Instead of losing 4.4 percent of income growth, grew 16.3 percent in
real terms over five years.  And every income quintile after that grew at
least 13 percent.  So the growth has been very even with the best growth
coming at the bottom.

     As Martin said, there's many factors; but policy does matter.  And I
do believe that the hallmark of President Clinton's economic policy will be
not simply deficit reduction and fiscal discipline, but progressive deficit
reduction and progressive fiscal discipline, that, in turning our country's
fiscal situation around, it was not done on the backs of the poor, just the

     As we were bringing the deficit down, we increase the earned income
tax credit dramatically to encourage people to work and be part of the new
prosperity.  We increased the minimum wage, empowerment zones, the
Community Reinvestment Reform, the tripling of funding for dislocated
workers, the funding for the digital divide.

     All of these things were designed to say that while we bring down the
deficit, we do not need to do it by cutting funding for those who are poor
and lower middle income.  Indeed, we increased funding so that they could
become more part of this economy.  And as Martin said, as this expansion,
which has been helped by the low interest rates from fiscal discipline, has
extended; it has forced more and more businesses to reach out to lower
income workers who, through these benefits and many of the benefits that
are added in welfare reform and the others things that encourage people to
become part of the work force, has helped ensure that the growth here has
been balanced and shared even by those at the lower end of the income

     The second point I just want to point out is what a large difference
the earned income tax credit makes.  The poverty rate that you see today,
11.8 percent, is one that does not include tax policy.  So you might ask,
if this was after tax, what would the poverty rate be, instead of 11.8
percent.  Well, the Census does an alternative definition, and if it were
not for the earned income tax credit and you included tax policy, the
poverty rate would go up from 11.8 percent to 12.8 percent.  So if you did
after-tax policy and there was no earned income tax credit, then the
poverty rate would increase a full point, from 11.8 percent to 12.8

     Because of the earned income tax credit, however, when you add that
in, the poverty rate would be 11.3 percent.  So the earned income tax
credit alone makes the difference between whether the after-tax poverty
rate would be a point higher than it is or half a point lower.  In terms of
people, that means there are 4 million people, 2 million children, that are
lifted out of poverty every year because of the earned income tax credit.

     This pro-work tax credit that's pro-job and pro-growth as well, is a
major advance in public policy.  And in our budget right now we have
initiatives to increase that, to reduce the marriage penalty for people on
the earned income tax credit, and to give more for people who have three or
more children.  Because the poverty rates are still far higher for children
if they're in families with three or more children.

     The third point that I would make is simply that we saw some dramatic
gains in places where we still have dramatic problems, and it's important
to recognize both at the same time.  There were -- concerning children, we
should feel proud that of the 2.2 million people that were moved out of
poverty this year, 1.3 million were children.  In one year, 1.3 million
children moved above the poverty line, a tremendous advance in a single
year for our nation.

     Indeed, since the President's been in office, 3.6 million children
have moved above the poverty line.  And the child poverty rate has gone
down, from 22.7 percent to 16.9 percent, a 25 percent drop.  The African
American poverty rate has taken a dramatic drop, from 46 -- excuse me, the
African American children poverty rate has gone from 46 percent to 33
percent.  I think what is worth pointing out is what dramatic progress that
is, and what a dramatic problem that still is.

     The fact that we have made progress in reducing the number of African
American children in poverty from half to a third is a tremendous
accomplishment, unquestionably.  The fact that a third of our African
American children are still in poverty should be something that weighs on
the conscience of all Americans, and something that we should all be
working on.

     The same is very much true with Hispanic children, where there's been
significant increases, and yet 30 percent are still in poverty.  So this is
a day for celebration, but it is also a day to recognize how serious the
problems of poverty still are in many pockets of our country, and how far
we still have to go.  Martin and I are available for questions.

     Q    What do you think the election is going to impact -- how it will
impact on these figures in any way?

     MR. SPERLING:  Well, I think that you have to -- I think that there
are different spheres in the economy, and you have to look at the public
policy sphere.  And what I guess I would say is that there's obviously many
factors involving the economy, the information technology, et cetera.  All
I would say is that a Clinton-Gore administration has focused like a laser
beam, from the beginning, on insuring that at every step of the way,
affirmative steps are being taken to insure that those who are economically
disadvantaged, have tools to become part of the new economy. .

     And I think that -- and I worry that whether intentional or not,
passage of explosive, large tax cuts would essentially drain our federal
resources so that there would not be enough funding for those at the bottom
of the income stream, who have the least political power, but have the
greatest need for additional education, for additional incentives, for
additional health care.
     So, I for one believe the continuation of the policies we have, and
hopefully even the strengthening of these, would continue to focus on
ensuring that whatever is happening in the economy, that there's a special
focus on making sure that those who have the least economic opportunities
now have more in the future.

     Q    Gene, there were two sort of negative areas in the report today.
One --

     MR. SPERLING:  Martin handles all negative things.  (Laughter.)

     Q    It looks like in income inequality trends are stuck.  In six
years there hasn't been any move to improve the wage -- the income gap --
and also the gap between men's wages and women's wages has widened, for the
second year in a row.  Does this concern you guys at all?

     DR. BAILY:  Well, obviously, it is a concern.  We would like to see
the income distribution become a little more equal.  But one step at a
time.  As Gene mentioned, really there was tremendous growth in inequality,
and that has been turned around. We're now seeing broad growth across the
board in income.  And actually, as we said, the bottom fifth had the
largest increase.

     So we'd like to see inequality reduced.  But I think the priority is
to make sure that all families see increases in their incomes.  That's the
thing that's most important.

     Again, I think there has been tremendous progress in women's earnings
relative to men.  One thing I would point out in this report, that's the
improvement in the full-time earnings of African American males, which have
increased substantially.  And the ratio of those earnings to the rest of
the population, or to white males, has narrowed substantially.  So I think
that's another sign where we're seeing some reduction in the inequality.

     MR. SPERLING:  Can I just say, one way to think about that is we did
have dramatic increase in inequality during the '80s, and you can see that
-- if the bottom 20 percent was having income grow at 26 percent, the
bottom 20 percent was actually losing income.  If you look at the last six
years as we've described, the bottom 20 percent saw their income grow 16.3
percent in real terms.

     Now, if the top 20 percent had seen their income only grow 10 percent,
then you would have had income inequality narrow.  But the fact is they
grew 16 percent, almost the same rate.  So, in other words, if things are
staying stable because there is strong income growth at the bottom, I don't
think anybody feels that somehow our country would be better if there was
less income growth other places.

     So I do think the focus really should be, is the prosperity being
shared at the bottom of the income sphere.  It clearly is.  There clearly
are still significant pockets of poverty and problems in our country, but
at a larger level we are seeing significant growth in the bottom 20 percent
and the stop of inequality increasing.  And the only reason inequality was
stable was not because there wasn't growth at the bottom, but because there
was comparable growth at both the top 20 percent and the bottom 20 percent.

     DR. BAILY:  Can I just mention the number, because it is striking --
for full-time workers, African American males increased their earnings by
$2,379 in just that one year.  That was an 8.6 percent increase.

     Q    I'm wondering if you could comment on the state of the economy.
The U.S. economy is fairly moderating.  We see a lot of signs of that.  Is
the spike in energy prices enough to transform what could be a soft landing
scenario to a hard landing scenario?  And could you just give us a basic
outlook of what we could expect over the next year?

     DR. BAILY:  We don't think a hard landing is likely.  The economy has
been very strong, has continued to be stronger than we expected.  The third
quarter growth will be certainly lower than the first half of the year.
But by the fourth quarter we expect to see growth at around 3 percent.  The
projection for the third quarter is a little bit less than that.

     In terms of what the energy price increase does, it certainly has been
painful for the economy.  We've seen an increase in what people have had to
pay for gas and for heating oil.  It's taken purchasing power out of
people's pockets.  But at the same time, this economy is less dependent on
oil in relation to its GDP; much less dependent than it used to be.  So if
you look back at the example of the 1970s or early '80s, we're not as
dependent on oil as we were in relation to our GDP.

     Another reason why I think this is a different situation is
productivity growth has been very strong, whereas in that earlier period we
saw weak productivity growth.  So we have a strong budget situation, strong
growth in demand, and we're less dependent in relation to our GDP on oil.
So I think all those reasons suggest that, while it is taking some
purchasing power away from Americans, it's unlikely to push us into a

     Q    Can you give us a little bit of a state of play on the New
Markets initiative?  It looks like it's becoming a magnet for a lot of
different amendments on the different types of tax provisions.  Is that
going to kill it, or not?

     MR. SPERLING:  We still remain quite hopeful on the New Markets

     There have been conversations between the President, Speaker Hastert,
Majority Leader Lott in which all have expressed the desire to get this
done.  I think we have to wait and see how the finance markup unfolds.  I
think the most important thing we think for the passage of new markets is
that we're able to move it into conference, move it out of the Senate,
because I think there is an enormous amount of good feeling for this
legislation.  I think there's a lot of bipartisan support.

     So I think the important thing is to, at this point of the year, is to
keep movement, keep the process moving forward, and I think we think if we
can -- if that happens, that people of both parties of good faith on this
issue, will be able to work out the differences, and pass something that I
think will certainly will honor the agreement that Speaker Hastert and
President Clinton came to, but we'll certainly -- may include some measures
that Majority Leader Lott, Chuck Robb, Senator Santorum, many others, are
looking at.

     The question of how many unrelated matters will come on board is
really one that's very difficult, because obviously that goes to how the
entire end of the year will unfold, and if anybody knows the answer to
that, I would love you to give me a call.

     PRESS:  Thanks.

     MR. SPERLING:  Thanks.

                   END                    2:17 P.M. PDT

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