THE WHITE HOUSE
Office of the Press Secretary
________________________________________________________________________
For Immediate Release April 14, 1999
PRESS BRIEFING BY
DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL GENE SPERLING,
AND DEPUTY SECRETARY OF TREASURY LARRY SUMMERS
The Briefing Room
1:10 P.M. EDT
MR. SIEWERT: As you know, the President will have an
announcement later today on the details of his Universal Savings
Account. Here to provide some background information on that, the
Director of the National Economic Council, Gene Sperling;
and Deputy Treasury Secretary Larry Summers.
MR. SPERLING: As you know, when the President put
forward his State of the Union proposal, he laid out for the country
a very basic choice about how to deal with the surplus over the next
15 years as to whether we focused on consumption or adding to savings
and dealing with the predictable retirement challenge in Medicare and
Social Security that will come. And he laid forward a proposal that
essentially called for 90 percent of the surplus over the next 15
years being devoted to savings in some fashion -- 62 percent for
Social Security, 15 percent for Medicare -- in terms of largely debt
reduction, dealing with our retirement challenges and the solvency of
those two programs.
But he also called for 11 to 12 percent of the surplus
going to USA accounts as a way of encouraging private savings and
encouraging Americans to have a strong retirement security, not only
through a strong Social Security, but also through strong pension and
savings under the traditional notion that retirement savings should
be a three-legged stool and that all are important for a family or
for an elderly couple in their retirement.
When we went through the Social Security forum, the
President heard two very powerful concepts. He, on the one had,
heard about the call for people to keep Social Security a defined,
rock-solid benefit guarantee; on the other hand, repeatedly heard
that many Americans do not have the chance to save, to build wealth,
to share in the tremendous gains that have happened in the stock
market, and that we should be doing more to help more people be part
of the wealth creation and savings that many Americans -- better off,
middle class Americans -- are able to share.
And so we put forward a plan, as you know, that kept
Social Security the defined rock-solid benefit that that is, but
that, in addition, as part of strengthening the other two legs of
Social Security called for a USA account, which was to make a saving
account universal.
There are, unquestionably, holes in our current
retirement system. Seventy-three million Americans have no
employer-provided pensions, 50 percent have no pensions whatsoever.
Only 18 percent -- or 20 percent have IRAs. And our tax system,
which does an excellent job for many, many Americans through the IRAs
and 401Ks does not provide the type of incentives that it should to
the families who, because they have lower incomes, lower disposable
incomes, have the hardest time saving and, therefore, should have the
most incentives.
Right now our tax system, our retirement tax incentives
-- 66 percent go to the 5 percent of Americans over 100,000. So,
only 33 percent go to families under 100,000 and only 7 percent of
the tax benefits -- only 7 percent of the retirement tax benefits --
go to families making under 50,000. These are the families that have
to live day by day, paycheck to paycheck and have the hardest time
saving.
So we wanted a plan that would not only ensure that all
of them had their own accounts, but provided incentives for people to
save more, to add more. And so it was designed to not only give more
Americans the savings accounts, that more Americans could participate
in the wealth creation and see the benefits of accumulated returns
and compound interest, but also would provide them an incentive as
401K plans do to provide more savings in a matching way.
The plan that Larry Summers will give you the details on
is unquestionably designed to be progressive. It is designed to be
progressive to balance out the system so that, as I said, right now
the tax incentives only give seven percent to families under $50,000.
This seeks to address that by operating in the form not of
deductions, which are often, by their nature, less progressive
because they are worth more to people in higher brackets, but in
terms of a tax credit, an automatic, even refundable tax credit that
would go to everybody who, in some form, making under $80,000.
It also is a plan that will address what has often been
raised, which is that we often don't give the proper attention to
those who stay home at times and take care of children. This would
allow both members -- both parents to have their savings -- to have a
savings account if their joint income is over $5,000 and under
$100,000. And so this, I think, also responds to what we've often
heard is the need to address the concerns, not only of the person who
may be working, but to the spouse who may be taking more time off to
help raise their children.
I think that as you look at our plan, you will see that
for most average income families, this will be a more generous tax
cut than those making -- than you would get from a 10 percent tax
credit. I think in the examples you have there, you'd see that for a
couple making $40,000, if they would get $300 each automatically, or
$600. And then, as you'll see in the example there, if they were
willing to each put in $350, or $700, they could match $700 back.
Therefore, together, they'd have $2,000 in their USA accounts in
which they would have gotten $600 automatically, and then if they
contributed $700, they would have gotten another $700. So that would
be a $1,300 tax credit, which would be more than four times larger
than the tax credit that same couple would get under a 10-percent
across-the-board tax cut.
I also should say that this administration -- that this
year, tomorrow, when people -- tomorrow as people fill out their tax
credit, there is a child tax credit -- it will be $400 this year and
$500 afterwards -- that puts cash in millions of people's pockets to
help with daily needs, with child care costs, that is on the tax
forms for the first time, that this President proposed and signed, as
there is with the HOPE Scholarship, which, again, gives a tax credit
that people can use and help pay the cost of college education, child
care, et cetera.
This is a tax incentive, however, that is specifically
designed to promote savings, to fill the holes in our retirement
system, to give those families who struggle from paycheck to paycheck
the greatest ability and incentive to save more and to be part of the
wealth creation that others are enjoying, and have the additional
savings that can lead to a truly dignified retirement security.
With that, let me give you Larry Summers, who will walk
through the mechanics, and then we're both here to answer questions.
DEPUTY SECRETARY SUMMERS: Thank you very much, Gene.
Retirement security is a crucial priority for American families. A
married couple, both of who are age 65, has a nearly one-half chance
of living -- having a surviving member to age 90, requiring the
financing of 25 years of consumption. At the same time, while we've
made enormous progress increasing our national savings rate by
reducing the budget deficit, for the first time since the 1930s,
American personal savings was negative in the fourth quarter of last
year. Retirement savings -- retirement security, increased savings
are critical priorities -- all the more with the baby boom generation
facing retirement.
And that is what this proposal is designed to address,
by supporting the existing retirement security system and making it
universal, reaching in particular the 73 million Americans who have
no IRA, no defined benefit pension, no Keogh plan and no 401K plan.
Proposal establishes Universal Savings Accounts. For all Americans
with incomes below $40,000, $300 is put by the government into their
USA account. For those with incomes between $40,000 and $80,000,
that $300 phases out.
In addition, for all Americans with incomes under
$100,000, a matching contribution is made by the government with
respect to individual contributions to those accounts. That matching
is at a rate of 100 percent for those with incomes under $40,000,
phasing down to 50 percent for those with incomes between $80,000 and
$100,000.
Between the individual contribution and the government
match, each member of a couple is able to contribute $1,000. A
married couple who contributes $1,000 each for 40 years can expect at
current rates to accumulate $250,000 in today's inflation-adjusted
dollars. That is sufficient to finance a $20,000 a year real
annuity.
The proposal will involve accounts that will be
administered by the federal government to provide a basic set of
investment choices. We will also explore with private providers the
possibility of private providers providing accounts as well on a
carefully regulated basis.
I should emphasize also that this proposal has been
designed to reenforce and provide further incentive for the most
rapidly growing part of our private income security system, and that
is the 401K plan. Individual contributions to 401Ks will be treated
just like other forms of individual savings and will be matched with
contributions to Universal Savings Accounts. This means an employee
at a firm that offers a 401K account will benefit from a triple match
rather than the existing double match. I contribute $1 to my 401K;
my employer makes a contribution and the government makes a
contribution instead.
By integrating USAs with 401Ks to provide this incentive
through a contribution to the USA account, based on contributions to
the 401K, we reinforce this rapidly growing and important feature of
our national retirement security system.
We'll be debating Social Security all year, I'm sure.
But it is important to understand that we have, since the Second
World War, had a three-legged retirement security system: Social
Security, private pensions and individual savings. What is crucial
is that even as we strengthen Social Security, we ensure that all
Americans have an opportunity to participate in that pension and
personal savings leg of the system, and that's what this proposal
will do.
Q How much does it cost?
MR. SPERLING: When this is fully implemented, it would
cost $38 billion a year, and then it would probably grow at about the
rate of inflation. One point I would like to make in terms of like
the affordability, really two points, is one, we again see this as
something that happens only after Social Security and Medicare have
been addressed. In other words, we hold our tax incentive to the
same standard we would hold the Republican tax incentive to, which
is, first, we have to reserve the funds for Medicare and Social
Security as part of debt reduction and increasing solvency, and only
after that should we turn to new measures, whether their tax
incentives or our USA Account. So this is consistent with the
policies we've put forward.
It's also important to see that this is, while a very
significant and sizeable tax incentive for retirement for working
families, that it is far more affordable. While this would rise by
inflation, it would still be under $50 billion by 2009. While the
Republican tax cut in the Senate that year is $179 billion and in the
House it's $178 billion in their budget resolutions, so it is a
sizeable tax incentive, but it is one designed to fit within an
overall budget structure that will not crowd out crucial priorities
like education, health care, Medicare and Social Security.
Q When would it be fully implemented?
MR. SPERLING: Well, there really are two issues on
implementation. One is the administrative challenge of setting up;
the other is when the funds would be available once Social Security
and Medicare are fixed. I would think that in order to fully have
the implementation it would probably be a few years before it would
be fully set up.
If there were funds available prior this is something
that could be phased in. One could, for example, have an automatic
tax credit portion of $200 or $300 a year, and then wait until the
surplus is large enough to support the matching contribution. But
what we are most committed to is ensuring we have enough for Medicare
and Social Security reform, and making sure that we phase this in
after that, and making sure that it can fit within a plan that is not
only good for Social Security and Medicare, but does not lead to the
kind of severe reductions in discretionary spending that you would
see in the Republican budget resolution.
Q Gene, is this contingent on the arrival of the
expected surpluses every year or 10 years out if the surpluses don't
arrive? Is it going to be an automatic entitlement nevertheless?
How does that work?
MR. SPERLING: Well, this would be -- no, if we were
passing this it would be -- we put things out as a 15-year plan.
Obviously, the logic of this would be that it would be if it was
popular and working well, that it would be renewed after that. But I
think that that is -- the point you raise, which is that these are
still projected surpluses, is a reason why one should have a more
reasonable size tax incentives so that one is more confident that
they will be able to fit in under any scenario.
Here, if you look again at the Republican budget
resolution in the House, the numbers are $138 billion in 2007, $153
billion 2008, $178 billion -- that is all money that is gone away
from the government under their plan. On each of those years ours
would be less than one-third of that. So the risk in our plan is
severely less in terms of being able to fit into a fiscal budget --
significantly less than the Republican plans that call for a
homogenous commitment right now of surplus money years out.
DEPUTY SECRETARY SUMMERS: If I could just add two very
quick points to Gene's answer. First, this proposal comes only in
the context of Social Security and Medicare reform, which, if done in
the way the administration suggests, would, on current projections,
nearly eliminate the national debt sometime between 2015 and 2020,
reducing interest expense and making room for initiatives of this
kind.
Second, even such risk as there might be, is addressed,
as Gene suggested, by the rather limited size of this program
compared to some suggested alternatives -- and by what I think is an
equally important point, which is that this is a tax cut that is
saved. This is a tax cut which individuals have no alternative but
to save. And that means its resources going back in the economy;
that means it's avoiding crowding out; that means it's contributing
to lower interest rates, more tools for American workers, lower
mortgage rates for American homeowners and so forth. So a crucial
feature of this tax cut is that it's the right kind of tax cut, given
what our national economic problems are. It is a pro-savings tax
cut.
Q Larry, just to follow up, then, what is the general
explanation for why the savings rate has fallen so low, and why is
this particular proposal going to be any more effective than IRAs,
which are also saved taxes --
DEPUTY SECRETARY SUMMERS: I think there are a
combination of factors that explain America's low savings rate. One
crucial factor has surely been our economic success and the
tremendous wealth accumulation of recent years, which doesn't show up
as income, but which people spend out of, nonetheless, leaving
measured savings having contracted. If you measured savings relative
to an income concept that included the capital gains that have taken
place, the savings rate would appear to have declined much less.
And, in fact, if one looks at the ratio of wealth to income for the
American population, it's actually at an historic high, which is a
different concept of saving.
But I think there is a second general national tendency,
which is we have tended to encourage consumption with the widespread
availability of credit with the tremendous focus on consumer goods in
our society. And I think providing a vehicle which encourages
savings, which puts emphasis on the retirement security problem is
likely to lead Americans to save more than they otherwise would. It
gets them in the habit of saving. The available evidence on IRA
expansions suggests that they have a similar effect in encouraging
people to save. Experience of employers with 401Ks suggests that
education programs do have an important impact on savings behavior.
And so I think this type of public action can
contribute. And of course, with respect to the guaranteed portion,
this is money that is put in an account that has to be saved because
there isn't the possibility of withdrawal. And so you have the
important difference with an IRA that this is a transfer that has to
be saved in substantial part.
MR. SPERLING: Can I just add one thing, though, which
is crucial in our overall plan, which is we're not putting all of our
saving eggs in this one basket. The savings rate has more than
doubled from -- net savings rate -- from 3.1 to 6.7 since we've been
here. More than 100 percent of that has come from the reduction in
the federal deficit. The overwhelming bulk of our strategy for
increasing savings is a debt reduction strategy, and 77 percent of
our plan is essentially going to debt reduction of some form for
Social Security or Medicare.
So if you're looking at what has been the most
successful way to increase national savings in our country, that is
the path we are following. And then we are tacking on on top of that
an incentive that would be for private savings, and as Larry said, is
designed to go after some of the people who can't just shift around
or substitute savings, but aren't saving at all, and give them
special incentives both by having an account, which many of them are
not used to having, and secondly, by giving them an incentive to put
more of their funds in to get the availability of a government match.
Q A 401K question -- presumably, what you want to do
is keep lowering middle income people from pulling out of that and
dumping into this, but in terms of the match, is that phased out as
their incomes go up?
DEPUTY SECRETARY SUMMERS: The same income limits, the
match of the 401K is exactly parallel to the match of other
individual savings -- same income limits that I described.
Q -- there was an act to discourage companies from
offering 401K plans to middle income workers that have this
government-funded alternative.
DEPUTY SECRETARY SUMMERS: In many cases, companies
offer 401Ks primarily for the benefit of higher-income workers, and
are then required because of the nondiscrimination rules to make the
program attractive to lower-income workers. And that is the
constraint under which they operate. They will have an easier time
in making the program attractive to lower-income workers now because
there will be an additional government match beyond their own. And
so setting up a 401K that benefits all workers will be more
attractive than it was before.
Q Let me also ask -- you said that the
administration proposes only in the context of Social Security
and Medicare reform. Say Congress thought that this was an
attractive idea and wanted to enact it, but they had not yet
dealt with the issue of Medicare reform, for instance. Would the
President veto this proposal?
DEPUTY SECRETARY SUMMERS: I don't think it's our place
to get into hypothetical possibilities. But the President has
been very clear for 15 months now, since the State of the Union a
year ago, that his priority is Social Security first. And we
would not support the dissipation of the surplus for other
purposes, no matter how worthy, until a satisfactory resolution
of our broad Social Security and Medicare challenges have been
found.
Q Gene, can you talk about the state of the
negotiations? You had said publicly, I believe, that the release
of the USA Accounts was in part because of diverted attention to
Kosovo. People on the Hill clearly are diverted as well. What
do you think the chances of actually enacting your Social
Security plan and your USA Accounts are?
MR. SPERLING: I think that what you've had is
tremendous success following the President's State of the Union
in getting a bipartisan commitment that in some form or another,
a tremendous amount of the surplus, whether you describe it as
the whole Social Security surplus or 62 percent of the unified
surplus, that there's been since the President's State of the
Union, a tremendous swing among the Republicans to supporting
reserving a large amount of the surplus for savings for Social
Security or the retirement challenge.
That's the positive. Where we still need to go now is
to find some common ground that we can build off of and could be
the foundation for negotiations. We feel that our plan very much
offered that foundation a commitment to debt reduction -- which
now you see in some way people leaning towards -- but a
commitment towards debt reduction where in some way the benefits
of debt reduction would help Social Security solvency, we believe
could be the foundation, the bipartisan foundation, that we could
build on and then hopefully have some additional processes to try
to go further.
We would like to see the Republicans join us in making
a commitment towards debt reduction for Social Security solvency.
I think that right now would be the most promising way to move
the process forward. But again, it's always -- you know, it's
always very hard to predict what's going to happen in the next
month. So I think now, with the budget resolution out, I think
what will happen is you will see some Republican plans coming
out. Then you will have a couple of different options, a few
different options on the table, and hopefully that will start to
generate members of both parties to look for the type of common
ground that can bring people together.
So, while I couldn't give you an exact road map, I
still think that there is ample reason for at least guarded
optimism that we can make significant progress on Social Security
and Medicare this year.
Q The CBO says that the surplus disappears sometime
between 2020 and 2030. At those times the claim on the Federal
Budget is going to be pretty substantial. Is it responsible to
lock into law the expectation that people are going to have this
government match and these government contributions without
knowing where the money would come from down the road?
MR. SPERLING: The first thing I'll tell you is that
that question, I hope you will certainly ask those who just
passed the Republican budget resolution, because they have locked
in $170 billion, going up to $200 billion a year during that time
period, because the tax cuts are a permanent drain of three,
four, five times as much, I think this is a reasonable amount.
And as Larry said, this is being done in the context of an
overall plan where you are dramatically paying down the debt. So
you are putting the country in the strongest fiscal situation it
would ever be with, as Larry said, virtually no publicly-held
debt by that time period, very low interest costs, the lower
interest rates that come from having higher savings.
So I think it's a very legitimate concern. I think
whenever we pass anything that has a feel or the effect of
permanent drain, one should ask the question of whether it will
be sustainable even if projections don't work out as we've
projected. I think that's a legitimate question. I think we
made the judgment that this size of $35 billion to $40 billion
when you're looking at projections of surpluses in the $200
billion-$300-billion amounts or more was reasonable, particularly
when what you were doing with the rest of that surplus was paying
down the national debt and increased savings.
But I just want to remind you, that question is most
powerfully asked for a large, undefined tax cut, which is very
hard to change later, and so whatever force that concern is, it's
a legitimate concern. We make the judgment that ours is
responsible in light of projected surpluses, in the light of the
rest of our debt reduction. I would argue that those who project
using the whole on-budget surplus for tax cuts down the road are
not showing the same degree of caution and are putting at serious
risk the notion that if surpluses were not as large, that the
government would be later forced to go out and borrow again and
be a drain on national savings.
DEPUTY SECRETARY SUMMERS: Can I just say one thing?
You know, before I got here and was an academic economist, my
work was on questions relating to savings, budgets, personal
savings. And if you stop and think about the question you just
asked, it's a very good question and you step back from what
we're here talking about and from this specific proposal, what
we're now addressing is the question of whether something that
we'll spend three-tenths of a percent of GNP that has to be saved
25 years from now, will represent a bit of fiscal imprudence.
If you think about where this country was just six
years ago in terms of our budget situation, when the question
was, were we going to succeed in containing a budget deficit that
was at four or five percent of GDP, I think the very fact that we
can worry and try to assure that there is sufficient resources to
answer a question like the one you asked should remind us of how
totally far we have come in our attitude towards budgets, where
we take surpluses for granted and are concerned about their
dissipation at some point 20 years in the future.
Q Gene, by not making this universal are you sort of
in essence chipping away at the idea of universality in the
overall Social Security program? Because this is part of your
reform program, you're not making this universal. What does that
say about --
MR. SPERLING: First let me question your premise.
This is not part of our Social Security reform plan, this is part
of our plan to deal with retirement security. But we made a very
conscious decision to have a separate plan for dealing with
Social Security and to have this as way, as Larry said, of
strengthening the other two legs, the retirement system, the
savings and pension side of it. So, first of all, this is
addressing those other two parts of the retirement system.
Secondly, I think you have to go back to the statistic
I gave at the beginning. We have a system right now with 401Ks,
IRAs, et cetera, that clearly works for many Americans. It
clearly -- since 66 percent of the benefits go to families making
over 100,000, there clearly already is a very ample and
significant tax incentives, because at a higher bracket you get
31 cents on the dollar saved as opposed to somebody in the 15
percent bracket that gets only 15 cents on the dollar in tax
incentive. And then you get all of the buildup from that higher
amount.
So I think where we were looking is how could we take a
current system, a system that is a good system but has holes in
it, how could we fill those holes? And we felt the way to do it
was to have a progressive account that was automatic so that
everyone had an account and then had incentives. I think that
the people at the brackets over $100,000 have very substantial
existing tax incentives, and I would say the large, large
percentage of people over $100,000 already are covered, so this
would make it universal.
But we did add in our plan that if somebody over
$100,000 does not have any form of pension, then they would be
eligible for this. So it is universal in the sense that somebody
over $100,000 who, for some reason, fell through the cracks and
didn't have their plan would be eligible for this. So it very
much is designed to take the current system as it is and make it
universal.
Q What effect would this have on personal savings?
What kind of projections do you have? If people actually did
this, what would it do? And, secondly, would it require
annuitizing the money that's saved at retirement?
MR. SPERLING: Let me just say that I do think that
when you look at the criticisms that are often given of some of
the IRAs for upper income that people just shift resources, when
you're dealing with people who are not saving at all right now
and are living paycheck by paycheck, I think that you're dealing
with people who have the lowest disposition to save and by giving
them incentives to the degree you're having savings in there,
there's less of a chance that that's just being substituted and
more of a chance that that is actually increasing savings as
opposed to consumption. And so I think this is designed as well
as any plan like this has ever been designed to actually increase
incremental savings.
But let me let Larry ask that, and Larry also probably
has three hours' worth that he could fill you on that answer the
same question.
DEPUTY SECRETARY SUMMERS: I'm not sure I do, but I
promise you I will not impose it on you. We will not annuitize
-- there's no requirement to annuitize the accounts. I'd
anticipate that the induced personal savings would be on the
order of the revenue cost. On the one hand, there would be some
substitution, on the other hand, there would be some inducement
of extra savings because of the matching grants and because of
the publicity and greater marketing of savings that would be
generated.
Of course, when you've got the current level of U.S.
personal savings, you've got a sufficiently smaller negative
denominator, and so that could be an enormous percentage
increase.
Q -- one of these savings accounts and been putting
money into it and then faced an unexpected expense, like buying a
house or sending a child to college or an illness. Would they be
able to draw money out of it before retirement?
DEPUTY SECRETARY SUMMERS: This, as we envision it as a
retirement security program, and so it would be for retirement
only. And that reflects the judgment about the size of the
credit that is involved and reflects what we see at this point as
being the greatest need.
We have, in the context of other savings programs such
as IRAs, worked to adjust eligibility rules for buying a new home
and so forth. But this program, as we envision it, is a pure
retirement security program.
Q -- to get your money out of it? Would there be
just a penalty, or would you not just be able to do that at all?
DEPUTY SECRETARY SUMMERS: You would not be able to get
your money out. That's why there's a lot of confidence that this
would generate an extra savings, but of course it means that it
doesn't have the consumption possibility and you have to make a
choice, and we've chosen to focus this program on savings for
retirement.
Q Can I just follow up on that? Because how
realistic is it, do you think, for a four-person family with only
$40,000 worth of income to set aside $700 annually in the hopes
that in 40 years they will realize some sort of return from that?
Why not just give a flat out tax credit, a $1,300 -- matching
program?
DEPUTY SECRETARY SUMMERS: First, a family with $40,000
would receive the $300 contribution. And so in order to get up
to the $1,000, they would only have to contribute $350, because
they would get the 100 percent match on what -- they would get
the --
MR. SPERLING: Seven hundred for a couple is what he
was referring to.
Q -- on the couple, the example here is the family
of four.
DEPUTY SECRETARY SUMMERS: So the couple would, if they
contributed the $700, would end up with a $2,000 account. It
would be an attractive opportunity for people, perhaps for people
near retirement. In fact, if one looks at the revenue cost of
the program the largest share of the revenue goes to the fixed
$300 accounts because not everyone, our estimators judge, will
choose to take advantage of this opportunity. But it seems to us
that for those who do, and if we want to spread a kind of savings
culture in this country, it's important to reinforce savings.
MR. SPERLING: Can I just add on the statistics -- we
thought that was a reasonable question, so, I mean, one of the
things it does show, though, is that if that family of $40,000
did nothing but take their automatic tax credit, they would still
accumulate $76,000 -- would be able to have an annuity of $6,036.
So it would still be a substantial improvement to income
security, even for a family that could not set aside.
But, truthfully, you know, we had these conversations
internally and we looked at both these factors and we decided
that the best way to address the concerns that you're raising and
induce savings was to have a flat tax credit, so that everybody
had an account, but to still have some inducement so that you are
actually doing something to increase national savings.
Q I just wanted to ask about China and WTO. how far
apart are you? Do you think you'll be able to strike a deal and
were you afraid of losing momentum? Is that why you made the
announcement yesterday?
MR. SPERLING: The announcement yesterday was
completely consistent with what the President's strategy and plan
has been all along, which was that we want to get a good deal
with China. We were very pleased with the progress we made, but
the President also felt that we should not compromise or take a
bad deal on several items at the end simply to meet an arbitrary
deadline.
And so when he spoke with Premier Zhu Wednesday night
before, they both recognized that they had made a lot of
progress, that there were some outstanding issues that would be
very difficult to get done in that 20 hours that remained, so
that they would announce the progress they had made, be very
specific about what the openings still were and commit to
negotiating as quickly as possible, and that they would both try
to make progress.
They had a good conversation yesterday. The President
called from the Oval Office. He reached Premier Zhu while he was
still in the United States. They spoke and they talked about
what the best way --
Q -- having second thoughts and that he bowed to
politics and they could have gotten a deal?
MR. SPERLING: Absolutely not the case. I'm telling
you, in fact, we provided the maximum transparency on what was
happening. We told exactly what we would agree to, we told
exactly what hadn't been agreed to in terms of banking,
securities, auto finance, textiles, in terms of the duration for
non-market economy dumping and for product-specific surges. We
told exactly what those things were, said we'd made good progress
and said we would want to go back.
We did make the following decision, which was that we
were not going to take an unsatisfactory deal on the remaining
six, seven items simply to meet an arbitrary deadline. I think
that would have hurt -- I think that would have been bad
negotiating. I think it would have hurt support for getting
permanent MFN for China, and the President said at the press
conference and he said in the private conversation Wednesday
night, that they would resume negotiations as quickly as possible
or in the best way. He spoke with Premier Zhu. They talked
about what they thought would be the most effective way of going
forward, and they agreed the most effective way would be for us
to send negotiators there before the end of the month, and I am
hopeful and optimistic that we will get a deal.
But on the other hand, we owe it to American businesses
and American workers to get the best deal possible and not to
make any political compromises or compromises to meet an
arbitrary deadline, and so the President, whatever has been
reported, the President has had one strategy for going forward
and he has stayed consistently on it.
We are pleased to see more people vocally coming out in
support of this, and we're very hopeful that if we are able to
conclude a deal, that there will be a surge of support for what
the President's done and his open market and China policy and
that we'll be able to get China into the WTO this year.
DEPUTY SECRETARY SUMMERS: If I could just say one word
on that. All of us on the economic and the foreign policy teams
have been committed to the objective of doing everything we can
to get the right deal at the right time, and that remains our
objective and we are optimistic that we will achieve it.
But we would not serve what is the very important
American interest in forging a satisfactory deal with China well
if we sought to artificially rush the negotiation to a
conclusion, or if we didn't pursue the opportunity to reach this
agreement with full vigor. And that is the approach that we are
all agreed on taking.
Q Would the President consider enacting the USA
Accounts -- Social Security or Medicare?
MR. SPERLING: Asked and answered.
THE PRESS: Thank you.
END 1:52 P.M. EDT
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