Network Democracy/Social
Briefing Book
Current Proposals

                            THE WHITE HOUSE

                     Office of the Press Secretary
For Immediate Release                                     April 14, 1999

                           PRESS BRIEFING BY 
                           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 
      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 

      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 
      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 

      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 

      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 

   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 
   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 

   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 

   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 

   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 

   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 

   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 
   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
Fast Facts National Dialogue Home Page Project Information Briefing Book