Press Briefing by Press Secretary Ari Fleischer, March 5, 2001

The James S. Brady Press Briefing Room

12:20 P.M. EST

MR. FLEISCHER: Good afternoon. Thank you for coming in. Several personnel announcements today. The President intends to nominate Kenneth Dam to be Deputy Secretary of Treasury. The President intends to nominate William S. Farish to be Ambassador Extraordinary and Plenipotentiary of the United States of America to Great Britain and Northern Ireland. And the President intends to nominate Roger Walton Ferguson Jr., to be a member of the board of governors of the Federal Reserve System. We'll have paper coming out on that shortly.

Those are the only announcements I have. I'll be more than pleased to take your questions


 * Q   Ari, what has the administration said or what does it plan to say to the Russians about this tunnel?


 * MR. FLEISCHER: Any conversations on that -- let me back up one step. If the reports are accurate, or inaccurate, it's not a topic that I'm at liberty to discuss.  And any conversations between our nations will be private ones.


 * Q   That's all you're going to say on it?


 * Q   We know that the tax cut will be phased-in, the lower rates will be introduced gradually over the years.  At the same time, we are told that the size of the tax cut, under no circumstances, would be scaled back in case the surplus wouldn't come in as expected.  Does that make any fiscal sense or common sense?  Why shouldn't the actual cut just follow the actual surplus, as it comes in?


 * MR. FLEISCHER: The rate at which the tax cut is phased-in is reflected by the fact that we have a surplus that is exploding.  The surplus is growing in leaps and bounds under all economic projections.  In the current fiscal year, the surplus is approximately $250 billion to $300 billion.  In the year 2010, the surplus is projected to be between $750 billion and $800 billion or so.  And so the size of the tax cut does grow as the surplus grows.


 * Q   Can you tell us what makes the President such a believer in 10-year projections, since it's been proven that even 10-month projections are not safe and correct?


 * MR. FLEISCHER: Well, it's interesting, because the House requires, of course, a five-year budget window.  The Senate requires a 10-year budget window.  So no matter what the President submitted in his budget, the House and the Senate would have no choice but to follow suit -- five years House, 10 years Senate.  And that's in keeping with the -- actually, I don't know if it's statute, but it's the long-standing procedures of the House and the Senate.


 * So the President's budget can be viewed as a one-year, five-year, 10-year, whatever window you like. And the budget specifies in each of the next 10 years what those numbers are.


 * Q   Ari, what's he going to do this week to get the thing through? And could you preview tomorrow's trip a little bit?


 * MR. FLEISCHER: On the second part of the question, the President will be traveling to Chicago, Illinois tomorrow, where he'll be talking, making the case for his budget and tax plan, talking about the importance of economic growth, talking about how we are all in this economy together. And one of the interesting phenomenons that have happened in the American economy in the last decade or so is this growing investor class, the surge of middle income Americans, who now invest in markets, have mutual funds, who have other investments.


 * It's another reminder how we all are in this together. And the markets often are leading indicators, suggesting which direction the economy will grow, or go.  And the President believes that he has an economic plan that can help strengthen the economy and he will talk about that generally at the Exchange tomorrow in Chicago.


 * The President is going to continue to meet with members of Congress, discuss his plans with members of Congress. And we're looking forward to Thursday's vote in the House of Representatives.  We expect that this will be a singular moment, a very important day for getting tax relief to the American people.  And we're pleased to be working with such a do-something Congress.


 * Q   In his approach to this, is he looking ahead to the Senate, assuming that he's fine in the House?


 * MR. FLEISCHER: Well, it's a little premature until the House acts, of course.  But throughout this whole process he's been working with both House members and Senate members.  But all revenue items must originate in the House, and upon completion in the House, only at that point can the bill go to the Senate and the tax work begin in the Senate.


 * Q   Ari, is he going to North Dakota to send a message to Senator Conrad?


 * MR. FLEISCHER: He's going to North Dakota and South Dakota and Louisiana for the same reasons that he's been traveling, as he did to Pennsylvania or to Missouri or to Nebraska.  He wants to speak directly to the voters about his plan to build up support for the plan and urge the voters to contact their representatives.


 * Q   Right.  But the real reason he's going to these states is because on the target list in the White House, at least half of them are up for reelection, particularly in the Senate.  I mean, the President is a pretty charming guy, but would you dismiss the idea that this is a fairly heavy-handed, hardball approach to making sure that the vote gets through, that the package gets through?


 * MR. FLEISCHER: I think the President talking directly with the voters can never be seen as heavy-handed or hardball.  I think it's what Presidents do for a living.


 * Q   You know what I'm --


 * MR. FLEISCHER: And as I indicated, the President is going to talk to constituents and urge them to contact their representatives, you bet.


 * Q   But you know what I'm -- you're just not going to answer?


 * Q   Perhaps my question was too subtle.  You do want to send a message to Senator Conrad, I assume?


 * MR. FLEISCHER: Well, I think I answered in your question, saying any time the President travels and he urges people to send e-mails or pick up the phone or send letters, the President, himself, said --


 * Q   So it's politics then.  It's not really pushing the taxpayer. It's really to get to the people who are opposed to him, is that right?


 * MR. FLEISCHER: I think it's called the essence of governing, is to --


 * Q   Oh, that's the essence of governing?


 * MR. FLEISCHER: -- is to reach out to the voters, to talk to them, so they agree with the Presidential agenda, so they'll contact their representatives.  Absolutely.


 * Q   You pointed before to the sharply partisan votes in tax bills before, as kind of -- that's how Congress does business.  Since the House Ways and Means Committee was a party-line vote, and the House vote is this week, can you point to anything that shows that President Bush has brought any kind of new climate or bipartisanship to what Congress has done, is doing?


 * MR. FLEISCHER: You know, I want to remind everybody about the last time a tax bill was enacted into law, and that was in 1997, when the Congress, the Republican-controlled Congress passed a $285 billion tax cut that was signed into law by President Clinton.  It was that tax cut that actually created the $500 per child credit.  There was none prior to that. It lowered the capital gains rate from 28 to 20 percent.  This is a significant tax relief package.


 * At that time, too, every Democrat in the Ways and Means Committee choose to vote against it at the beginning of the process. By the time it got to the end of the process, it was a different story.  So there's a history and a tradition up on Capitol Hill, to have bills emerge.  But still, they ultimately get signed into law.  At least that was the case in the previous one.


 * And we're confident that we're going to be able to work with enough Democrats and Republicans alike to secure passage both in the House and the Senate, not only on the first go round, but on the final conference agreement, which will be the most important of all.


 * I do think, Ann, though that if you look around, you'll see the tenor is changing. I think it's changing over time.  I think you're seeing that -- even the calls for investigations, I think, are diminishing.  I think you see less and less people interested in looking back, and more people looking forward, more people interested in working on the substantive agenda.  And I do submit that there is, over the last several years, a case of pent-up demand for getting things done.  And the President's going to continue to work with people in both parties to get things done.


 * Q   Has this White House asked Congress not to do more investigations, particularly on the pardons?


 * MR. FLEISCHER: The President spoke about that last week, and he said that he has moved forward.  And I think people hear his message.  And Congress still is a separate branch.


 * Q   Ari, are you saying that because there are fewer investigations, it's a sign of bipartisanship?


 * MR. FLEISCHER: No, I think you're seeing increasing signs from people up on the Hill saying, let's move forward, on all issues.  And it is still early in a session.  I've indicated we're pleased to be working with a do-something Congress.  But it's early in the session.  Typically sessions start out, and then the legislation starts coming out over the months.  And we'll have additional items of legislation coming to us, and I think we'll all be able to see what the votes are, as Congress takes up bills.


 * Q   Can we go back to that last answer, what do you mean by that?


 * Q   Yes, does it strike you as odd that you're talking about bipartisanship on the one hand, and on the other hand, the President is going out to all the states where there are possibly vulnerable Democrats to make some convincing arguments, he hopes, that this tax cut should be passed, or else?


 * MR. FLEISCHER: Of course he also traveled to Pennsylvania, where you have two Republican Senators.  And it's exactly what Presidents do for a living.


 * Q   One of whom doesn't agree with the President's tax program, on the record.


 * MR. FLEISCHER: If the suggestion is that it's somehow inappropriate for the President of United States to travel the country, to talk to the voters who elected him, and to make his case to the people and urge them to contact their representatives, that's a new and novel notion.


 * Q   What about the spirit of bipartisanship?


 * MR. FLEISCHER: It's exactly what the President does for a living, and he's going to keep on doing it.


 * Q   Bipartisanship?  Come on.


 * MR. FLEISCHER: I fail to see the lack of bipartisanship.  I see everything bipartisan.


 * Q   In the spirit of bipartisanship, though, Senator Daschle has accepted an invitation from one of the TV stations in South Dakota to have a live discussion with the President on tax policy.  Is that something the President would be interested in?


 * MR. FLEISCHER: I think it was a challenge to the President to debate, and that is not the purpose of his trip.  There will be no such debate. The President is looking forward to the travel.


 * Q   Does the President believe that a vote against this tax package is a vote for recession?


 * MR. FLEISCHER: The President believes that the tax package is one of the best ways we have of stimulating the economy to keep out of recession. He would hope that all members of Congress, both parties, would vote for the tax package because taxes are too high, because the surplus belongs to the people and they should have it back, and to stimulate the economy.  He thinks it's a combination --


 * Q   Does he agree or disagree with that rallying cry?


 * MR. FLEISCHER: I think I just answered it.


 * Q   Does he think the pardon investigation should end now?  You say he's tired of the investigations and wants -- should they come to a halt?


 * MR. FLEISCHER: As the President said last week, he has moved on, he's looking forward.  He understands that Congress will do as Congress does. Congress is a separate institution, and I remind you that many of the things that people talk about on the Hill are bipartisan in their expressions of concern.  But the President has moved forward.


 * Q   Does that mean that he wants Congress to hear that message?


 * Q   Is he or other officials calling up on the Hill asking them to end the pardon probe, saying it's time to move on?


 * MR. FLEISCHER: The President has spoken out.  I think people understand the President's view.  But as I indicated, the President also knows that Congress is a separate institution.


 * Q   But would it be fair to say that senior officials have said -- Congress is a separate institution, but would it be fair to say, in explaining what the President meant that senior officials say, can you get this over with quickly?


 * MR. FLEISCHER: I'm not aware of any senior officials doing that.


 * Q   Ari, there's a report published in The New York Times today that a religious group called Samaritans First, which receives U.S. government funds through AID, requires people to attend prayer meetings or watch movies before they receive the assistance that the U.S. government is supporting.  Does the administration condone this kind of practice?


 * MR. FLEISCHER: AID is looking into that matter to make certain that all AID assistance is carried out in accordance with the law.  And that's a matter that AID is looking into.


 * Q   Well, AID has, in fact, issued a statement saying that government money cannot be used to finance religious activities.  So does the administration plan to alter that policy?


 * MR. FLEISCHER: But in regard to the specific question about El Salvador and any of the practices in El Salvador, AID is looking into that matter now.  AID is looking into that matter now.


 * Q   How is the President being kept informed of the various disputes in the airline industry, and is he prepared to intervene if he's asked?


 * MR. FLEISCHER: The President is updated regularly on those labor matters, and in the case of all the airlines, just as with Northwest, it first was triggered by the National Mediation Board.  If the National Mediation Board takes its action, freeing the parties from further negotiations, at that point the President would be more likely to step in, if the President decides to do so.


 * There are several other pending possibilities that are under active review. The administration is monitoring them carefully, and we will continue to await and listen to the status of the negotiations between labor and management and hear from the National Mediation Board.


 * Q   Has he indicated a willingness to step in?


 * MR. FLEISCHER: Again, I think until the National Mediation Board, if and until they make their statement, it would be premature for the President to weigh in.  You clearly heard what he did on Northwest Airlines after the National Mediation Board did act.


 * Q   Any decision by the President about whether FEMA and Drug Czar will be Cabinet-level positions?


 * MR. FLEISCHER: If there are any further announcements to be made about Cabinet, we'll keep you informed.


 * Q   Wouldn't FEMA have been a natural to be announced today with the swearing-in of the new director?


 * MR. FLEISCHER: Again, if there are any changes to the current policies, we'll keep you informed, we'll let you know.


 * Q   The purpose today of the meeting with leaders from Congress, about Medicare -- what's the idea here?


 * MR. FLEISCHER: The President wants to start building the case for fundamental Medicare reform and he's holding a bipartisan meeting today with several leaders on the Hill to discuss that important issue.


 * Congress came very close in the last session to having a bipartisan recommendation. There was a Congressional Commission set up of 17 members. And, if I recall, either 10 or 11 voted for the Commission recommendations in a strong bipartisan showing.


 * The President continues to believe that it's very important to our nation's seniors, and also to a lot of middle aged Americans who care about what is going to happen to their parents upon retirement, that they get the health care they deserve. The Medicare system is in need of reform and modernization and that's why he's going to work with this group of Congressmen and Senators.


 * Q   What is wrong with Medicare now?


 * MR. FLEISCHER: Jim, did you have a follow up; and I'll come back to Helen.


 * Q   The Commission effort dealt mainly with poorer seniors.  The President campaigned on a much broader plan.


 * MR. FLEISCHER: The Commission effort?  No the Commission effort dealt with Medicare generally.  The Commission effort was broad and encompassed all of Medicare reform.  The President's Immediate Helping Hand provision dealt with low income seniors, to get them prescription drugs.  But the Commission that the President has referred to, saying that they generally had a very sound approach to America -- although there are some things he wants to take a second look out -- the Commission was fundamental Medicare reform.


 * Q   So the President has decided there are two ways to go here.  One is to go with Helping Hand; one is to go for comprehensive reform.  It sounds as if he has decided to try to invigorate the effort to move toward comprehensive reform?


 * MR. FLEISCHER: As the President said in his address to the Congress last Tuesday night, he thinks that no senior should have to choose between prescription drugs and their food.  Many seniors, unfortunately, in our society are faced with that choice.


 * So what the President has sent up to the Hill is a proposal to have an Immediate Helping Hand, so low income seniors can get immediate relief through the states for their prescription drug needs.


 * He also recognizes that there are many people on Capitol Hill who prefer, instead, to work forward on comprehensive reform plan, and that's a group of the people he's going to meet with today. Of course, any comprehensive reform plan would include prescription drugs for seniors, as well as take other steps to modernize Medicare.  And I'll get into some of the reasons on that in just a moment.


 * Q   I have some follow up on the Chicago trip tomorrow.  Could you flush out a little more on what you mean on his speech to the investor class?  What does he say to people -- investor class about big losses this year and might not be impacted by your tax cut because they pay the alternative minimum tax?


 * And what's the status of his meeting with Mayor Daley?


 * MR. FLEISCHER: On the meeting -- again, the President's remarks are going to be overall remarks about keeping the economy strong and promoting his budget and tax plan as a way to keep the economy strong.


 * As far as markets are concerned, what I indicated is there has been a phenomenal change in the United States in the last 10 years, where millions of middle income Americans, who previously did not own any assets, who were not invested in their economy, now are. They're invested either through their pensions or their 401(k)s or they directly own mutual funds.  And it's a reflection of how strong a country we are economically that we're able to spread the wealth.


 * So people who previously were left out, are now left in, are part of what's in, and --


 * Q   -- but look at those futures, which is --


 * MR. FLEISCHER: Understood.  I understand that.  But it's a reflection on markets.  And what I was suggesting is that when the President addresses the question of how to grow the economy and keep it strong through his budget and tax plan, he's also talking about how many millions of Americans are in this together and how markets have changed to the point now where we have people who previously had no access now have access for the first time.  And if the economy is strong, markets are strong; if markets are strong, tens of millions of Americans have more assets and resources to take care of their family and their needs.


 * On Medicare, Helen --


 * Q   No, I had -- on Daley.


 * MR. FLEISCHER: Oh, on Daley, I don't have anything for you yet on the specifics or the timing or any of the other events.  If you don't mind, Lynn, let's check back this afternoon on any other schedule and logistics for tomorrow.

Helen had a question on Medicare.


 * Q   What is the core reason of changing the Medicare system?  And I don't say "reform," because reform indicates you make it better.


 * MR. FLEISCHER: Well, there are two reasons.  One is, Medicare is going broke, the amount of money coming in for Medicare exceeds -- going out from Medicare exceeds the amount of money coming in.


 * And the second fact is that Medicare remains a 1965-style program at its core. It's been very cumbersome, very difficult for a lot of seniors to get the health care they need.  For example, while there are some 37 million, 38 million Medicare beneficiaries in this country, the majority of them are forced to get Medigap insurance, because the benefits they qualify under Medicare are insufficient:  prescription drugs, eyeglasses.


 * Q   -- the benefits, under your plan?


 * MR. FLEISCHER: Well, certainly, many of the proposals on the Hill that dealt with Medicare reform did allow seniors to have more options and more choices, so they could get a package of health care benefits that suited their individual needs.


 * The other interesting thing about Medicare today that was so different from when Medicare was created in 1965, is the fastest growing group of Americans are octogenarians, people in their 80s. And in the 1960s, that just wasn't the case.  And you have tremendous differences in health care needs between somebody who just turned 65, for example, and someone who is in their 80s.  They have different needs from a health care system.


 * The Medicare system, though, currently really remains a one-size-fits-all system. But there are many people who had a tremendous number of options in the work place when they were 64 years old and 364 days old.  They could have a medical savings account; they could have HMO coverage; they could have PPO coverage, a variety --


 * Q   You want to get privatization in.


 * MR. FLEISCHER: We want more choices and more options for seniors, so what seniors are able to enjoy when they're 64 years old, they're still able to enjoy when they're 65 years old, while still protecting 80-year-olds and other seniors who want no change whatsoever, by maintaining the current Medicare system.  And that really is what the bipartisan reforms on the Hill have focused on, in terms of Medicare.


 * Q   Is the President going to call today or early this week some House Democrats to talk to them about the tax plan?


 * MR. FLEISCHER: Always an option.  We'll just have to see how the week progresses.


 * Q   Is he going to take with him any of the senators from the Dakotas or from Louisiana, as he did in Nebraska and in Arkansas?


 * MR. FLEISCHER: I typically don't get my report from Congressional Affairs on who is traveling until later in the week, until much closer to the trip.


 * Q   Can you tell us whether they've been even invited?


 * MR. FLEISCHER: No.  Again, a lot of that depends on the congressional schedule and what the calendar of Congress is.  As you recall, especially on Thursdays, often they don't know if they're going to be in or out a session.  But, again, I just haven't gotten any report yet from Congressional Affairs.


 * Q   Ari, you said a few moments ago that surplus estimates are exploding.  And if that's the case and we're going to have these big surpluses going forward, what's the danger in agreeing to some sort of trigger mechanism like the Democrats want to do with regard to a tax cut?


 * MR. FLEISCHER: Well, as the President has indicated, he thinks there are only two things that are going to lead to a smaller surplus.  One is a failure to have economic growth.  And if there's a failure to have economic growth, the last and the worst thing you should do, in the President's opinion, is raise taxes, which is what a trigger would be tantamount to. The other reason the surplus will diminish is if the politicians do this year what they did last year, which is to spend the surplus.  And as a result of agreements made by the Congress and the President last year, the surplus for the next 10 years is $570 billion smaller because of spending increases.  It's $37 billion smaller because of tax cuts.  And that's proof-perfect, in the President's opinion, that the biggest threat to the surplus is spending increases, not tax relief.


 * One final point on triggers. What you're saying is, if the politicians spend too much money, we should reimpose a marriage penalty on people, for example.  And the President thinks that's not in keeping with the values we should hold as a government, and it's bad economic policy.


 * Q   Ari, since the administration is looking favorably on repealing the repetitive stress syndrome rules, does the administration have an alternative to that, and also, as a second part of that question, given what has occurred thus far, is it fair to characterize that the President is anti-union?


 * MR. FLEISCHER: Well, the Department of Labor is also taking a look at repetitive stress illnesses, to make certain that we are protecting the health and safety of workers.  And if we have anything further to inform you about, we will, or you may want to talk to the Department of Labor on that.


 * But I think what you're seeing is a President who is very concerned, as you saw on the executive orders that he issued a couple of weeks ago, to make sure that there is fairness and balance in the system, and that the federal government doesn't tip its hand to union shops or non-union shops. Previously, it was easier to get federal contracts if you were a unionized shop, and that often is unfair to small businesses, to minority businesses, and that's one of the reasons the President has signed executive orders maintaining a level playing field in the awardance of government contracts.


 * Q   Ari, on the question of -- a couple weeks ago the President said the committees are going to do what the committees are going to do.  How does it square with his promise to restore honesty and integrity to Washington, if his officials are basically pressuring Burton to stop investigating.  And if we're going to change the tone, this is probably the most bipartisan investigation that Committee's headed in several years. Why would you try to put an end to that?


 * MR. FLEISCHER: Well, there's a premise to your question that administration officials are -- I think you said pressuring.  And I don't know where you get that from.  As I indicated before, I have no information about that.  The President has spoken, and said that he's moving forward. But the President, also out of respect for the legislative branch, understands that they will -- and as you point out, some of these investigations are bipartisan.  And the President is respectful of the prerogatives of Congress, to exercise its powers.


 * Q   Ari, how many Democratic votes does the White House hope to get on Thursday?


 * MR. FLEISCHER: Oh, I'm not a vote-counter or a vote-guesser.  We're going to continue to work to try to get as many as possible.  We'll see what the count is, and the President will continue to be hopeful that his plans will receive bipartisan support.  Bipartisanship is a two way street. The more Democrats vote for it, the stronger the signal we'll get from the Hill that the Democrats, too, are interested in bipartisanship.  We hope they'll be many, but whatever the number is -- we're interested also in majorities to pass our agenda so we can get legislation signed into law.


 * Q   Going back to the first question you took today, the espionage issue.  Diplomatic conversations with the Russians aside, what effect do you think these stories have had -- the Hanssen case and the story that you don't want to confirm or deny from yesterday -- what effect do you think that this has all had on relations with Moscow?


 * MR. FLEISCHER: I think that the President is still going to approach relations with Moscow the same way he always has, and he addressed that throughout the campaign, and we're looking forward to having good relations with Russia, straightforward and direct conversations, which is the President's manner and style, and I don't see that changing.


 * Q   Outside the context of the current tax cut proposal, a lot of conservatives outside and inside Congress would like to see over time the government move toward a flat tax.  What's the Bush view of the flat tax cut?


 * MR. FLEISCHER: Well, there are two principal approaches to tax simplification on Capitol Hill.  One is to have a flat tax, the other is to have a consumption-style tax.  And there is no clear majority for either view up on Capitol Hill at this time.  The President does believe in simplification; that's one of the reasons that Congress, in his opinion, should pass his tax plan.  It reduces the current five brackets down to four brackets, it lowers them, it simplifies the code by abolishing one bracket; elimination and total repeal of the death tax is one of the biggest simplification measures he can enact.


 * The death tax represents, by some accountants, 40 percent of the tax code. It also is one of the greatest ways of tax avoidance.  There are many people who are very wealthy, who are able to hire the best tax attorneys and CPAs to get around the tax because of its complexities.


 * The President is prepared to engage in further tax relief items after this year -- additional tax simplification items. But he's focused right now on passage of his tax plan for 2001 and those simplification items that are contained in that plan.


 * Q   Ari, not all of the trigger mechanisms that were proposed would necessarily raise taxes; some would simply freeze the process if there is no further increase in the surplus.


 * MR. FLEISCHER: If Congress were to enact a law this year that says we will reduce the marriage penalty, and then three years from now, Congress says to a married couple, we didn't mean it, there is a trigger, your marriage penalty is back.  That family is going to look at the marriage penalty as reimposed.


 * Q   It wouldn't have been gone in the first place, or at least not all of it; it would simply be frozen.


 * MR. FLEISCHER: According to all accounting in Congress, once you pass a tax cut, that tax cut is permanent law of the land.  Same thing with the spending increase; once you increase spending, it is permanent law of the land.  So any type of trigger would bring revenues into the federal government, because now that tax cut no longer goes into effect.  So it is actually legally constituted as a tax hike.


 * Q   You're suggesting it would rescind what had already been done?


 * MR. FLEISCHER: Certainly any trigger that is designed to stop a tax cut from going into place would result in a tax hike, according to --


 * Q   But these are all incremental.  So if I get so much this year and so much the following year, and then it's frozen, that doesn't take back what I've already gotten.


 * MR. FLEISCHER: One of the greatest effects of a tax cut on the economy is the psychological sign that it sends to people, that it's permanent.  No, but it's permanent -- that you know that you will have more money to spend each year.


 * For example, if you're going to make some purchasing decisions, and you know that you will have more money in your paycheck this year, next year and the following year, and you make a decision, on the basis of that. And the government goes and pulls the rug out from underneath you by saying, oh, that tax cut we promised you, we didn't mean it, it's on hold -- that is not in the economic interest of the country, nor is it in the consumer's interest. And that would be the effect of --


 * Q   But better that than going into deficits, right?  Better disappointing some families than sending the country into deficits, right?


 * MR. FLEISCHER: But, again, there are two things that will put the economy into deficit -- spending increases and slower economic growth.  And I do note again that in this town there was no such interest expressed for all the years that spending increased.  Only now that taxes are going to be cut do people express that concern.  And the greatest danger, again, is if you don't cut taxes, that money will be spent.  That's the history of Washington, and that's what we're up against this year, as well.


 * Q   -- is a real concern.


 * MR. FLEISCHER: Well, it's twofold.  It's, one, the President wants to deliver tax relief and let people keep it, and not have it be snatched away from them after it's been delivered.  And, two, he is concerned that the money will be spent if you don't cut the taxes.


 * Q   To get you on the record on this question, in the White House view, there's no ethical conflict in former President Bush and former Secretary of State Jim Baker using their world contacts with world leaders to represent one of the most well-known military arms dealers, the Carlyle Group?  That's perfectly okay, it's ethical?


 * MR. FLEISCHER: The President has full faith that his family will conform with all proper ethics laws, all ethics laws, and will act properly in their conduct.  And that's exactly what they've -- been done, and there are no questions that --


 * Q   So he thinks it's okay for former President Bush to go to the Middle East dealers and sell guns and tanks and planes?


 * MR. FLEISCHER: Again, the President has full confidence that all members of his family are acting in full accordance with all ethics laws.


 * Q   Ari, Senator Daschle wasn't informed about the South Dakota trip before it was announced.  Was it accidental or a mistake, or the President just doesn't feel it is appropriate, out of courtesy, to let him know that --


 * MR. FLEISCHER: Well, again, the President's travel to all states is a decision that the White House makes and it is the prerogative and the liberty of the President to travel.  And he will continue to do so.


 * Q   Ari, one clean-up from the Roger Ferguson appointment, will he also serve another term as vice chairman?


 * MR. FLEISCHER: On the paper it will spell it out a little more clear. Mr. Ferguson will serve the remainder of the 14-year term that expires on January 31, 2014, as a representative of the Boston Federal Reserve District.  He was previously appointed to the Board of Governors in 1997, and served as vice chairman of the Board since 1999.  So it deals with the complexity of how the Federal Reserve seats are held, and I think once you see the printed statement, it should make it clear.


 * Q   Ari, on Medicare overhaul, does the President have a timetable for establishing a commission or anything like that?


 * MR. FLEISCHER: No, and I didn't say there would be a commission on Medicare.  So I wouldn't go in that direction necessarily.


 * Q   -- explore options and --


 * MR. FLEISCHER: That's correct.  A bipartisan meeting with some of the people who have been most associated with bipartisan reform.


 * Q   If the President, if they do, in fact, decide to move ahead with comprehensive reform, what does the President see as the next step?


 * MR. FLEISCHER: I think we need to allow them to have the meeting first and see what the sentiment is.


 * Q   Ari, you were saying before that bipartisanship is a two-way street.


 * MR. FLEISCHER: Right.


 * Q   Could you elaborate a little bit on what you think the other half of that street is?  And could you also address the question of whether, in the 2002 elections, the President might be more inclined to campaign against, let's say, Democrats who opposed him on the tax cut?


 * MR. FLEISCHER: Well, I think it's far too early to start talking about the 2002 elections.  But bipartisanship is a two-way street, and the President has been encouraged by some of the early signs of bipartisanship coming from the Hill.  And he understands that there are going to be Democrats who are never going to vote with him.  He understands that, and he only asks that the disagreements be kept at a civil level and that the politics of personal destruction, which has been the hallmark of this town for too long, be laid to rest, and that we have disagreements based on principle.


 * But I think it's also clear that there is a limit to how many votes we're going to be able to get on any given issue, but we're going to continue to reach out to work with the Democrats on all issues. And then the Democrats have to decide -- so, too, do the Republicans -- when it comes time to vote, how they will vote.  And we will be respectful of those who vote against the President, and we will continue to put together bipartisan coalitions.  Sometimes they'll be bigger then others, sometimes they'll be smaller then others.  But in all cases, our goal will be to govern, and to get legislation signed into law.

THE PRESS: Thank you.

END  12:53 P.M. EST