DEAL REACHED

October 15, 1998
	Fifteen days after the start of the fiscal year, President Clinton and congressional leaders have agreed to a $1.7 trillion federal budget for 1999. After a background report, Elizabeth Farnsworth discusses this deal with House Majority Leader Dick Armey and Gene Sperling, director of the the president's National Economic Council.

Oct. 15, 1998: A background report on the budget deal. Feb. 2, 1998: Debate over the President's budget proposal. Feb. 2, 1998: The details of the President's proposal. Jan. 9, 1998: Exploring the possiblities and plausibility of a budget surplus. Aug. 5, 1997: President Clinton signs a budget deal that will balance the books by 2002. July 29, 1997: Experts analyze the budget deal. May 2, 1997: Sen. Pete Domenici and Budget Director Franklin Raines discuss the budget agreement. Browse the NewsHour's coverage of the budget, the White House and the Political Wrap index   Office of Management and Budget U.S. Senate	ELIZABETH FARNSWORTH: And for more now we turn to House Majority Leader Dick Armey, Republican of Texas, and Gene Sperling, director of President Clinton's National Economic Council. And welcome to you both.
	Agreement on teacher funding, defense spending, drug interdiction, aid to farmers.
	Congressman Armey, what would say are the key Republican achievements in this bill? REP. RICHARD ARMEY, House Majority Leader: Well, I think, quite frankly, I'm very proud of what we did and the timeliness of it. We were very pleased to receive the President's request for more teachers, especially since he offered to provide a way to pay for them. And when the President's people were willing to work with us so that we could let the state and local communities take this money, make these decisions, manage the money, spend the money on teachers as they saw the need, whether it be for special education or for regular teaching, with a freedom of choice and management and control at the local level, we thought this was good for America and good for the schoolchildren. We were very excited to move forward on that. The fact that we have recognized and responded to our very real concerns about the lack of defense readiness in this increasingly more uncertain and hostile world was very important in this, especially given that we now have a real commitment to a missile defense system in a world where, in fact, the Koreans have just shot a missile over Japan and have missile capabilities of reaching Alaska and Hawaii. We thought this was a very important new emphasis on defense readiness. The idea that we put together the first package of real drug interdiction on behalf of the safety and security of our children in the streets was very important, and to be able to do this in such a manner as to retain the fundamental character of this Congress as the surplus Congress, where, in fact, the majority of the surplus is retained even after these negotiations, so that we can have it next year for retirement security and tax relief was very important. We did a very good job of responding to the needs and the concerns of the American farmers, not only in terms of the emergency relief package we had for them but in terms of some real durable and important lasting tax relief for the farming community. So we've done a lot of good things in this bill, and all of it just at the time that America was recognizing and asking us to respond to these needs.
	What the White House got out of the deal.
	ELIZABETH FARNSWORTH: And, Gene Sperling, what, in your view, are the key achievements of the White House in this bill? GENE SPERLING, White House Economic Adviser: Let me mention five things: Number one, the President defined the fiscal agenda for the year that we should save the surplus until we fix Social Security, despite the efforts of Majority Leader Armey and others to have a $700-$800 billion dollar drain of the surplus for a tax cut, the President successfully saved the entire surplus for Social Security. Secondly, and I want to praise Majority Leader Armey for this, we were able to pass the IMF. We were able to work in a bipartisan way, address the Majority Leader's concerns and others and pass the IMF. It's very important for the international economy. Third, because of the President's veto throughout, we were able to get additional money for a real emergency package for farmers. We were able to four - strengthen environment, get the clean water, make some progress on time change, and fifth, and most importantly, this was a dramatic victory for education. With all due respect to the Majority Leader, the education bill he brought to the floor only weeks ago had zero money for new teachers, it had zero money for reading, it had zero money for college mentoring. It had zero money for summer jobs. Because of the President fighting tough, being willing to threaten a veto, and staying here, negotiating in a unified, Democratic front, we got $1.1 billion -- $1.2 billion, so that we can get 100,000 teachers in reduced class sizes to 18 for the critical first, second, and third grades. We had the child literacy initiative, 250 million for after school help, for tutoring, for helping teachers. We have 500,000 summer jobs. We have hundreds of colleges and college students who will be involved in mentoring students - sixth, seventh grades, and they have a chance to have hope of college. This is a terrific education win. I'm overjoyed to hear the conversion of many who now want to support the President's education budget, and that bodes well for the future. ELIZABETH FARNSWORTH: Congressman Armey, you want to respond? REP. RICHARD ARMEY: Gene does such a good job of spinning I reckon when he dies, he'll just screw him in the ground. And it did good, Gene. I think they'll really appreciate it at the White House, but, remember, we passed and the President signed into law seven - seven education bills this year, prior to these meetings. Much of what you talked about were in those bills that we passed earlier. The president also vetoed seven bills. He vetoed a bill that would have allowed parents to be more able to save for their own kids' education. He vetoed an awful lot of things in education. The fact of the matter is we've been working on these education packages all year. The President has not received our education package well. He didn't show up with this request for a hundred new teachers until after. In fact, the negotiations had already begun. When he did and when he showed us that he was capable of fighting the pig -- so that we could have some budget discipline in the matter - and when he showed finally the flexibility to let the local communities make control of that, we were happy to work with him on that -- in the best interest of the children we now have established the principle as well as it's ever been established and very definitively that it is the parents working with the local community that gets the child the best education. And I - again, if I can talk about conversions, Gene, I will welcome you all aboard to that point.
	Funding the IMF.
	ELIZABETH FARNSWORTH: I want to go back to just a couple of issues, specifically. You've covered education pretty well, but Congressman, what'd you get on the IMF that you really wanted? REP. RICHARD ARMEY: Well, that was very important. Of course, you know, again, that's something we started early in the year. The IMF was asking for $18 billion, no questions asked, no strings attached. What we got was very real and very important transparency requirements. No longer will the IMF work in the dark and keep everybody else in the dark. We also got some very real interest premium on the loans with a shortened time rate for the loans. That allows us to safeguard against the moral hazard that has caused the IMF to be the first worst perpetrator of contagion in world markets. I think now we are in a position where we can impose the discipline and the accountability on the IMF so that we could expect and hope that it would really be a really stabilizing influence in the world. Now, if the IMF is going to be stabilizing, as opposed to the destabilizing role it's placed in the last couple of years, then I think we can put that $18 billion to good use for all the peoples of the world, including the American people. ELIZABETH FARNSWORTH: And, Mr. Sperling, can the administration deliver these reforms? GENE SPERLING: I think that these are reforms that we support. These are reforms that we've consulted with, with the other G-7 countries, and we are very happy to work in a constructive way with Majority Leader Armey, Republicans and Democrats, in having full funding for the IMF and significant reforms. I think it's important we be able to work in a bipartisan way because we do have a serious situation. The President has shown great leadership on this by addressing it right from the State of the Union.
	The "local control" issue.
	GENE SPERLING: And it's important that we can work in a bipartisan way, but I have to go back on the education issue in the following way. We do have some differences when it comes to focusing on private schools, on vouchers. Yes, we disagree, and we've had veto threats, but the President is the one who has led and had the 100,000 teachers in his budget, in his State of the Union, and when it comes to local control, what I don't understand is why when we have a tax incentive that would allow those at a local level to try to do more in raising bonds for school construction and school modernization, why Republicans like Congressman Armey oppose letting those at the local level have an easier time through a tax cut at raising money for modernizing our schools, helping to meet our education technology agenda, so we can put computers in the classroom. It's just incredibly puzzling, and I think that will be an issue worth discussing as the election comes near. ELIZABETH FARNSWORTH: A brief response, Congressman Armey, because I want to move. REP. RICHARD ARMEY: Again, we could swap you out on a tax cut, you wouldn't accept our version; we wouldn't accept your version. But Gene hit the hail on the head, and this is the difference. The White House wants Washington to be in control of education spending. We want America in their home communities to be in control, and that's really what the difference is all about.
	Will conservatives vote for this budget?
	ELIZABETH FARNSWORTH: Congressman Armey, we heard Rep. Ishtook on the piece that preceded this conversation saying that this bill was really giving too much, and somebody in that press conference called it a Great Society bill. How do you respond to that? REP. RICHARD ARMEY: Well, you know, I just disagree with Ernest. Ernest has to understand the President opened this year by asking for $150 billion in increased spending, $135 billion in increased taxes. Well, he ended up with $20 billion in increased spending. We got some tax relief. It was targeted mostly on the farmers, but the fact of the matter is, given where the President wanted to take us at the beginning of this year, where we ended up - remembering that the spending that is beyond the caps that we agreed upon last year - is all emergency spending and half of it went to the emergency of rebuilding our military. The first major reconstruction of our military readiness since 1964 - I think Ernest Ishtook ought to be more appreciative of that, and as he understands the importance of that in terms of the safety, security, and effectiveness of our men and women in uniform, I think he will come to really appreciate what we were able to accomplish in that $19 billion.
	Working in the wake of the impeachment vote.
	ELIZABETH FARNSWORTH: And, Mr. Sperling, what do you think the process, this process you've just been through, these negotiations, what does the process say about the President's role in the wake of the House's vote to hold impeachment hearings? GENE SPERLING: Well, I think it's clear that this President still commands overwhelming support from the American people. When he's been addressing the key issues that he's been doing so for nearly six years, education, health care, fiscal discipline, savings surplus for Social Security, the American people are behind him, they support him, and obviously even the Republican-controlled Congress comes his way significantly on these key issues like education. Of course, some of the conservatives were upset. The President was promoting fiscal discipline and saving the surplus and strong, dramatically strong education budget. They wanted to drain the surplus for a tax cut before we solidified our fiscal discipline, and they didn't want education. So when you look at it in that light, I understand why they're unhappy, but I think that the President's where the American people are and I think most of the Republicans made a wise decision, coming our way on education, coming our way on the environment, and now we just need to go further on school construction, on patients bill of rights, on getting the tobacco legislation, and the incentives for disabled Americans to get to work. These are some things we did not get done and we're going to come back and try again on. ELIZABETH FARNSWORTH: And Congressman Armey, in the brief time we have left, do you want to comment on the President's role and then tell us when we can expect a vote on this bill. REP. RICHARD ARMEY: Well, we negotiated this entire work with Erskine Bowles and the - the quality of character and quality of work that Erskine brought to the table was commendable. He did an excellent job, and we will miss Erskine. I'm sorry to see him leave Washington. I'm proud for him to be able to go back to his family in North Carolina. But, quite frankly, you have to understand, Erskine Bowles was the man from the White House that carried this, the fact that we could sit there and deal with him as we did, knowing from the beginning it would always be dealing in good faith with good research, good background work, it was - in fact, this is the fourth time I've been through this - and it never went more smoothly than it did this time. And I think Erskine Bowles is the person that deserves the credit for that. ELIZABETH FARNSWORTH: And when do you think we'll see a vote on it? REP. RICHARD ARMEY: Again, the writing of it, the sorting of the papers, the reading of it, we would expect a vote sometime between 5 o'clock and 10 o'clock tomorrow evening. ELIZABETH FARNSWORTH: Okay. Congressman Armey, Gene Sperling, thank you very much.