Press Briefing by Chief of Staff John Podesta and OMB Director Jack Lew, January 16, 2001

by John Podesta, Jack Lew

1:15 P.M. EST

MS. GEGENHEIMER: Good afternoon. Today we are releasing the third and final report of the Clinton-Gore administration's e-commerce working group, which is entitled, "Leadership For The New Millennium: Delivering on Digital Progress and Prosperity." White House Chief of Staff John Podesta and Director of the Office of Management and Budget Jack Lew are here to discuss the report and the administration's leadership on this issue. And Jake Siewert will follow.

MR. PODESTA: Thank you. I'm going to make a brief statement, and then Jack is going to make a brief statement, and then we're going to take questions.

When President Clinton and Vice President Gore took office eight years ago, they were convinced that technology would be and could be the engine of economic growth. That's why, in the campaign in 1992 and then in the way they governed, starting in 1993, they made promoting technology, along with fiscal discipline and opening markets and investing in people, a key component of their economic strategy.

It was a profound decision for America's future. Over the past five years, the information technology sector, which accounts for 8.3 percent of U.S. GDP, accounted for almost one-third of U.S. economic growth.

More companies are using information technology to increase their productivity, develop customized products and deliver online training to their employees. In 1993, when President Clinton entered office, there were 50 web sites on the Worldwide Web; today there are 25 million. People are using the Internet to get lower prices for home mortgage, make better informed decisions about their health care needs, and check on the voting records of their elected representatives. And we're, of course, all using it to get low discounted airfares on January 20th. (Laughter.)

Today we're releasing the third and final report of the administration's e-commerce working group, which is entitled, "Leadership For The New Millennium: Delivering on Digital Progress and Prosperity." This report outlines the work that we have done to promote electronic commerce, reinvent government for the information age, bridge the digital divide and ensure that all of our children have access to education technology.

None of this would have been possible without, of course, the creativity and determination of entrepreneurs and community-based organizations. But the administration played an important role in creating the right policy environment that allowed these efforts to flourish. The sum of the principles and policies that the administration has set have really helped create the rules of the road for the information age. And they have largely been accepted around the world.

First, the administration established a policy framework that emphasized private sector leadership, and the avoidance of unnecessary government regulation, and got other countries to adopt those principles. For example, we were able to create an agreement in the WTO to make cyberspace a duty-free zone.

Second, the President signed legislation that allowed the Internet and e-commerce to flourish. Legislation that gave online contracts the same force of law as paper contracts, protected intellectual property in cyberspace, established a temporary moratorium on new indiscriminatory taxes on Internet access and electronic commerce.

I think, as the paper we handed out notes, some of the estimates range this past year that business to consumer e-commerce will now total $61 billion, and business to business e-commerce could total $184 billion. That's from really a trickle of electronic commerce that occurred when the President came into office.

Third, the President and Vice President worked to protect privacy, especially in sensitive areas, such as medical and financial records, and children's privacy. They wanted to make sure that all Americans had the opportunity to enjoy the benefits of the information age. That's why they've worked so hard to connect schools and libraries to the Internet, and to train teachers to be as comfortable with a computer as they were with a chalk board.

Thanks to the e-rate, and grass-root efforts like NetDay, the percentage of schools that are connected to the Internet is now 95 percent. The percentage of classrooms connected to the Internet increased from 3 percent in 1994 to 63 percent in 1999. We're spending about $2.25 billion a year now through the e-rate to help schools and libraries provide the services that we're talking about.

They also supported a national network of community technology centers in low-income urban and rural neighborhoods, and worked to ensure that the information technology is accessible to the 54 million Americans with disabilities. The administration also boosted R&D through an unprecedented five-year extension of the R&D tax credit, and increases in government support for R&D.

It's worth remembering that today's Internet is an outgrowth of the ARPANET which the government began funding in 1969. President Clinton and Vice President Gore supported research initiatives like the Next Generation Internet, which is connecting 180 universities at speeds that are up to a thousand times faster than today's Internet; and nano-technology , which could eventually allow us to store the Library of Congress' collection in a devise the size of a sugar cube. These initiatives will help ensure that America maintains its technological leadership well into the 21st century.

The administration fought for telecommunications reform so that consumers would enjoy greater choice, faster deployment of broad-band networks, and lower prices. There are now providers of high-speed Internet access in 70 percent of the nation's zip codes.

The administration also made more spectrum available to the private sector for new digital wireless services. The number of wireless subscribers increased from 11 million in 1992 to 108 million today.

I want to turn the platform over to Jack to talk about what we've done on electronic government, but as I'm doing so I also would like to introduce a few people who really drove the creation of this report: David Beier, who chairs the working group on electronic commerce and is the Policy Director for the Vice President's Office; Sally Katzen from the Office of Management and Budget who is our leader on electronic government; Tom Kalil, the Deputy Director of the National Economic Council, who has been with the President since the start of his journey on this and has probably taught him how to use a computer somewhere along the way, who right from the beginning in the 1992 campaign, Tom has spearheaded that. And if you wait one moment, Elizabeth Echols, who is the Executive Director of the committee.

Let me turn it over to Jack.

MR. LEW: Thanks, John.

John has focused on the many things we've done in e-commerce and in terms of making access to the Internet available broadly to people throughout the country at all economic levels. I wanted to focus for a few minutes on what we've done over the last eight years to develop e-government and to really bring government into a whole new generation of technology.

E-government provides access to government information 24 hours a day, 7 days a week. It's focused on the needs of our citizens and businesses, and with access to the Internet, anyone can get access to government information, services and transactions, easily, quickly, efficiently and responsively.

The President and Vice President have taken the lead and we've made remarkable progress in a short time. Let me give you just a few examples. One-stop government information: First Gov provides a simple, straightforward mechanism for the public to locate information and services. Users can access 27 million federal agency web pages at one time. They can search half-a-million documents in less than a quarter of a second, and handle millions of searches a day.

The private sector has played a key role in creating First Gov, and now helping us to broaden it. Dr. Eric Brewer from the University of California-Berkeley, and co-founder and chief scientist of Inktomi, is one of the people who has really contributed a lot to the development of First Gov, and it is something that has been a partnership with the private sector, academia, state and local governments, and nonprofit organizations.

Over 40 federal agencies have been working together on web portals designed specifically for people with special needs, people with disabilities, seniors, businesses, students and workers. Recently, First Gov introduced a new feature called Facts For You, through which a citizen can learn about housing prices, weather patterns, school performance, diet, airline safety, on-time performance, and health quality.

First Gov currently links to state and local web sites, but very soon it's going to be interactive with state and local web sites, so that there will be one site that you can go to to access information not just from the federal government, but state and local government as well.

In the area of government services, we have already made enormous progress that puts us on a path towards making all government services online by October 2003. You can now make a reservation in a national park, follow the progress of the space shuttle, check the National Weather Service. And if you look at the programs that most people rely on the federal government for, you can actually apply for benefits in many cases -- Social Security benefits; the public can apply for benefits, track their benefits. The Veterans Administration -- veterans can apply for and send completed applications electronically to their local VA offices.

Forty-two million people are filing their tax forms electronically. Student assistance -- you can get your applications online, file them online, student aid can be applied for online. And in the last six months, 10.5 million loan applications have been process online in a timely manner.

Government procurement -- GSA Advantage allows federal employees to access quality products online at lower prices. The number of items has grown 57 percent; sales has grown 50 percent in 2000, with over a $1 million a day in sales in late September.

Fed Bus Ops allows agencies to post contracting opportunities to the web and vendors, and to download these notices directly from the Internet. Beginning as a five-agency pilot, now 19 agencies participate, and 60,000 vendors are involved.

The Smart Pay program provides purchase, travel and fee charge cards to government agencies. Use of purchase cards streamline procurement, invoicing and payment processes, and it saved the federal government $1.1 billion in fiscal year '99 on total sales of $14.8 billion. That's a tremendous savings and a large percentage reduction in cost.

A new service, Pay.gov will be operational in 2002 to be a one-stop shop for making electronic payments online.

We've also developed the public key infrastructure which is necessary to establish security in this electronic government world. It involved the issuance of digital signatures, establishment of cross-agency infrastructure for the use of digital signatures, and acceptance of common digital signatures by multiple agencies.

John mentioned the privacy issues. There very much of a concern in e-gov, as well as in general on the Internet. With respect to privacy, last spring we at OMB issued government-wide policy directing federal agencies to post their privacy policies on key web pages. And virtually every agency has responded and posted those guidelines. It tells you why data is being collected and how it's being used.

More recently, we've put out guidance to track user -- that prohibits the tracking of user behavior across government sites and over time. In addition, we directed each agency to describe its privacy practices and the steps to comply with administration privacy policies in its budget submissions, to make sure that this isn't just something that's off on its own, but it's very much a part of how we look at agencies and whether or not they're doing their basic jobs.

In terms of accessible federal web sites, making information technology available is critical in keeping our economy going and reaching all people, people with disabilities, people who have special needs. In July, all large agencies succeeded in making their principal web sites, as well as their top 20 web sites, by volume, accessible to persons with disabilities.

We've documented, in this report, 1,300 separate electronic government initiatives, originating from 36 agencies. All 1,300 have been entered into a database which is sortable by type of transaction, type of government program, type of technology.

Technology is the promise of changing the world. It offers a possibility of not only making government better and more efficient, but fundamentally to rethink how government should work. We made enormous progress and we have set a foundation which really brings the business of government into a new century, with a whole new technology. As John noted, here the people who have done the leg work for many years on this, David Beier who chaired the committee, the working group, Sally Katzen, the Vice-Chair, Tom Kalil and Elizabeth, and I think we should now invite them up, so that if we get questions, they can participate in responding to them. Thank you.

Q Can you tell me what's going to happen to the President's personal papers and official communications? Maybe it isn't related exactly to what you're saying, but is there some sort of rule of thumb here that you operate under in terms of what will be preserved?

MR. PODESTA: Let me take the paper side and then I'll take the electronic side, and somebody will correct me if I get this wrong. The official papers of the President and essentially the White House staff operate under the Presidential Records Act, which I think was passed in 1979. And we are right now in the process of archiving all that material. It will be sent to, under the custody of the National Archives, where it will be stored at the Clinton Library. And that is true for electronic records, as well as paper records.

We were kidding around as we came in, one of the computers in the Lower Press here has the death notice on the computer which says that the files of that computer have been officially archived and it is no longer in use.

So the material that is on the hard drives, the material that -- we were the first administration to try to, as you well know and have well documented, to try to enter the thorny field of archiving our electronic mail records. We, I think, have done that. We've obviously experienced a couple of problems in doing that, but I think no organization, probably private sector or public sector, has tried harder to produce a system that would really archive the history and the decision-making, both paper and electronic, of this administration.

And that work is ongoing. By the time noon rolls around on January 20th, everything will be boxed up, the hard drives will be downloaded, the electronic mail will be stored. It will all, again, be, at that point, under the custody of the National Archives, and it will be available pursuant to the Presidential Records Act, which staggers the release of that information, depending on what kind of information is in there.

Q You stamp it "classified," or to be opened in 50 years?

MR. PODESTA: Well, for example, if it is classified, then you've got to go through the process of declassifying the information before it's publicly available. It could be accessed, for example, by Congress or other sources who have access to classified information. There's some personal information that pursuant to the Presidential Records Act, as I said, there's a schedule in the act itself which makes that available through the Freedom of Information Act, once it's fully available to the National Archives.

Q Do the hard drives go to the Archives?

MR. PODESTA: I believe that the actual -- I'm not certain about that, but I believe the hard drives actually do go to the Archives. I'll check that.

Q John, what happens actually on Saturday at noon to the White House web site? Does that change and all of a sudden it becomes the Bush White House? And what happens to -- there is on your web site a virtual library that goes back eight years of all the --

MR. PODESTA: We're working with the Archives to essentially transfer the information from our web site to an Archives web site which would be available, in essence, immediately. I don't know whether we'll be able to turn the switch, but that's our goal, so that at 12:01 p.m. you can look at the Clinton administration's library on a National Archives web site.

With regard to the incoming administration, I don't know exactly what their plan is, but at that moment, they would have control of the White House web site, and I assume that they will try to stand up their web site virtually instantly with coming into office. I don't know if that will be the first order of business and whether it will be up and available on Saturday, but I would think by Monday they'll probably have that up and running.

Q So White House.gov as of Saturday or Monday won't have the Clinton records on it anymore -- is that your understanding?

MR. PODESTA: We'd probably be happy to have a link to the Archives web site if people wanted to come here to find a link to the Archives web site, but we'll have a new URL, and people will be able to find Clinton information, Clinton administration information through that Archives web site. And that should be up and running and part, essentially, of the process that is envisioned in the way the library will be conducted.

I think one of the things the President very much wanted to do was to make sure that in working with the Archives, which again has custody -- it will be their information -- as well as building the library, displaying the information, et cetera, that these new tools are available so that people around the country can really have greater access than any previous administration has done. It's an important tool, and it's an important opportunity I think for the American people to be able to go online and be able to retrieve information, retrieve documents, et cetera.

The full range of documents, obviously, as I mentioned -- paper documents, which ultimately will -- many of which have already been scanned and could be available electronically; others will be scanned and available electronically. But that takes place, again, over some period of time, and pursuant to the Presidential Records Act.

Q John, this technology is obviously evolving. Could you, and maybe some of the others up there identify what you think on the e-commerce side are the one or two biggest issues that loom in the immediate future? And then, Jack, the same thing for streamlining further government use of the Internet?

MR. BEIER: On the e-commerce side of the equation, the two biggest public policy issues that are going to confront the next administration and governments across the world are going to be taxation questions. That is, whether a particular economic activity can be taxed at all, and if so, by whom, and using what rules. This administration, through the Treasury Department, has taken a leadership role on an international basis to try to create neutral, transparent rules that neither discriminate against or in favor of electronic commerce. We've made a lot of progress, but a lot of those key decisions haven't been fully made.

And the second is going to be, in my judgment, whether the rules that we have in place with respect to financial records, medical records and privacy of children need to be supplemented at all by additional safe harbor kind of rules for privacy on the Internet. We've tended to take the view that the private sector should take a leadership role, and they've done a very good job of improving privacy compliance. But I'm sure that that's going to be a topic hotly debated in the Congress this next year.

Q When you say children, what do you mean?

MR. BEIER: During this administration, the Children's Online Privacy Act passed, and it's been fully implemented by the Federal Trade Commission, with a set of regulations. So children 13 and under already have statutory protection, a set of rules that apply to them in terms of data collection and use. What's not done are data collection relating to items that are not financial and that are not medical. And that's, as I say, going to be for the next administration and for this Congress.

MS. KATZEN: With respect to e-government, I think the two greatest challenges and developments that you'll see is moving from information to services and transactions. Right now you can get a lot of information. You can also get a lot of forms, which you download, fill in, and mail back.

What the agencies are starting to do is to be able to take the information online, process the information, and send you electronically your license. DOT has done this, VA is doing this. It's becoming -- it's a transforming thing. It's not just automating the processes. It's transforming the way you do business. And this is going to happen throughout the government, in terms of ability for citizens to deal with their government.

I think the second is in the area of security. One of the problems has always been how do you authenticate that the person who says he or she is who she says he or she is -- well, in any event, you get the picture. It's difficult, because a dog on the Internet can be just as much a person. The idea is to have a digital signature that would be as real, in effect, as a pen and ink signature. That you can authenticate who it is who's sending it and that the message to which it's attached has not been tampered with in transmission.

The private sector is working hard on this. We've been working hard on this in partnership with them. And the trick will be to enable a common signature to be used with multiple agencies. We have something called PKI, Public Key Infrastructure. It's an infrastructure that enables us to use it. And what we want is, if you have a digital signature that you're using with Department of Transportation for licenses for your trucks, that you can also use it with VA or with IRS to pay your taxes. And we're working on those kinds of bridges, as they're called. And I think with that breakthrough, there will be an enormous simplification and streamlining of government for citizens.

Q CBO is going to come out in a couple of weeks with its revised projections of the budget outlook, and the economists expect, given the economy has slowed, to have some dramatic impact on the outlook for the surplus. What are your own internal numbers and projections showing --

MR. LEW: Well, just today we've put out a report that has our baseline projections and our economic projections in terms of the consequences on the budget for the next 10 years. And what is in our report shows that there is still a very substantial surplus. Not counting Social Security or Medicare, it shows that with the baseline there is no change in policy -- there's a surplus of $1.9 billion over the next 10 years.

We've also included an analysis which goes a step further and says, what's likely to happen -- things like the research and development tax credit that always get extended. If you go the next step and ask how much is there really that's available for new policy, you quickly go down from $1.9 billion to $1.6 billion.

I think one of the things that gets lost in any of the discussions is that if there is a decision to spend the surplus, be it on the tax cut or on spending programs, the cost of paying interest goes up very rapidly. It can be hundreds of billions of dollars, depending on the timing and the out-year impact of the policies.

I think that any decisions that are made with regard to the use of the surplus have to be prudent ones, and that means you have to look at the moment you're making the decision for all the competing demands. It's very possible that the first round of decisions will be the last if the surplus isn't there when you're done with it. And I think that the report that we've put out today establishes a baseline against which actions can be measured, against which program trends can be measured, whether or not more kids have access to education, or less; whether or not more people have access to health care, or less. I think it's a very important beginning point in the budget process for the coming Congress and administration.

Q John, going back to the Internet, are you predicting that in the next 10 years paperwork will disappear?

MR. PODESTA: I think that if -- anybody who has worked in a kind of paperless environment would be crazy I think to predict that paperwork will disappear. I think that it will be transformed. I think that the gains that this technology is showing in productivity, not just in the information technology sectors, per se, but as they essentially trickle through, or flood through, the economy, will mean that many transactions that used to take place that were slower, that were more cumbersome, that were more paper-intensive, will be able to be done electronically.

But I think that the fact that some things will continue to happen in hard copy -- I'll probably, I'll be the last guy to continue to read a newspaper, I suppose, because I think there are some features of holding on to something that at least are comforting. But I think that you'll see this technology taking over more and more functionality, productivity increasing across the board, not just in the .com economy or in the information technology-intensive economies, but across the board, throughout the economy. That's the wave of the future and I suspect that that will accelerate rather than just keep moving in a linear direction.

Q How will the U.S. deal with the underdeveloped and many third world countries who cannot afford computers or Internet and who do not have today --

MR. PODESTA: Well, I was thinking as Sally was talking about the services that might become available through U.S. government agencies, the President likes to talk about the fact that when he was in India he got a driver's license online. Now, he didn't have to take the driving test, which may have -- if he was in the United States that may have prevented him from getting a driver's license, I don't know. He hasn't driven in a while.

But I think that we've placed a major emphasis on this in terms of the President gave an important speech I think in the UK here when he went on the trip to Ireland and to UK last December, I guess, about that. I think that it's clear that we can't just be concerned about the digital divide in the U.S., although that has been a central concern of ours. We've got to worry about it around the world.

But these kinds of technologies can be rapidly deployed and empowering, and I think India is a very good example of that. When we were in Rajasthan, we saw the power of having one community computer that was available in a town that enabled a woman's co-op to be able to get into the production of milk. We saw how health information could be delivered online. And so the most advanced, rapid information could reach the places in the world that are perhaps, in a different respect, some of the furthest behind what you see in the United States. So I think there's great promise, as well as -- just to finish up.

Q How will the U.S. in their relations with India in the future under the new administration?

MR. PODESTA: Give me that one more time.

Q The relations between U.S. and India as far as IT or computers are concerned --

MR. PODESTA: I'm not sure I'm in a position to judge that. I look forward to being able to utter the words -- as I probably am going to do right now -- you won't have me to kick around anymore. (Laughter.) But I'll leave that question to my successor.

Q What are your farewell remarks? (Laughter.)

Q Stories have oftentimes gone through internal White House communication to tell very vivid stories many years later about how White Houses came to certain decisions. But you've learned in this administration that e-mail can become not only a -- of doing that, but also a source of controversy. What advise do you have to this and any succeeding administration about how White House staffs should handle their e-mail communications?

Q Don't write.

MR. PODESTA: Yes. Well, I don't think I would say that. I think people are learning this in the private sector, quite frankly, as well as in places like the White House, that there is more formality than people I think expect out of an e-mail transaction. There is a record left behind. There are footprints that don't take place in a telephone conversation. And I think that that will probably cause some people I suppose to think a little more as they compose it at the keyboard or maybe, in a year or two, as they compose by talking to their computer. But because I think a record is left behind, people have to be able to come to grips with that.

But it's also an extremely -- I think from our perspective, we have been an active administration and I think the ability to communicate relatively instantly with a wide variety of people to be able to kind of network, to be able to use electronic mail and electronic conferencing technology, to be able to share information has been critical to our ability to stay on top -- like I think any modern organization -- to stay on top of what's going on, and to be able to have a dialogue.

So I think it will -- you've got to be able to use it, but you've got to be smart about it and you can't be a smart-aleck. So that means that I won't be able to serve in any future government. Thank you. (Laughter.)

1:46 P.M. EST