Press Gaggle by Tony Fratto and Secretary of Education Margaret Spellings

CHICAGO--(Business Wire)--Aboard Air Force One

En route Chicago, Illinois

9:52 A.M. EST

MR. FRATTO: Why don't I start, and then I'll turn it over to
Secretary Spellings. As you know, we're on our way to the Windy City,
Chicago, Illinois. The President will visit Horace Greeley Elementary
School for a No Child Left Behind discussion; and will visit some
classrooms and Secretary Spellings can give you some more details on
that and what we're hoping to accomplish.

After that the Secretary will -- I'm sorry, the Secretary --
(laughter) -- the Secretary will, of course, be with us, and the
President will go to the Union League where -- actually, interesting,
we're going to get a chance to visit with the Chicago 2016 Olympic
Committee. As you know, Chicago was chosen as the U.S. entry for the
2016 Olympics. So it will be exciting and the President will give them
his best wishes. And then he'll have a meeting with the Illinois
Chamber of Commerce business leaders and community leaders, and have a
chance to talk about his thoughts on the economy today, how the
economy is doing and what his sense of principles are for how we
should look at some of the economic challenges that we're facing going
forward.

I'm going to turn it over to Secretary Spellings at this point and
ask her to make a few more comments, details about the visit today and
about No Child Left Behind and where we're heading. And she can take
some of your questions and then I'll come back afterwards for any
non-education questions you might have.

SECRETARY SPELLINGS: Okay. As Tony said, we're celebrating the 6th
anniversary of No Child Left Behind at Horace Greeley Elementary. It's
a predominantly minority school. It is the only Blue Ribbon school in
Chicago -- that is the most prestigious award the Department of
Education gives -- because they are showing that it's possible for us
to educate kids who have been previously left behind. Obviously we
think we're on the right track. We've started to close the achievement
gap. Arne Duncan, who is the superintendent -- obviously a mayoral
appointee -- and Mayor Daley have been strong education reformers.
I've given them a large -- a $27 million grant for a teacher incentive
fund that puts our best teachers in the most disadvantaged places.
That's one of the keys to closing the achievement gap. They are a
pilot program with us at the U.S. Department, on supplemental services
-- that's the tutoring services that are provided as part of No Child
Left Behind. So they're really leading some of the reforms in Chicago.

But I think the important thing as we reflect on the anniversary
-- and you all may have seen Kennedy's piece today -- is, you know,
it's time for us to take stock, to embrace what has worked in No Child
Left Behind, and improve the things that should be improved. That's
why we have reauthorizations in the Congress, that is why every six
years the Congress gives itself an opportunity to stop, look and
listen, and correct things that may need improvement. And there's a
lot of agreement about what those areas are.

One of the things that Senator Kennedy talked about was the need
to give credit for progress, student achievement progress over time.
I've given nine growth model pilots to states to look at ways of doing
that, to be more precise about accountability. We need to be more
nuanced about how we identify schools, making distinctions between
those schools that are in range from those chronic, chronic
under-performers.

So I think we know what needs to be worked on with No Child Left
Behind, but we also need to affirm these core principles of every kid
on grade level by 2014, and continue to hold ourselves, as the
grown-ups, accountable for the achievement of kids. It's been a major
sea change in education in this country, and we can't let the boulder
roll back down the hill.

Q Kennedy said it's a disgrace about the funding levels. Do you --
what's your response?

SECRETARY SPELLINGS: Well, clearly, I don't agree with that. I
mean, funding for education is up about 46 percent since the President
took office. I need to check that number. That may be a little less
accurate based on the new omni that just passed, but it's up
significantly since the President took office.

Funding is a perennial issue in Washington, just like it is in the
Illinois legislature and the Illinois -- the Chicago school board. But
the thing about No Child Left Behind that is unique is we now ask not
just how much do we spend, but how are we doing. We're going to spend
more money on education -- we always do, we should. But we also need
to make sure that we're getting something for it. This "put the money
out and hope for the best" strategy that we've tried for 40 years left
a lot of kids behind, and that's not the point. The point is, yes,
we'll spend money, but we have to have something for it on behalf of
kids.

Q Do you still want to expand it to high schools?

SECRETARY SPELLINGS: Well, one of the things Senator Kennedy even
talked about today in his piece is that we need to make sure that
we're doing something about this drop-out crisis. Now, if someone can
show me a way to have vigorous, improvement in high school without
understanding what our true drop-out rate is, I'm all ears. But every
governor, all 50 state governors, have agreed that we need a more
accurate graduation rate. That's something that I think the Congress
can support -- we certainly can -- but we ought to hold ourselves
accountable for how many kids we're getting out of high school.

Today, half of our minority kids get out of high school on time.
Half. I mean, that's outrageous when half -- when not -- most of the
jobs require -- fastest-growing jobs require post-secondary education.
And we've got to attend to that matter. It's called the silent
epidemic in education.

Q What date does the law expire?

SECRETARY SPELLINGS: It doesn't actually ever expire. It will roll
forward continuously without change, and it's a good and strong law,
so --

Q But this is a reauthorization we're talking about.

SECRETARY SPELLINGS: This is a reauthorization opportunity, but
the law will not expire.

Q Are you worried, if the law is not reauthorized, that the flaws
that you have identified, it could actually weaken the impact of it if
you don't fix those things, and it goes forward without that?

SECRETARY SPELLINGS: Well, one of the things that the President is
going to talk about today is that -- and I think school people --
obviously, the folks I deal with all the time -- I mean, they're
concerned. I mean, we're still going to have school. We're marching
towards 2014. And they want and need some additional kind of policy
rationality based on what we've learned.

And so what the President is going to say is that we want the
Congress to act. We hope they will. But if they don't, I'll take
administrative steps at the Department, as I have in the last three
years, to start to work on some of these matters. I've said a couple
weeks ago that this nine-state growth model pilot can now be expanded
nationally -- so things like that. We cannot wait around and just say,
well, as we march towards 2014, that inertia in the Congress is
adequate. It's not.

Q What does that mean, that the -- can you talk a little bit about
that model that -- what that is?

SECRETARY SPELLINGS: About the growth model?

Q Yes.

SECRETARY SPELLINGS: One of the things -- and I'll try not to be
too wonky on you, but when No Child Left Behind was passed, about 11
states in our country had annual assessment. By 2005-2006, about half
had annual assessment. The reason that we had to look at just a static
target -- adequate yearly progress is the terminology of No Child Left
Behind -- is because no one had adequate measurement systems. You
can't chart progress over time, year on year, unless you have annual
measurement. So now we're in a place where every state has a system
like that. We can now follow the 3rd graders who become the 4th
graders, and then the 5th graders, through the system and have a
better picture of how we're doing, as opposed to taking a picture of
this year's 3rd graders and next year's 3rd graders and the year
after's 3rd graders.

So we're in a place that we can have a more sophisticated
approach, a more realistic picture, and a more fair picture for
accountability. But the reason the Congress didn't do that is because
nobody had the underpinnings necessary six years ago. But we do now.

MR. FRATTO: Okay?

SECRETARY SPELLINGS: All right.

MR. FRATTO: Thank you, Secretary.

Q Thank you.

MR. FRATTO: Anything else, guys?

Q Tony, what's he going to say in his economic statement? Can you
give us a sense -- what does he want to accomplish, whatever he's
saying?

MR. FRATTO: I think what he'll have a chance to do is to talk
about, as I said earlier, the economic landscape out there today,
which I think we can see from some of the economic data out there that
the U.S. economy is basically a strong foundation; it's an economy
that tends to be able to deal with economic shocks and changes, and a
changing global economy. It deals with those things over time. But
we're seeing mixed economic data that will affect the economy in the
short-term, and we want to take a look at that, but also keep an eye
on long-term economic growth.

And so the President will talk about the sort of mixed economic
picture out there, and what the administration is doing and what we'd
still like to see Congress to do on certain targeted parts of the
economy, things like keeping taxes low, making tax cuts permanent,
looking at the housing and mortgage markets and some of the work that
we've done there, and still more work to be done; energy, health care
-- things that are important to businesses and their competitiveness
and their ability to create jobs and create growth going forward.

So he'll talk about that, and he'll also talk about the need for
Congress to keep spending in check, and as I said earlier, to not
raise taxes. I think one thing that's abundantly clear is that had we
raised taxes this past year, it would have most likely worsened this
mixed picture that we're seeing.

Q Tony, is he meaning to reassure the American people on the
economy with his remarks?

MR. FRATTO: I think just trying to be very clear as to what we see
out there, and to make sure that everyone knows -- policymakers, the
American public, the business community -- all understand that the
President and his economic team are paying attention to the economy.
We're looking at ways to continue to improve it, to keep it open and
dynamic, to look for increasing trade opportunities, to be competitive
and to continue to create jobs. We have to remember that we're in six
years of an economic expansion; we're at 52 consecutive months of job
growth. We're at a very mature point in this business cycle, and we
want to make sure that we're doing everything we can to keep it going.

Q Senator Clinton said on Saturday that the U.S. economy was
slipping towards a recession. Is that a view the White House shares;
why or why not?

MR. FRATTO: I don't know of anyone predicting a recession.

Q Tony, when the President said last week that he was considering
an economic fiscal stimulus package, some economists think that he in
a way kind of boxed himself in. He raised expectations among the
public that he will do something. Do you think it is likely now, and
has he boxed himself in?

MR. FRATTO: No, I don't think he has. I think the President said
then, and more recently also, that he wants to look at the data. He
hasn't made a final decision. Obviously we're going to have an
opportunity to talk about certain economic policies that will go
forward and will be part of this administration's policy, like keeping
the tax cuts in place, keeping spending in check; there are a number
of elements. In terms of anything that may or may not be needed in the
short run, we're going to see more data out there, and I don't think
we've raised expectations. I think we've all been very clear that we
want to see additional data and we want to analyze it. We want to make
a determination certainly by the end of this month as to whether
something for the short- and medium-term is needed.

Q When you say "more data," do you mean different -- are you
talking about a specific kind of information that you're looking for
or are you looking for longer trends to evaluate? What is --

MR. FRATTO: Well, I think it's dangerous to look at any one piece
of economic data. You want to look it cumulatively and you want to
look at it over some time period to see if you see a trend and to see
if it has any predictive value for the future. So it's no one piece of
data -- I'd want to look all the data together.

Q And there's a lot of data out there already that -- so why does
he need more information at this point?

MR. FRATTO: Well, first of all, we have time to consider more
information, and so you want to be as accurate as you can. I think --
you've heard me say this before: economic prognosticating is a very,
very inexact science. And so there are lots of people who will say
things with great certainty as to what they think is going to happen
-- and, again, I remind people it takes us three reports to get the
GDP correct for the previous quarter. So thinking about the future is
a very difficult undertaking and you want to get as much information
as you can, and we have enough time to get more information and so we
should.

Q Does he see the State of the Union as kind of a deadline to
figure this out?

MR. FRATTO: I think that's just sort of an obvious opportunity. We
also have the budget that will be released a week later, and so they
feed together.

Q Tony, some of the Democratic economists are talking about
extending unemployment benefits or making food stamps more widely
available as a way to help in the short term. Are those things the
President will consider?

MR. FRATTO: I think there are lots of ideas out there. I'm not
aware that there are an unavailability of necessary funds in either of
those programs, as far as I'm aware, but I haven't looked at them.

Q Making them available for longer or more broadly.

MR. FRATTO: Yes, I think -- I don't think that -- let me just
leave it at this: There are lots of ideas out there that people have.
I'm not going to get into the business of ruling in each new idea that
sort of emerges into the press.

Q Tony, can you give us an idea of who the administration has been
consulting with outside the White House or outside the administration?
You have been -- well, haven't you?

MR. FRATTO: Lots of people have come forward. Some of them you --
some people you've heard in the press that have, you know, made their
own ideas known in the press. Some haven't. Lots of ideas coming in.
And lots of ideas coming from within also.

Q Martin Feldstein in an interview that we had Saturday said that
he puts the chances of a recession at more than 50 percent.

MR. FRATTO: Yes, just go back to my comments about
prognosticating. I think it's tough.

Q But you said you didn't know of anybody who was predicting a
recession.

MR. FRATTO: Well, even that isn't a firm prediction. I would say
that's pretty close to 50-50.

Q When you said earlier that it's a mature time in the economy,
what do you really mean by that? Are you suggesting that there's a
natural ebb to that and recession is part -- or a downturn is --

MR. FRATTO: No, no, recessions are by no means inevitable.
Recessions are usually caused by some act or failure to act and -- or
just sort of overhangs that occur in the economy that the economy
tries to deal with. But they're by no means inevitable, and I don't
think there's any reason why we should have one.

But you do see patterns emerge when you're in periods of long
expansions and where expansions are challenged by changes or
imperfections in the marketplace. We saw this with -- we saw this in
the 1990s a couple times with a few different challenges. We're
obviously seeing it now with things like what happened in housing. And
the test for any economy is how it deals with it.

I mean, I think one thing is clear is that there's probably not
another economy in the world that can deal with the kinds of shocks
that we've dealt with over the past seven years and avoid recession.
Ed, most any other economy in the world -- I'd submit any other
economy in the world would have found itself in recession if it had to
deal with those kinds of shocks. And this one hasn't because it does
have a lot of inherent dynamism and flexibility and the advantages of
things like very deep liquid capital markets and integrated financial
systems. So it tends to respond well.

Q Did the President (inaudible) the al Qaeda video?

MR. FRATTO: The al Qaeda video?

Q Yes.

MR. FRATTO: Just another reminder that there are people out there
who are seeking ways to disrupt or derail the march to freedom and
democracy. And we see them and they seem to find their way into the
multimedia world.

Q Does it change any plans at all for the trip?

MR. FRATTO: Not that I'm aware of.

Q Tony, do you have --

MR. FRATTO: I'm sure I'll have some --

Q Back to the economy. For months the President has been stressing
that the fundamentals are very strong, but today you said he's also
going to talk about the mixed picture. What is it that accounts for
him talking about the mixed picture? What does he see?

MR. FRATTO: The basic fundamentals of the economy do remain fairly
strong. Historically speaking, you have relatively low inflation,
relatively low interest rates, relatively low -- in fact, historically
low unemployment rates. The economy is still creating jobs and is
still growing. It may not be creating jobs as fast as you'd like to
see, it may not be growing as fast as we would like to see, and even
in the area of inflation, core inflation, again, relatively low. But
we see higher prices in energy and health care and some other areas.

So there are some mixed pictures out there. We see very strong
export growth, but we see some weakness domestically in manufacturing,
for example. So I think that's just it; it's just a very -- it's a
clear look at what we're seeing out there, and the President will have
an opportunity to reflect on it.

Q Tony, do you know -- have you heard anything about this Iran
skirmish in Hormuz, the Strait of Hormuz?

MR. FRATTO: I really haven't. I'd just refer you to DOD on that.
Okay?

Q What was the question, I couldn't hear.

Q Talking about a skirmish in the Strait of Hormuz.

MR. FRATTO: Okay?

Q Thank you.

MR. FRATTO: Thank you.

END 10:13 A.M. EST

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