The President. Well, Jim, thank you very much, and thank all of you for letting me participate in this way.

In our meeting last February at the White House and other subsequent meetings with Governors, we've discussed the importance of keeping the economy on sound footing, and we've discussed the importance, also, of getting the Federal deficit under control and of reducing unemployment. I'm pleased to report we are making progress on both of these fronts.

Regarding the deficit, I understand your concerns, especially about high interest rates and how they affect the States' own economic recovery. I'm pleased to report that we now estimate the deficit to be well below that which was projected last February. My recent signing of the deficit reduction downpayment package is clearly a first step. And I pledge that I'll continue to work to bring down deficits. We'll have to work together with Congress to get spending under control, as well as to pass a constitutional amendment requiring a balanced budget.

On the employment side, more Americans are working today than ever before in our history. And I'd like to congratulate all of you on the work that you've done in your States to implement the Joint [Job] Partnership Training Act. It's working well, and 70 percent of those undergoing training have been able to find permanent jobs. That's a dramatic improvement over the old CETA approach. The increased numbers of Americans working because of the economic expansion means more revenue for the States, as well as the Federal Government. And I know this is good news for all of us.

This kind of success justifies the faith we've had in returning power and responsibility to the States. Our invaluable dialog has made our partnership in federalism possible, and our fine working relationship and communication must continue.

Jim, I wanted to congratulate you on the great job that you've done as the National Governors' Association chairman. And to John Carlin I want to offer my congratulations on your election as the new chairman of NGA. I look forward to working with you and all of the members of NGA during your chairmanship.

Governor Thompson. Thank you, Mr. President. We do appreciate your taking the initiative to speak to us today.

And on a personal note, I think we all had a special feeling on Saturday evening as we watched you and our American athletes join together with other nations of the world with the common goal of excellence. And we were proud for you and proud for our country's athletes.

I'd like to thank you for the access that your administration has granted to the Governors. We have met with Cabinet Secretaries, with your staff, and with you to express our concerns about issues ranging from health care cost containment to highway funding. Those are issues that are near and dear to Governors' hearts, and we appreciate your accessibility, even if we do not always agree.

Your comments indicating your commitment to work with us on the pressing issues of the future are welcome, especially on the issue of deficit reduction. The downpayment just approved is welcome, but, obviously, as you say, only a first step. And we are committed to continue our efforts to work with you and the Congress.

``Flexibility'' is a key word to Governors. If JTPA has been a success, as you indicate, it has been a success largely because of the capability that the States have to tailor the program to our needs.

In the Medicaid program, the waivers that have been granted by HHS will allow States to implement badly needed cost containment measures. However, we still need greater flexibility in this area, Mr. President, if we are to achieve our common goal: holding down health costs.

We are full partners in the Federal system, and we sincerely appreciate you calling in recognition of that partnership. We look forward to a continuing dialog with you and your administration on these and other issues.

Thank you very much.

The President. Jim, thank you. Governor Carlin, look forward to working with you. And, believe me, I am committed to what I have long held, the belief that our nation, as a federation of sovereign States, that is the very basis of our freedom. And so, I'll continue to work with all of you. And, again, thank you for letting me participate in this way.

Goodbye.

Governor Thompson. Goodbye, Mr. President, and thank you.

Note: The President spoke at 9:45 a.m. from Rancho del Cielo, his ranch near Santa Barbara, CA.

As printed above, the remarks follow the White House press release.