    [Public Papers of the Presidents of the United States: George H. W. Bush (1991, Book I)]
    [April 9, 1991]
    [Pages 350-353]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks at a Meeting of the American Business Conference
    April 9, 1991

        Thank you very, very much. And, Bob, thank you, sir, for that
    introduction and for letting this distinguished group use this meeting
    room today. It's always a pleasure to be back here. Let me also salute
    the ABC's leader, Jim Jones. What a job he's doing. But I remember his
    effectiveness in the leadership role in the Congress, and I'm glad that
    those energies that he has are being used and shared by all of you. We
    have many distinguished visitors with us today, and I won't single them
    out. I was told that Bill Seidman and Richard Breedon were here. But as
    I look around, unless they're basking way back in anonymity somewhere,
    they may not have made it.
        But in any event, I'm delighted to see this group. Great to talk to
    the American Business Conference. We did a little homework on this, and
    I've been here four times in recent years. And then, of course, we're
    privileged to have two of your own with us in the administration, Bob
    Mosbacher and Arthur Levitt. And it's an honor and a pleasure to, as Bob
    says, talk to a group that stands for success--a group that admits only
    medium-sized companies that thrive in the marketplace. But I've got to
    tell you, I feel a little funny being here. After all, I'm the CEO now
    of an outfit that's lost money for 33 of the last 35 years. [Laughter]
        But in keeping with today's theme--charting economic growth in the
    nineties--I'd like to talk about our administration's plan for
    generating more American success stories like your own. Our recent
    success in the Gulf has renewed Americans' belief in themselves. In just
    the past couple of months, consumer confidence has soared. And the stock
    market, of course, has been climbing toward that 3,000 mark. Most
    economists predict that the recession soon will give way to a new cycle
    of growth. And, incidentally, we agree with that assessment, inside.
        But we can't rest on our laurels. There's an entire world of
    competition out there. The administration's economic growth package is
    designed to let people like you do what you do best--create jobs, create
    new opportunities, create wealth.
        Let's start with an issue that we all have to address in the next
    month. And I think Bob just talked about it; Jim has been participating
    in a meeting with me in the Cabinet Room at the White House about it--
    I'm talking about the issue of free and fair trade. As you know, I have
    asked Congress to extend the Fast Track trade authority.
        Fast Track, in my view, is another term for good faith. It
    guarantees that Congress will accept or reject the very same agreements
    that our negotiators and their counterparts have worked out. And this
    doesn't weaken the Congress' power to review agreements; it simply
    prevents eleventh-hour changes that would force negotiators from all
    countries to start over, to start from scratch.
        Our trading partners consider Fast Track a vital test of our
    reliability. And if we do not retain the Fast Track process, we
    jeopardize three critical foreign trade initiatives: the Uruguay round
    of trade talks, the North American free trade agreement, and the
    Enterprise for the Americas Initiative.
        Americans understand the benefits of free trade. In the last 4
    years, exports from the United States have increased 55 percent, more
    than twice the rate of import

    [[Page 351]]

    growth. And export business has grown more rapidly than the rest of our
    economy. This trade boom has helped everyone involved. A North American
    free trade agreement would place us in the largest integrated market on
    Earth: 360 million people, $6 trillion of annual output. It would also
    give our neighbors access to the technologies and products that they
    need to improve their standards of living, further clean their
    environments, and create a true community of nations on our continent.
        We also believe strongly in promoting trade. I have asked Bob
    Mosbacher to lead a governmentwide effort to help small and medium-sized
    companies sell their goods and services abroad. I know you support free
    trade, which is why I want to help you in persuading Congress to extend
    the Fast Track process. Without it, we will surrender our chance to
    shape the emerging world economy. Without it, we risk setting off the
    kind of protectionist warfare that helped produce the Great Depression.
    And with it, American workers and businesses will be able to demonstrate
    their strength in a new and vibrant world market.
        Let me say that we are approaching this Fast Track process on the
    Hill in a totally nonpartisan manner. The Democratic leaders, several of
    the key Democratic leaders, are as enthusiastic about this Fast Track
    authority granting as I am. And we're approaching it strictly because we
    believe that it is best for the United States of America. And I also
    know that it's good for our trading partners as well.
        This brings me, then, to a second part of our growth package:
    creating an educated, innovative work force. Our budget emphasizes the
    importance of building an America that is ready to take its place in an
    emerging world economy. It stresses the absolute necessity of an
    educated nation. We want to reinvent the American school, to create a
    nation of students, to make sure that education offers opportunity to
    everyone.
        Our education strategy starts with some very obvious truths: that
    schools succeed when teachers teach; when parents support the schools;
    when schools accept help from people with skills--local businesses,
    community colleges, that huge pool of untapped talent, our retirees;
    when communities fight harder to rip down barriers that prevent
    effective teaching, barriers such as crimes and drugs and community
    indifference.
        And we also want to encourage entrepreneurship in education. We will
    support research into the best teaching methods and techniques. We want
    to help workers improve their knowledge and skills. Your Vital Link
    program offers a great way to achieve this goal. And we want to ensure
    that the American people are the best educated, best motivated in the
    entire world.
        Our economic proposals also sweep away obstacles to free enterprise.
    What we're trying to do--we're trying to unleash the power of American
    imagination.
        Your organization understands, I'd say better than most, that
    runaway government spending steals opportunity from private citizens.
    Last year's budget agreement--controversial though it was--placed real
    and stringent caps on congressional spending. If Congress wants to spend
    money now, more money on certain programs, it'll have to make the hard
    choices. It'll have to raise taxes or take the money from other
    programs.
        This year, for the first time in years, Federal spending will
    actually increase less rapidly than the inflation. And I can promise you
    that if Congress sends me these spending bills that break this budget, I
    will send them back, with a veto message.
        But there's lots more to do. We in government must do more. As Vice
    President, I headed the Task Force on Regulatory Relief. And as
    President, I remain committed to weeding out regulations that prevent
    people from creating jobs and opportunities. I see some know what over-
    regulation means. [Laughter] But we're going to continue to do this, and
    we must. Last year regulations--here's why--last year regulations cost
    the economy at least $185 billion, or $1,700 for every taxpayer. The
    Government generated more than 5.3 billion hours of paperwork last year.
    And that's enough to keep 2 million people busy doing nothing but
    filling out forms.
        Our Council on Competitiveness, as chaired by Vice President Quayle,
    attacks the scourge of unnecessary regulation. We want to let people
    turn their attention to

    [[Page 352]]

    the more important and rewarding work of building a prosperous future.
    We've followed the same approach in looking at our Tax Code. We want a
    tax system that rewards enterprise. I have repeatedly asked the United
    States Congress to cut our high capital gains tax. And I can't think of
    any issue that's been more badly misrepresented than this one. Our
    critics say that a capital gains cut helps only the rich. And in my
    view, they are dead wrong.
        Here are the facts on it. More than a quarter of all families who
    file capital gains have annual incomes of less than $20,000 a year. More
    than three-quarters of all families who declared make less than Members
    of Congress. A capital gains cut isn't a sop to the rich. It rewards
    people who turn good ideas into goods and services--goods and services
    that people need.
        When taxes on entrepreneurship are high, investors have no incentive
    to risk money on untried businesses and entrepreneurs. Before Congress
    cut the capital gains rate in 1978, the pool for start-up businesses had
    virtually dried up. And after the cut, we experienced an investment
    boom. Between 1978 and 1986, the number of initial public offerings
    increased nearly 1600 percent, from 45 to 719. The amount of investment
    seed money increased nearly a hundredfold, from $250 million to $22.5
    billion. Capital gains payments to the Federal Government quadrupled.
    This is what happens when you reduce the cost of capital.
        We must encourage savings and discourage debt. And for the past 4
    years we've taxed capital gains like any other form of income. And at
    the same time, we have encouraged people to take on debt. Not
    surprisingly, people have borrowed more and invested less. Home equity
    lines of credit offer a perfect example. These devices, which let
    homeowners borrow against their increased home values, have nearly
    tripled in volume since tax reform.
        No other major industrial power taxes capital gains at nearly the
    rate we do. Germany and Japan enjoy much higher savings and investment
    rates in part because they don't punish successful investment.
        My point is simple: Taxes on growth are taxes on the American dream.
    We should clear away obstacles to the American dream. And similarly, we
    should foster innovation wherever we can.
        Our budget advocates increased Federal support for R&D, for research
    and development, in basic and applied science. It also encourages
    private-sector innovation by extending the research and experimentation
    tax credit. Our administration understands the power of knowledge, and
    we want the Tax Code to reward people who turn their big dreams into
    revolutionary new goods and services.
        And finally, this administration believes in protecting workers'
    earnings and savings. Our banking reform proposals--they try to
    modernize the laws that affect our banking system. Let's face it: 1930's
    regulations and restrictions don't cut it in the 1990's.
        To pick just one example, under our current laws, a California bank
    can open a branch in Birmingham, England, but not in Birmingham,
    Alabama. Think of the banking system as an irrigation network for the
    economy. When it works properly, it nourishes the seeds of economic
    growth. And when it doesn't, companies like the ones represented here
    can wither and die. Our reform package tries in a very comprehensive way
    to make our banking system more competitive, up to date, safe and sound.
        We also believe in protecting retirees from undue hardship. Eight
    years ago, Congress adopted measures to guarantee the short-term
    solvency and long-term stability of the Social Security system. Congress
    should resist any temptation to undermine that stability by permitting
    raids on the trust fund balances. We need to honor our promises to the
    workers and retirees. I know we've got a fight on this one. But I
    believe we're going to prevail.
        I know I have covered a lot of ground, touching on a lot of
    different issues here, but I wanted to make a point. Our growth package
    addresses the challenges posed by a new, exciting, rapidly changing
    world. Our themes: We want to promote growth. We want to create jobs for
    all Americans. We want to unleash the power of American imagination. We
    want to ignite people's ambitions, rather than inciting their fears.
        Many people call the 20th century the American century. Well, we
    shouldn't be

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    content with that. The stunning collapse of communism in 1989 was no
    accident. During the 1980's, the Communist world learned that no wall,
    no barrier can fend off powerful ideas. It saw our prosperity and our
    vitality. It saw that our way is better. The prosperity of the 1980's,
    which began with tax cuts and progrowth policies in the United States,
    transformed the entire world. Our challenge now is to shape the
    revolution that we started to make the 21st century the next American
    century.
        And so, I ask your help in that quest. Together, with business
    working cooperatively with government, we cannot fail.
        Thank you all very much for coming to Washington. And may God bless
    our great country.

                        Note: The President spoke at 2:07 p.m. in the Great
                            Hall at the Department of Commerce. In his
                            remarks, he referred to Secretary of Commerce
                            Robert A. Mosbacher; James R. Jones, chairman of
                            the American Business Conference; L. William
                            Seidman, Chairman of the Federal Deposit
                            Insurance Corporation; Richard Breedon, Chairman
                            of the Securities and Exchange Commission;
                            Arthur Levitt, nominee to the Defense Base
                            Closure and Realignment Commission and founder
                            of the conference; and Vice President Dan
                            Quayle, Chairman of the Council on
                            Competitiveness.