[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

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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

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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.