[Public Papers of the Presidents of the United States: George H. W. Bush (1991, Book I)]
[May 1, 1991]
[Pages 451-456]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks and a Question-and-Answer Session at a Meeting of the Society of 
Business Editors and Writers
May 1, 1991

    The President. Thank you, Jim. And let me say I'm very pleased to be 
here. And I was greeted out here by Sandy Duerr, the president. She 
seemed unfazed by her responsibilities of this awesome group. And I want 
you to know that we presidents must stick together--where is she? 
[Laughter] Randy Smith, and Susan Thomson.
    No, but it is a pleasure, and I appreciate what Jim said there 
because financial reporting, financial news, is very important. It isn't 
always front-page. Look at D1 or E-something or other. But it is 
fundamental, and it's timely. And I'm very pleased that you invited me 
here.
    I've been looking forward to finding a good forum to talk about an 
issue of importance to all Americans: economic growth in America. And 
this is a good one for just that, so that's what I want to do with you 
today.
    At the outset, I am, of course, very pleased that two major banks 
today, following yesterday's action by the Fed, dropped the prime rate 
of interest by half a point, down to 8.5 percent. I think that's going 
to be very good for the economy of the United States of America.
    While experts disagree about the length and depth of the recession, 
we must commit ourselves to policies that will promote growth and 
prosperity into the next century. This administration's economic growth 
package, including our urgent request to extend Fast Track trade 
procedures, can do just that. It can set us on a path toward long-term, 
market-driven economic growth.
    Our administration's growth package begins with control of Federal 
spending. You all know and I know how controversial last fall's budget 
agreement was, that bipartisan budget agreement. But what it did do with 
establishing these caps is to finally put the Federal Government on a 
pay-as-you-go diet. It cut the growth of Federal debt over the next 5 
years by nearly $500 billion. That extra capital--that extra capital can 
help generate new jobs.
    To increase private savings and investment, we've proposed tax-free 
family savings accounts, penalty-free withdrawals from IRA's for the 
first-time buyers. We've proposed cutting the tax on long-term capital 
gains. That would reduce the Tax Code's bias in favor of debt, expand 
incentives to invest, give hope to the small guy, the little guy, the 
small entrepreneur with the big idea. Indeed, it would reinvigorate

[[Page 452]]

the American dream.
    We also want to redouble our efforts on the problem of excessive 
regulation. We all know the strangling effect that red tape and 
overregulation can have on businesses. Every time we write new laws, 
though, the laws require new regulations. Some of these regulations are 
needed, and frankly, some are not. We want to free our people from 
unnecessary regulations.
    The Council on Competitiveness, chaired by the Vice President, 
reviews all major new government regulations to ensure that the 
regulatory benefits outweigh the burdens imposed on the economy. The 
Council will look carefully at everything from the new clean air 
regulations to ways of approving new biotechnology products. We should 
not deny the people the benefits that come from products that improve or 
even save lives.
    I headed the Task Force on Regulatory Reform for President Reagan. 
And I recognize, having done that, that there are legitimate need for 
regulations. But I am worried about this, and I want to be sure--assure 
you, the financial writers of this country, that we are going to do 
everything that we can to have sensible handling of regulations. I don't 
like it when I see more and more pages in the Federal Register devoted 
to regulations. So, yes, we'll do what's right by spelling out 
regulations for the clean air bill or the new child-care bill, all of 
which are important, but I do not want to see us overregulate the people 
or the economy of this country.
    We've also sent up to the Hill--some of you know this, I'm sure--a 
financial industry reform bill. This is a comprehensive package, and it 
will put our financial services system on a sound footing and modernize 
our outdated banking laws. We've proposed reforming the McFadden Act. 
This means letting financial institutions compete across State lines. 
Reforming Glass-Steagle--this would let banks offer a broader range of 
financial services to its customers and in the process, to compete more 
effectively in international markets. And then, reforming deposit 
insurance--return it to its original purpose, which was to protect the 
average depositor.
    Next point, strengthening bank supervision, so that we might be able 
to intervene before banks fail. We've proposed a new way of regulating. 
It's simpler, and I think it will be more effective.
    It's time we brought this banking system of ours into the 21st 
century so that our banks can fuel economic growth. But in order to do 
that, we need comprehensive reform, not just a quick and narrow fix. And 
I'm going to work very hard with the Congress to try to get our 
proposals passed.
    These forward-looking proposals are only one part, then, of our 
vision for a strong and vibrant American economy. Our request to extend 
Fast Track procedures looks beyond our borders--right to the heart of 
the international market.
    In recent years, trade has kept our economy growing. Export business 
accounted for 84 percent--84 percent--of our economic growth last year. 
That's nothing new. Merchandise exports have risen 73 percent in the 
last 4 years--more than twice the rate of import growth.
    Recent, unparalleled growth in world trade has produced huge 
benefits for us. Our free trade agreement with Canada has opened up 
previously closed agricultural markets. I wanted to check my figures on 
the helicopter coming back from Maryland this morning. Just now, I 
called our Secretary of Agriculture, and he told me that our 
agricultural exports to Canada increased 35 percent over the last 2 
years because of this agreement. And we expect the growth to intensify 
as the agreement takes full effect.
    You go back and look at the legislative history--or the free trade 
agreement history, and you'll find many who were predicting a far 
gloomier outlook.
    Our trade strategy is simple: We want to build on the success of the 
Canadian FTA. The United States will continue to lead the world toward a 
system of free trade and open markets. That system makes American genius 
available to the whole world--and give Americans access to the good 
ideas and good products from abroad. Trade means economic growth. Trade 
means jobs for all Americans.
    That's why extension of our Fast Track procedures 
in these trade negotiations is ab- solutely critical. Fast Track lets us 
open up

[[Page 453]]

new markets and new opportunities.
    Fast Track really is another term for ``good faith.'' It means that 
we will consult closely with the Congress. Congress has some 
constitutional responsibilities here. We have been and we will consult 
closely with Congress, and also the private sector during these trade 
talks. It means that we will not tinker with trade agreements worked out 
by our negotiators and their foreign counterparts.
    It gives everyone a fair say in trade talks. It does not take away 
Congress' power to have the final say, to review these trade agreements. 
Congress will have its say. It will have a final vote on accepting or 
rejecting agreements as written, and it will conduct that vote within a 
reasonable period of time.
    It gives the American people a fair say. We will take all the time 
necessary to address the issues that concern Americans. And there are 
some issues that concern Americans, and we have to have good answers for 
those questions, and I believe we do.
    Fast Track lets us treat our foreign counterparts fairly. It 
promises that we will not attach amendments or make changes, since to do 
so could force negotiators to call off talks or start again from square 
one.
    Our trading partners consider Fast Track an essential ingredient for 
successful trade talks. We've had Fast Track authority since 1974, and 
we will need it. And we need to keep it if we hope to pursue these vital 
trade agreements--the Uruguay round of the GATT talks, the North 
American free trade agreement, and of course, the Enterprise for the 
Americas Initiative. Without Fast Track, very candidly, we jeopardize 
those agreements. And we jeopardize trade. And we jeopardize American 
jobs.
    Right now, we have the chance to look forward, to expand economic 
growth, to expand opportunity from the Yukon to the Yucatan. The North 
American free trade agreement with Canada, our largest trading partner, 
and Mexico, our third-largest trading partner, would create the largest, 
richest market in the entire world. Think about it--360 million 
consumers and $6 trillion in annual output.
    A unified North American market would let each of our countries 
build on our strengths. It would provide more and better jobs for U.S. 
workers. It would stimulate price competition, lower consumer prices, 
improve product quality. The agreement would make necessities such as 
food and clothing more affordable and more available to our poorest 
citizens. It would raise productivity and produce a higher standard of 
living throughout the world. And the resulting economic integration will 
strengthen American businesses in the global marketplace.
    Let me just try to illustrate the stakes that are involved in the 
Fast Track debate by discussing the Mexican component of the North 
American free trade agreement. Trade with Mexico has helped both our 
countries. Just 4 years ago, we had a $4.9 billion trade deficit with 
Mexico. And since then, Mexico's President Carlos Salinas has slashed 
tariff rates. He came in determined to shake things up in Mexico and 
he's done a great job at that. He slashed the tariff rates. Our exports 
to Mexico have increased nearly 130 percent to $28 billion, and our 
trade deficit has shrunk two-thirds to $1.8 billion.
    This export boom has created an estimated 264,000 new jobs in the 
United States. And each additional billion dollars in exports creates 
nearly 20,000 new jobs here in the United States. And meanwhile, the 
trade boom has offered new opportunities for Mexican workers. It's 
offered prosperity to those who before had lived in squalor.
    Some people are concerned about these negotiations with Mexico. And 
just this morning--in the spirit of working closely with Congress, which 
I am determined to continue--we sent a detailed report to Chairman Lloyd 
Bentsen of the Senate Finance Committee; to Congressman Dan 
Rostenkowski, the chairman of the Ways and Means Committee; and to the 
majority leader, Richard Gephardt, who, incidentally, has just come back 
from Mexico. And I believe that this letter and our report responded to 
the concerns, the understandable concerns, that they have raised. I gave 
them my personal commitment to close bipartisan cooperation in the 
negotiations.
    While economic studies show that a free

[[Page 454]]

trade agreement would produce jobs in the United States as well as 
greater exports and output, I know that there's a concern--not just on 
Capitol Hill but in many of the labor halls around this country--about 
job loss. And our negotiators will address these concerns in provisions 
of the North American free trade agreement. We will ensure an adequate 
transition period for workers in import-sensitive industries. We will 
work with Congress to see that dislocated workers receive proper 
assistance and retraining. I believe we have the answers to the 
questions that are being raised by the labor unions and by some on 
Capitol Hill.
    At the same time, it is worth noting that the agreement will create 
high-wage, high-skill manufacturing jobs in the machinery, computer, 
telecommunications, and electronic industries. As Mexico develops 
further, it will need even more of these high-tech goods and services. 
Those goods and services are more likely to come from the United States 
than from anyone else in the world.
    And secondly, President Salinas and the Mexican people have no 
interest in allowing their country to become a pollution haven for U.S. 
companies. Because economic growth goes hand-in-hand with environmental 
protection, we will expand environmental cooperation programs parallel 
to the free trade talks. I can assure you, having dealt with him and 
talked to him quite recently in Houston, Texas, on this very problem, 
that President Salinas is deeply concerned about the problems facing the 
environment. He has already ordered shut down the major pollution 
refinery, the PEMEX refinery, in Mexico. And that is strong evidence of 
his good faith because he had to take on some very powerful people to 
make that happen.
    I will share with you a story that maybe some of you heard me refer 
to before, but it made a real impact on me when we were talking about 
the environment. And he says that when the schoolchildren around Mexico 
City, where they have that high smog content--when the schoolchildren 
paint the sky, they don't show the stars. They paint it gray or black. 
And they can't see the stars. And he said, ``My ambition is that these 
young children in Mexico will paint in the stars.'' And I think that 
says, as emotionally as I could possible say it, something about this 
man's commitment to doing something about the environment.
    And so we are concerned, but we believe that the environmental 
cooperation programs that we have in mind and that we've discussed with 
him can satisfy anybody who's reasonable on this question.
    And finally, President Salinas has also made it clear that this 
agreement will improve opportunities for Mexican working people. Mexico 
has strong laws regulating labor standards and workers' rights. Beyond 
those, we will also begin new initiatives to expand labor cooperation 
between our two countries.
    None of these things will happen, though--none of this can happen if 
we cannot bargain in good faith. If the Fast Track procedures that we 
have employed for 17 years--Republican and Democrat administrations 
alike--suddenly are withdrawn or weakened, the United States must 
continue to open new markets, create new technologies, and seize new 
opportunities before us. I am confident, and so are the American people, 
that we can and will prevail in this exciting and challenging world. And 
I am confident that as we head into the next century--the next American 
century--a strong and healthy America will lead the way.
    Thank you all very much for listening and having me over to this 
most prestigious forum. I'm delighted to have been here. Thank you all.
    Moderator. Thank you, Mr. President. We understand you'll take a 
couple of questions.
    The President. That's his understanding, not exactly mine, but go 
ahead. [Laughter]

Japanese Trade With Mexico

    Q. As you know, the Japanese do a lot of low-cost manufacturing in 
Japanese assembly plants in the maquiladora system right now. Have the 
Japanese expressed any concerns that the U.S.-Mexico trade agreement 
might cut them off from Mexico and----
    The President. I've talked trade with Prime Minister Toshiki 
Kaifu, and it did not come up in our discussions. But whether

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that's been represented to our trade negotiators, to Ambassador Hills, 
or others, I simply don't know the answer to your question. I'm sorry. 
They shouldn't be worried about it. I mean, there will be new factories, 
new markets, new products. I mean, I don't think they should worry about 
that.

Fast Track Authority Extension

    Q. In addition to the concerns about the environment and displaced 
workers, a lot of small manufacturing companies in this country who are 
suppliers to big assemblers are concerned. What advice have you sought 
and obtained from such companies in devising your strategy for dealing 
with Congress towards the Fast Track approval?
    The President. I don't know about individual companies, but our 
dealing with the trade organizations has gotten strong support from the 
small business groups--National Federation of Independent Businesses, 
and other groups as well. And so our dealings, at least the White House 
dealings, have mainly been with these organizations that represent the 
smaller businesses. But perhaps our trade negotiators themselves have 
been in touch with individuals. I just don't know. I know when we were 
in Mexico we met with some Mexican business people and American business 
people. Some of them were very large businesses, but there were some 
small businesses involved there, and we got their input. But whether 
there's a concerted effort to approach all these companies, I'd have to 
leave that to the Departments to give you the answer.

Mexico-U.S. Relations

    Q. Mr. President, critics of the proposed free trade agreement with 
Mexico have cited their concerns over environment, labor laws, and 
possible job losses in this country--all of which you have addressed 
today and responded to. I think there may be an area that's sort of been 
given short shrift. Every year $1 billion-worth of stolen cars, trucks, 
and airplanes are transported to Mexico. Yet Mexican officials are doing 
nothing to stop this illegal trafficking and may, in fact, be thwarting 
efforts to stop it. Don't you think it may be a little inconsistent for 
this country to further open its borders with Mexico while such chronic 
and basic law enforcement problems exist and aren't being dealt with?
    The President. No, I don't think so. I think that problems like 
this, problems of illegal drugs, that you could have mentioned and 
didn't, that are coming across the border that concern our citizens need 
to be solved. There's no question about it. But I think a more 
prosperous Mexico and a more prosperous border on the United States side 
would be one antidote--would be one thing that would be helpful.
    But, look, we have got to enforce existing laws. We have got to do 
better in terms of interdiction. And I think we are. And one of the 
reasons we are doing better is that in this administration under 
President Salinas we are getting--I think most of our law enforcement 
people would tell you--superb cooperation.
    Now, having lived in Texas, why, I know that it's not--we face some 
of the same problems along our border that Arizona does. And so I would 
say that they ought not to use the existing problems to hold up--
problems of crime going across borders, or border brutality, or drugs 
coming in--to hold up an important trade agreement.
    And if, indeed, this does benefit the people of Mexico, and if you 
then have a little higher standard of living along the Mexican side of 
the Mexican border, I would argue with my critics that this would be a 
sure-fire way to reduce illegal exit or crime or whatever.
    That's the way I'd respond to it. But I don't want you to think from 
the answer that we are unconcerned about the violations of the law.
    Last one. Here we go.

The Economy

    Q. You have fought very hard to lower the interest rate as a way to 
stimulate the economy. Yet two million more people are unemployed this 
year than last year. And the construction industry is not doing any work 
at all. People can't borrow money because they're overextending from 
their small savings already. How can just dropping the interest rate get 
us out of a reces-

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sion if----
    The President. In the first place, I think we're going to be coming 
out of the recession, particularly with this drop in interest rates. So, 
I would argue with the people that disagree that we will. Most of the 
indicators--I think most of the economists, most of the blue-chip 
forecasters agree with what I've just said.
    Secondly, I think dropping interest rates is the best way to 
stimulate economic growth and to create new jobs and new opportunity. 
Remind me what was the predicate again--that two million----
    Q. The fact that two million more people are unemployed--we can't 
seem to stimulate the economy no matter what the industries are. And 
people are already too heavily in debt in this country.
    The President. New jobs is the answer, isn't it, then, to those that 
don't have a job. And the way you get new jobs is you go for a growth 
agenda like I tried to answer here today. And we will come out of this 
recession, which isn't, fortunately, as deep as some in the past, and 
when we do come out of it you're going to see growth. And growth is 
going to create new jobs. And that two million or whatever the figure is 
will decline. I'm absolutely convinced of it. That's what's happened in 
every other recession.
    And so the unemployment figures--anytime it's--my view is--they 
always ask me, what's acceptable unemployment? For the guy who doesn't 
have a job, nothing. No percentage is acceptable. I will say, 
historically, the unemployment figures have been a lot worse in this 
country. And when the recessions that they were part of ended, people 
went back to work in large numbers. So, I think the best answer for hope 
for the people that are unemployed lies in economic growth, new 
opportunities.
    Q. When do you predict the end of the recession?
    The President. I can't give you an exact time. But would you settle 
for a general ``sooner rather than later''? [Laughter] Because it's 
going to--wait until you see the effect of these rates. I mean, I don't 
really know the answer to your question. And if I did, I wouldn't tell 
you because the last thing a President needs to be doing is predicting 
interest rate levels or levels of where the stock market ought to be, or 
something of this--I just couldn't get into it. But I do--I believe, as 
do most of the forecasters, that the recession will not be a long and 
deep recession. And I think I'd go with the average of the blue-chip 
forecasters who seem to indicate that we'll be out of it fairly soon. 
But I've got to stop short of a definitive date.
    Thank you all very, very much.

                    Note: The President spoke at 12:07 p.m. in the 
                        Ballroom at the Washington Marriott Hotel. In 
                        his remarks, he referred to Jim Kennedy, Sandy 
                        Duerr, Randy Smith, and Susan Thomas, secretary, 
                        president, vice president, and former president 
                        of the Society of Business Editors and Writers; 
                        Vice President Dan Quayle, Chairman of the 
                        Council on Competitiveness; Secretary of 
                        Agriculture Edward Madigan; President Carlos 
                        Salinas de Gortari of Mexico; Senator Lloyd 
                        Bentsen; Representatives Dan Rostenkowski and 
                        Richard A. Gephardt; Prime Minister Toshiki 
                        Kaifu of Japan; and U.S. Trade Representative 
                        Carla A. Hills.