[Public Papers of the Presidents of the United States: George H. W. Bush (1992, Book I)]
[June 19, 1992]
[Pages 978-985]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks and a Question-and-Answer Session With the Industrial League of 
Orange County in Irvine, California

June 19, 1992
    The President. Thank you, Reed, very much. Please be seated. I was 
riding over here today with Senator John Seymour, our outstanding 
Senator in Washington who's fighting a good battle for everything those 
of us interested in business believe in, and he told me I was walking 
into the most influential group of people in Orange County. I want to 
just say to Reed Royalty, thank you, sir. To the Mayor, Sally Sheridan, 
I'm pleased to be back on her turf. I want to salute the other Orange 
County mayors.
    And I would single out once again my good friend Senator Seymour, 
who's out here some place. And let me just say this is supposedly 
nonpolitical, but I want to see him return to the United States Senate; 
let's get it right up front. While we're at it, if we are going to move 
the growth and opportunity agenda forward, we must select Bruce 
Herschensohn, and so permit me yet another partisan plug. Both of them 
have earned it, deserve it, being in the United States Senate. And we 
need their leadership and support.
    Now, Todd Nicholson and everyone from the Industrial League, the 
Orange County Forum, the many leaders of the local chambers of commerce 
who helped with this event, my sincere gratitude to you. You had one 
week, and look at this, it's unbelievable. I'm glad to be here with so 
many businessmen and businesswomen. Forty years ago I did start a 
business and that made me, I think, have some sensitivity and 
understanding what it means to take risks, to meet a payroll, and to add 
to the productivity of this great country.
    I'm proud to work with three solid, strong leaders, not only for 
Orange County but for this country. Two of them are here, and I'm 
talking about Members of the House. My dear friend ``B-1'' Bob Dornan is 
not here, regrettably, but he's a good friend, and he's a champion of 
American values. But Chris Cox is with us, and he

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embodies the entrepreneurial spirit here today, and he's pushing great 
new ideas like turbo-enterprise zones. I salute him. And Dana 
Rohrabacher I'm told is here--I'm having a little trouble with the 
lights--but anyway, he is a stalwart advocate of reform, too, fresh off 
his surfboard. [Laughter]
    All three of these Congressmen--the point I want to make is this: 
All three of them stood solidly with me in the fight to do what the 
American people want, to pass a balanced budget amendment to the 
Constitution. And we are not going to give up that fight. That will 
discipline the executive branch, and it will discipline the United 
States Congress. And it will facilitate the day when we can get done 
what the American people want and are properly demanding: the 
elimination of these deficits that are mortgaging the future of our 
children.
    Today I want to talk about our Nation's transition into the post-
cold-war era and what this means to a competitive economy. Three days 
ago I met there at the White House with Russia's freely elected 
President, Boris Yeltsin. It was indeed an historic meeting. We rejoiced 
at the new breeze of freedom that has swept the entire globe, scattering 
the last dust of that grim totalitarianism. And we spoke of the dreams 
that we share for our people, the American people, the people of Russia. 
It really was an extraordinary moment in history.
    We stood next to each other in the Rose Garden and together 
announced the most sweeping nuclear arms cuts in history, reductions far 
deeper than we could have hoped for even 6 months ago. And in the 
process we will eliminate the most destabilizing weapons of all, those 
that terrify mankind the most, those multiple-warhead ICBM's. Russia 
will eliminate all 308 of those giant ICBM's, those SS-18's which alone 
carry more than 3,000 warheads. Each one of those warheads aimed at the 
United States, each one of them is more than 10 times more powerful than 
the bomb dropped on Hiroshima. That means that you and I will no longer 
fear for our children and grandchildren the threat of nuclear war that 
plagued us all for 40 years.
    I know people in Orange County love politics, but I wish you could 
have seen Boris Yeltsin at work with the crowds and the people and the 
waving. We took him out on the Truman Balcony just before he left. I 
said, ``I want you to see how a President spends some time,'' because we 
had the Presidential scholars out there on the lawn. No sooner do we get 
to the balcony and all of them were facing the other way. I really 
wanted him just to see the event. The next thing I know, he was waving 
so vigorously they all left the event, turned around, and came up, and 
he was greeting them like a long-lost brother. This guy really has a 
flair for public opinion, I'll tell you. But it says something. He was 
elected democratically. He came here as the first democratically elected 
leader of Russia, and the American people understood that and gave him a 
warm welcome.
    But now with the cold war behind us, we have that freedom to focus 
more resources and more talent on the concerns that trouble us at home. 
And with the new partnership of peace we forged with Russia, we have the 
chance to expand trade, and that means then creating jobs and 
opportunities for Americans that will benefit both of our nations in the 
process.
    While we look ahead to these exciting new horizons, there is one 
critical element that we must never forget: The cold war is over, but we 
still need a strong deterrent. Our requirements are changing, but the 
need will never disappear. Look at the threat posed by global 
instabilities, by terrorists, by renegade regimes looking to get control 
of sophisticated weapons. We must continue to invest in military R&D, 
and we will.
    And in order to keep the peace, I make you this pledge: As long as I 
am President of the United States, I guarantee you that our country will 
remain the strongest country on the face of the Earth. We owe that to 
our children. Who knows where the next difficulties will crop up. And 
it's only the United States, only our country, that can lead for 
democracy and freedom.
    The new challenges we face in the post-cold-war go beyond world 
security. There are still pioneer days ahead. At one point in the movie 
``Awakenings,'' a fellow who's been asleep for decades finally wakes up 
and has the whole world in front of him.

[[Page 980]]

When his doctor asks him what he wants to do that day, his face breaks 
into a huge grin, and he shouts, ``Everything!'' That is the spirit that 
we need to call up right now, that purely American belief that America's 
future knows no limits.
    I am tired of all the pessimists in this political year telling us 
what is wrong with the United States of America. I'm tired of it. The 
fact is we're entering a different economic world than the one we grew 
up in. William Jennings Bryan captured the bold spirit which will lead 
us to success when he said, ``Destiny is not a matter of chance; it's a 
matter of choice. It's not a thing to be waited for; it's a thing to be 
achieved.'' The world economy of the 21st century will be a new age of 
American competition in a fiercely challenging global marketplace. And 
we simply have to make some changes if we expect to compete.
    First, we have to realize the intensified need for sophisticated, 
well-educated workers. The worldwide high-tech explosion will leave us 
behind unless we literally reinvent American education, make our schools 
the best in the world, to turn out the best prepared workers in this 
world. To do this, let's borrow a page from business. I want to bring 
competition into our schools through ideas like school choice. Parents 
should have the right to choose their children's schools. And beyond 
that, I'll use every resource I can to pave our way into the future.
    Our national technology initiative brings Government officials 
together with private businesses to let them know what Government can 
offer in technology. This moves new discoveries out of the Federal 
laboratories into the marketplace to save existing jobs and create new 
jobs.
    Today, for example, I'm announcing an important regulatory change 
that will help many companies with defense-related businesses make the 
transition to the post-cold-war era. One unnecessary obstacle has been 
what they call the recoupment fee or tax, if you will, that DOD charges 
on military and commercial products sold to customers other than the 
U.S. Government. These fees hurt American workers by making it more 
difficult for them to compete for business here and abroad. Given the 
historic changes we've seen during the last year, this burden is no 
longer justified. And today, I am directing my Secretary of Defense to 
take what actions he can to eliminate these fees.
    I will continue fighting for American jobs by encouraging trade and 
opening markets abroad. You know how vital that is since America is the 
world's leading exporting nation. And California leads America, 
accounting for one of every 8 U.S. export dollars, one out of every 8 to 
California. Just last year, a 13-percent increase over 1990, this State 
exported over $50 billion in goods, creating jobs up and down this 
golden coast. I will keep pushing for the North American free trade 
agreement. And some say NAFTA will cost jobs, and they are dead wrong. 
It will lower trade barriers, and it will establish one of the biggest 
and richest markets in the world with the potential of creating hundreds 
of thousands of jobs.
    For the long term, Washington must have the courage to make hard 
choices. The Federal Government is too big, and it spends too much. It 
is time that the Congress woke up and listened to the American people. 
Most Americans believe as I do that the only way to discipline both the 
executive branch and the Congress is a constitutional amendment to 
balance the Federal budget. For years I've called for just such an 
amendment because to ensure long-term economic growth, we must get the 
Federal spending under control.
    Now, I have a detailed plan before the Congress right now. It is up 
there. I brought along a copy just to show it to you. You might not have 
read much about it in this strange year out there. But the way it does 
it is the only way that the budget can be brought under control, and 
that is to control the growth of the mandatory programs. And it does it 
without raising taxes on the American people or on American business. 
Here it is in considerable detail. But we need, again, the discipline 
and the sense of urgency that the balanced budget amendment will bring. 
And while I'm at it, I would like to ask the American people this fall 
to give me what 43 Governors have, the line-item veto, and let the 
President have a shot at getting spending under

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control.
    Nationally, our economy is recovering. Some good fundamentals are in 
place: low interest rates, low inflation, exports are strong. But in 
California, as everyone in this room knows, it is a challenging time. 
It's been a tough time. But you've risen to the challenge before. In 
particular, as the Defense Department downsizes, you face adapting from 
a military to a competitive civilian market. It's tough for companies 
and employees, but remember: Our Nation's economy is the most productive 
in the world. Together, we're going to use our strengths to bring back 
growth and opportunity right here to Orange County.
    For 200 years, our prosperity has sprung from our ability to 
innovate, to create, to change as the world changes. And now is your 
time to shape your own identity in an evolving economy. That's the heart 
of what we call entrepreneurial capitalism, a heart that I still hear 
beating in Southern California. This area is like an R&D lab for the 
whole country.
    All around us are marvelous examples of the technological transition 
from the cold war to the era of global economic competition. We will 
depend upon companies like many in Orange County who still develop and 
use technology that was begun for defense. I've seen examples here of 
some remarkably creative thinking. During the cold war, the military 
funded the development of many new manufacturing techniques. And now 
you're demonstrating astounding innovation by turning systems developed 
for national defense towards the commercial market, worldwide, I might 
add.
    Right here, Hughes Aircraft is applying the military's global 
positioning satellite system to a new procedure controlling shipping 
traffic along our coastal waters. McDonnell Douglas, their SDIO-funded 
Delta Clipper program will dramatically reduce the costs of reaching 
into orbit. This will ensure that we lead the world's commercial 
aerospace industry. Rockwell is developing ways of using SDI's high-tech 
offshoots to give us smart cars and smart freeways and breaking gridlock 
on our highways. Now, that's got to be good news for Southern 
California. To them I say: Hurry up.
    The more closely we look at these companies, the more we understand 
why they're thriving. It's because they are able to adapt and they're at 
the cutting edge of the post-cold-war era, transforming this world into 
a productive peace. Defense conversion puts Orange County back in the 
business of job creation, a skill that you mastered in the eighties with 
the high-tech start-ups that made this area famous. And now you're 
redefining it for the nineties. Here, job creation doesn't mean job 
training. Your workers are already the most qualified in our labor 
force. What they need is opportunity. And if we give a budding 
entrepreneur a chance, he'll bring training, experience, and old-
fashioned American hunger to his own business and create jobs for 
dozens, maybe even hundreds of fellow workers.
    Venture capital regrettably has dried up. And so we must take action 
to get it flowing again. And so I am going to keep pushing Congress to 
slash the capital gains tax. They can call it a tax break for the rich, 
and I call it job opportunity for those that need jobs and need work. 
I'm going to keep pushing the Congress to make the research and 
experimentation tax credit permanent. As a Nation, this is how we must 
support our risk-takers, for their vision of today will be our future of 
tomorrow. We must bequeath to the next generation the legacies that 
define our future: strong families, good jobs, and world peace. As a 
Nation, we will chart a course to guide America into the new century 
where confidence and self-reliance produce greatness. I believe we're 
going to find that greatness.
    I am delighted to be here. I appreciate this marvelous turnout and 
this warm welcome. Thank you all very much. And may God bless the United 
States of America. Thank you very much.
    Be glad to take some questions out there.
    Moderator. The President has graciously agreed to answer some of 
your questions for a few minutes. So what questions do you have?
    The President. You've got to yell so I can hear you. Yes, ma'am?

Multilateral Trade Negotiations

    Q. [Inaudible]

[[Page 982]]

    The President. The question is, how do we move forward the GATT, or 
what's the opportunity for it. As you know, the major stumbling block to 
a successful conclusion in the Uruguay round has been agriculture. We 
have had difficulties with the EC, particularly on agriculture. We are 
pushing to get this done, certainly to get it all but done before I go 
to Munich for the G-7 meetings.
    This woman has put her finger on something that is vital, not just 
for the American economy but to Third World economies all over the 
world: the knocking down of these barriers. Because it is my belief that 
we can compete with anybody provided the playing field is level. So 
we're going to keep on. The stumbling block is agriculture. We still 
have some property rights differences. But I believe we'll get a deal.
    The question is, how soon. We have pushed on it. We've had meetings 
recently with the EC ministers. I am now pressing for an EC ministerial 
before the Munich summit. I can't predict to you that GATT will be 
concluded before the G-7 meeting in Munich, but I am hopeful that then 
or shortly thereafter we will finally conclude a GATT deal. It is in our 
interest. There's a lot of special interest in various categories that 
are going to fight whatever agreement we get, but no longer should we be 
a protected society. We want to be the most competitive and the most 
productive society, and the way to do that, I think, is to knock down 
the barriers to our trade and just watch us move.
    And so, we'll keep pushing on it. You want to put this in terms of 
benefiting the Third World, incidentally, I can't think of any action 
that would help them more than freer and fairer trade. The best answer 
is not these ever-increasing aid programs but trade. And that's all tied 
up in GATT. So we'll keep working on it. And we keep plugging away on 
knocking down the agricultural barriers that really have been holding up 
the GATT.
    Yes, sir.

Budget Rescissions

    Q. [Inaudible]
    The President. We've tried that on the rescission. And we've sent 
them up there. The Justice Department advises me that the President does 
not have the power that I wish he had. So I also have to be somewhat--
well, I have to be very diligent in safeguarding the Presidency. But I 
don't believe that that power exists, but if I can get an opinion from 
Justice, on whom I depend for these legal matters, to say, okay, it's 
all right on this particular piece of legislation for some reason, then 
I'd like to try it because I really believe the President should have 
it.
    I am not told by our experts that that inherent power lies in the 
Presidency. I don't know that Bob Dole feels that it does, either. What 
I think he'd like to find is what I'd like to find, is a case to test it 
without doing violence to the protection of the office. So we're going 
to keep pushing.
    In the meantime, though, we have tried the rescission route. What 
I'd like to see is a repeal of the impoundment bills that were put into 
effect in the seventies which really removes from the President the 
right to control spending. And I think we need that, particularly when 
we're operating at these big deficits. But that's the way I'm 
approaching it, and I hope like heck we can find a case to test this in 
the courts, one that my top attorney at Justice, Attorney General, says 
is okay to do.
    Who's next? Yes, ma'am.

Federal Industrial Policy

    Q. I just returned from a study trip to Japan and Singapore, and we 
met with some of the top officials of companies and also the government. 
In both cases the government really plays an active role in helping 
technology-based companies focus their R&D, focus their technology 
directions and, as a result, position Japan and Singapore to be very, 
very strong players in the technology-based business. It seems to be--
[inaudible]--somewhat in the United States in terms of that policy. What 
are you going to do?
    The President. We spend $90 billion in the United States in the 
Government level on research and development, $90 billion. What we don't 
do--and you're correct, some of the Asian countries do do--is target. I 
do not believe in what is known as

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industrial policy where the Government decides which businesses are 
winners and which businesses are losers. I don't believe in that.
    I came out of a business background. I believe that the market 
should set these goals and targets, not the Government. But we do have 
an enormous bunch of research that will benefit certain industries. And 
that is correct because what we've done is use that in terms of 
Government service, and now what we're saying is let's open up this lab 
technology and let it spill forth into the private sector. So some 
industries will benefit, but I am going to stop short of an industrial 
policy. I am going to stop short of the targeting that, for example, 
MITI--I think you're probably referring to the MITI minister, what those 
officials do in Japan. It has worked hardship on some of our businesses, 
but I don't think that makes the policy correct.

Capital Gains Tax

    Q. I'd like to see a lower capital gains tax rate, not across the 
board, that would benefit speculators in real estate and stocks; I'd 
like to see a lower capital gains tax only on securities newly issued by 
companies, large or small, equity or debt. This would reduce their need 
for bank loans, allow them to raise capital at a more advantageous rate, 
expand facilities, employ more people, and compete better in the world 
marketplace.
    The President. I can understand that, and I'd rather have that than 
nothing. But I'd rather have the broader application to capital gains, 
and let me give you a good reason as it relates to Los Angeles. Peter 
Ueberroth is undertaking an assignment to try to bring private business 
into the heavily impacted urban areas. It is his belief, and I agree 
with him, that if we can get a broad elimination in these areas of 
capital gains that that would serve as a magnet to entrepreneurs to 
start new businesses.
    So what you suggest may be the way that it evolves in the 
legislative process, but I would prefer to do what happened under the 
Steiger amendment in 1978, and that is have a broader across-the-board 
reduction of capital gains because I really believe that's what it's 
going to take to stimulate creation of new businesses. I understand your 
point, but I would much prefer to see it broader.

Russia and Yugoslavia

    Q. Mr. President, when President Yeltsin was here, did you discuss 
with him the situation in Yugoslavia? Are there constructive acts that 
he can take to help that situation improve?
    The President. We did discuss Yugoslavia at length. You may remember 
a boat trip out of Annapolis on the Severn that I took with him. That 
was billed as R&R, but I think it was probably the most fascinating 
session that I had with him in terms of a give-and-take on specific 
issues. I'll get to your question in a sec, but I just wanted to share 
with you what we were talking about out there because we started with 
what the French called a tour d'horizon, but we're talking about just a 
wide review of policies as it affects the new states in the former 
Soviet Union. It was fascinating hearing him discuss what's going to 
happen in Azerbaijan or Armenia or how they're going to treat the 
problems of Ukraine. It was just a marvelous experience, and I gave him 
the U.S. view on this thing.
    We did talk about Yugoslavia. In answer to your question, I do not 
believe that the Soviets have any special role anymore. There was a time 
when Yugoslavia, and I think that's what you're referring to, really was 
almost a satellite to some degree, less so than some of Eastern Europe, 
but a satellite of the Soviet Union. That has been dissipated now, and 
Russia doesn't want the responsibility to deliver the Serbs, for 
example.
    I think the role for them is in the United Nations. I think the role 
for Russia is as a veto-holding member of the United Nations family to 
go along with the common objectives of getting a cease-fire, of having 
the U.N. keep the peace, of helping with humanitarian aid which we 
simply have got to do. But I don't see them having a special assignment, 
although in fairness, he did say that they would like to be helpful. But 
I don't think that their history gives them, he doesn't feel, the 
special leverage that we might think just looking back a year or two.

[[Page 984]]

Aid to Russia

    Q. Mr. President, what is your personal assessment of what is going 
on in Russia right now? We've heard a lot about the hardships there, and 
it seems that they are having a hard time. And, secondly, is the United 
States going to give Russia the support it needs to get its act 
together?
    The President. What is going on there right now is indeed a 
manifestation of hardship. Yeltsin, I am convinced, really believes in 
democracy. I am convinced of that. It wasn't just the courage that he 
showed standing on the tank to put down the coup, but it was more than 
that. He has now put into effect some changes that really, really 
adversely impacts for the short run the lives of many of the people in 
Russia.
    And so they're going through extraordinarily tough times. He warns 
things can get more difficult, things can get tougher. He is absolutely 
convinced that the path for prosperity lies through these fundamental 
reforms that lead to the convertibility of the ruble, for example; that 
leads to fairer trade; that invites investment in partnership. Therein 
lies tremendous potential for the United States, jobs and investment 
from America. Jobs in American investment and investment from America, 
it's there when you look at the tremendous potential of Russia.
    But it is my view that we must not miss this opportunity to help 
them. We have spent trillions of dollars standing up against the 
Communist menace, and it was proper that we do that. We are now the 
undisputed leader of the world because we did it, and Russia is free and 
democratic, going through some of the darndest democratic gymnastics 
you've ever seen, challenging each other and fighting each other in the 
congress. Yeltsin's got problems worse than I do with the Congress. I 
mean, this guy's got real problems over there. But we want to help them. 
We want to pass the ``FREEDOM Support Act'' which unloosens tremendous 
amounts of money from the IFI's, international financial institutions, 
particularly the IMF and the World Bank. The U.S. contribution in cash 
is substantial but not all that substantial; it's in the hundreds of 
millions, not in the billions. But we are trying to get an increased 
quota for the IMF through our Congress. I am committed to the ``FREEDOM 
Support Act,'' and I am challenging the Congress to move on this as an 
insurance policy for the people of the United States.
    And yes, the demands are tough at home. A lot of people don't 
understand it, but once in a while a President has to be out front for 
what is right. I don't want to have on my conscience missing this chance 
to solidify the democratic experience, the move to a market economy. So 
I'm urging the Congress to move, hopefully as expeditiously as next 
week, to support the ``FREEDOM Support Act'' because I believe it's in 
our interest. This isn't in the interest just of Russia. I've got to see 
what's in the best interest of the United States of America. I believe 
that if we go forward with the ``FREEDOM Support Act'' we will be doing 
just that, doing what's best for our country and for the generations to 
come, not just in peace and prosperity and democracy but in markets and 
in opportunity, investment opportunity.

Job Opportunities for Youth

    Q. Mr. President, do you believe that starting a major program of 
work projects to put youth to work would be a good idea at this time?
    The President. We think that we've designed a good program. I will 
sign soon legislation across the country to add to the summer job 
program $500 million. I believe that what we've done in terms of helping 
the cities and through our SBA and FEMA response to what happened in Los 
Angeles, coupled with our what is called a ``Weed and Seed'' initiative, 
weed out the criminals and then seed the urban areas with enterprise, is 
the approach we ought to take.
    I would stop short of yet a new federally run bureaucracy to create 
jobs outside of the private sector. I really believe that jobs with 
dignity in the private sector is not only help short-run but is a longer 
run answer to the problems, whereas the Government programs start off 
well-intentioned and sometimes have pretty good short-run effects, but 
in the long run do not provide the kind of jobs that good job training 
and

[[Page 985]]

entrepreneurship and capital gains, bringing people to the cities, can 
provide. And so I am not in favor of a broad Government program, 
although I am strongly supporting aid that I have mentioned for the 
cities largely in terms of the summer job program.
    Well, here's the last one, and then I promise to go peacefully and 
let you all eat or leave or whatever is next for you. I heard you were 
having broccoli, so I'm out of here. [Laughter] Now, what's next?

Racial Harmony

    Q. Mr. President, Bob Johnson, from Washington, DC. What's your 
message to black and white Americans to help bring about racial harmony?
    The President. That's a good question, Bob, and the answer is that 
the President must speak out at every opportunity, whether it relates to 
problems in the cities or whether it relates to the country in general, 
for racial harmony against discrimination of any kind. In addition to 
that, I point with considerable pride to legislation that some consider 
controversial.
    I stood up against a civil rights bill that I felt would result in 
quotas. I don't believe in quotas. We passed a civil rights bill that I 
can say does not result in quotas and takes a step towards the 
elimination of discrimination in the workplace. We passed under our 
administration the ADA, which deals with people with disabilities. That 
is forward-looking legislation.
    My point is, I'm not sure that more legislation is required. I do 
think more brotherhood is required; more compassion is required. I have 
tried very hard as President to speak out against discrimination, and I 
will continue to do so because we are one Nation. We're one Nation under 
God, and we ought never to forget it.
    Thank you all very, very much. We're out of here.

                    Note: The President spoke at 12:26 p.m. at the Hyatt 
                        Regency Irvine. In his remarks, he referred to 
                        Reed Royalty and Todd Nicholson, president and 
                        executive director of the league, and Peter 
                        Ueberroth, chairman of the Rebuild L.A. 
                        Committee.