    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [June 29, 1993]
    [Pages 944-952]
    [From the U.S. Government Publishing Office www.gpo.gov]

    [[Page 944]]

    Remarks and a Question-and-Answer Session With the National Federation
    of Independent Business
    June 29, 1993

        The President. Thank you. Thank you very much, and good morning.
    Please be seated. When Jack Faris came to see me the other day in the
    Oval Office, he invited me to come over here and speak. And he said the
    best time to come would be noon. But the President of Argentina will be
    in the White House at noon, and I couldn't figure out how to explain
    that to him, that we were going to miss lunch. So then I was invited to
    come at 9:15, which is okay for me most days. But I'm one of these
    people who gets up at 6 every morning, and then I wake up about 10:30.
    [Laughter] So if I say anything I shouldn't today, I'll have total
    deniability since it's 9:15.
        I was eager to come by and address you this morning for several
    reasons: first of all, because your organization is one of this city's
    most aggressive participants in the economic debate now taking place
    here and around the country; and because when I was the Governor of my
    State, I worked very closely with the NFIB on a wide range of issues;
    and because I know that unless we are firmly and unequivocally committed
    to private sector job growth, and especially to small business growth,
    we cannot succeed as a country.
        Let me say that when I got into the race for President about a year
    and 8 months ago, I did so after having worked for nearly a dozen years
    as a Governor of a State that until the last year I was Governor usually
    had an unemployment rate above the national average. I spent all my time
    trying to figure out how to create conditions in which jobs could grow,
    children could be educated, people could be trained, and folks could be
    empowered to do what they could do in a very tough global marketplace. I
    worked year-in and year-out to try to establish partnerships with the
    private sector. Until I became President, except for one brief interlude
    when I took office and found an operating deficit as Governor, I had
    never proposed raising one red cent in taxes to pay down a debt, because
    my State had a very tough balanced budget law, perhaps the toughest in
    the country in its practical operation. This has been an interesting and
    a difficult experience for me in that regard.
         But here's how I see the world: We have now been in a long-term
    economic slowdown of about 3 years in which our economy is not producing
    many jobs. We have been in a global economic fight which has caused us
    grave problems for 20 years. And literally for 20 years most middle
    class wage earners have worked longer work weeks, and their wages have
    not kept up with inflation. We have seen an enormous increase in this
    country, in the 1980's, in the cost of health care, housing, and
    education, which has far outstripped the earnings of most wage earners
    and small business people to cope with. And we now find ourselves in the
    midst of a global recession, as I prepare to go to Tokyo to meet with
    the leaders of the other G-7 nations--the European nations, Canada, and
    Japan--in which our economy, though it is weak by our standards, is now
    perhaps the best performing of all these countries.
        During the 1980's, most of our job growth came from two sources.
    First of all, we had a huge operating deficit that was built into our
    system because we had a very large tax cut in 1981, twice the original
    size that President Reagan proposed, when the Congress and the President
    got into a bidding war, and very large increases in defense spending. So
    that the deficit, plus investments in defense, especially in defense
    contracts, as those of you who are from California or Connecticut or
    Massachusetts who saw it go up and then watched it come down, know that
    that created a lot of jobs.
        The other thing that created a lot of jobs in the 1980's was you,
    the small business sector. Indeed, throughout the 1980's and every year,
    the Fortune 500 lowered employment in America, even as income went up,
    by a couple of hundred thousand people a year. But small business people
    generated the vast mass of the jobs. In fact, a study by David Birch at
    the Massachusetts Institute of Technology indicated that about 85
    percent of all new jobs were created in units of under 50, and most of
    those were created by people who themselves were small business persons.
        Then about 3 years ago, that stopped. And

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    we can all argue about why that is, but I think it's clear that there
    were a couple of reasons. First of all, small business people are not
    unaffected by slowdowns in the global economy, as well as the domestic
    economy. Secondly, the extra added cost of hiring one more employee
    became exponentially greater as health care costs, payroll costs, and
    other things mounted up, and more and more people, even in the small
    business sector, turned to overtime and part-time workers.
        But the bottom line is we now find ourselves in a world in which
    there is a global recession, in which we have the lowest unemployment
    rate of any of our competing wealthy countries, except for Japan which
    has, as you know, a much different trading system and economic
    organization, and in which still our unemployment rate is way too high
    for us. And when we look to the future, it seems to me absolutely clear
    that we have to find ways to reinvigorate the job machine of America and
    to restore the health of small business.
        The problem is that we have dug ourselves into a number of holes
    that we have to dig out of, none of which are easy. And all along the
    way, we have to know that we may not be able to get instant results
    because what happens in America today is at least to some extent
    affected by what happens in Europe, what happens in Japan, and what
    happens in other countries. I know, for example, you had the Trade
    Ambassador, Mickey Kantor, here yesterday talking about the trade
    agreement with Mexico. And there's a lot of debate in this country about
    that. Our administration believes it will create more jobs than it will
    cost. We feel very strongly about that. We're going to have a debate
    about it later in the year, but the point is at least it's the right
    debate. That's the right debate: Is it going to help the American
    economy? Is it going to create more jobs than it will cost?
        Well, it is against that background, anyway, that I became the
    President: 3 years of slow economic growth, which doubtless contributed
    to a challenger beating an incumbent; and then a very large Federal
    debt, having gone from $1 to $4 trillion in 12 years; an annual deficit
    having gone from $74 billion a year in 1980 to $311 billion projected in
    1993; and the deficit for the next 5 years was written up $165 billion,
    estimated after the election.
        And so I was confronted with a very significant problem, one which
    had very practical impacts on you in at least two ways. First of all,
    the bigger this debt and the deficit gets, the more of your tax money we
    have to spend every year paying interest on the debt and the less we
    have to invest in the future: to finance research and development, to
    finance new technologies, to finance education and training of the work
    force, to grow the economy. Second, and even more important for you,
    America had a historic gap between short-term interest rates and long-
    term interest rates because of the size of the deficit and because
    nothing was being done to bring it down. So you had very low short-term
    interest rates. As you know, they started coming down way over a year
    ago with the Federal Reserve lowering, lowering, lowering the rates they
    were charging. But our long-term interest rates, which determine home
    mortgages, business loan interest rates, consumer loan rates, car loan
    rates, college loan rates, they were quite high. And the gap between the
    short and long-term rates was very high.
        It was obvious to me that unless we first did something to reassert
    control over our economic destiny, unless we did something about this
    deficit first, we would not be able to move forward. And so I proposed a
    plan to the United States Congress to bring the deficit down by $500
    billion over the next 5 years, in roughly equal amounts of budget cuts
    and tax increases with almost all the taxes, 74 percent of them, falling
    on the upper 6 percent of income earners, including subchapter S
    corporations, the upper 5 percent of those, and they were pretty stiff.
        But the reason I did it was because it seems to me we had to try to
    lower the deficit about $500 billion. We imposed what amounted to a 5-
    year freeze on domestic discretionary spending. That is, we do increase
    funds for defense conversion to help those poor people that lost their
    jobs because of the defense cutbacks, for Head Start, for education and
    training, and for some technologies. But we cut other stuff even more,
    so there's a decline in defense, a freeze on domestic spending. The only
    thing that's going up is basically the retirement programs and the
    health care programs. I'll come back to that. I'll come back to that in
    a moment. So we had big cuts over the previous budget in everything, all
    the entitlements: veterans, agriculture, pay of Federal employees,
    retirement of Federal, civilian, and military employees.

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    Things that had not been touched in previous budgets we went after, it
    cut them, locked that down, and then asked for what I thought was a
    progressive tax package.
        But there were also some interesting growth features in the tax
    program that I proposed that the House of Representatives passed. One
    was one of your long-time goals, increasing the expensing provision from
    $10,000 to $25,000 a year. I think that's real important. If we do that,
    there are hundreds of thousands of businesses in this country that might
    be able to hire one more person, might be able to get their incomes up
    by buying another piece of equipment.
        The second was something that larger businesses, by and large,
    wanted, and that was a change in the alternative minimum tax
    calculations designed entirely for one purpose: to encourage people to
    invest in more plant and equipment, to become more productive. The third
    was the small business capital gains tax, designed to encourage people
    to invest in ventures under $50 million in capitalization and to get a
    50 percent cut on the tax due if they held the investment for 5 years.
    This was designed to get a bunch of new venture capital and private
    capital into the real job generators of this economy.
        The third was a permanent extension of the research and development
    tax credit. Next, there was changes in the passive loss provisions on
    real estate designed to get home building and real estate up again,
    particularly in those regions of the country where it has been so
    depressed that it's dragged everything else down.
        Then we extended the deduction people can take for their health
    insurance premiums to self-employed people, as well as to other small
    businesses which already had it, which I thought was very important, a
    big deal for farmers.
        And finally, there were other things, but finally there was a
    proposal which I think we ought to try to finally test whether the
    rhetoric that both Democrats and Republicans have been putting out in
    Washington for years, and in the streets of America, about using the
    private sector to revitalize the distressed areas of our country could
    really prove true. We devised an empowerment zone proposal which was an
    expansion of the enterprise zone proposal that for the last several
    years had been supported by everybody from Jack Kemp in the Republican
    Party to Charles Rangel in New York in the Democratic Party. This
    empowerment zone proposal went beyond anything previously proposed to
    give really powerful incentives for the private sector to hire people
    out of depressed cities and small towns in rural areas or to put
    businesses into those areas. And it seems to me that's very important.
        If you look at all the millions of people that live outside the free
    market economy in America because they live in areas that are so
    depressed, there is a huge potential market there if the free market
    system can work. So, those things were also in the bill. In other words,
    we raised tax rates, but we tried to find ways for people who have been
    successful, who have money, to lower their taxes but only if they
    invested in things designed to grow the economy, create jobs, and expand
    opportunity for all Americans.
        Now, when the Senate passed the bill last week there were a lot of
    things in the Senate bill that were good. They had some less tax and
    some more spending cuts so that, by any calculation, clearly now the
    spending cuts exceed the tax increases. But by taking most of the tax
    cut out of the energy tax and having to make it up to get $500 billion
    in tax reductions, they reduced the size of the small business expensing
    from 25 to 20; they eliminated the new business or the small business
    capital gains tax; they put a surcharge on capital gains, which I think
    is not well-advised; and made the research and development tax credit
    temporary. So, we are now trying to resolve the conflicts between those
    two bills. I know the NFIB will be actively involved in that, but I
    think it's very important that you understand basically what the
    tradeoff was made between the Senate and the House bills. The bottom
    line is both of them reduced the deficit by $500 billion.
        You had long-term rates going down again today to a 16-year low, and
    this has already produced some very significant consequences, if I just
    might mention a few. From the time Secretary of the Treasury, then
    designate, Lloyd Bentsen said we were going to have a serious deficit
    reduction plan and talked about what was going to be in it in November,
    we've seen long-term interest rates take a dramatic drop. While the
    economy itself is not recovered by any means, there have been some very
    significant advances tied directly to the drop in long-term interest
    rates. And if I might just mention a few, number one, we've had a 20-
    year low in home mortgages; a 6-year high in housing

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    sales; a 9-year high in increase in construction employment, 130,000 new
    construction employees in America in a 4-month period; and there have
    been 755,000 jobs, over 90 percent of which are in the private sector,
    come into this economy in the last 5 months. That compares with only a
    net gain of a million over the previous 4 years, all tied to bringing
    down the long-term interest rates.
        There are people in this room today who are responsible for that,
    directly or indirectly, people who have refinanced their home loans.
    Most of the real financial gains have come from people who have
    refinanced their home loans and then turned around and done something
    else with the money, and that's bumped the economy. But business loans
    are lower, consumer loans, car loans, college loans, the whole 9 yards.
    That is the strategy.
        It is estimated that if we can pass this deficit reduction plan and
    keep the interest rates down for a year, that'll put another $110
    billion back into this economy. And by the end of the year or next year,
    that will really begin to produce some job growth, and we'll also begin
    to produce some real earnings potential.
        So that is why we have done what we have done. And I'll say again,
    as somebody who was a Governor in a State with a very tough budgeting
    system, it was very painful for me to ask anybody to pay any money just
    to pay down the deficit. But unless we do something about this, we will
    never--it's like a bone in our throat as a nation--unless we deal with
    this, we can't get on to dealing with our other problems. We'll spend
    all our time in Washington working around the edges of these other
    problems because we have not faced the problem of the deficit.
        Now, let me just make one or two other comments about that. No
    matter what plan you might embrace to reduce the deficit, and no matter
    what plan you've read or heard about, every one of them can have our
    annual deficit go down for 5 years, and then it starts to go up again.
    Why? Health care costs. We cut $50 billion in the House version, $60
    billion in the Senate version off of projected Medicare expenses from
    the previous year's budget. And it is still estimated that over 5 years,
    the Medicare budget alone will go up 45 percent. Now, that's better than
    most of you are doing, right? Most of you are paying more than 9 percent
    a year in increased premiums. Most of you are paying almost twice that.
        But I say that to try to illustrate the next point. There's been a
    lot of controversy about the willingness of this administration to try
    to take on this health issue and whether we're being too comprehensive
    and what we're going to do and all that. The point I want to make is
    this: We've got to do something to bring costs within inflation, or it's
    going to break the country. That's the first thing. You can talk to just
    about any conservative in Congress of either party, you can talk to the
    most conservative Republican in the Republican Party, and most of them
    will tell you now we are not spending enough money on some of the things
    that will generate jobs in the future. If we don't spend enough money to
    keep our technology lead over other countries in areas critical to the
    future, in super computing and electronics and aerospace and these other
    things, and if we don't really educate and train our people, then our
    incomes will fall behind. But if we are strangled by rising health care
    costs, the future can have no lobby in the Congress.
        So this budget plan that we presented is great on deficit reduction.
    It does invest some money in the future, but it doesn't invest anything
    like what you would want us to invest if we weren't strung up by our
    heels by the deficit. And there is no answer to it except to get health
    costs in line with inflation. There is no other answer, because that's
    the only thing that's eating us alive now through Medicare and Medicaid.
    It is the same with you.
        Now, what we see is people have learned a lot about controlling
    health care costs, and a lot of big businesses that can self-insure now
    have their costs in line with inflation. The California public employees
    system, which is a huge system with bulk purchasing power, this year has
    a contract which is below inflation. That's great for them. But what
    does that mean? Even more pressure on you to pay for the uncompensated
    care bills of people who don't have health insurance if you do. Which
    means every year more and more small businesses are either dropping
    coverage--about 100,000 Americans a month lose their health insurance--
    or they have more limited coverage that may or may not be adequate for
    the people whom they insure.
        So, what I want to say about that is this: It seems clear to me, if
    you study the Federal budget and you want the deficit down to zero and
    you want America to invest and grow again,

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    if you look at the private budgets of businesses in this country, that
    we have to do something to give small businesses bulk purchasing power;
    relief from all these rules and regulations the Federal Government
    imposes; relief from the incredible paperwork imposed on health care
    providers by this country being the only country in the world having
    1,500 different health insurance companies, thousands of different
    policies, a dime on the dollar more in paperwork costs than any other
    advanced country in the world, a dime on the dollar. And the more big
    businesses self-insure and control their own costs, the more you're
    paying the difference. So, we have got to do some things to simplify and
    make more uniform this system.
        Now, the big controversy obviously is over whether there should be a
    mandate for employers, employees, one or both, to cover people who have
    no health insurance. Here is the problem, and I invite you to the
    debate, but here is the problem: Seventy percent of all small businesses
    have some health insurance. And they're paying out the ears for it. I
    have to be delicate in my language. [Laughter] Seventy percent do. Costs
    are going up like crazy. For the 30 percent who don't, those folks, if
    they get sick, will still get health care. Show up at the emergency
    room, and they will get it. Everybody gets it. But who paid for the
    emergency room to be there? The rest of you. You built the
    infrastructure. You financed. You maintain the infrastructure.
        The Government should clearly insure the unemployed, uninsured. And
    my goal has been to do that by managing the system better so we don't
    have to raise taxes on you to do that, because people who are paying too
    much already shouldn't pay more to fix the system. But if you look at
    every system in the world, it is perfectly clear that unless you have
    some mechanism by which everybody is covered, you cannot control the
    costs, and you cannot stop the cost-shifting.
        Now, nobody wants to do this in a way that kills the only job-
    generator we've had in America over the last 2 years, which is you. But
    it's very important to remember that most small businesses do provide
    health insurance. This is the nub of the economic dilemma. If it were
    easy, somebody would have done it already, right? I mean, if it were
    easy, it would already be done. It's not easy. There is no perfect
    solution. But I assure you that we're all going to be better off if we
    enter into an honest debate and try to work through this, and we try to
    resolve it. The worst thing we can do is to leave it alone, and
    especially, the worst thing we can do for the small business sector,
    because bigger employers will figure out how to get managed care, and
    they'll just go around this whole health insurance system we have today.
    Everybody else is going to be out there just strung up. So we must face
    it. And we've got to provide some means of covering people, letting them
    change jobs, and having people have this without going bankrupt. And
    that is something that I am deeply dedicated to.
        Let me mention one or two other issues that are very important, and
    then we'll move on to questions. I believe the SBA can be a force for
    good in small businesses. And I promised myself if I got elected
    President, when I started, I would appoint somebody to run the SBA who
    had literally had real experience and was not just a political
    appointee. Now I plead guilty. Erskine Bowles is a personal friend of
    mine. His wife went to college with my wife. That does not disqualify
    him. [Laughter] But his wife is a successful business person, and he has
    spent his lifetime trying to help people like you start your businesses,
    expand your business, market your business overseas. He actually knows
    what he's doing. So it seems to me that would be nice to have an SBA
    director who could do that, who had been through that.
        The second thing that I really thought about a lot early in the
    election because of the experiences I had seen not only in my State but
    around the country, is that we had to do something to try to deal with
    the credit crunch. The access to credit is obviously going to have more
    to do with how a lot of your members do than a lot of other things this
    Government does. So, early in my administration we brought together all
    the appropriate banking regulatory agencies and, in what was then an act
    of unprecedented cooperation, we changed a lot of the restricted
    regulations that cause so much of the credit crunch. Banks are now
    clearly empowered to make more character loans based on the reputation
    of the borrower. Documentation requirements by the Federal Government
    have been relaxed dramatically, as have regulations regarding appraisals
    of real estate to secure small business loans. And there will be more
    flexibility in classifying loans.
        Now, that has been done at our level. It takes

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    more time than I wish it did for all those changes here to actually be
    felt in every community bank in America. And one of the things that the
    NFIB needs to do with Erskine Bowles is to let us know in which
    communities this is working and in which communities there has been no
    change, because we made a vigorous, clear effort to send this signal out
    all across America by changing the way we did business with the banks.
    But it has not changed in every community in America, and a lot of
    people are still really stung by what happened to them in the eighties.
    But the banks are in much better shape today than they were 3 years ago.
    And that's good, that's a good omen for our future. But now that they're
    in better shape the time has come for them to loan money on good terms,
    at low interest rates. So we need your help on that.
        Next I'd like to say a little something about regulatory reform.
    Every President talks about it, and almost nothing ever happens. There's
    a division in our Budget Office that a lot of you probably have never
    heard of in the Office of Management and Budget called OIRA--that would
    gag you--OIRA, the Office of Information and Regulatory Affairs. For
    years, the position of Administrator of this Office, believe it or not,
    was vacant. But this Office actually has the capacity to rationally
    review all of these regulations. We have named, and Congress has
    confirmed, an Administrator for OIRA, and we are going to do our best to
    see what we can do to reduce unnecessary regulations.
        Perhaps more important, I have asked the Vice President as part of
    his job in reviewing the whole operations of the Federal Government--and
    by the way, I predict you will be very pleased by the report that is
    issued by his group in September--we are reviewing the operations of
    every last part of this Government. Unlike your business, unlike all big
    businesses, the way we do business in the Federal Government and many of
    these agencies has been largely unexamined for decades. So that when
    something new comes along that we have to do, it normally is just added
    on to what was being done already, instead of being substituted for it.
    And the whole quality revolution that has engulfed the American private
    sector and led to rapid increases in productivity has largely escaped
    Government. And we're trying to change that, too. It escapes nearly
    every organization that has a mandate for customers and income, so we're
    trying to change that. Our goal is pretty simple: We want to avoid
    regulations that are inconsistent with the goals of jobs and growth; we
    want to avoid regulations that overlap; we want to create a process that
    is open and fair, where business has some input, and not just large
    businesses but also medium and small ones as well; and we want to change
    the whole way Washington works.
        I think these are the kinds of things that you would want us to do,
    and these are certainly the things that we have to do. I don't plan or
    pretend that we're always going to agree on all these issues. And I wish
    that the world looked to me as President just the way it does to you or
    the way it even did to me as Governor. Like I said, it took a lot of
    mental gymnastics for me to finally face the hard reality that we had
    this huge deficit and unless we did something about it, we were never
    going to be able to do anything else. We'd spend all our time--I spent
    all my time giving speeches about things we were going to do, and no
    impact would be felt because we were out of control of our economic
    destiny. So I hope that you will be supportive, not supportive of me
    personally so much as supportive of our efforts, common efforts to deal
    with our common problems. The one thing I made up my mind to do when I
    won the election in November was at least try to level with the American
    people about the problems and try to face things that other people in
    public life had avoided. This is painful. You know, my daughter and the
    kids her age who get into all this interesting music has got this great
    phrase. She said, ``Dad, denial is not just a river in Egypt.''
    [Laughter] And sometimes I think that's probably a good phrase for us to
    remember in a lot of ways.
        But my plain duty to you is at least to try to articulate what these
    issues are and face them. We tried it the other way. We tried ignoring
    the deficit. It didn't go away. We tried telling everybody what they
    wanted to hear, that it could all be done by some sleight of hand, and
    it didn't happen. And we tried a lot of things about health care in the
    Federal Government which, frankly, made your problems worse. I could
    control health care costs without doing anything on the health care
    system. And what would happen? All the providers, when we just cut
    Medicare and Medicaid more, all the providers will send you the bill.
    That's what happens today.

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        So, I ask you to think about this. Let us face our problems; let us
    talk about our problems. The first big urgent thing is to pass a deficit
    reduction plan that keeps as many of these growth incentives as we can
    possibly have. That was the good thing about the House bill. Then I look
    forward to engaging in the health debate. I look forward to engaging in
    the trade debate. I look forward to engaging in the job creation debate.
    But in the end just remember, every advanced country in the world is
    having a terrible time creating jobs. We are doing better than most of
    them because of you, because we have a vigorous small business sector.
    Unfortunately, a lot of the things that we want to do may help some
    people and impose burdens on others in the small business sector at the
    same time, though we know that these big issues will not go away. And we
    know now after 3 years of stagnation we have to change if we want to
    grow.
        I believe if we do it together the next 20 years can still be the
    best years this country ever had. We are in a new and unprecedented era.
    This happens to us about once a generation, and when it happens we have
    to adjust as a people. That is what we are now trying to do. That's what
    makes being here so exciting. But I never forget that the thing that's
    important about it is that what happens here affects what you do there.
    And what you do there, wherever ``there'' is, in your hometown, is what
    really makes America work.
        Thank you very much.
        Moderator. Mr. President, again we very much appreciate you taking
    the time to be with us in your remarks today. One of the things the
    President has asked for and is willing to do is to take some questions
    from us. I will tell you from the years past, in other conferences with
    other Presidents who have spoken, this is the first President who has
    said, ``I would like to have questions from the group.'' And because we
    have such a large group assembled, Mr. President, what we've done is,
    we've circulated cards for people to use to ask questions. We've
    accumulated these, gone through, and picked out the top questions. And
    we have time for just two or three if we could.
        The President. Did you say the tough questions? [Laughter]
        Moderator. The tough ones, the only kind we have.
        The President. I have a feeling when this is over, I'm going to know
    why my predecessors didn't take questions. [Laughter] Go ahead.

    Health Care Reform

        Moderator. The first one is: I have a small business with two part-
    time employees. The business is out there for me to expand. However,
    mandated health care and the present uncertainty has caused me not to
    hire more people. What assurances can you give me and others in my
    position that will give me the confidence to hire more people and to
    create more jobs?
        The President. First of all, I think you ought to wait and see what
    we come out with. I think that most people believe that this plan would
    be much tougher on small businesses than I believe it will be. But let
    me put it to you in another way. We have to decide what to do with part-
    time employees. And either employers will have to make some contribution
    to their health care. By the way, I think all employees should make some
    contribution to their health care, because if they don't, they may get
    to thinking it's free, and overutilization is one of the problems. I
    mean, everybody should pay something in accordance with their ability to
    pay. But I have to say this: I believe employers should make some
    contribution, because I will say again, those who don't pay at all are
    being supported, even when they don't use the hospital, even when they
    don't use the clinic, even when they don't use anything, they're being
    supported by those who do pay something, because they are keeping the
    infrastructure going. And everybody's bills will be lower over the long
    run if everyone makes a fair contribution. I think small businesses
    should really be limited in what they're required to pay by the
    Government. And also, anything that is done should be phased in so that
    as we go along the way, if there are mistakes or unanticipated
    consequences, they can be corrected. We should not wave a magic wand and
    say, okay, next year the system is going to look like this. We're going
    to have to phase this thing in so we can all work together and see what
    the problems are.
        But I have to say that I think in terms of job creation over the
    long run, you're going to have more people working over the long run if
    we don't have these costs being bounced around and thrown off from one
    group of employers onto another. The trick is going to be how to keep
    the questioner's costs low enough,

    [[Page 951]]

    and also what is the fair way to apportion the costs for the part-time
    workers.

    Workers' Compensation

        Moderator. Dear Mr. President, as a North Carolina strong Democrat
    and a strong supporter of the Clinton-Gore campaign, please share your
    views on reducing the cost of health care and workmen's compensation for
    my small business.
        The President. Well, that's one thing I didn't say. The half of
    the--is that you? Good for you. This is just like a Baptist church. I
    figured we've got all the saints on the front row here. [Laughter] Let
    me say, first of all, one of the things that we are seeking to do in
    this health reform effort is to alleviate the inordinate burden of
    workers comp on employers by, and I don't want to get and sort of
    prefigure exactly what this is going to look like, but if you look at
    the workers comp system it is really three things: it's a health care
    system, it's a disability payment system, and it's an unemployment
    system, right? It was created at a time when we didn't have
    comprehensive systems to do all that. We now have health care systems, a
    disability program, an unemployment program, and we've got workers comp.
    And half the cost of workers comp is the health care.
        So, what we're going to try to do is to fold the health care costs
    part of workers comp into this health care program which would
    dramatically cut the cost of workers comp. Like everything else, it's a
    little more complicated than it seems. Here is the dilemma. Here's the
    problem we don't want to do. Most people will tell you who have tried to
    cut down on abuse of workers comp, that having that health care part of
    the program out there is one thing that stops it from being abused,
    because you can prove that people are well; you can say, now you have to
    go back to work, you have to go to therapy. So, if we merged the cost
    into a health care program, we don't want to do it in a way that in
    effect cuts the rest of it loose so people can allege disability in
    excess of what it is and the abuses that are plain in the present system
    will be worse instead of less. We have to do this in a way that will
    reduce the abuses in the present system. So that's the dilemma. It is
    obviously extremely costly administratively, has a lot of health
    overlap, to have these duplicated health systems for employees. It's not
    necessary, and we ought to abolish it, but we need to do it in a way
    that doesn't aggravate the disability problem of workers comp. So that's
    the issue there. I think we can do it.

    White House Conference on Small Business

        Moderator. Thank you. The national White House Conference on Small
    Business was scheduled to take place in 1994. Does your administration
    have a date set for the conference, and will you allow us to assist with
    issues hitting small business the hardest?
        The President. The answer to the second question is yes, we will
    allow you to assist. The answer to the first question is, do we have a
    date yet? That was not a yes or a no. He's become a politician. He's
    just been up here a couple of weeks, and he's already--[laughter]--he
    said that the answer is, it'll be sometime between January and March of
    1995. I'm really looking forward to it.

    Meetings With Business Leaders

        Moderator. We all are. And according to the time that I have, this
    is the last question. Rather than talk with the CEO's of the Fortune 500
    about business matters, why not get a panel of small business members,
    50 or less employees, say, 25 from each State, to inform you on a
    regular basis?
        The President. Let me make a suggestion sort of to follow up on that
    without embracing that specific suggestion, although I think that's
    about as good as any I've heard. I will hereby, in front of you,
    deputize Mr. Bowles to work with you to come up with some formula for
    bringing in a representative group of small business leaders to see me
    on a regular basis and talk about this. Let me say we'll do that.
        Moderator. Thank you.
        The President. Let me make one other point about this. Let me say
    that I have started--and this question may have come from someone who'd
    seen the press on this. But I have started every week or 2 weeks for the
    last couple of months, through Alexis Herman, who is my special
    Assistant for Public Liaison--she works with groups throughout the
    country and also helped organize my coming here today--having lunch with
    business leaders from around the country. And we try always to have one
    smaller business person in with a lot of the big business leaders who
    come. We have manufacturers, people from finance. We always try to have
    at least one small business person at the table, or either that or

    [[Page 952]]

    someone who started a business from scratch that may not be so small
    anymore, but they started--just to try to have the mix. It's been an
    immensely valuable thing for me just to do this. And we just take an
    hour-and-a-half informal, off-the-record lunch. We talk about whatever
    they want to talk about and a couple of things that I'm working on. But
    it really helps to keep me connected to what's going on out there. It's
    pretty easy to get isolated, as I'm sure you know, in this town. And so
    I would embrace this. I'm glad you stood up when I said it, but it will
    do me more good than it will you. I'll get a lot out of it, and we'll
    follow up.

    Government and the Private Sector

        Moderator. Mr. President, your staff says that they will give us
    time for one more question.
        The President. Good.
        Moderator. Which we appreciate. Mr. President, thank you for
    speaking to us. I'm sure you agree that most of our social problems can
    be eased or solved by putting every capable American to work. What
    compromises in your social agenda are you willing to make to reduce the
    burden of Government?
        The President. Well, the answer is I'm prepared to do nearly
    anything to put everybody to work. But let me say again the country with
    the lowest unemployment rate of all the wealthy countries in the world
    is Japan. And it would be hard to make a serious case that they have a
    low unemployment rate because their Government's not involved in their
    economy. And basically what they have is high productivity for exports
    and labor-intensive, even not very productive protections for the
    domestic market, so they can keep unemployment low. It's an interesting
    system. I'm not suggesting we follow it; I don't think we should. The
    only point I'm trying to make is that a number of the business leaders
    who come to see me believe that one of the reasons that we have
    unemployment as high as it is, is that we had nothing to substitute for
    the big cutback in defense spending. For example, when Eisenhower was
    President, we built the interstate highway network. And then we had in
    the seventies, we had a huge investment in building new water and sewer
    systems, making environmental investments that had never been made
    before. And then in the eighties, we had a huge investment in defense
    industries of all kinds, not just people in the military but all the
    contractors.
        So my feeling is, what we need to do is to get the Government out of
    those things where the private sector is doing well and doing better.
    And I think, as I said, I'm really eagerly awaiting the work the Vice
    President is doing. He's consulting experts from all over America on
    what we can do to increase the productivity of the Federal Government. I
    think the Government does a lot of things that hold back the job engine
    in the private sector. But there are also some things that Government
    does well that we're not doing now as much as so many of our competitors
    are. For example, if you wanted to have a more efficient high-speed rail
    network in this country, you'd have to have some sort of public input
    here, just like they do in every other country.
        So I think the problem is, we're doing too little of some of the
    things we do well, and we're doing too much of things that we can't
    really have much of an impact on except to slow down the job machine.
    And it's not so much less; we need a lot less in some areas, but we also
    need to far more sharply define what nearly all of us could agree the
    Government ought to do as well as what the Government ought not to do.
    And we're going to have to be much more disciplined about it. I mean,
    there are lots of departments here in this town that have a good
    mission. But they also are doing things that they started doing 25 or 30
    years ago that may or may not have a credible rationale for continuing
    now, and we can't afford that anymore.
        It's just like you. If you want to increase your impact, and you're
    not getting any more money, you've got to change what you're doing.
    You've got to stop doing some things, and you want to start doing
    others. And the thing I like about this budget that we're about to adopt
    is that if we want to do new things, it's going to require us to stop
    doing some old things and will require some real discipline for the
    first time in a long time. And we'll do our best. And if we set up this
    consultation process, you can help us along the way.
        Thank you very much.

    Note: The President spoke at 9:15 a.m. at the Hyatt Regency. In his
    remarks, he referred to Jack Faris, president and chief executive
    officer of the federation.