    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [June 21, 1993]
    [Pages 898-900]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Interview With J.P. McCarthy of WJR Radio, Detroit, Michigan
    June 21, 1993

        Mr. McCarthy. Good afternoon, Mr. President. How are you?
        The President. I'm great. It's nice to talk to you again.
        Mr. McCarthy. I can't hear.
        The President. Can you hear me now? I can hear you. Can you hear me?
        Mr. McCarthy. Mr. President, I can now. How are you? We haven't
    talked since very late in the campaign. You were in an automobile
    someplace, and you were running out of voice. But you were in high
    spirits, and now we know why. Congratulations.
        The President. Thank you very much. It's nice to hear your voice
    again.
        Mr. McCarthy. Nice to hear you.
        The President. I got to hear a little bit of your last conversation.
    That was fascinating.
        Mr. McCarthy. With Bob Talbert?
        The President. Yes.

    Economic Program

        Mr. McCarthy. Mr. President, are you going to get your tax bill and
    your budget bill through the Senate? Carl Levin is on this program a
    little bit later. We've already taped that segment. He says, ``Yes, it
    will be done.'' What do you think?
        The President. I think it will be done. It's not easy ever to make
    these kinds of tough decisions. There are $250 billion in budget cuts in
    that bill that affect everything from agriculture to veterans, to
    Medicare, to virtually all the specific programs in the Government. And
    there are some tax increases, as is well-known, two-thirds of them on
    people with incomes above $200,000, three-quarters of them on people
    with incomes above $100,000. I think it's fair and balanced. And this
    will bring the deficit down by $500 billion, and it will keep these
    long-term interest rates coming down, which is what is so necessary if
    we're going to have reinvestment in our country and rebuild the
    manufacturing sector and get this economy going again.
        I think it will pass because, frankly, there isn't another
    alternative. And those who have tried to fashion other alternatives have
    come up with programs that hurt the vulnerable in our country and the
    middle class more and hurt the business economy more. And I think that's
    why we've had people from companies representing the automakers to high-
    tech companies in California supporting the program. It's a little-known
    thing that over half the 100 biggest companies in the country have
    supported the program, that the labor organizations have supported it,
    that the home builders organization, a largely Republican group, have
    supported it because it will bring interest rates down and create jobs
    and incomes for the American people.
        Mr. McCarthy. But if it does pass the Senate, and apparently Senator
    Levin feels you have enough votes, 50 or more votes, it has to go back
    to the House. It's been changed significantly from the bill approved by
    the House. We hear the Black Caucus may be falling out of step. Can it
    pass the entire Congress?
        The President. I think it can. I think what you will see is, when
    the bill passes the Senate, if we can pass it in the next few days, then
    there will be a conference of the Senators and the House Members. And
    they will try to take the best parts of both bills and come up with a
    bill which has more budget cuts than taxes, fair taxes, but still has
    some of the incentives we need for small business job creation, for the
    high-tech job creation, for empowerment zones to get private sector
    investment into the urban areas and to the poor rural areas, and also
    some of the money for Head Start education and training and for joint
    projects with

    [[Page 899]]

    the private sector for new technologies to help to deal with the defense
    cuts. I think you will see that budget coming out of there. And I expect
    it to pass both Houses.
        Like I said, these are difficult times, because for 12 years the
    American people have been told one thing and had another thing happen
    where the debt just kept getting bigger and bigger, and it's eating us
    alive. And interest rates were high, and we couldn't get investment. We
    couldn't get jobs. We're going to turn it around, but it's not easy.
        Mr. McCarthy. A couple of things started to leak out this weekend on
    those weekend Washington shows. One item was that entertainers and
    sports people, people who make big salaries for usually a relatively
    short period of time, would be exempt from the new higher rate of income
    tax. Is that true?
        The President. Not to my knowledge.
        Mr. McCarthy. Apparently it was on ``Face the Nation'' or one of
    those shows yesterday. Not so?
        The President. No. There aren't any exemptions. I think what you're
    going to find is that people who make a lot of money for just a couple
    of years may wind up doing something that many of them already do, by
    the way, which is structuring their contracts so they get paid over a
    longer period of years than they play. That's something that's happening
    now and that may happen. But I know of no exemptions for any high income
    people.
        Mr. McCarthy. And the surtax on the capital gains tax, everyone was
    figuring maybe there will be a capital gains cut. Maybe that will be a
    tradeoff, higher income tax rates, lower capital gains. Will there be a
    surtax on capital gains?
        The President. It's hard to say. That's in the Senate bill. But I'm
    not sure how it will come out in the end. I think one thing you can look
    forward to is a so-called venture capital gains on new business capital
    gains tax, where people who put their money into new businesses will be
    given big incentives to do so. That is, if you take a risk on somebody
    and you start a new venture and you hire some new people to create new
    jobs in the economy and you hold that investment for 5 years or more,
    you'll be able to reduce your tax liability if, in fact, it turns out to
    be successful. We have to have more people trying to start new
    businesses. And that's a more hazardous undertaking. So I think you will
    see that.
        Mr. McCarthy. Will there be some incentives for new business?
    Because I heard from----
        The President. Absolutely.
        Mr. McCarthy. I asked this morning in my morning show--I mentioned,
    of course, that I would be talking to you. And I said, ``Give me some
    questions that you'd like me to ask the President.'' And I heard from
    several small business people. They said something like this: ``Look, I
    wanted to open two new businesses this year''--this was a fellow who was
    in the fast-food franchise business, but he said, ``With all that's
    going on relative to the proposed new legislation on taxes, I'm afraid
    to build any more restaurants.'' Small businesses are getting hurt. I
    heard that over and over this morning.
        The President. Let me just mention two or three things that should
    be reassuring to small businesses. If these provisions of my plan pass,
    first of all, anybody who starts a new venture will be able to get
    investment for that new venture. And if the investment is held for 5
    years or more, the tax rates will be much, much lower than the ordinary
    income tax rates, if it passes.
        Secondly, for ongoing small businesses, today the writeoff for
    expensing on the tax form is $10,000 per year. We propose to raise that
    to $25,000. That will be a substantial reduction in the tax burden of
    most small businesses and will be an encouragement, I think, for them to
    hire more people.
        Thirdly, if someone has a chain of restaurants, for example, like
    the person who called in, in the plan that I presented to the Congress
    that the House of Representatives adopted, we have some changes in the
    alternative minimum tax provisions which operate as real incentives for
    people to continue to invest their profits in the expansion of their
    businesses without running up bigger tax bills.
        So I would urge the small business people who are listening to us to
    really look at what is in that House bill. There are a lot of very
    strong pro-business and pro-small business provisions in the bill that
    have not gotten a lot of attention. That's why, let me just mention, the
    National Realtors Association and the National Home Builders
    Association, two groups not normally associated with the Democratic
    Party, have already strongly endorsed this economic program because of
    the incentives for economic growth and because it's bringing down long-
    term interest rates. That's the last thing I will say. Any business
    person who has to bor-

    [[Page 900]]

    row money in all probability is going to save more money in lower-
    interest rates than they'll pay in higher taxes.
        Mr. McCarthy. Mr. President, one of the thrusts of your campaign was
    jobs. There would be more jobs. Jobs, jobs, jobs would be created. If
    the business climate isn't good, if there isn't an opportunity for
    businesses to do well, to be successful, there will be fewer jobs. I
    mean, that's just simple economics, isn't it?
        The President. That's right, but simple economics dictate that the
    President of the United States stop telling everybody what they want to
    hear and start telling the truth. That's what simple economics dictate.
    I mean, in 1981 we cut taxes and increased spending and nearly
    bankrupted this country over the next 12 years, and we've been paying
    for it ever since, so that we had very high long-term interest rates,
    and credit was expensive, and job generation was weak. That's a problem,
    by the way, for wealthy countries throughout the world. Even Japan's
    having trouble creating jobs now. But look what's happened since I
    announced my plan and it started to pass its way through Congress, just
    in the last 4 or 5 months. First, we've had 755,000 new jobs in this
    economy, over 90 percent of them in the private sector, in the first 4
    months of this administration. In the previous 4 years, we only had a
    million jobs. Second, in construction, part of the economy very affected
    by interest rates, in the first 4 months we had 130,000 new jobs, that's
    the biggest increase in 9 years. Has that affected every State and every
    community yet? No, but it shows that we are really moving in the right
    direction. If we can get everybody in this country to refinance their
    home loans, their business loans, to take available credit because
    interest rates are lower, that will put tens of billions of dollars back
    into this economy to create jobs.
        Mr. McCarthy. What inflation rate, sir--I don't mean to interrupt
    you, but we're short on time--what inflation rate would you be happy
    with one year from now?
        The President. The lowest possible one. But if we got unemployment
    down to a very low level and every American had a job, it might be a tad
    higher than it is now, but right now we think we're in good shape on
    inflation. What we need in America are more jobs and higher incomes, and
    that's what we're working on. So, this is a job-creating strategy we're
    following, and I believe it will work.

    Counselor to the President

        Mr. McCarthy. How is David Gergen doing in his new job?
        The President. He's doing very well. He's a good man. We've been
    friends a long time and----
        Mr. McCarthy. Is the Washington press corps still braying at the
    moon, sir? [Laughter]
        The President. I don't even know how to answer that. The moon still
    comes out here, though, at night, and the sun comes up in the morning.
        Mr. McCarthy. President Clinton, a pleasure to talk to you today.
    Thank you very much for spending the time. I hope you get a chance to
    visit us.
        The President. Me too. See you.

    Note: The interview began at 12:30 p.m. The President spoke from the
    Roosevelt Room at the White House. In the interview, he referred to
    journalist Bob Talbert of the Detroit Free Press.