    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [July 21, 1993]
    [Pages 1149-1154]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Interview With the Alabama Media
    July 21, 1993

        The President. First of all, let me thank you for coming, and thank
    you for understanding why we didn't do the entire hour today. I'll be
    happy to answer any questions you have. And I have reviewed your
    schedule. I hope you found it helpful coming here, and I'm very glad

    [[Page 1150]]

    to see you. I saw some of you walking across the street today.
        Go ahead, sir.

    Economic Program

        Q. The Vice President was just talking about Senator Dole's
    alternative plan, and your administration's spokesman has been very
    critical and much more so of Republicans in recent days, what they've
    put forward. He used the phrase that the Republicans didn't have the
    guts to make the tough choices. I was just curious whether you would
    extend that characterization to Senator Shelby, the cosponsor of that
    Republican plan.
        The President. Well, let me characterize the plan. I mean, what
    bothered me about the plan was that it seemed to me to run the risk--I
    thought there were two things wrong with it. First of all, it had a lot
    less deficit reduction in it than our plan does. Secondly, under the
    guides of not taxing the middle class, it imposed no new revenues on the
    people who were paying 70 percent of our load, that is, people with
    incomes over $200,000 a year. That group of people, the top one percent
    of Americans, derived, according to all serious, studies, about 70
    percent of the gains, economic gains of the 1980's, and their taxes were
    reduced while middle class Americans had their incomes stagnant and
    their taxes increased in the aggregate in the 1980's. The third problem
    that I saw with it was that even the deficit reduction figure that they
    alleged was actually quite a bit smaller because they had what we call a
    plug in it. And I think that must be what the Vice President must have
    referred to. That is, there was, I don't know, $65 billion, $70 billion,
    something like that where they said, ``Well, we'll cut this, but we'll
    tell you later how we're going to do it. We'll figure that out somewhere
    down the road.''
        Our plan really from the beginning was dedicated toward being taken
    seriously by the experts in this field who very often have almost made
    fun of Presidential budgets, so that it could really make a contribution
    to lowering interest rates as well as lowering the deficit. The budget
    expert for Price Waterhouse, for example, was quoted recently in a
    Philadelphia Enquirer piece as saying I had the much better side of the
    argument on deficit reduction as compared with Senator Dole and that it
    was the first genuinely honest, credible budget to be presented by a
    Chief Executive in a decade, and that, in fact, the only thing that I
    have understated was the amount of deficit reduction in it, that it
    would probably reduce the deficit considerably more than we had claimed.
        So that's all I can say. I don't want to get into characterizing
    Senator Dole or Senator Shelby except to say I know these are difficult
    decisions. But this is not a narrow dispute over whether we should have
    some sort of energy tax, which I think we should because the energy tax,
    let me say, essentially permits us to fund some mechanisms for people to
    avoid paying the higher taxes through tax incentives but only if they're
    trying to create jobs.
        And I'd like to just make that point, if I might, very quickly. This
    bill also has--I think it will have in its final form, it did in the
    House version and I think will in the final form in the Senate, an
    increase in the expensing provisions for small businesses. It will more
    than double under either provision. And what that means is--and I want
    to hammer this home, because this affects Alabama--this means over 90
    percent of the small businesses in the country, the Subchapter S
    corporations, that is, that's in the small businesses in the Tax Codes,
    over 90 percent of them will not only pay no tax increase under the
    income tax provisions but, in fact, will get a tax break if they simply
    reinvest more in their companies because of this Code. Now, no one has
    been saying that except me. But it's a fact. The Wall Street Journal
    yesterday had a great article on that issue.
        Secondly, the new business and small business capital gains
    provision enables people to cut the tax they would pay on their gains
    from investments in companies with a capitalization of $50 million or
    less when those investments are held for 5 years or more. That is a huge
    tax break designed to create jobs. Similarly, we do much more for
    research and development tax credit, for the education and training
    workers by employers, for investments to get the real estate and home
    building market going again, all those things. So that even those
    Americans, that top one and a half percent or so that will be affected
    by these income tax raises, the substantial income tax raises, they can
    lower those rates if they'll just simply turn around and invest their
    money in creating jobs in America. So that's why I wanted this plan and
    why I still think it's way the best.
        Yes?

    [[Page 1151]]

        Q. We have heard the figure all day of 82,000 new jobs for Alabama.
    When you're talking about a State, though, that has in some counties
    people with less than a seventh grade education, they're not trained to
    do the type of technical jobs that you're talking about. What kind of
    jobs--and I've been trying to pin this down all day--what kind of jobs
    are Alabamans trained to handle that would bring in these 82,000 new
    jobs for our people?
        The President. Well, first of all, I would make two observations to
    that. You're asking me a Governor's question now. It's something I know
    a little bit about. And I guess I need to back up and tell you a story.
    Let me just give you a two or three-sentence story about my State.
        When I became Governor of Arkansas in January of 1983, we had an
    unemployment rate 3 percentage points above the national average. We had
    a State that, compared with what was working for America in the
    eighties, was too poor, too undereducated, too rural, too oriented
    toward production as opposed to services. We just didn't fit very well.
    And we embarked upon a long-term strategy to make ourselves fit with the
    global economy.
        During the entire term of my service, our unemployment rate dropped
    below the national average only one time for 1 month until 1992, when it
    dropped well below it. And today it's about a point below the national
    average, even though for 5 years running we created jobs at a more rapid
    rate than the national average. In other words, we had to change the job
    mix of the State and the skill mix of our people. And you can't do that
    overnight.
        But the point I want to make is it can be done. And we have seen it.
    So the President and the Congress cannot do everything. We have to have
    a partnership. Your new Governor, Governor Folsom, was up here the other
    day going around and visiting people in our Government who might be in a
    position to help change both the job mix and the skill mix of the
    Alabama economy. And we can be partners there, but a lot of that work
    has to be done at the State and local level.
        Now, let me give you the two examples to get to your point. Don't
    forget that Alabama today has an enormous technological base around,
    let's say, your medical facilities, your distinguished medical school
    and your medical facilities in the Birmingham area, or in terms of the
    space operations in the northern part of your State, where a cousin of
    mine for many years was a career NASA scientist. You have, in addition
    to that, a lot of industries that have gone through all the things the
    American industry went through in the 1980's to become far more
    competitive in the global economy in traditional industries, which may
    not require people with college educations but almost certainly require
    people who can read at the high-school-graduate level and who can have
    up to 2 years of further training.
        So I would say, therefore, that what you should be looking to us for
    is help in the whole area of defense and military conversion and help in
    the whole area of trying to get more private sector dollars into
    distressed areas and then hooking into the efforts that we're going to
    try to establish to have a national system of training, which includes
    more aggressive efforts in the literacy area and in development
    apprenticeship programs that are partnerships with the private sector.
    All of the small town and rural south has been involved in an aggressive
    effort, in effect, to be a better fit with the global economy.
        But I would say that there are lots of jobs. First of all, not all
    the jobs that will be created--if you create a manufacturing job, let me
    just give you another example, if you create a few thousand more
    manufacturing jobs, there will be about one and a half other jobs
    created, many of which don't require many skills at all, for every
    manufacturing job you create, because that's the way that works. I would
    be looking at a State strategy to hook into the national strategy, which
    would take advantage of lower interest rates, the specific programs of
    the administration, and which would focus on those two areas: changing
    the skill mix, changing the job mix.
        Yes?

    Space Station

        Q. Mr. President, we've talked about the space station funding with
    several people today. A lot of people in north Alabama depend on the
    space station program and, of course, NASA for their livelihood. This
    administration is committed to funding right now. Is it committed, say,
    next year? The following year?
        The President. Absolutely.
        Q. Or should those NASA workers look for other jobs?
        The President. No. I feel passionately myself,

    [[Page 1152]]

    as does the Vice President, about the space program and about this
    project as redesigned. I want to have a very candid conversation with
    you about this. I mean, I want to say things, and I don't want you to
    overdraw the political implications. But I want to just try to describe
    to you the situation I found. When I was elected President, I was
    elected saying that we were going to have to cut the deficit and cut a
    lot of spending but that a lot of the targets for spending cuts I did
    not agree with. In other words, there was a big constituency in the
    Congress last year for eliminating the space station and eliminating the
    superconducting super collider. I thought the space station was very
    important technology, and I thought the super collider was very
    important science, and I still do.
        I also think that with regard to the space station, you have to see
    the validity of the space station not only in terms of its own merits
    but in terms of what we have already done to the science and technology
    base of the country by cutting the defense budget since 1987--which is
    not just closing bases, it's shutting down contracts--without
    aggressively implementing a defense conversion strategy until about 4
    months ago when we started in earnest to spend funds that had lain
    dormant up here in Washington for a year almost. So there are two
    reasons, I think, to go forward.
        It was obvious to me that the space station was in trouble on
    management grounds, design grounds, and because the political
    constituency for it had gotten too narrow, that it was too narrowly
    focused around Alabama and Florida and Texas and California where the
    jobs were. We can't afford to start voting in the Congress based on that
    alone. If it's in the national interest, we should continue it. So we
    got this eminent body, as you know, to review the whole space station
    project, to look at the budget constraints, and to design a program that
    we could continue in good faith.
        As you know, the program only survived by one vote the first time in
    the House. And two friends of mine, who were part of a group that had
    voted to kill it, stayed until the end and changed their votes and voted
    to put it over. And I was immensely gratified by that. I think we have
    the votes in the Senate to continue it, and I am passionately committed
    to it. I believe in it very strongly. So I can tell you, I'll be there.
        I also want to say to you, though, that one of the problems is that
    when people who advocate the space station at the same time say things
    like, ``Well, it's just spending, stupid. If we just cut more spending,
    we wouldn't have to raise any revenues,'' and try to falsely give the
    impression that all these taxes are going to come on the middle class
    and that it's not going to go to deficit reduction, and imply that there
    is no spending cut in the program as it is when that's not true, that
    creates a problem. I'll give you an example in the case of the super
    collider just so you'll see how sharply it is. At the very moment the
    super collider, which I was strongly supporting, came up for a vote in
    the House of Representatives, on the steps of the Capitol were
    standing--and the super collider is in Texas, you know, primarily, a
    little bit in Louisiana--the two Republican Senators from Texas and Mr.
    Perot from Texas, saying, ``We've got to cut more spending.'' So they
    send the message to the House, and the thing loses by 70 votes more in
    the House than it did last year. They just--``Well let's just lob them
    one then.''
        In other words, it is very difficult, when all these other people
    from other States are getting nothing out of this budget, if the people
    from the States that have massive Federal projects won't help to bring
    the deficit down and make the tough choices. It makes it harder to keep
    it alive. Now, that's just a fact. Consider how you'd feel if you were a
    Member of Congress from Iowa where we've cut farm programs, from the
    Rocky Mountain West where we have restrained the Government subsidies of
    a lot of the resources in the West, and you're being asked to keep alive
    the space station or the super collider, and the people who represent
    those States are screaming at you that if only you'd cut more spending
    you wouldn't have to raise these taxes. Now, that's really the political
    problem.
        I can do a couple more. Go ahead.

    Military Base Closings

        Q. Mr. President, in our area in southern Alabama, in Mobile, people
    have said, the economic plan--we'd like to support it, but, on the other
    hand, we see the Federal Government do things like build a brand new
    home port and then within a couple of years decide to close something
    that hasn't really had a chance to even rust. How do you instill
    confidence in--

    [[Page 1153]]

        The President. You mean because of the base closing operation?
        Q. Yes, exactly.
        The President. Well, let me say, first of all, I can't either defend
    or criticize every particular decision of the base closing commission. I
    have to tell you that they have a very difficult job. The Joint Chiefs
    of Staff made recommendations to them, passed on by the Secretary of
    Defense. They reviewed it, and they modified it to some extent to try to
    ease the unemployment impact in some areas. But here is the fundamental
    problem, and I'll come back to your specific case.
        The fundamental problem is that we are going in rather rapid
    succession from a military with about 2.5 million people in 1987 to one
    with somewhere between 1.6 million and 1.4 million people at the end of
    this decade. Now, as we do that, we were looking at projected downsizing
    of the military force by 40 percent, with a base structure downsized by
    only 9. If you do that, that means you're going to have a lot of base
    structure and capacity you can't use. And what will happen is you will
    have to cut contracts for these weapons that are so important to us. For
    example, in the attack on Iraq where we sent the cruise missiles in,
    it's very important that we continue to modernize those things, make
    them more accurate, continue to develop weaponry. You have to cut more
    of that if you don't cut bases and structure appropriately. So, in
    general, I had to approve that.
        Now, my argument to the people in Mobile is that there are long lead
    times in defense expenditures. The decision to build that facility, to
    modernize it, was made probably in the early eighties before we could
    have anticipated the end of the cold war, the collapse of the Soviet
    Union, the need to redesign this whole national security system. And
    that should not be viewed as a waste.
        On the other hand, what ought to be done is the Government should
    have a significant burden to work with the people of Alabama to figure
    out what can be done to turn that to a valuable commercial use. How can
    this be used to create jobs and opportunity for Alabama? How can this be
    turned into a real asset for your State? That is my commitment. My
    problem with this whole defense downsizing all along is there are all
    these economic studies which show that you can create about as many jobs
    in civilian life as you can in defense for about half the money. But if
    you don't spend any of the money and if you don't work at it, then
    you'll never get that done. So that's the only answer I can give you.
        I'll take another couple. Go ahead.

    NASA and Senator Richard Shelby

        Q. I've been getting shrugs all day to this question, Mr. President.
    Let's try once more. It was the biggest story in Alabama politically all
    year. About 5 months ago, Mr. Panetta gave a directive to NASA to
    transfer the external tank project out of Huntsville. The press was told
    this was done to punish Mr. Shelby for his criticisms of your economic
    program. NASA has written back to you 2 months ago saying this is a dumb
    idea, it's not safe, it doesn't make economic sense, and we can't
    guarantee the safety of future shuttle flights if you separate the
    management team from the engineers they manage. What is the status of
    what we call the ``Shelby sanction''?
        The President. Well, first of all, you just told me something I
    didn't know. I had no idea that NASA had written to me about that, and I
    will take it up immediately.
        Secondly, let me tell you, you can go back through my whole career
    as Governor, which was a pretty successful one, and I got a lot done,
    and I went through a whole lot of tough decisions, usually with the same
    sort of criticism I've been getting early on here. When you start
    something tough and you start pushing rocks up a hill, you know,
    sometimes you have to settle for 85 percent of what you ask for. But if
    you advance the ball, that's the game.
        I have to tell you, I have not had any personal criticism of anyone
    for their opposition to my plans. The thing that I thought was wrong
    about what Senator Shelby did was that he launched his criticism in a
    very personal way against the Vice President after the television
    cameras showed up, and I thought that was wrong. I thought it was
    insensitive to a new Vice President and President. I didn't like that.
        I have tried to have, and I want to have, a good relationship with
    Senator Shelby. I have a very good relationship with several Republican
    Senators who rarely vote with me. But there are all kinds of other
    issues. This is not the end of the world. This economic plan--after we
    finish this, we've got to pass national service, which is being debated,
    which was one of the heartland provisions of my campaign. We've got

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    to deal with the health care crisis, and we're going to have some
    bipartisan support on that. We've got to take up a crime bill in an
    environment which is very troubling in America today. We've got a whole
    lot of other fish to fry for the American people. And I do not want to
    have any kind of bad relationship with any Member of Congress I can
    avoid. So I want to have a good relationship with Senator Shelby. And I
    have to tell you, that was my only personal regret. The fact that he
    stood up against my program is a decision for him to make. But I did not
    know what you just told me about that letter, and I will get it and
    review it and get a report back from the NASA Director.
        Yes?

    Unfunded Federal Mandates

        Q. Mr. President, one of the questions that we raised earlier--being
    from Montgomery, we're very sensitive to the fact that over the years
    the Federal Government has mandated programs and then has asked the
    States to pay more along the way, something that you can relate to from
    your days in Arkansas. Is there any encouragement from your
    administration toward the new administration of Governor Folsom----
        The President. Absolutely. Absolutely. I just talked to the National
    Association of Counties this week, and I reiterated what I said in my 3-
    hour work session with the Governors earlier this year. We are going to
    do everything we can to stop this practice of nonfunded mandates. One of
    the charges I gave the Vice President when he undertook this reinventing
    Government project, which I think will be very exciting to you and to
    the people of Alabama when we recommend some pretty fundamental changes
    in the way the Federal Government operates, is to try to get out of this
    business of rulemaking against the States and the local governments that
    cost money without paying for it.
        Now, I have to say, I want to give just this little window here.
    There are times when the Congress passes laws that the President is not
    in a position to veto. For example, sometimes the Congress will put a
    little mandate in a huge budget bill that you simply cannot veto,
    because you have to let the agencies go forward. But the Congress, the
    Democrats who have been involved in this in the past clearly know of my
    position on this and my strong conviction. I think it's wrong.
        I'll take one last question. Go ahead.
        Q. Mr. President, I've been told I can't return to Alabama until I
    ask you: Who's going to win the next Alabama and Arkansas game?
        The President. Well, all I can say is after I went to the last one I
    predicted that Alabama would win the national championship. And I hope
    we'll be more competitive next year. I think we probably will be.
        Thank you.

    Note: The President spoke at 4:55 p.m. in the Roosevelt Room at the
    White House.