    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [March 23, 1993]
    [Pages 343-345]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to Democratic Governors Association Members and State and
    Business Leaders
    March 23, 1993

        Thank you very much. Governor Walters, thank you for that
    introduction. That was spoken with a fervor that could have only been
    mustered by someone who, a year and a month ago, was freezing to death
    in the Super 8 Motel in Manchester, New Hampshire. [Laughter]
        I also want to tell you that we just had a press conference at the
    other end of the hall, and I was upstairs on the telephone, and I didn't
    know you were here yet. And I was told that I had been introduced, so I
    rushed downstairs, only to find that I would be introduced twice or
    thrice. [Laughter]
        I'm delighted to see you all. I thank you for being here. I thank
    the leaders of business and labor and State and local government for
    coming along with my colleagues in the Democratic Governors group to
    endorse this program.
        Last week was a remarkable week here in this Capital. The House of
    Representatives took a strong stand for the most credible deficit
    reduction program in anybody's memory. At their request and based on the
    Congressional Budget Office estimates and based on what the Governors
    asked, we took another $60 billion-plus in deficit reduction spending
    cuts so that now we'll have $500 billion in deficit reduction over 5
    years; a significant amount of tax increases, most of them on upper
    income people whose incomes went up the most in the 1980's, but a broad-
    based Btu tax that we think will both preserve the environment, promote
    energy conservation, and raise money in a fair way; big spending cuts;
    and finally, some very significant but very targeted investment
    increases.
        The debate moves to the Senate this week, and I want to tell you a
    little about that, because there is an honest philosophical debate going
    on, as well as an underlying political one that I need your help on. In
    the last 12 years I think you could argue that your Government had two
    big problems: one is that the deficit literally exploded, and the public
    debt quadrupled. We started the decade of 1980 with a $1 trillion debt;
    we in 1992 had it up to $4 trillion, with huge projected annual
    operating deficits. That is a massive problem. It led to a big gap
    between short- and long-term interest rates, and it clearly had a major
    contributing impact on our trade deficit, our ability to save and
    invest, and our long-term economic growth. We had to do something about
    it.
        The other big problem was that we were actually seeing reductions in
    investment by the National Government even as all of our competitors
    were increasing their investment. And that

    [[Page 344]]

    may seem inconsistent. I mean, how could we be making a relatively
    smaller contribution at the national level to the education, for
    example, of people who graduate from high school but don't go to college
    and need apprenticeship programs? How could we be retrenching in our
    commitment to the education of our young children and to dealing with
    the problems of poor children? How could we be retrenching in our
    commitment to develop new technologies and new partnerships in the
    public-private sector and new partnerships for dual-use technologies
    between defense and domestic technologies?
        Well, the answer is pretty clear. We're spending more and more money
    every year, first on defense in the first part of the 1980's. And then
    the latter half of the 1980's, while we have cut defense, we spend even
    more on interest on the debt and more money for the same health care.
    And then as all of you know, those of you who are employers in
    particular, about 100,000 Americans a month are actually losing their
    health insurance; and many of them, the lower wage working people, are
    coming onto the public rolls.
        So that's what's happened to us. So we run the deficit up. We run
    investment down at the same time. That is a huge problem. Our plan seeks
    to address both of these.
        There are those who really don't want a change. They don't want any
    tax increases, or they don't really want the cuts that I have offered.
    And they're going to maneuver this process for political paralysis.
        But underneath that or over that, if you will, there are a group of
    people who do want to reduce the deficit but just don't agree that an
    investment strategy is important. And they are the people that I urge
    you to reach out to, because it is important to reduce the deficit. But
    it's also important to increase investment. And if you do one without
    the other, you won't get the full benefits of this plan.
        I would argue to you that we have gotten a major benefit out of
    deficit reduction. Look what has happened to long-term interest rates:
    down almost a full point since the election. You have millions of
    Americans refinancing business debt, consumer debt, home mortgages,
    getting the benefit of variable interest rates on various kinds of debt
    payment. That will unleash billions of dollars, tens of billions of
    dollars into this economy this year, which in turn will be reinvested,
    which will create new jobs. That is very important. I don't think the
    marginal amount of deficit reduction you would get by killing this
    investment package or killing our emergency jobs program would bring
    interest rates down any more. You just can't get them down much more.
    But we would, if we killed it, forgo the chance to jumpstart the job
    engine of this economy by half a million jobs. And that is a serious
    thing. That's about a half a percent on the unemployment rate. That's a
    very substantial impact.
        Now, let me make one other comment that, again, the employers here
    as well as the employees will not find surprising. There has been a
    dramatic restructuring of our economy and of the global economy which
    has been going on for the better part of 20 years, and we've been
    clearly aware of it for a decade now, where the biggest companies in
    America have been forced to restructure their operations here, either
    because they're going global and they have to put production overseas or
    because they just have to increase productivity and do more with less
    through technology. But many of them have also provided for outsourcing
    or contracts with smaller businesses, and the American entrepreneurial
    economy for the entire decade of the 1980's was able to create more jobs
    in the small business sector and the medium-size business sector than
    big business lost.
        Two years ago, it stopped. And it started slowing down about 4 years
    ago, so that over a 4-year period we had almost no net job growth in the
    private sector. Virtually all, not quite all but almost all the net job
    growth for the previous 4 years was, believe it or not, in State, local,
    and national government.
        Job growth was canceled out by job reduction in the private sector.
    Now, why did that happen? The truth is, no one knows all of the answers.
    It's an international phenomenon. In Europe during the 1980's, where
    they didn't have the vital small business sector that we had and all the
    entrepreneurial culture, there were two major economic recoveries where
    the economy was growing like crazy and no new jobs were created. So this
    is a global phenomenon.
        But we also know that part of the problem here has been the credit
    crunch, the general recession, the cost of hiring new workers because of
    the back-breaking costs of health care as well as other attendant costs.
    So more and more people are relying on part-time workers or asking their
    existing work force to work over-

    [[Page 345]]

    time.
        I say that to make this point: We have gotten the maximum short-term
    benefits we can get now out of a very, very tough and vigorous deficit
    reduction program. We are going to get long-term benefits out of it. The
    time has come to put in the other piece to create jobs and to lay the
    foundation for an educated work force and for a high-technology future.
    And that is what the rest of this program does.
        So I ask those of you who are living out there at the grassroots, in
    the private sector or at the State and local level, to go make that
    honest policy argument in the United States Senate. We've done our work
    on deficit reduction. Let's do our work on investing in our people and
    putting them back to work, too.
        Thank you very much.

    Note: The President spoke at 2:38 p.m. in the State Dining Room at the
    White House. In his remarks, he referred to Gov. David Walters of
    Oklahoma, chairman, Democratic Governors Association.