    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [February 19, 1993]
    [Pages 125-137]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks and a Question-and-Answer Session on the Economic Program in
    Chillicothe, Ohio
    February 19, 1993

        The President. Thank you very much. Let me say, first of all, what a
    wonderful time I have had in your community since I arrived last night.
    I have seen a lot of your fellow citizens who did not win the lottery.
    [Laughter] They were out by the Comfort Inn where we stayed last night,
    and they were around the city park where--the Mayor and I went jogging
    this morning around the city park. It was 3 degrees, which I suppose
    means I don't have enough sense to be President. [Laughter] But we had a
    wonderful time. We ran around the park three times and saw some students
    from the school, and we saw some city employees and others. I flew in
    here with Congressman Strickland last night, and we had a great visit on
    the way in. I'm glad to see him over here.
        And so between the two of them I know a lot about this congressional
    district and a good deal about this community. I know it has a lot of
    beautiful old buildings--I saw them this morning--and was the first
    capital of Ohio. I also know it has a nice new McDonald's--[laughter]--
    because I went there this morning. Good to see you. [Applause] How
    embarrassing.
        Let me say, too, I want to thank your school officials,
    Superintendent Cline and your principal, Rod Jenkins. And Melissa Hagen
    did a good job, don't you think? I thought she did a really good job.
    Maybe she'll be coming back here someday to hold a town meeting like
    this; you can't tell.
        I also want to say--I just have a couple of notes. Normally I don't
    use them, and I want to put them down, but I asked for some notes about
    some people in the crowd because they illustrate what to me this effort
    that I have undertaken as your President is all about.
        Is John Cochran here? Is he here anywhere? John, are you here? Stand
    up there. Now, my notes say that he has 16 children--and you're one of
    them--[laughter]--that he has the largest

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    family-owned farm in town. And important to me, he owns the bowling
    alley. [Laughter] And I want to thank him. He was unable to come to the
    Inauguration.
        I want to say--is 8-year-old Tiffany Sexton here? Stand up here,
    Tiffany. Now, these are her parents, Sgt. Anthony and Jerry Sexton; is
    that right? All of you stand up. I want you to see them. Now, she
    invited me to dinner and promised to cook--Tiffany--so I had to take a
    raincheck, and I asked them to come today.
        Is Cindy Baker here? Stand up. Cindy Baker has three children, one
    of whom is a student in this school. She wrote me a half a dozen times
    in the election, pleading with me to come to Chillicothe. So I thought
    since she was the first person who invited me, she should be here at
    this meeting.
        I also want you to know, you know, we had those famous bus tours,
    you remember, Hillary and I and Al and Tipper Gore. What you may not
    know is the people who owned the bus company that we used all during the
    bus tours all across America are from Ohio. They're from Columbus, and
    they are here: Barbara and Tom Sabatino and Kerwin and Regina Elmers.
    Would they stand? They're here somewhere, I think. Yes, in the back.
    There's Tom, my bus driver. Give him a hand. [Applause] Thanks. If it
    hadn't been for them, we might not have won the election. [Laughter]
        Now, let me just make a couple of introductory remarks, and then
    we'll get right to the questions, because I want to just restate very
    briefly how I came to the plan that I announced to the Congress a couple
    of nights ago.
        First, let me say that I was Governor for 12 years of a State with a
    lot of towns like this one, a lot of counties like Ross County, a lot of
    manufacturing facilities like the Mead Paper facility here that worked
    our people and a lot of people who worked on the farm. And we had a
    pretty tough time in the eighties. We lost a lot of manufacturing jobs,
    a lot of farm jobs. A lot of our small towns got in trouble. And I was
    forced to spend a lot of time trying to figure out how we could change
    things to make a better future for the hard-working good people of my
    State. So a lot of what I believe about all this goes directly to the
    experience that I've had for many years working with people like you.
        If I might, let me just mention one or two things. A lot of our
    problems stem from all the pressures we're having now in a global
    economy and stem from the fact that we've got some problems here at home
    which make it difficult for us to compete in that economy. We have a
    higher percentage of poor children. We have much more diversity than
    many of the countries with which we compete. And historically, we have
    never had the kind of partnership between Government and business and
    working people that some other countries have. So, for example, if you
    read yesterday Boeing is laying off a lot of employees in the airline
    manufacturing business--not affecting Ohio, but it's a big thing for
    America, in part because of defense cuts but in part because Europe put
    $26 billion into the airbus project, a direct taxpayer investment, to
    make sure they could make airplanes that would compete with Boeing,
    something that we haven't historically done.
        So we have a new global economy in which there are great
    opportunities but new challenges. We have some problems here at home
    that make it hard for us to compete. We have to educate a higher
    percentage of our people at a higher level. We have to provide basic
    health care to everybody but control health care costs. All of our major
    manufacturers are spending 30 percent more for health care than all
    their competitors around the world, and that puts them in a real bind.
    And we have many other challenges of this kind that we have to face.
        Now, for the last 12 years we have followed a certain approach
    there. We have said as a nation our policy is to keep taxes low on the
    wealthiest Americans in the hope that they will invest in our economy
    and make it grow. And that worked. In the last 12 years, the tax burden
    basically went up on the middle class, went down on the wealthiest
    Americans, and according to a study released last year, about 70 percent
    of the economic gains of the last decade went to the top 1 or 2 percent
    of the people in the country. That was a deliberate decision that was
    made to try to free up that money in the hope that it would be invested
    to create new jobs for everybody else.
        Also, our theory was that the Government should not be too active.
    So we didn't deal with a lot of the issues that other Governments around
    the world were dealing with, in Japan, in Germany and other countries,
    for example. And we actually reduced our investment of your

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    money in a lot of things that make jobs, like the Community Development
    Block Grant program, which cities in Ohio like because they provide
    funds not only to do things like repair your parks but also to build
    roads and rail networks and other support systems for new industry if
    you're trying to get them into a community. We sort of held the lid on
    that on the theory that we should just put a big bind on the Government,
    and all Government spending was bad, and all Government activity should
    be discouraged, and we'll just see what happens.
        Well, there have been some not-too-bad years in the last 12. But
    overall, we've still got a lot of problems. Unemployment's too high.
    Most people are working harder for lower wages. Health care costs are
    exploding, but fewer people have health care coverage in this country
    than any other major country in the world. And the insecurity of losing
    health insurance is one of the major problems for many, many American
    families. And we are not educating a high enough percentage of our
    people at very high levels to compete in this global economy. And
    because we lowered taxes a lot on the wealthy but could not control the
    health care costs the Government was spending, we starting running
    bigger deficits. So that even though we reduced our investment in things
    like aid for small cities to create jobs, the cost of health care and
    the cost of interest on our debt exploded, so we've got a huge
    Government deficit. Our national debt is now 4 times as big as it was in
    1980.
        So when I got elected President, I did it with a conviction that we
    needed to do the following things: We needed to emphasize investment for
    jobs and for incomes--that means investments in new technologies,
    investments in things like highways and bridges and airports and water
    systems and sewer systems, investments in the areas that will create
    jobs for the future, and investments in education of our children all
    the way from Head Start to college loans, to investments for adults to
    become retrained if they lose their jobs; second, that we needed to
    provide affordable health care for all Americans and bring the cost in
    line with inflation before it bankrupts the country with nothing to show
    for it; third, that we had to bring down the national debt; and fourth,
    that we needed a national economic strategy where the American people
    could work in partnership again to try to grow this economy.
        Now, we have a lot of tough decisions to make to try to pursue all
    these objectives at once. The plan I announced to the Congress relies on
    the following things.
        Number one, we cut spending, 150 different specific spending cuts,
    putting a lid on Federal pay increases, cutting the White House staff by
    25 percent, cutting the administrative costs of the Federal Government
    by 14 percent over 4 years, saving billions and billions of dollars.
        Number two, we raise funds in taxes in a way that I think is fair,
    with 70 percent of the money coming from people whose incomes are above
    $100,000 and with a broad-based energy tax that would affect a little
    bit on oil, a little bit on natural gas, a little bit on coal, so we
    wouldn't hit any region of the country too much.
        Thirdly, we increase dramatically something that a lot of you may
    not know about that's one of the best things in the Tax Code--it's
    called the refundable earned-income tax credit--so that no one with an
    income of $30,000 a year or less would pay any new money under this
    plan, and so that people who work 40 hours a week and have children in
    their home would be lifted above poverty for the first time for working,
    not for welfare but for working.
        The other thing that you will hear from some of my critics, and so I
    want to tell you it's true, is that we did actually increase some funds:
    in the short run, with a plan to jumpstart the economy by creating a
    half million new jobs; and over the long run, with increases in
    education programs from Head Start to worker retraining, to
    apprenticeship programs for high school grads who don't go on to
    college, to increased access to college loans, to retraining for workers
    who lose their jobs when there are defense cuts or other cuts in our
    industry. We have to do that because that's what determines what
    people's incomes are and whether you can keep people working. We also
    did increase funds in direct aid to things that create jobs: new
    technologies and investments to put people to work.
        So it's a balanced program: deep spending cuts, tax increases fairly
    applied, and new investments in the areas that create jobs. That's what
    I'm trying to do. The Congress will decide to vote for it in part based
    on whether people in towns like Chillicothe all over America think it's
    a good deal.
        I can tell you this: The price of doing the same thing is higher
    than the price of my pro-

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    gram. And I'll just give you one example and open the floor to
    questions. Just since the election, since we made it absolutely clear
    that we were determined to bring down the deficit, interest rates, long
    term, have begun to drop. If you look at the difference in long-term
    interest rates on election day and where they were after I made my
    speech to Congress, a lot of the people who might have spent $10 or $12
    or $15 more per month in energy costs, directly and indirectly, will
    save much more than that if they're paying a home mortgage, a note on a
    car, they've got consumer credit, or they otherwise have to borrow
    money.
        That's because if you bring the deficit down, you not only free up
    tax dollars to spend on education and other things, you free up money in
    the private sector to borrow at lower interest rates. So an awful lot of
    people are going to save a lot of money on this program immediately. It
    will create jobs immediately. And the price of it, I am confident, is
    lower than the price of doing the same old thing.
        So I thank you for being here. I want to say a special word of
    thanks to all these Ohio elected officials who are here. I presume
    they've all been introduced, but I saw Senator Glenn and Senator
    Metzenbaum and Speaker Riffe, a lot of others here. I thank them for
    being here. And we're here for you. So thank you very much, and I'll
    take questions.

    Social Security

        Q. I get Social Security disability, a little over $6,000 a year.
    And if that is willing to help bring the economy up to shape, I am
    willing to let some of my Social Security go for that economy. And I was
    wondering if that will affect my Social Security disability any.
        The President. The short answer to that is it depends on whether you
    pay any tax now on your income. Let me explain what that means.
        The only people on Social Security who will pay any more tax are
    those who pay some tax on it now. That is, in America today, if you drew
    a Social Security check, and in addition to the Social Security check
    you have an income of $25,000 a year or more, or if you're a married
    couple, $32,000 a year or more, one-half of that income is subject to
    income tax at whatever rate your total income is.
        We propose to go from half of that to 85 percent, because that is
    about the amount that the average Social Security recipient should pay
    taxes on if they get the rest of it for a lifetime. The rest of it, that
    is, that 15 percent, will equal about what they paid in plus interest.
    So they get back what they paid in plus interest without taxation on
    average, and the rest of it would be subject to tax.
        So the answer is, if you draw Social Security and you pay some tax
    now, you would pay some more. If you don't pay any tax now, you won't
    pay any more because your income is too low to be subject to it.

    Student Loans

        Q. Hi. My name is Greg Gilmore, and I'm a senior here at Chillicothe
    High School. How will the new program for college loans and community
    service be handled? And, to clarify, what process will students have to
    go through to receive the college loans?
        The President. Well, we're working out the details now. But let me
    tell you how I want it to work, okay? And it will be pretty close to
    this, I think. First of all, let me tell you how it works today. You
    know, there is a student loan program today, and the more you borrow,
    the more you have to pay back in short order. And you get the money
    through your bank, and there's a Government guarantee.
        Today, that program costs the taxpayers about $4 billion a year: $3
    billion in busted loans where people don't pay back the money they owe
    and $1 billion in transaction fees to the bank. What I hope to be able
    to do is to have people borrow the money directly from the Government
    and pay it back at tax time so they can't beat the bill. That will save
    a huge amount of money. And I want to take the savings and do two
    things:
        One is to say to young people, you must pay the money back, but you
    can pay the money back as a percentage of your income. So that if you
    make less money, you pay less, and we'll string it out over longer
    periods of time. So we'll never discourage anybody from being a teacher
    or working in some other kind of public work just because the salary is
    low.
        The second thing we want to do is give people the option either to
    earn credits against this loan before they go to college, or to do
    community service after they get out, as teachers or police officers or
    in other public service. And the way I'm trying to set it up, if you
    borrowed the maximum amount of money we'd make

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    available and then you worked for 2 years at roughly half pay as a
    teacher or police officer, that would wipe off your obligation. And
    you'd pay your loan back by giving something back to your country. And
    so that's how it's supposed to work.
        Now, that's more Government spending all right, but see, that's a
    direct investment in you. That's not expanding some Government program.
    That's putting the money direct into you. That's cutting the cost of a
    program and increasing investment in your future.

    Youth Apprenticeship Program

        Q. Mr. President, I'm a student member from Pickley Ross Vocational
    Center. Since there is a critical need in this country for skilled
    workers, I'm excited about your youth apprenticeship program. My
    question is what role will public vocational education play in your
    youth apprenticeship program?
        The President. The short answer is, a big one. The longer answer is,
    here's how I want to set it up. What we're trying to do at the national
    level is to come up with enough funds to match with local funds and to
    encourage private sector people to get into an apprenticeship program
    which will be an American version of what the Europeans have done for
    years.
        I've asked the Labor Secretary, Bob Reich, to work with the
    Education Department, the vocational people in the private sector to try
    to set up a framework within which every State in America would be able
    to design a program that a person, a young man or woman, could enter in
    high school if they wanted, and they would continue for at least 2 years
    after high school.
        Let me tell you why we have to do that very quickly. If you look at
    the income charts on American earnings from, oh, let's say for the last
    20 years, for the last 20 years you see a bigger and bigger and bigger
    gap every year between the earnings of young people with college degrees
    and young people who drop out of high school or young people who had
    only a high school diploma. However, if you look at the earnings of
    young people who get at least 2 years of training after high school in a
    vocational institution, the community colleges, in the service, or on
    the job, if it is high-quality training, a great deal of that job gap is
    closed, and the young person moreover acquires the ability to continue
    to learn new things throughout a lifetime.
        The best programs are those which start in the high schools and run
    with some continuity for 2 years thereafter. And so there is no magic
    answer. We're going to have to design these sector by sector in the
    economy, and the National Government can't do it. We can just set up a
    framework and standards and provide some of the funds, but we're going
    to have to do it on a State-by-State and sector-by-sector basis.
        But that's what we have to do. We need to get--first of all, my
    dream would be no high school dropouts, and then for 100 percent of the
    high school graduates to have at least 2 years of some kind of very
    high-quality training that is approved by both education and the private
    sector. Some would be delivered in schools; some would be delivered in
    the job place.

    Health Care

        Q. My name is Karen Ritinger. Mr. President, once reimbursement for
    Medicare is reduced, what actions will be implemented to prevent health
    care providers from shifting costs to the private sector?
        The President. Well, first of all, that is a bigger problem with
    Medicaid than Medicare, as you know, I'm sure. The budget that I
    introduced to do that, to cut down on Medicare reimbursement, is a
    budget that assumes we're not going to do anything else about health
    care. Within 100 days of my taking office, we're going to present a plan
    to the Congress to try to deal with the cost shifting problem.
        The question she asked indicates a real understanding of the
    problem. If all you do is to cut what the Government pays to doctors and
    hospitals, if you cut it below their real costs, then the medical
    providers will find a way to recover their real costs from people who
    pay directly or through private insurance, and the insurance premiums
    will go up more.
        So what we have to do is to do what every other country in the world
    but America has done and develop some sort of all-payer system where the
    reimbursement levels are pretty much the same and where you have real
    efforts to eliminate unnecessary duplication and waste and paperwork
    that benefit the private sector along with the public sector, and that's
    what we're going to do.
        In other words, I just presented the best budget I could with the
    system we've got, but what we need is a comprehensive system which

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    eliminates the cost shifting from the Medicare and Medicaid to the
    private sector and has some cost reduction mechanisms that benefit
    everybody.
        Let me say--I don't know, there must be some people that work at the
    factories in town or work in other manufacturing facilities. Our program
    has some significant tax incentives over the next 5 years for businesses
    big and small to reinvest, to create jobs, and to become more
    productive. But the best thing we could do, better than an investment
    tax credit, better than the tax changes for big manufacturers, the best
    thing we could do is to find a way to get health costs in line with
    inflation and still take care of everybody in America. If you did that,
    you'd free up hundreds of billions of dollars to make America compete
    again. And so that's a very good question.
        Yes, let's take one over here. We haven't taken any over here.

    NAFTA

        Q. Mr. President, as a member of the UAW and local union president,
    I'm concerned about the loss of American jobs to foreign countries. What
    impact will the North American Free Trade Act have on the economy and
    the budget deficit?
        The President. The North American Free Trade Agreement, in my
    opinion, will help the economy and reduce the budget deficit if, but
    only if, it is implemented in a way that protects us from unfair
    practices.
        What I want to do is to get the North American Free Trade Agreement
    ratified, if we can also get an agreement that requires the Mexican
    Government and private sector to invest in environmental investments to
    get their environmental cost up to ours, so we don't have people just
    running down there so they can evade all the Clean Air Act and all those
    other acts in America. And I want to have some labor standards
    agreements that will reassure us that the Mexican Government will
    enforce even their own labor laws.
        One of the things that--I don't know if you all remember one of the
    television ads I ran in the last campaign about an American program
    where we were actually subsidizing companies that would move their
    plants overseas, and some of them went to Central America and lowered
    wages. They didn't raise wages down there; they went down there and
    lowered wages. So what we have to know is that we are actually
    strengthening the Mexican economy so they will buy more.
        Now, let me say this in defense of President Salinas. In the last 5
    years, our trade deficit with Mexico has gone from a huge deficit to a
    slight surplus, and our volume has gone way up. So they bought a lot
    more from us than we sold to them relative to where we were 5 or 6 years
    ago.
        But this agreement, I'm convinced, needs some strengthening in order
    to avoid hurting the American work force. I do think, if you look at it
    over the long run, a country like ours can only get wealthier by selling
    more to other countries. And it's easier to sell to your neighbors than
    it is to people far away. And so far, Mexico has not been wealthy enough
    to buy a significant volume of our goods.
        Let me give you an example. Our biggest trading partner by far is
    Canada, even though it's a tiny country; it's a big country
    geographically, but in terms of population they only have about 30
    million people. But they buy a huge amount of our stuff, by far our
    biggest trading partner.
        So we would be better off--one of the reasons the Japanese and the
    Germans have gotten so much richer so much quicker in the last 10 years
    is that they've been selling more stuff overseas. So I've got to try to
    make that a market. It's good for us over the long run, but I'm going to
    try to do it in a way that builds up the American manufacturing base,
    not tears it down.

    Abortion

        Q. I know the discussion so far has been centered around the
    economy, but personally I feel I must address a different issue. The
    Senate Report, 97th Congress, S. 158, concludes that, ``Physicians,
    biologists and other scientists agree that conception marks the
    beginning of the life of the human being.'' And it goes on to say,
    ``There's overwhelming agreement on this point in countless medical,
    biological, and scientific writings.'' The Constitution of the United
    States guarantees life, liberty, and the pursuit of happiness. My
    question for you, Mr. President, is deep down inside do you believe that
    life begins at conception? And if so, why are we denying the right to
    life for the 4,400 human beings a day and 1.6 million human beings a
    year in the murder of an abortion?

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        The President. Wait a minute. Okay. My question for you is do you
    believe that women who have abortions should be tried for first degree
    murder?
        Q. Yes, I do.
        The President. Good. At least you have a consistent position. He
    said yes. That was his answer. His answer was yes.
        Then that brings me to the question--there are two different issues
    here, not one. One is the biological question: Is a cell a living thing?
    Answer? If two cells join in the process that begins to make a human
    being, are they living? Answer? No one disputes that. That's not the
    issue.
        The issue is a much deeper one, and one over which people have
    argued for a long time, one over which Christians have argued for a long
    time: When does the soul enter the body so that to terminate the living
    organism amounts to killing a person? That is the question. It is a
    deep, moral question over which serious Christians disagree.
        I have heard--you may smile with all your self-assurance, young man,
    but there are many Christian ministers who disagree with you. And the
    question is--and let me say, I honor your convictions. I worked very
    hard in my State to reduce the number of abortions. I don't like
    abortion. The question for policymakers on the issue of whether Roe v.
    Wade should be repealed is the question of whether we really are
    prepared to go all the way and make women and their doctors criminals
    because we believe we know that.
        Now, you are. But here's the problem. In a great democratic society,
    you have to be very careful what you apply the criminal law to. For
    example, we make drugs criminal, right? And we throw a lot of people in
    jail, and our jails are full and they're just doubling all the time
    because they're so full. And 90 percent of us agree that drug use should
    be criminal, and we've still got the jails full. You have to be very
    careful when you know that there is a difference that splits the
    American people right down the middle.
        Very few Americans believe that all abortions all the time are all
    right. Almost all Americans believe that abortion should be illegal when
    the children can live without the mother's assistance, when the children
    can live outside the mother's womb. There is about a 50-50 split in our
    country of honest conviction about whether terminating a baby in the
    mother's womb before the baby can live outside the mother's womb amounts
    to what you say it does, which is first degree murder.
        So the reason I support Roe v. Wade and the reason I signed a bill
    to make abortion illegal in the third trimester is because I think that
    the Government of this country should not make criminal activities over
    which even theologians are in serious disagreement. That's how I feel.

    Employment

        Q. My name is Melissa Zangree. Mr. President, I'm a sophomore here
    at Chillicothe High School. Will there be jobs for me when I graduate
    college?
        The President. There will be if my economic program has a chance to
    be put in, I think. But let me say this: The most maddening thing in the
    world for me as a public servant is to see people who want to work, who
    don't have jobs.
        A year ago yesterday we celebrated the first anniversary of the
    first primary in our Presidential campaign in New Hampshire. And so I
    made a few calls there, and I was reminiscing yesterday about going into
    New Hampshire, a State that tripled the unemployment rate in 3 years,
    and listening to young people like you tell me that the worst thing
    about their lives was going home at night when their parents, who had
    lost their jobs through no fault of their own, and they couldn't even
    bear to talk at the dinner table anymore.
         But it is the big challenge. What is happening is all these big
    companies are restructuring. They're trying to be more competitive in a
    global economy, and they're laying people off. And small companies have
    to make up the difference, and a lot them can't borrow money from the
    bank, and there aren't markets there.
        All I can tell you is I'm doing the very best I can to make sure
    that there will be jobs available for you. That is the issue. If we
    cannot maintain America's position and the American dream unless we are
    able to create a higher number of jobs every year. This is amazing.
    We're supposed to be coming out of this recession we've been in, and
    unemployment's higher now than it was at the bottom of the recession. So
    the answer to your question is, I honestly believe that if my program is
    given a chance to work, it will create jobs for young people

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    like you. That's what I honestly believe. I believe that.

    Taxes

        Q. Welcome, Mr. President. My name is Barbara Smith, and I'm a
    concerned citizen. And my question is, instead of imposing an energy tax
    which would unequally affect consumers, why not develop a national sales
    tax which would be equal to all consumers, or even a national lottery,
    to help with the deficit?
        The President. A lottery is a different issue. I doubt it would
    raise a great deal of money, and I've always been opposed to them,
    because lotteries tend to have an unequal effect, taking a
    disproportionate amount of money from lower income people. So I've
    always been opposed to that.
        But let's talk about the national sales tax. Almost every country
    that I know of that we compete with, advanced countries, all the
    European countries and Japan and Canada, have a national sales tax. They
    call it a value-added tax. Most of them--if you go to Canada you see it
    on your bill--you know, they separate it out, just like the sales tax.
        But most countries just put the value-added tax into the wholesale
    price, and you don't even see it on your bill. And a lot of those
    countries like that because what they do is they tax things sold in
    their country. Now, what's good about that? That means that--let's take,
    again, your plant here--if Mead Paper makes, let's say, stationery and
    sells 15 percent of its products overseas, those products would not be
    subject to the VAT tax. Or, you're in the UAW, if you make an
    automobile, and any automobile you sold in another country would be
    subject to no tax at all. Then, when another country's car came in here,
    it would be subject to the tax.
        So a lot a people in manufacturing like this national sales tax
    because it helps your exports, and it puts a burden on imports coming
    in, supports the job base of the country. It's perfectly legal; all our
    other competitors do it.
        Now, here's why I didn't propose it right now. That is a radical
    change in the tax system of the United States. It is something I think
    we may well have to look at in the years ahead. But I did not want to
    confuse two different things: One is the imperative of getting the
    deficit down, with the need to maybe change our tax system. I mean,
    there's only so much change a country can accommodate at the same time.
    Also, the energy tax equals about 1.5 percent of total Federal revenues,
    or 1.6 percent. And it will have a very modest impact on energy, and it
    is pretty equal throughout the regions of the country, actually.
        If you take a farmer, you might argue that a farmer might pay a
    little more directly or indirectly because if you buy fuel it's about 2
    cents a gallon, but then if you buy fertilizer, that's got a lot of fuel
    in it. So the only people who will be unevenly affected are people who
    buy things that have a lot of fuel component.
        But I thought, and by the way, we still have the lowest energy cost
    by far of any of our competitors, and our energy taxes are very low. If
    it were to put us out of compliance, I might have thought of that. But I
    do believe that America, at another time, and maybe not too long in the
    future, will debate whether we want to shift the nature of our tax
    system because we're in a global economy.
        But let me say one other thing. If you do a value-added tax, if you
    do a national sales tax, you have to be really careful to be fair to
    people. You have to exempt food; you have to exempt maybe clothing or a
    certain amount of allowance. You've got to be careful how you do it so
    you don't make it a regressive tax. But they can be designed that way,
    and we're the only major nation without one.

    Prescription Drug Costs

        Q. Mr. President, my name is Cathy Dunn. My mother's monthly
    prescription drug cost exceeds her monthly income on retirement. What,
    if anything, can be done about the rising cost of drugs in this country?
        The President. Well, one problem is that older people who are
    eligible for Medicare, but not poor enough to be on Medicaid, don't have
    their prescription drugs covered. So you have this ironic development
    that older people who have serious medical problems and require
    expensive medicine who are on Medicare might actually have lower
    incomes--real incomes--than some people on Medicaid. And it's a big gap
    in our health care system, and it's one that I'm going to try to see
    that we address now.
        Let me say, you may have seen on the other end of the age spectrum,
    I've been in somewhat of a dispute with some of the drug companies
    because I want to immunize all the children in our country. But only
    about half of our 2-year-olds are immunized against serious diseases.

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    That's a very serious thing. And I'm coming back to the drug problem.
    Let me bring you back around to this, because it's very important that
    you understand this. And we save $10 later for every $1 we invest now in
    immunizations of children for preventable diseases. And yet, a lot of
    vaccines made in America sell for lower prices overseas than they sell
    in America.
        Now, if you look at the price of vaccines--for a lot of these
    vaccines, the most expensive price goes to the family doctor who buys
    them. That's why the cost of getting your shots has gone from about, oh,
    $10 to over $200 if you just go to a family doctor and get all the
    baby's shots. Right?
        Next cheapest is, State government can buy vaccines in bulk. The
    next cheapest is, the Federal Government can buy even bigger--vaccines--
    and we buy through a Federal agency about 40 percent of the vaccines in
    the country, and then we give them out to the States. And then the
    States that have good public health networks, they give them out, and
    those shots are the cheapest of all. But even cheaper than that are some
    of these same vaccines made by American companies sold in foreign
    countries.
        Now, that all sounds terrible. Let me say one or two things, since
    I've been fighting with the drug companies, in defense of them. They're
    a very important part of our economy. They do a wonderful job in finding
    new drugs to solve problems. They have to spend a fortune to do all the
    research and development. The problem is that to sell those vaccines in
    other countries, these other countries are tougher on them, and because
    they want everybody immunized, they drive down the cost of the vaccines.
    So Americans are paying the whole research and development costs for
    people who benefit from these drugs all over the world, because the
    companies can't collect other places.
        Another problem is that we have more lawsuits in this country, so we
    add about $4 a vial to the vaccines to put into a fund against the
    possibility that some child might have a reaction. So they would always
    be somewhat more expensive.
        But we have got to find a way to work with the drug companies. They
    do very well, I want to emphasize. They are some of our best companies.
    But we've got to find a way to deal with these two huge problems. One is
    older people, particularly, paying huge prices for drugs that have been
    developed for some time, that are not experimental drugs. I think we'd
    all admit we should pay more for experimental drugs; that's got all the
    research cost in it. And the second is children in America paying more
    for vaccines than children in other countries, even though they were
    made here. And we're trying to work through that, and I think we're
    going to make some progress on it.

    Health Care Reform

        Q. Mr. President, I am one of those family doctors who you were
    speaking about, and I have a couple of questions. One is, in your
    address to the joint session of Congress, nothing was mentioned about
    tort reform. And I'm very concerned about that because of the
    malpractice crisis and the liability costs in malpractice insurance. The
    second thing is, our local medical society has reviewed at least four
    plans put forward by organized medicine, the American Academy of Family
    Physicians and so on. Are you going to look at those programs and
    incorporate physicians' ideas as you're formulating the policies?
        The President. Absolutely. And we will also bring doctors into the
    process. But let me answer the second question first. Last year there
    were two major suggestions made for health care reform by physicians
    groups, the American College of Physicians and the American Academy of
    Family Practice. A more modest but still significant program was offered
    by the American Medical Association. And the American Nurses Association
    put out a very interesting plan. And I think all of those things should
    have a big influence on what we do, because in the end it's the doctors
    and the other health care providers that have to live with whatever
    system we put out. So the answer to your question is yes, those
    suggestions, and in particular the two you mentioned, are being taken
    very seriously.
        Second, on cutting the cost of malpractice, that's a big issue with
    me. I'm proud of the fact that my State had the second lowest
    malpractice rates in the country. And one of the things we did was to
    pass a law enabling the court to fine anyone who brought a frivolous
    tort suit, if it was judged to be frivolous, that the lawyer himself or
    herself could actually be fined. Not a big fine, but it had a real
    impact.
        The other thing I think that has real promise is an experiment that
    I believe is now being tried in Maine and one or two other places

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    which really relates to family practitioners, because we cannot get
    medical reform in this country unless family practitioners, family
    doctors, feel freer to set simple fractures, to get back into the
    business of delivering babies, to do that whole range of things. The
    thing that a lot of people are working on now is being able to say to
    doctors in small towns and rural areas, for example, here are a set of
    accepted practice guidelines for this procedure or that procedure. If
    you can show that you have followed these guidelines, that will raise a
    presumption against malpractice for you. I think that has real promise.
        The third thing in really expensive areas is, we might all look at
    what's been done in the vaccine area. That really worked, where people
    just pay a fee into a fund and a big national fund is set up. And if
    there's a problem, you go against that fund; you don't have to go
    through a whole prolonged lawsuit with an insurance company, a lawyer, a
    doctor, and all the lawyers and all that. That's something else that I
    think we need to look at to see if that might have more general
    application.

    Economic Program

        Q. During the campaign, Ross Perot spoiled me with flip charts,
    pointers, and poster board. I'm a simple woman. What I need to hear from
    you is, over the next 4 years, how much spending cuts, dollar-wise, will
    we see? How much total revenue will be brought through our taxes,
    through the increase in our taxes? And what percentage of that is going
    towards new programs? In other words, we're hearing ``tax and spend,''
    the old Republican motto about the Democrats. I want you to show me in a
    simple manner exactly the dollar figures that we'll look at over the
    next 4 years.
        The President. I don't know if I can do the math in my head right
    now for 4 years, but I will tell you, basically, the tax bill goes from
    about $20 billion to about $75 billion over the next 4 years; the
    spending cuts go up to more than that in the fourth year. In the early
    years there are more tax increases than spending cuts; in the later
    years there are far more spending cuts than tax increases. At the end,
    they're about the same. The net aggregate reduction in the deficit over
    4 years is about $320 billion, over 5 years is at $475 billion less debt
    than we would otherwise have.
        In the fourth year of the budget, which is the one that we all
    target on under the Federal system, the deficit will go down $140
    billion a year in that year. Essentially, there will be a net increase
    in that fourth year in spending of about $26 billion a year. That is,
    there's about $40 billion more in spending, net new spending, all
    targeted toward things like the college loan program, Head Start, new
    technologies, and jobs and about $15 billion in additional tax
    incentives to businesses to reinvest in new jobs. So that's what the net
    new spending is. But if you look at it total in the first 4 years, the
    spending cuts and the revenue increases are about equal. If you string
    it out for 4 more years, if we really change the spending habits of the
    country, the spending cuts are far greater than the tax increases. And
    I've got a little chart. I'll send it to you, and you can see exactly
    how much year by year in each of the three categories.
        Let me just make this point on the spending cuts. I have spent a
    month during which we have worked almost around the clock trying to get
    a handle on this budget. The Federal budget is put together in a way
    that I don't think is very good, and it doesn't resemble any business
    budget or any State or local budget you have ever seen.
        Let me give you an example. I wrote a letter to the Agency that is
    supposed to be helping me put together the budget--a memo--and I said,
    here are about 30 questions I want answered. One question was, how much
    more money are we collecting a day than we were 5 years ago in tax
    money, and how much of revenue has grown in each of the last 5 years?
    You know what the answer was that I got back from the Agency? ``Federal
    revenues as a percentage of our gross national product are slightly
    smaller than they were 5 years ago.'' So help me, that was the answer I
    got back, I promise. In other words, just to your point, we were taking
    more money in, and tax revenues had grown less fast than the economy,
    but what difference did that make; we had more money. They didn't even
    answer the questions.
        I'll send you the exact chart. But it's basically 50-50 spending
    cuts, revenue increases for the first 4 years. Spending cuts swamped
    revenue increases in the second 4 years and will go much more if we
    adopt a new health care control plan. And the investment increases are
    significant but modest. They reflect a big change in the spending
    priorities.
        One of the things I'm trying to do is change;

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    Government is great at starting things and bad at stopping things. So
    we're still, believe it or not, you're still paying for a bicentennial
    commission. That was over in 1976. And there are lots of things. It's a
    little bit of money, but you can't justify it. It's just terrible. And
    there's a lot of stuff in there like that. So what I'm trying to do is
    to flush that out, reduce consumption, and increase investment so that
    we can put some people to work. That's what I'm trying to do. And I'll
    send you the chart.
        When I spoke on Thursday night I tried to give the exact numbers in
    the last, but I will be glad to--I mean, that chart was in the book that
    we presented to the Congress. And I was hoping that it would be run in
    all the newspapers in the country, because there is a chart in the book
    we released to the press on Thursday morning. Anybody who wants that
    chart, I'll be glad to give it to you.
        Let me make one final point about that: I have no interest in
    raising a penny in taxes if we're not going to do the cuts. I don't want
    to get a deal where we're going to raise the money and not do the cuts.
    Not a penny.
        The second point is, I don't have any pride of authorship in this.
    I've been working on this like crazy for 4 weeks. There must be people
    who know more about some of these things than I do. And I have invited
    all the people in the Congress, Republicans as well as Democrats, and
    all the people in the country to help us find more. I'm more than open
    to it.
        But I have to say, too, there are some tough decisions involved in
    the cuts. As you know, there is a uranium enrichment facility in this
    congressional district not far from here. And one of the things we've
    concluded is that there are only two in the country, and both are
    running at about half capacity--with the projected need going down--is
    that we will have to close one of those. So there are tough decisions
    involved in this. There are a lot of tough decisions that have to be
    made in this cut area. But if anybody's got any more ideas about how we
    can cut more, I'd like to have them.

    Health Care Reform

        Q. Mr. President, I'm Mayor of a small town. We have two employees.
    About the last 8 years, health insurance went from $400 a month to
    $1,500 a month for two employees. If you can have Hillary get this
    health insurance in line, it will help our little village. Plus, I'm on
    economic development in our county, and our biggest employer makes
    television sets. And if that health care comes down, it will sure help
    those stay in business, too. So tell Hillary to keep on it. And if you
    get that down, we'll send her a big thanks.
        The President. Thank you. Let me say, this is a subject, probably a
    whole subject for another town meeting. But let me say that one of my
    biggest problems with a lot of you in dealing with health care is this:
    If you ask the American people a question about health care, are we
    spending too much or too little, a lot of people will say we're spending
    too little. Why? Because they feel insecure about losing their health
    insurance. Or because, like your mother, they're spending too much out
    of pocket. So if you ask the American people, are we spending too much
    or too little, a lot of people say too little. That's wrong. We're
    spending too much and on the wrong things.
        That young doctor that stood up here, I'll bet you anything more
    than 30 percent of his gross income goes to paperwork. Right? We are the
    only country in the world where you have 1,500 separate health insurance
    companies writing thousands of policies with every doctor's office and
    every hospital in America having to keep up with them.
        Just for example, the average country we complete with, of every
    dollar people spend on health care, 95 cents on the dollar goes to
    health care, a nickel to run the administrative programs. In America,
    it's more like 86 cents. You figure out what 9 cents on the dollar is--
    or 11 cents on the dollar--for an $840 billion health bill, or if you
    take the Government out of it, about $600 billion. You just figure it
    out. It's lots of money.

    Tuition Tax Credits

        Q. Yes, Mr. President. I'm John Cooper, and I go to a private
    school. And in years past we have not had any support from the
    Government with funds. And I was just wondering if you had a plan that
    will help pay for some of the taxes that we have. And I was wondering,
    if you don't have one, why not?
        The President. I'll tell you why not. I don't, and I'll tell you why
    not. When I was a boy, I went 2 years to a private school, to a
    wonderful Catholic school. And we paid tuition. And my folks were not
    wealthy. They were working people when we did it. And I was living way

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    out in the country, and we moved to a new community, and we just didn't
    know anything about the school. And I've always treasured that
    experience. But I don't believe, particularly right now, that we can
    afford to give tuition tax credits or other breaks to fund private
    schools, even though I support the competition private schools give to
    public schools. And I'll tell you why.
        Q. Mr. President----
        The President. Let me tell you why. Even though I'll bet you
    anything you've raised more money in this State to put into this school
    system we're in right now, the United States today is behind at least
    eight of its major competitors in the percentage of our income we spend
    on kindergarten through 12th grade education. And we have more problems
    in our schools than most of our competitors because we have more income
    diversity and more racial and ethnic diversity, and a lot of our schools
    are located in places where there are a lot of tough economic problems.
    So I don't think we can afford to do that now. I wish I could tell you
    what you want to hear, but I just don't agree with it.
        Mayor Joe Sulzer. Mr. President, I'm sorry, but we have time for
    only one more question over here, and then we'll have a special
    presentation. And then we would ask everyone to remain seated as the
    President leaves. Thank you.

    Participation in Government

        The President. May I ask a question? May I ask you something before
    we get off, Mayor? These things always work like this. We could stay
    here till the cows come home to do this. And I love this. And you've
    been great. But I want to--[applause]--I want to say--wait a minute. I
    want to make two points, and then I'll answer the last question,
    whichever, whoever the Mayor designates to be the last question.
        The first is that one of the things I've been really proud of in the
    last month--it proved the election worked, it proved all the town
    meetings worked, it proved the Ross Perot charts worked, it proved the
    whole thing worked--is that the volume of our mail and telephone calls
    is running at historic highs in the White House. That means the American
    people--a lot of its people who disagree with me, a lot of its people
    who agree, a lot of its people who are just asking honest questions--but
    my point is, it means people believe maybe their Government can be made
    to work for them again and maybe we can be accountable again.
        So a lot of you have questions you haven't gotten answered today. I
    would encourage you to write to us. I have reorganized the White House
    Correspondence Office. I've tried to put a number of people there who
    really understand the issues that I believe in and the things that we
    care about. We're trying to minimize the number of just formal responses
    we give--unless people send us a form letter; that's different--but I
    mean people that really write us. So I would encourage you to do that.
        The second thing I want to do is to say that I want to encourage you
    to continue to hold me and everybody else accountable and ask the tough
    questions. I don't think it was all that easy for that young man to
    stand up there and ask the question he asked on abortion because he knew
    he had a different position than I did. And I was proud of him for doing
    that, and I think you should be, too.
        And believe me, none of us have all of the answers. This is a new
    and uncharted time. And I want to encourage you to continue to believe
    in your country and to participate in this. Hold our feet to the fire,
    but try to make it a constructive thing. This is an exciting time for
    this country and it's sort of a make-or-break time, I think, and I'm
    doing the best I can and I think you are, too. And if we keep doing
    that, I think the chances are we're going to come out okay.
        I think I can say for the other elected officials here, I'll bet you
    they're pretty proud of their constituents in Ohio after this town
    meeting.
        Who is last, Mayor? Who did you select, Mayor?
        Mayor Sulzer. Right over there, Mr. President.

    Education Reform

        Q. Mr. President, I'm a sixth grader at Smith Middle School, and I'm
    wondering, do any parts of your education plan deal with children my
    age?
        The President. Good for you. Okay. The answer is yes, but most of
    them don't. And let me tell you why--the answer is yes, they do. We
    emphasize more funds and more efforts in math and science education, for
    example. And I have asked the Congress to give the Education Department
    some funds that will enable us to target learning strategies in
    elementary and jun-

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    ior high and high school that work, and try to get schools to repeat
    them.
        Do you know that every problem in American education has been solved
    by somebody, somewhere? I mean, this is not like looking for a cure for
    some disease we haven't found a cure for yet. What we are not good at in
    American education is taking what works in one place and putting it in
    place another. So the two major things are, we're trying to repeat
    education strategies that have given young people in the sixth grade
    great performance in some places; we want to try to put them in all the
    schools in the country. And secondly, we're going to make a special
    effort on math and science education.
        Now, let me answer the other question. Most of the funds that I have
    recommended in education, most of the effort will be going to try to
    make sure kids get off to an equal start in school: fully funding the
    Head Start program, supporting schools and their preschool programs,
    trying to make sure that child nutrition and child health care is good,
    and then when children leave school, trying to make sure that they have
    a vocational program, a job training program, a college program to go
    to.
        Why? Because over 90 percent of the cost of the public schools,
    kindergarten through 12th grade, comes from the State and local level. I
    can have an impact on your education only if we focus on a few issues
    where we can really help, like how do you get more computers in schools,
    how do you do better with math and science. But most of the money comes
    from the State and local level. Whereas, a lot of what we have to do for
    children before they start school and after they graduate from high
    school has to come from the national level, and that's why we do it that
    way.
        Thank you very much. You were great.

    Note: The President spoke at 9 a.m. at Chillicothe High School. In his
    remarks, he referred to Mayor Joe Sulzer; Richard Cline, superintendent
    of schools; Vernal G. Riffe, speaker, Ohio House of Representatives; and
    Melissa Hagen, high school student council president.