    [Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
    [February 11, 1993]
    [Pages 85-89]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to Business Leaders
    February 11, 1993

        Thank you very much. I would like to thank all of you ladies and
    gentlemen for coming here to join me today. I would like to say a
    special word of thanks to the leaders of various organizations and
    sectors of our economy who came in a little earlier for a briefing. And
    thanks to the members of the administration who are here, who have been
    working so hard for the last 3 weeks on our economic program, and to the
    Vice President who went all the way to California last night to do a
    town meeting and came in about 5 o'clock this morning. He's the only
    person here who's had less sleep than I have. That's what Vice
    Presidents are for. [Laughter]
        I have asked you to come here today because we have to meet a
    challenge together. Many of you have been my friends for some time,

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    and you have worked with me in this campaign and in others. Many of you
    are members of the other party who love your country and care very
    deeply about the health of our economy. It doesn't matter. If you look
    at the history of our country, whenever the chips have been down, the
    private sector, the business community has rallied to help America meet
    its challenges in war and in peace. In two World Wars, business men and
    women were among the leaders in our great national mobilizations,
    putting aside narrow interests for the national interest. When our
    Nation faced challenges from civil rights to the energy crisis,
    businesses have taken the lead in coping with change. Americans are at
    their best answering alarm bells in the night.
        But I think every one of you know that today we face a crisis which,
    while quieter, is every bit as profound as those we have faced in our
    past. We risk losing the standard of living that we have taken for
    granted for so many years as Americans. Too many middle class Americans
    have already suffered through a decade or more of declining real wages
    and rising basic costs. Now, even though it is said we are in a recovery
    and the overall economic indicators are quite impressive, the job
    creation that normally accompanies a recovery is not in evidence. Small
    businesses are having trouble creating jobs because of the lack of the
    availability of credit or because of the costs of health care. Big
    businesses are continuing to restructure, not just manufacturing
    businesses now but service organizations, too, because of the demands of
    the global economy.
        Business people have to deal with the realities they face, and they
    often make annual plans and 5-year forecasts, based on the best numbers
    they can get. Your Government for the last several years has either not
    been making annual plans or 5-year forecasts, or they've been based on
    numbers which aren't real and plans which were never intended to be
    carried out.
        Early in my campaign for President I did what I had always done when
    running for Governor: I put out a plan which, as nearly as I could, set
    forth what I thought we ought to do as a country to increase jobs and
    incomes, to reduce the national debt, to restore the health of our
    economy, and to deal with the long-term problems we face. I wanted to
    increase investment, reduce consumption, restore fairness to the Tax
    Code and growth to the incomes of America, deal with the structural
    problems of this economy like health care and the credit crunch, and to
    do it in a context that would enable us to have long-term health by
    reducing the national debt considerably.
        I did it last year based on the numbers that were then available. I
    revised the plan again in late spring. In August the Government said
    that the deficit was going to be bigger than we had anticipated. Then,
    still, I thought we could do essentially what we had outlined. But after
    the election, the Government revised the deficit figures upward again,
    this time by as much as $50 billion per year in each of the next 4
    years.
        Now I have a choice. I can do what has been done by people in both
    parties for the last several years and has certainly been done by
    administrations unwilling to give up the rhetoric of low taxes and less
    Government, even though costs were exploding: I can sort of deny the
    problem and finesse the numbers. Or I can tell you what I think is the
    truth. I think I should follow the latter course.
        I believe that given the size of this deficit, given the burden it
    will put on today and tomorrow in terms of higher interest rates, given
    the fact that we also have a plain investment deficit in the education
    and training of our people and the investment in our infrastructure and
    those things that are critical to building high-wage, high-growth jobs,
    we have to take even more dramatic action than I had previously thought
    to increase investment for jobs and incomes, restrain unnecessary
    Government spending, raise revenues in a fair way, and reduce the
    national debt so we can have long-term growth.
        I think if we do not do these things, we will pay for it. I think
    the cost of the status quo is far, far higher than facing our problems
    and moving forward. Business people have known for years that something
    had to be done about our deficit. The national debt has quadrupled since
    1980. Even more disturbing, unless present trends are altered, the debt
    on an annual basis will explode in the years ahead with 50 percent of it
    coming from increases in health care costs.
        I want to reduce this deficit, not as an end in itself but because I
    think it is a critical part of a strategy to build jobs and growth for
    America today and over the long run. In order to do that, I need your
    support and your contribution. Everyone will have to pay their fair
    share. But if you do, we will all be better off, and

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    the business community will be stronger in the years ahead.
        Government has an obligation to provide the proper environment in
    which business can prosper, but the private sector drives the economy.
    If interest rates are too high, if the financial system is in disarray,
    if health care costs are crushing out discretionary income which can be
    put into new plant and equipment or hiring additional workers, the
    environment in which we operate will be crippled because the private
    sector cannot work. I want to be a better partner than that to you so
    that you can do your job.
        Productivity has gone up at an astonishing rate in many sectors of
    the American economy in the 1980's and in the early nineties. This
    recovery, indeed, that we now see underway seems to be based on three
    things: home mortgages going down enough for people to refinance their
    homes and buy new homes; consumer confidence coming up since the
    election--I hope I can keep it up; but most important, dramatic
    increases in productivity in the private sector. Those productivity
    increases are not yet manifest in more jobs for the American people or
    higher incomes, and they won't be until we do something about health
    care, about the deficit, and about doing the things it takes to make our
    country as a whole competitive over the long run. That is what I am
    trying to grapple with as your President, and what I need your support
    beginning next Wednesday in the Congress with, so that we can make
    progress on these great issues.
        If we don't reform our economic policies, I'm convinced eventually
    we will fall further and further behind. Ten years from now we won't
    even recognize the country that we all grew up in. Ten years from now,
    if we don't change present policies, the following things will happen:
    The deficit will be $653 billion in a given year. The national debt will
    be 78 percent of our gross domestic product. Health care costs will take
    up almost 20 percent of GDP. They are at 14 percent today. Only one
    other advanced nation in the entire world, Canada, is above 9, and
    they're just a little bit above 9 today. Medicare and Medicaid costs
    will triple for taxpayers and people less able to bear the burden.
        We have got to change. The short-term pain of making changes now is
    so much less than the long-term cost of continuing to do things the way
    we're doing them. So next week I will try to propose an economic package
    that will give the American people fundamental change. A goal is an
    economy that faces the world without fear and not only meets but beats
    our rivals in economic competition around the world; an economy that is
    growing, that provides jobs to everyone willing and able to work, that
    does not rest until the great American middle class that built this
    country once again feels that people who work hard and play by the rules
    will be rewarded and not punished.
        The broad outlines of this plan are no secret, but I'd like to
    restate them. First, to ensure that we do not lose the momentum and the
    new confidence that we have seen among consumers and in the markets and
    to finally get sustainable job growth, I believe strongly that we need
    an investment-led jobs package. But all of us here know that our
    problems go beyond the business cycle. More importantly, we need a long-
    term plan to increase investment in the American people and their
    future. We will put in place a program of investment in the physical
    infrastructure that is a precondition for prosperity and productivity.
    Finally, we will reduce our deficit, not as an end in itself, as I said,
    but as a means to achieve higher incomes and more jobs. This will
    require tough choices from all Americans. And before I turn to the
    middle class for help I have to turn to people who did well in the last
    decade.
        This past week we began with the Government, where we ought to
    begin, setting our own house in order. Too often in recent years our
    Government has been on automatic pilot. And believe me, it's been a very
    long time since the kind of searching reexamination of the mission of
    Government has been undertaken that you do all the time, that you do
    just to survive. And so we are beginning a process of literally trying
    to reinvent your National Government so that we can increase its
    productivity, its effectiveness, and its ability to be a partner with
    you in the great enterprise on which we now embark.
        I believe that Washington has to change before we can ask America to
    change. On Tuesday I kept my campaign pledge to cut the White House
    staff by 25 percent below the level that I found it. That was a
    significant cut, but I want to emphasize to you I did it the way most of
    you would have done it. I didn't just slash the numbers. We have
    reorganized the White

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    House staff, and I believe this smaller group will increase its ability
    to serve the American people.
        We now have an Economic Security Council to go with our National
    Security Council and our domestic policy operation. We're going to have
    a smaller drug policy operation, but it's finally going to have
    something to do with the rest of the Government. It's not going to be
    politics and speeches and posturing; it's going to be affecting the
    policies of every department of the National Government. We are going to
    have a smaller, but more importantly, far more productive White House.
        And on yesterday, we extended those measures to the entire
    Government, ordering a reduction in Federal bureaucracy by 100,000
    people by attrition over the next 4 years, with at least 10 percent of
    those cuts to come from senior management, and ordering agency and
    department costs to be reduced by between 3 and up to 5 percent over the
    next 4 years, for savings in excess of $9 billion by administrative
    actions alone--and again, not cutting for cuts' sake but to redirect
    those monies to more productive purposes and leaving those departments
    not only leaner but more efficient than they were before.
        This is just the beginning. We are going to reexamine whether you're
    getting your money's worth. One of the people I spoke with already this
    morning said, ``I can give you some examples of things that work and
    things that don't in the National Government.'' I'll just mention one
    publicly because we all know it doesn't work: The Superfund has been a
    disaster. All the money goes to lawyers, and none of the money goes to
    clean up the problems that it was designed to clean up. Those are the
    kinds of challenges we expect to do a better job of meeting, perhaps
    with fewer people whenever possible, but with greater productivity.
        Now I ask you to do your part. We have to replace this social
    contract that somehow crept into our thinking in the 1980's, that
    somehow we had to have greater inequality in this country to get
    prosperity. That was the idea. Even in the years in which we created
    jobs, income inequality was exacerbated in America.
        Now I think we need a new compact. Everybody does his or her part,
    pays their fair share, joins our national effort, and garners the
    rewards of a growing economy. The plan I will offer will give a climate
    in which you can grow, investing in people and the best trained work
    force in the world, giving us the kind of flexible employees that we all
    need. That is Government's responsibility to work with you to do and one
    that we have not done a very good job of in the past.
        We want to lower the cost of capital through long-term reductions in
    the deficit. We want to provide special incentives to new enterprises
    with long-term capital gains treatment. We want to provide some changes
    in the Tax Code that will plainly reward investment as opposed to
    consumption in the business sector. But we also have to face the fact
    that the deficit will not vanish in a flash. We will cut it, and we will
    cut it as much as we reasonably can. And if our plan is adopted, it will
    be the first time since the 1940's that the Government has succeeded in
    dramatically slashing the debt. And I might add, it was inevitable then
    at the end of World War II, when the debt was running at about 120
    percent of gross national product.
        We are going to work as hard as we can, and we desperately need your
    support to do it, to bring health care costs under control. I have to
    say this: If you want this deficit brought down, not for 4 years but for
    8 or 10 years until we can do away with it, it will never, ever be done
    until we pass a national health plan to control costs and provide a
    basic health system for all Americans and to stop shifting costs onto
    you for people who aren't insured. It will never happen unless we do
    that.
        Fifty percent--let me reiterate--fifty percent of the projected
    growth in this debt between now and the year 2000 is in health care
    costs. And we only pay 33 percent of the national health care bill. More
    than two-thirds of it is being paid by you. And the same thing will
    happen to your cost. The best thing the President and the Congress could
    do for the American economy over the next decade is to bring health
    costs in line with inflation. It would free up hundreds of billions of
    dollars to reinvest in new jobs and higher incomes and greater
    productivity and growth. And we must not delay that.
        So I implore you not only to feel that you can be involved in our
    deliberations on what should be in the national health strategy but also
    to help us pass that, along with this budget, in Congress this year.
        I want to also do something the governments of our competitors do
    without apology. I think

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    we ought to have pragmatic partnerships with the private sector to
    strengthen our technological leadership. Research and development
    resources should shift toward technologies that will translate into
    commercial successes. And we must work together to create a national
    information infrastructure.
        One of the things I've been determined to do in all these budget
    meetings we've been having for the last 3 weeks is to make sure that
    every dollar by which we reduce research and development in the defense
    budget finds itself into an increase in the domestic research and
    development budget of this country, and more. We have got to do that. We
    also should give you more incentives to invest, as I said. I want to
    reform the corporate tax system to ensure that it rewards and encourages
    those who invest in productivity: in plant, equipment, research and
    development, in people who will create the jobs and the markets of
    tomorrow.
        And in return, we must ask your contribution to bringing the deficit
    down. Let me say something I haven't said yet. We did not just cut the
    White House staff and the executive administrative costs of this budget.
    You will see there are a lot of other very real cuts in Federal
    spending--and they will be real, definable and measurable, not
    imaginary--that will be laid on the table before the Congress and the
    American people.
        Once we do that, we must ask for greater contributions to close this
    deficit. And we should begin with those whose taxes were reduced and
    whose incomes went up in the 1980's, the wealthiest Americans and
    corporations. I will ask for an increase, as I said in the campaign, on
    the income tax for the wealthiest Americans and corporations, along with
    the incentives that I have recommended to get people--lower their tax
    burden if, but only if, they make investments in this country.
        Our situation is worsened, and we may have to broaden the range of
    revenues which we seek. But we should begin by asking those who can most
    afford to pay to do so.
        I have also been persuaded by my Treasury Secretary that it is
    unwise, indeed impossible, to raise the individual income tax rate
    unless there is a corresponding increase in the corporate tax rate to
    avoid tax shifting. But the corporations should also have incentives to
    reinvest as their rates are raised. And so we have done both things in
    the plan we will recommend.
        I talked a lot in the campaign about an issue which has relatively
    small dollar impact but great significance to the American working
    people, and that is the enormously increased rate of executive
    compensation in the last 12 years as compared with the compensation of
    workers. I want to make a proposal that deals with the fact that the Tax
    Code should no longer subsidize excessive pay of chief executives and
    other high executives, excessive defined as unrelated to the
    productivity of the enterprise.
        I believe, finally, that if all of us do what we're supposed to do,
    if I can ask every American honestly to look in the mirror and say,
    ``What do I want this country to look like in 4 years? What do I want
    this country to look like in 10 years? What do I want this country to
    look like when my children are my age? Do I really want to let yet
    another opportunity go by when we just wander through a year instead of
    really investing in our people and our future, instead of really having
    a technology policy, instead of really having an economic strategy,
    instead of really doing something about the credit crunch, instead of
    really doing something about health care, instead of really doing
    something about the deficit, just because I wish I didn't have to change
    my ways?''--I think almost every American will look in the mirror and
    say no, no, this year we'll pull together and do our part.
        If the business community leads the way, Congress will follow. I
    need your help. I hope you'll be there.
        Thank you very much.

    Note: The President spoke at 11:49 a.m. in the East Room at the White
    House.