[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

[[Page 1154]]

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.