[Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
[June 3, 1993]
[Pages 803-805]
[From the U.S. Government Publishing Office www.gpo.gov]



Remarks at Fredericktown Village in Frederick
June 3, 1993

    Thank you very much. Good morning, ladies and gentlemen, and good 
morning, boys and girls. It's great to be here in Frederick today. I 
want to thank Roger Glunt, the President of the National Association of 
Home Builders, for being here and for his support of our economic 
program, as well as the support of homebuilders and realtors all across 
America who understand what we can do for the American economy if we can 
get interest rates down and keep them there.
    I want to thank the Murrays for giving me a tour of their home 
before it was finished. One of the things I did in my former life, back 
when I had one--[laughter]--when I was a young man, was engage in a 
little bit of homebuilding. That's hard work. And I'm glad to see 
somebody else doing it back there. But they did a great job. I want to 
say thanks to the Dragers and the Fishmans and the Taylors, the other 
families here on this circle who showed me their home and talked to me a 
little bit about their lives. I want to thank Jim Johnson for being here 
and for the wonderful job that he does at Fanny Mae to help finance 
homes and make the American dream come real for Americans. And I want to 
say thanks to Don Meade, the construction site supervisor, who hasn't 
spoken today. That will make him the most popular person here. I thank 
him for showing me around.
    Ladies and gentlemen, last year when I was

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out campaigning for the job I now hold, I think all of us realized that 
our country was in a period of short-term recession, which it lasted for 
about 3 years, but of long-term economic problems brought on by some 
economic competition from other countries around the world and from some 
problems that we had created for ourselves and that it was impossible to 
point the blame at one person, that both parties in Washington were to 
blame, but that it was absolutely clear that we couldn't keep going the 
way we were going, where the deficit was going up and up and up every 
year, so our debts were piling higher.
    In 12 years, 12 years, we went from a $1 trillion to a $4 trillion 
national debt. And the deficit was over $300 billion a year. And at the 
same time, we were reducing our investment in the things that make us a 
rich country: in incentives for people to build houses, in new 
technologies to compete with other countries, in the education, and 
training of our work force.
    So what I tried to do was to turn that around. It seemed to me that 
the faith--we had to begin was to bring down the deficit with a 
combination of tough spending cuts and tax increases that would be 
mostly on those who had been more successful, whose taxes had gone down 
and were in higher income groups.
    This plan that I have presented to Congress does that. But I want to 
emphasize to you--I'll talk a little more about the details in a 
moment--but why would the homebuilders be here supporting it if it were 
bad for business and bad for America? They wouldn't be. They're here 
because all these people building these houses need jobs, and we need 
more people like them working. And if people can work, we wouldn't have 
half the problems we've got in this country.
    Six million Americans are employed in the housing and related 
industry. Homebuilding is critical to our future and critical to the 
dreams of millions of American families. A year ago, less than half of 
the American people under the age of 35 thought they had a good chance 
to buy a home. Today, over 70 percent of them do. And there's one clear 
reason: lower long-term interest rates, which make mortgage rates as low 
as they've been in 20 years.
    If you think about it, mortgage rates currently are at about 7.5 
percent. Now, if someone had a home mortgage at 10 percent and they 
refinance that at 7.5 percent, in the very first year of the 
refinancing, they'd save $2,100. That is way over twice as much in one 
year as the same family, let's say, a family with an income of $40,000 
to $60,000 would pay in new taxes under the energy tax in 4 years under 
our program.
    That is the key to this whole thing. A balanced approach, cut 
spending, raise money from people who can afford it, minimize the burden 
on the middle class, but ask people to pay something, but give them back 
low interest rates, more jobs, and a growing economy. That is the idea, 
and the critical thing is the interest rates.
    Every time mortgage rates go down a point, an additional 350,000 
people are able to buy homes. In November, shortly after the election, 
our administration announced a serious attempt to reduce the deficit 
based on spending cuts, targeted revenue increases. Long-term interest 
rates started to drop. They've dropped almost one full point since the 
election. Last week, after the House of Representatives adopted the 
economic program, they dropped again, and the stock market went up again 
because people who control these decisions began to believe again that 
we could take control of our destiny and really move America forward.
    You've already heard some of these specific ideas, but let me just 
reiterate. In this bill there aren't just tax increases; there are 
spending cuts, $100 billion in the entitlement areas, and another $150 
billion in 200 specific cuts in other areas, including a reduction in 
the size of the Federal Government by 150,000 employees over the next 4 
years, an across-the-board cut of 14 percent in the administrative costs 
of Government, and hundreds of other specific cuts in spending.
    But there are also some incentives in this program which are 
important. The small business community, some of you would be in that, 
have been asking for years to increase the expensing provisions in the 
Tax Code so they could write off $25,000 a year, not $10,000 a year, if 
they invested in their business to make it more productive. That's in 
this provision.
    Larger businesses who invest a lot of money in new plant and new 
equipment, which put people to work, have been asking for years for us 
to change the minimum tax provisions so they won't have to pay taxes on 
investments they make to put people to work. And we did that in this tax 
bill, and that will put people to work.

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    People in real estate have been asking for years that they simply be 
treated on what are called their passive losses, like people in every 
other business in the United States of America. And that is in this tax 
bill, and that will put people to work. These things will create jobs.
    Maybe most important of all, for something I care a lot about, I'll 
bet you that more than half the people in this audience from time to 
time in the last 10 or 15 years, have complained about the welfare 
system and have said sometimes there seems like there are more 
incentives to stay on welfare than off. Well, let me tell you something 
else this bill does. Some people stay on welfare rather than work 40 
hours a week, because if they take a minimum wage job and go to work, 
they've got to pay somebody for child care; they don't have any health 
insurance, so they go back on welfare; you pay it through Medicaid, and 
they can stay home with the kids. It's not because the welfare check is 
big, it's because of the child care and the medical benefits. This tax 
bill says that, look, we're going to favor work over welfare forever. If 
you go to work, you work 40 hours a week, you have a child in your 
house, the tax system will lift you out of poverty. We're going to favor 
work over welfare. That's a very important thing that this tax bill 
does.
    Now, next week the United States Senate is coming back into session, 
and we have to pass this bill in the Senate. Many Senators and many 
House Members and the President would like to pass the bill with even 
fewer taxes and more spending cuts, and we're going to look for that. 
But let me remind you, look at the results already. The most important 
thing is to pass a bill that has real deficit reduction, real spending 
cuts, put it all in a trust fund so the money can't go to anything else, 
and no tax increases without the spending cuts, and keep the interest 
rates down. That is what is important here.
    I have been overwhelmed--yesterday I had lunch again, as I do about 
every week with a lot of business executives who themselves will have to 
pay the lion's share of the tax bill. Over 60 percent of this money will 
come from people with annual incomes in excess of $200,000, over 75 
percent of it from people in the top 7 percent of the income bracket. 
And most of them are willing to pay as long as they know the interest 
rates will go down because the deficit is going down. So I think it's 
important to say, yes, let's shoot for more spending cuts and less 
taxes, but let's pass the bill and get the deficit down.
    I want to just leave you with this. New home sales last month 
reached a 7-year high in April, 7-year high. That's worth doing. 
Mortgages rates are at a 20-year low. That's worth keeping. Well, I ask 
you, let's don't take our eye off the ball. It is estimated that in this 
year alone, if we can keep these interest rates down at this level, it 
will put $100 billion back into the American economy, in people 
refinancing their mortgages, refinancing business loans, lower consumer 
loans, lower college loans, lower car rates. That's what we've got to 
do.
    I ask for your support. I ask for your support not on a partisan 
basis but to rebuild the American economy. There is no party label; 
there's just jobs and incomes behind this. We've got to grow this 
economy.
    I thank the people on this stage and all of you for being here today 
to make that point. Thank you very much.

Note: The President spoke at 11:12 a.m. A tape was not available for 
verification of the content of these remarks.