[Public Papers of the Presidents of the United States: William J. Clinton (1993, Book I)]
[June 29, 1993]
[Pages 944-952]
[From the U.S. Government Publishing Office www.gpo.gov]



[[Page 944]]


Remarks and a Question-and-Answer Session With the National Federation 
of Independent Business
June 29, 1993

    The President. Thank you. Thank you very much, and good morning. 
Please be seated. When Jack Faris came to see me the other day in the 
Oval Office, he invited me to come over here and speak. And he said the 
best time to come would be noon. But the President of Argentina will be 
in the White House at noon, and I couldn't figure out how to explain 
that to him, that we were going to miss lunch. So then I was invited to 
come at 9:15, which is okay for me most days. But I'm one of these 
people who gets up at 6 every morning, and then I wake up about 10:30. 
[Laughter] So if I say anything I shouldn't today, I'll have total 
deniability since it's 9:15.
    I was eager to come by and address you this morning for several 
reasons: first of all, because your organization is one of this city's 
most aggressive participants in the economic debate now taking place 
here and around the country; and because when I was the Governor of my 
State, I worked very closely with the NFIB on a wide range of issues; 
and because I know that unless we are firmly and unequivocally committed 
to private sector job growth, and especially to small business growth, 
we cannot succeed as a country.
    Let me say that when I got into the race for President about a year 
and 8 months ago, I did so after having worked for nearly a dozen years 
as a Governor of a State that until the last year I was Governor usually 
had an unemployment rate above the national average. I spent all my time 
trying to figure out how to create conditions in which jobs could grow, 
children could be educated, people could be trained, and folks could be 
empowered to do what they could do in a very tough global marketplace. I 
worked year-in and year-out to try to establish partnerships with the 
private sector. Until I became President, except for one brief interlude 
when I took office and found an operating deficit as Governor, I had 
never proposed raising one red cent in taxes to pay down a debt, because 
my State had a very tough balanced budget law, perhaps the toughest in 
the country in its practical operation. This has been an interesting and 
a difficult experience for me in that regard.
     But here's how I see the world: We have now been in a long-term 
economic slowdown of about 3 years in which our economy is not producing 
many jobs. We have been in a global economic fight which has caused us 
grave problems for 20 years. And literally for 20 years most middle 
class wage earners have worked longer work weeks, and their wages have 
not kept up with inflation. We have seen an enormous increase in this 
country, in the 1980's, in the cost of health care, housing, and 
education, which has far outstripped the earnings of most wage earners 
and small business people to cope with. And we now find ourselves in the 
midst of a global recession, as I prepare to go to Tokyo to meet with 
the leaders of the other G-7 nations--the European nations, Canada, and 
Japan--in which our economy, though it is weak by our standards, is now 
perhaps the best performing of all these countries.
    During the 1980's, most of our job growth came from two sources. 
First of all, we had a huge operating deficit that was built into our 
system because we had a very large tax cut in 1981, twice the original 
size that President Reagan proposed, when the Congress and the President 
got into a bidding war, and very large increases in defense spending. So 
that the deficit, plus investments in defense, especially in defense 
contracts, as those of you who are from California or Connecticut or 
Massachusetts who saw it go up and then watched it come down, know that 
that created a lot of jobs.
    The other thing that created a lot of jobs in the 1980's was you, 
the small business sector. Indeed, throughout the 1980's and every year, 
the Fortune 500 lowered employment in America, even as income went up, 
by a couple of hundred thousand people a year. But small business people 
generated the vast mass of the jobs. In fact, a study by David Birch at 
the Massachusetts Institute of Technology indicated that about 85 
percent of all new jobs were created in units of under 50, and most of 
those were created by people who themselves were small business persons.
    Then about 3 years ago, that stopped. And

[[Page 945]]

we can all argue about why that is, but I think it's clear that there 
were a couple of reasons. First of all, small business people are not 
unaffected by slowdowns in the global economy, as well as the domestic 
economy. Secondly, the extra added cost of hiring one more employee 
became exponentially greater as health care costs, payroll costs, and 
other things mounted up, and more and more people, even in the small 
business sector, turned to overtime and part-time workers.
    But the bottom line is we now find ourselves in a world in which 
there is a global recession, in which we have the lowest unemployment 
rate of any of our competing wealthy countries, except for Japan which 
has, as you know, a much different trading system and economic 
organization, and in which still our unemployment rate is way too high 
for us. And when we look to the future, it seems to me absolutely clear 
that we have to find ways to reinvigorate the job machine of America and 
to restore the health of small business.
    The problem is that we have dug ourselves into a number of holes 
that we have to dig out of, none of which are easy. And all along the 
way, we have to know that we may not be able to get instant results 
because what happens in America today is at least to some extent 
affected by what happens in Europe, what happens in Japan, and what 
happens in other countries. I know, for example, you had the Trade 
Ambassador, Mickey Kantor, here yesterday talking about the trade 
agreement with Mexico. And there's a lot of debate in this country about 
that. Our administration believes it will create more jobs than it will 
cost. We feel very strongly about that. We're going to have a debate 
about it later in the year, but the point is at least it's the right 
debate. That's the right debate: Is it going to help the American 
economy? Is it going to create more jobs than it will cost?
    Well, it is against that background, anyway, that I became the 
President: 3 years of slow economic growth, which doubtless contributed 
to a challenger beating an incumbent; and then a very large Federal 
debt, having gone from $1 to $4 trillion in 12 years; an annual deficit 
having gone from $74 billion a year in 1980 to $311 billion projected in 
1993; and the deficit for the next 5 years was written up $165 billion, 
estimated after the election.
    And so I was confronted with a very significant problem, one which 
had very practical impacts on you in at least two ways. First of all, 
the bigger this debt and the deficit gets, the more of your tax money we 
have to spend every year paying interest on the debt and the less we 
have to invest in the future: to finance research and development, to 
finance new technologies, to finance education and training of the work 
force, to grow the economy. Second, and even more important for you, 
America had a historic gap between short-term interest rates and long-
term interest rates because of the size of the deficit and because 
nothing was being done to bring it down. So you had very low short-term 
interest rates. As you know, they started coming down way over a year 
ago with the Federal Reserve lowering, lowering, lowering the rates they 
were charging. But our long-term interest rates, which determine home 
mortgages, business loan interest rates, consumer loan rates, car loan 
rates, college loan rates, they were quite high. And the gap between the 
short and long-term rates was very high.
    It was obvious to me that unless we first did something to reassert 
control over our economic destiny, unless we did something about this 
deficit first, we would not be able to move forward. And so I proposed a 
plan to the United States Congress to bring the deficit down by $500 
billion over the next 5 years, in roughly equal amounts of budget cuts 
and tax increases with almost all the taxes, 74 percent of them, falling 
on the upper 6 percent of income earners, including subchapter S 
corporations, the upper 5 percent of those, and they were pretty stiff.
    But the reason I did it was because it seems to me we had to try to 
lower the deficit about $500 billion. We imposed what amounted to a 5-
year freeze on domestic discretionary spending. That is, we do increase 
funds for defense conversion to help those poor people that lost their 
jobs because of the defense cutbacks, for Head Start, for education and 
training, and for some technologies. But we cut other stuff even more, 
so there's a decline in defense, a freeze on domestic spending. The only 
thing that's going up is basically the retirement programs and the 
health care programs. I'll come back to that. I'll come back to that in 
a moment. So we had big cuts over the previous budget in everything, all 
the entitlements: veterans, agriculture, pay of Federal employees, 
retirement of Federal, civilian, and military employees.

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Things that had not been touched in previous budgets we went after, it 
cut them, locked that down, and then asked for what I thought was a 
progressive tax package.
    But there were also some interesting growth features in the tax 
program that I proposed that the House of Representatives passed. One 
was one of your long-time goals, increasing the expensing provision from 
$10,000 to $25,000 a year. I think that's real important. If we do that, 
there are hundreds of thousands of businesses in this country that might 
be able to hire one more person, might be able to get their incomes up 
by buying another piece of equipment.
    The second was something that larger businesses, by and large, 
wanted, and that was a change in the alternative minimum tax 
calculations designed entirely for one purpose: to encourage people to 
invest in more plant and equipment, to become more productive. The third 
was the small business capital gains tax, designed to encourage people 
to invest in ventures under $50 million in capitalization and to get a 
50 percent cut on the tax due if they held the investment for 5 years. 
This was designed to get a bunch of new venture capital and private 
capital into the real job generators of this economy.
    The third was a permanent extension of the research and development 
tax credit. Next, there was changes in the passive loss provisions on 
real estate designed to get home building and real estate up again, 
particularly in those regions of the country where it has been so 
depressed that it's dragged everything else down.
    Then we extended the deduction people can take for their health 
insurance premiums to self-employed people, as well as to other small 
businesses which already had it, which I thought was very important, a 
big deal for farmers.
    And finally, there were other things, but finally there was a 
proposal which I think we ought to try to finally test whether the 
rhetoric that both Democrats and Republicans have been putting out in 
Washington for years, and in the streets of America, about using the 
private sector to revitalize the distressed areas of our country could 
really prove true. We devised an empowerment zone proposal which was an 
expansion of the enterprise zone proposal that for the last several 
years had been supported by everybody from Jack Kemp in the Republican 
Party to Charles Rangel in New York in the Democratic Party. This 
empowerment zone proposal went beyond anything previously proposed to 
give really powerful incentives for the private sector to hire people 
out of depressed cities and small towns in rural areas or to put 
businesses into those areas. And it seems to me that's very important.
    If you look at all the millions of people that live outside the free 
market economy in America because they live in areas that are so 
depressed, there is a huge potential market there if the free market 
system can work. So, those things were also in the bill. In other words, 
we raised tax rates, but we tried to find ways for people who have been 
successful, who have money, to lower their taxes but only if they 
invested in things designed to grow the economy, create jobs, and expand 
opportunity for all Americans.
    Now, when the Senate passed the bill last week there were a lot of 
things in the Senate bill that were good. They had some less tax and 
some more spending cuts so that, by any calculation, clearly now the 
spending cuts exceed the tax increases. But by taking most of the tax 
cut out of the energy tax and having to make it up to get $500 billion 
in tax reductions, they reduced the size of the small business expensing 
from 25 to 20; they eliminated the new business or the small business 
capital gains tax; they put a surcharge on capital gains, which I think 
is not well-advised; and made the research and development tax credit 
temporary. So, we are now trying to resolve the conflicts between those 
two bills. I know the NFIB will be actively involved in that, but I 
think it's very important that you understand basically what the 
tradeoff was made between the Senate and the House bills. The bottom 
line is both of them reduced the deficit by $500 billion.
    You had long-term rates going down again today to a 16-year low, and 
this has already produced some very significant consequences, if I just 
might mention a few. From the time Secretary of the Treasury, then 
designate, Lloyd Bentsen said we were going to have a serious deficit 
reduction plan and talked about what was going to be in it in November, 
we've seen long-term interest rates take a dramatic drop. While the 
economy itself is not recovered by any means, there have been some very 
significant advances tied directly to the drop in long-term interest 
rates. And if I might just mention a few, number one, we've had a 20-
year low in home mortgages; a 6-year high in housing

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sales; a 9-year high in increase in construction employment, 130,000 new 
construction employees in America in a 4-month period; and there have 
been 755,000 jobs, over 90 percent of which are in the private sector, 
come into this economy in the last 5 months. That compares with only a 
net gain of a million over the previous 4 years, all tied to bringing 
down the long-term interest rates.
    There are people in this room today who are responsible for that, 
directly or indirectly, people who have refinanced their home loans. 
Most of the real financial gains have come from people who have 
refinanced their home loans and then turned around and done something 
else with the money, and that's bumped the economy. But business loans 
are lower, consumer loans, car loans, college loans, the whole 9 yards. 
That is the strategy.
    It is estimated that if we can pass this deficit reduction plan and 
keep the interest rates down for a year, that'll put another $110 
billion back into this economy. And by the end of the year or next year, 
that will really begin to produce some job growth, and we'll also begin 
to produce some real earnings potential.
    So that is why we have done what we have done. And I'll say again, 
as somebody who was a Governor in a State with a very tough budgeting 
system, it was very painful for me to ask anybody to pay any money just 
to pay down the deficit. But unless we do something about this, we will 
never--it's like a bone in our throat as a nation--unless we deal with 
this, we can't get on to dealing with our other problems. We'll spend 
all our time in Washington working around the edges of these other 
problems because we have not faced the problem of the deficit.
    Now, let me just make one or two other comments about that. No 
matter what plan you might embrace to reduce the deficit, and no matter 
what plan you've read or heard about, every one of them can have our 
annual deficit go down for 5 years, and then it starts to go up again. 
Why? Health care costs. We cut $50 billion in the House version, $60 
billion in the Senate version off of projected Medicare expenses from 
the previous year's budget. And it is still estimated that over 5 years, 
the Medicare budget alone will go up 45 percent. Now, that's better than 
most of you are doing, right? Most of you are paying more than 9 percent 
a year in increased premiums. Most of you are paying almost twice that.
    But I say that to try to illustrate the next point. There's been a 
lot of controversy about the willingness of this administration to try 
to take on this health issue and whether we're being too comprehensive 
and what we're going to do and all that. The point I want to make is 
this: We've got to do something to bring costs within inflation, or it's 
going to break the country. That's the first thing. You can talk to just 
about any conservative in Congress of either party, you can talk to the 
most conservative Republican in the Republican Party, and most of them 
will tell you now we are not spending enough money on some of the things 
that will generate jobs in the future. If we don't spend enough money to 
keep our technology lead over other countries in areas critical to the 
future, in super computing and electronics and aerospace and these other 
things, and if we don't really educate and train our people, then our 
incomes will fall behind. But if we are strangled by rising health care 
costs, the future can have no lobby in the Congress.
    So this budget plan that we presented is great on deficit reduction. 
It does invest some money in the future, but it doesn't invest anything 
like what you would want us to invest if we weren't strung up by our 
heels by the deficit. And there is no answer to it except to get health 
costs in line with inflation. There is no other answer, because that's 
the only thing that's eating us alive now through Medicare and Medicaid. 
It is the same with you.
    Now, what we see is people have learned a lot about controlling 
health care costs, and a lot of big businesses that can self-insure now 
have their costs in line with inflation. The California public employees 
system, which is a huge system with bulk purchasing power, this year has 
a contract which is below inflation. That's great for them. But what 
does that mean? Even more pressure on you to pay for the uncompensated 
care bills of people who don't have health insurance if you do. Which 
means every year more and more small businesses are either dropping 
coverage--about 100,000 Americans a month lose their health insurance--
or they have more limited coverage that may or may not be adequate for 
the people whom they insure.
    So, what I want to say about that is this: It seems clear to me, if 
you study the Federal budget and you want the deficit down to zero and 
you want America to invest and grow again,

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if you look at the private budgets of businesses in this country, that 
we have to do something to give small businesses bulk purchasing power; 
relief from all these rules and regulations the Federal Government 
imposes; relief from the incredible paperwork imposed on health care 
providers by this country being the only country in the world having 
1,500 different health insurance companies, thousands of different 
policies, a dime on the dollar more in paperwork costs than any other 
advanced country in the world, a dime on the dollar. And the more big 
businesses self-insure and control their own costs, the more you're 
paying the difference. So, we have got to do some things to simplify and 
make more uniform this system.
    Now, the big controversy obviously is over whether there should be a 
mandate for employers, employees, one or both, to cover people who have 
no health insurance. Here is the problem, and I invite you to the 
debate, but here is the problem: Seventy percent of all small businesses 
have some health insurance. And they're paying out the ears for it. I 
have to be delicate in my language. [Laughter] Seventy percent do. Costs 
are going up like crazy. For the 30 percent who don't, those folks, if 
they get sick, will still get health care. Show up at the emergency 
room, and they will get it. Everybody gets it. But who paid for the 
emergency room to be there? The rest of you. You built the 
infrastructure. You financed. You maintain the infrastructure.
    The Government should clearly insure the unemployed, uninsured. And 
my goal has been to do that by managing the system better so we don't 
have to raise taxes on you to do that, because people who are paying too 
much already shouldn't pay more to fix the system. But if you look at 
every system in the world, it is perfectly clear that unless you have 
some mechanism by which everybody is covered, you cannot control the 
costs, and you cannot stop the cost-shifting.
    Now, nobody wants to do this in a way that kills the only job-
generator we've had in America over the last 2 years, which is you. But 
it's very important to remember that most small businesses do provide 
health insurance. This is the nub of the economic dilemma. If it were 
easy, somebody would have done it already, right? I mean, if it were 
easy, it would already be done. It's not easy. There is no perfect 
solution. But I assure you that we're all going to be better off if we 
enter into an honest debate and try to work through this, and we try to 
resolve it. The worst thing we can do is to leave it alone, and 
especially, the worst thing we can do for the small business sector, 
because bigger employers will figure out how to get managed care, and 
they'll just go around this whole health insurance system we have today. 
Everybody else is going to be out there just strung up. So we must face 
it. And we've got to provide some means of covering people, letting them 
change jobs, and having people have this without going bankrupt. And 
that is something that I am deeply dedicated to.
    Let me mention one or two other issues that are very important, and 
then we'll move on to questions. I believe the SBA can be a force for 
good in small businesses. And I promised myself if I got elected 
President, when I started, I would appoint somebody to run the SBA who 
had literally had real experience and was not just a political 
appointee. Now I plead guilty. Erskine Bowles is a personal friend of 
mine. His wife went to college with my wife. That does not disqualify 
him. [Laughter] But his wife is a successful business person, and he has 
spent his lifetime trying to help people like you start your businesses, 
expand your business, market your business overseas. He actually knows 
what he's doing. So it seems to me that would be nice to have an SBA 
director who could do that, who had been through that.
    The second thing that I really thought about a lot early in the 
election because of the experiences I had seen not only in my State but 
around the country, is that we had to do something to try to deal with 
the credit crunch. The access to credit is obviously going to have more 
to do with how a lot of your members do than a lot of other things this 
Government does. So, early in my administration we brought together all 
the appropriate banking regulatory agencies and, in what was then an act 
of unprecedented cooperation, we changed a lot of the restricted 
regulations that cause so much of the credit crunch. Banks are now 
clearly empowered to make more character loans based on the reputation 
of the borrower. Documentation requirements by the Federal Government 
have been relaxed dramatically, as have regulations regarding appraisals 
of real estate to secure small business loans. And there will be more 
flexibility in classifying loans.
    Now, that has been done at our level. It takes

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more time than I wish it did for all those changes here to actually be 
felt in every community bank in America. And one of the things that the 
NFIB needs to do with Erskine Bowles is to let us know in which 
communities this is working and in which communities there has been no 
change, because we made a vigorous, clear effort to send this signal out 
all across America by changing the way we did business with the banks. 
But it has not changed in every community in America, and a lot of 
people are still really stung by what happened to them in the eighties. 
But the banks are in much better shape today than they were 3 years ago. 
And that's good, that's a good omen for our future. But now that they're 
in better shape the time has come for them to loan money on good terms, 
at low interest rates. So we need your help on that.
    Next I'd like to say a little something about regulatory reform. 
Every President talks about it, and almost nothing ever happens. There's 
a division in our Budget Office that a lot of you probably have never 
heard of in the Office of Management and Budget called OIRA--that would 
gag you--OIRA, the Office of Information and Regulatory Affairs. For 
years, the position of Administrator of this Office, believe it or not, 
was vacant. But this Office actually has the capacity to rationally 
review all of these regulations. We have named, and Congress has 
confirmed, an Administrator for OIRA, and we are going to do our best to 
see what we can do to reduce unnecessary regulations.
    Perhaps more important, I have asked the Vice President as part of 
his job in reviewing the whole operations of the Federal Government--and 
by the way, I predict you will be very pleased by the report that is 
issued by his group in September--we are reviewing the operations of 
every last part of this Government. Unlike your business, unlike all big 
businesses, the way we do business in the Federal Government and many of 
these agencies has been largely unexamined for decades. So that when 
something new comes along that we have to do, it normally is just added 
on to what was being done already, instead of being substituted for it. 
And the whole quality revolution that has engulfed the American private 
sector and led to rapid increases in productivity has largely escaped 
Government. And we're trying to change that, too. It escapes nearly 
every organization that has a mandate for customers and income, so we're 
trying to change that. Our goal is pretty simple: We want to avoid 
regulations that are inconsistent with the goals of jobs and growth; we 
want to avoid regulations that overlap; we want to create a process that 
is open and fair, where business has some input, and not just large 
businesses but also medium and small ones as well; and we want to change 
the whole way Washington works.
    I think these are the kinds of things that you would want us to do, 
and these are certainly the things that we have to do. I don't plan or 
pretend that we're always going to agree on all these issues. And I wish 
that the world looked to me as President just the way it does to you or 
the way it even did to me as Governor. Like I said, it took a lot of 
mental gymnastics for me to finally face the hard reality that we had 
this huge deficit and unless we did something about it, we were never 
going to be able to do anything else. We'd spend all our time--I spent 
all my time giving speeches about things we were going to do, and no 
impact would be felt because we were out of control of our economic 
destiny. So I hope that you will be supportive, not supportive of me 
personally so much as supportive of our efforts, common efforts to deal 
with our common problems. The one thing I made up my mind to do when I 
won the election in November was at least try to level with the American 
people about the problems and try to face things that other people in 
public life had avoided. This is painful. You know, my daughter and the 
kids her age who get into all this interesting music has got this great 
phrase. She said, ``Dad, denial is not just a river in Egypt.'' 
[Laughter] And sometimes I think that's probably a good phrase for us to 
remember in a lot of ways.
    But my plain duty to you is at least to try to articulate what these 
issues are and face them. We tried it the other way. We tried ignoring 
the deficit. It didn't go away. We tried telling everybody what they 
wanted to hear, that it could all be done by some sleight of hand, and 
it didn't happen. And we tried a lot of things about health care in the 
Federal Government which, frankly, made your problems worse. I could 
control health care costs without doing anything on the health care 
system. And what would happen? All the providers, when we just cut 
Medicare and Medicaid more, all the providers will send you the bill. 
That's what happens today.

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    So, I ask you to think about this. Let us face our problems; let us 
talk about our problems. The first big urgent thing is to pass a deficit 
reduction plan that keeps as many of these growth incentives as we can 
possibly have. That was the good thing about the House bill. Then I look 
forward to engaging in the health debate. I look forward to engaging in 
the trade debate. I look forward to engaging in the job creation debate. 
But in the end just remember, every advanced country in the world is 
having a terrible time creating jobs. We are doing better than most of 
them because of you, because we have a vigorous small business sector. 
Unfortunately, a lot of the things that we want to do may help some 
people and impose burdens on others in the small business sector at the 
same time, though we know that these big issues will not go away. And we 
know now after 3 years of stagnation we have to change if we want to 
grow.
    I believe if we do it together the next 20 years can still be the 
best years this country ever had. We are in a new and unprecedented era. 
This happens to us about once a generation, and when it happens we have 
to adjust as a people. That is what we are now trying to do. That's what 
makes being here so exciting. But I never forget that the thing that's 
important about it is that what happens here affects what you do there. 
And what you do there, wherever ``there'' is, in your hometown, is what 
really makes America work.
    Thank you very much.
    Moderator. Mr. President, again we very much appreciate you taking 
the time to be with us in your remarks today. One of the things the 
President has asked for and is willing to do is to take some questions 
from us. I will tell you from the years past, in other conferences with 
other Presidents who have spoken, this is the first President who has 
said, ``I would like to have questions from the group.'' And because we 
have such a large group assembled, Mr. President, what we've done is, 
we've circulated cards for people to use to ask questions. We've 
accumulated these, gone through, and picked out the top questions. And 
we have time for just two or three if we could.
    The President. Did you say the tough questions? [Laughter]
    Moderator. The tough ones, the only kind we have.
    The President. I have a feeling when this is over, I'm going to know 
why my predecessors didn't take questions. [Laughter] Go ahead.

Health Care Reform

    Moderator. The first one is: I have a small business with two part-
time employees. The business is out there for me to expand. However, 
mandated health care and the present uncertainty has caused me not to 
hire more people. What assurances can you give me and others in my 
position that will give me the confidence to hire more people and to 
create more jobs?
    The President. First of all, I think you ought to wait and see what 
we come out with. I think that most people believe that this plan would 
be much tougher on small businesses than I believe it will be. But let 
me put it to you in another way. We have to decide what to do with part-
time employees. And either employers will have to make some contribution 
to their health care. By the way, I think all employees should make some 
contribution to their health care, because if they don't, they may get 
to thinking it's free, and overutilization is one of the problems. I 
mean, everybody should pay something in accordance with their ability to 
pay. But I have to say this: I believe employers should make some 
contribution, because I will say again, those who don't pay at all are 
being supported, even when they don't use the hospital, even when they 
don't use the clinic, even when they don't use anything, they're being 
supported by those who do pay something, because they are keeping the 
infrastructure going. And everybody's bills will be lower over the long 
run if everyone makes a fair contribution. I think small businesses 
should really be limited in what they're required to pay by the 
Government. And also, anything that is done should be phased in so that 
as we go along the way, if there are mistakes or unanticipated 
consequences, they can be corrected. We should not wave a magic wand and 
say, okay, next year the system is going to look like this. We're going 
to have to phase this thing in so we can all work together and see what 
the problems are.
    But I have to say that I think in terms of job creation over the 
long run, you're going to have more people working over the long run if 
we don't have these costs being bounced around and thrown off from one 
group of employers onto another. The trick is going to be how to keep 
the questioner's costs low enough,

[[Page 951]]

and also what is the fair way to apportion the costs for the part-time 
workers.

Workers' Compensation

    Moderator. Dear Mr. President, as a North Carolina strong Democrat 
and a strong supporter of the Clinton-Gore campaign, please share your 
views on reducing the cost of health care and workmen's compensation for 
my small business.
    The President. Well, that's one thing I didn't say. The half of 
the--is that you? Good for you. This is just like a Baptist church. I 
figured we've got all the saints on the front row here. [Laughter] Let 
me say, first of all, one of the things that we are seeking to do in 
this health reform effort is to alleviate the inordinate burden of 
workers comp on employers by, and I don't want to get and sort of 
prefigure exactly what this is going to look like, but if you look at 
the workers comp system it is really three things: it's a health care 
system, it's a disability payment system, and it's an unemployment 
system, right? It was created at a time when we didn't have 
comprehensive systems to do all that. We now have health care systems, a 
disability program, an unemployment program, and we've got workers comp. 
And half the cost of workers comp is the health care.
    So, what we're going to try to do is to fold the health care costs 
part of workers comp into this health care program which would 
dramatically cut the cost of workers comp. Like everything else, it's a 
little more complicated than it seems. Here is the dilemma. Here's the 
problem we don't want to do. Most people will tell you who have tried to 
cut down on abuse of workers comp, that having that health care part of 
the program out there is one thing that stops it from being abused, 
because you can prove that people are well; you can say, now you have to 
go back to work, you have to go to therapy. So, if we merged the cost 
into a health care program, we don't want to do it in a way that in 
effect cuts the rest of it loose so people can allege disability in 
excess of what it is and the abuses that are plain in the present system 
will be worse instead of less. We have to do this in a way that will 
reduce the abuses in the present system. So that's the dilemma. It is 
obviously extremely costly administratively, has a lot of health 
overlap, to have these duplicated health systems for employees. It's not 
necessary, and we ought to abolish it, but we need to do it in a way 
that doesn't aggravate the disability problem of workers comp. So that's 
the issue there. I think we can do it.

White House Conference on Small Business

    Moderator. Thank you. The national White House Conference on Small 
Business was scheduled to take place in 1994. Does your administration 
have a date set for the conference, and will you allow us to assist with 
issues hitting small business the hardest?
    The President. The answer to the second question is yes, we will 
allow you to assist. The answer to the first question is, do we have a 
date yet? That was not a yes or a no. He's become a politician. He's 
just been up here a couple of weeks, and he's already--[laughter]--he 
said that the answer is, it'll be sometime between January and March of 
1995. I'm really looking forward to it.

Meetings With Business Leaders

    Moderator. We all are. And according to the time that I have, this 
is the last question. Rather than talk with the CEO's of the Fortune 500 
about business matters, why not get a panel of small business members, 
50 or less employees, say, 25 from each State, to inform you on a 
regular basis?
    The President. Let me make a suggestion sort of to follow up on that 
without embracing that specific suggestion, although I think that's 
about as good as any I've heard. I will hereby, in front of you, 
deputize Mr. Bowles to work with you to come up with some formula for 
bringing in a representative group of small business leaders to see me 
on a regular basis and talk about this. Let me say we'll do that.
    Moderator. Thank you.
    The President. Let me make one other point about this. Let me say 
that I have started--and this question may have come from someone who'd 
seen the press on this. But I have started every week or 2 weeks for the 
last couple of months, through Alexis Herman, who is my special 
Assistant for Public Liaison--she works with groups throughout the 
country and also helped organize my coming here today--having lunch with 
business leaders from around the country. And we try always to have one 
smaller business person in with a lot of the big business leaders who 
come. We have manufacturers, people from finance. We always try to have 
at least one small business person at the table, or either that or

[[Page 952]]

someone who started a business from scratch that may not be so small 
anymore, but they started--just to try to have the mix. It's been an 
immensely valuable thing for me just to do this. And we just take an 
hour-and-a-half informal, off-the-record lunch. We talk about whatever 
they want to talk about and a couple of things that I'm working on. But 
it really helps to keep me connected to what's going on out there. It's 
pretty easy to get isolated, as I'm sure you know, in this town. And so 
I would embrace this. I'm glad you stood up when I said it, but it will 
do me more good than it will you. I'll get a lot out of it, and we'll 
follow up.

Government and the Private Sector

    Moderator. Mr. President, your staff says that they will give us 
time for one more question.
    The President. Good.
    Moderator. Which we appreciate. Mr. President, thank you for 
speaking to us. I'm sure you agree that most of our social problems can 
be eased or solved by putting every capable American to work. What 
compromises in your social agenda are you willing to make to reduce the 
burden of Government?
    The President. Well, the answer is I'm prepared to do nearly 
anything to put everybody to work. But let me say again the country with 
the lowest unemployment rate of all the wealthy countries in the world 
is Japan. And it would be hard to make a serious case that they have a 
low unemployment rate because their Government's not involved in their 
economy. And basically what they have is high productivity for exports 
and labor-intensive, even not very productive protections for the 
domestic market, so they can keep unemployment low. It's an interesting 
system. I'm not suggesting we follow it; I don't think we should. The 
only point I'm trying to make is that a number of the business leaders 
who come to see me believe that one of the reasons that we have 
unemployment as high as it is, is that we had nothing to substitute for 
the big cutback in defense spending. For example, when Eisenhower was 
President, we built the interstate highway network. And then we had in 
the seventies, we had a huge investment in building new water and sewer 
systems, making environmental investments that had never been made 
before. And then in the eighties, we had a huge investment in defense 
industries of all kinds, not just people in the military but all the 
contractors.
    So my feeling is, what we need to do is to get the Government out of 
those things where the private sector is doing well and doing better. 
And I think, as I said, I'm really eagerly awaiting the work the Vice 
President is doing. He's consulting experts from all over America on 
what we can do to increase the productivity of the Federal Government. I 
think the Government does a lot of things that hold back the job engine 
in the private sector. But there are also some things that Government 
does well that we're not doing now as much as so many of our competitors 
are. For example, if you wanted to have a more efficient high-speed rail 
network in this country, you'd have to have some sort of public input 
here, just like they do in every other country.
    So I think the problem is, we're doing too little of some of the 
things we do well, and we're doing too much of things that we can't 
really have much of an impact on except to slow down the job machine. 
And it's not so much less; we need a lot less in some areas, but we also 
need to far more sharply define what nearly all of us could agree the 
Government ought to do as well as what the Government ought not to do. 
And we're going to have to be much more disciplined about it. I mean, 
there are lots of departments here in this town that have a good 
mission. But they also are doing things that they started doing 25 or 30 
years ago that may or may not have a credible rationale for continuing 
now, and we can't afford that anymore.
    It's just like you. If you want to increase your impact, and you're 
not getting any more money, you've got to change what you're doing. 
You've got to stop doing some things, and you want to start doing 
others. And the thing I like about this budget that we're about to adopt 
is that if we want to do new things, it's going to require us to stop 
doing some old things and will require some real discipline for the 
first time in a long time. And we'll do our best. And if we set up this 
consultation process, you can help us along the way.
    Thank you very much.

Note: The President spoke at 9:15 a.m. at the Hyatt Regency. In his 
remarks, he referred to Jack Faris, president and chief executive 
officer of the federation.