    [Public Papers of the Presidents of the United States: William J. Clinton (1995, Book II)]
    [September 25, 1995]
    [Pages 1473-1486]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks in a Question-and-Answer Session at the Godfrey Sperling
    Luncheon
    September 25, 1995

        Godfrey Sperling. Well, Mr. President, what can I say, except it's
    wonderful to be over here. And as I've said before, in other times we've
    been at the White House, we'd love to have our breakfasts or lunches
    over here, maybe every week or two. Maybe Mike could work it out.
    [Laughter] But having said all that, we can get started. I hate to ask
    the President to sit down, but--[laughter]----
        The President. Please, be seated, everyone.
        Mr. Sperling. ----that's what we do. Our ground rules--you've been
    to our breakfast before and lunch, whatever we want to call this today,
    and you know the ground rules; everything's on the record. And you've
    seen this bunch of rascals before, at least a few of them. And they
    haven't changed; they're the same ones that you've seen in the past. So
    I'm giving you a little warning.
        So you all know, I understand there will be transcripts of this
    later in the afternoon. And beyond that, I just have to say welcome to
    you and thank you so much for coming to my 80th birthday.
        The President. I'm glad to have you here. I would like to say just
    to begin that the Vice President and I are delighted to have you and
    your family here. It's a special day. Someone told me that you had done
    2,800 of these now. And----
        Mr. Sperling. Almost.
        The President. I was trying to think of the significance of them.
    One of them is that I noticed from the breakfasts that I've been to,
    they are notoriously high cholesterol. And so you are--your very aging
    condition is a stunning rebuke to all of those who advocate healthy
    eating. [Laughter]
        Mr. Sperling. I stay away from it.
        The President. I don't know what the consequences of all that are,
    but it's a remarkable thing.
        Let me also say, as you know, this is going to be a busy week around
    here. And you may have heard already, but in case you haven't, not too
    long ago, this morning, the Bosnian Government announced that they would
    participate in the resumption of the peace talks tomorrow in New York,
    which is very good news. And

    [[Page 1474]]

    we do have the best chance we've had, I think, since the beginning of
    the conflict now to have a peace agreement come out of this. And of
    course, later in the week we'll have the signing here of the agreement
    between the Palestinians and the Israelis in the next phase of the peace
    agreement there.
        So I'm very encouraged. I think both these things are examples of
    the imperative for United States leadership. And I think the world's
    better off because of what's happened in the last couple of years. And
    of course, there are a lot of things at issue there, which you might
    want to ask about. But I don't want to take up any more of your time.

    Mood of the Country

        Mr. Sperling. Well, since I own the football, I usually ask the
    first question. You know, I was feeling quite perky over the weekend,
    Mr. President, with my birthday coming up and everything. And then I
    read in the papers, you know, we all were in a deep blue funk. And I
    just have to ask you, how did we get into that funk, and how are you
    going to get us out of it?
        The President. Well, first of all, before you draw that conclusion,
    I would urge you to read the entire pool report, on which the stories
    were----
        Mr. Sperling. They weren't good translations I read in the----
        The President. No, but I was basically very optimistic and upbeat
    about it. What I said was that the--there are a lot of contradictory
    things happening in American life now as a result of the fact that we're
    going through a period of profound change, and as you know from the
    stories, I believe the biggest change in the way we work, live, and
    relate to the rest of the world in 100 years, since we became an
    industrialized, more urbanized country, and since we got involved in
    World War I.
        And I believe that in this time, there are a lot of things that seem
    contradictory and that are unsettling to people. And the American people
    have basically helped me to understand that, especially in the last year
    or so, just going out and listening to people talk about their own
    lives. I'll give you just, if I might, a couple of examples. If I had
    told you 30 months ago, when I became President, that we'd have 7\1/2\
    million new jobs, 2\1/2\ million new homeowners, 2 million new
    businesses, a stock market at 4,700, the largest number of self-made
    millionaires in history, the entrepreneurial economy flourishing, and
    the median wage would go down, that would have been counter-intuitive.
        But it has happened because of the complex forces in the global
    economy. Or if you look at the same thing happening in our society,
    we've got the crime rate down, the murder rate down, the welfare rolls
    down, the food stamp rolls down, the teenage pregnancy rate down 2 years
    in a row, even the divorce rate down, but violent crime among teenagers
    is up. Drug use among people between the ages of 18 and 34 down, but
    casual drug use among teenagers up. So there are these cross-cutting
    things. And it's perplexing to people, I think, and they feel it in
    their own lives.
        And I think that the challenge for us all is to basically keep
    working for the future. You can't get--these periods of transitions come
    along every so often, and I feel very good about it. I feel very
    optimistic about the country. I think if you were betting on which
    country is likely to be in the strongest shape 20, 30 years from now in
    the 21st century, you'd have to bet on the United States because of the
    strength and diversity of our economy and our society. But we have some
    very, very important decisions to make, many of which will be made here
    in the next 60 days.

    1996 Election

        Mr. Sperling. Mr. President, with the Republicans always trying to
    trip you up, and sometimes successfully, why in the world do you want 4
    more years in the White House? Why not go home, you know, and go
    fishing?
        The President. Because I believe that my vision of this country is
    the one that's best for the country. I believe that our policies best
    embody the values of the American people who want to see our country
    preserve the American dream and our country's ability to lead the world
    and want to see families strengthened, want to see ordinary Americans
    have the chance to make the most of their own lives, and want to, in the
    words of Governor Chiles from Florida, want to see us be a community,
    not a crowd, a set of people who don't just occupy the same space of
    ground and elbow each other until the strongest win and the weakest
    fall, but a group of people who believe that we're all better off when
    we recognize obligations to one another and act on those obligations
    within

    [[Page 1475]]

    our families and across generational and income and other lines.
        So I feel very optimistic about the future of this country, but
    especially now, I think it's more important to run than it was 4 years
    ago. Four years ago I ran because I thought there was no action being
    taken to give us a new economic policy based on opportunity, a new
    social policy based on responsibility, and to try to bring this country
    together and change the way the Government works. Now I think the
    alternative vision out there is destructive of the future we want.
        Mr. Sperling. Bob Thompson, I think, has a question. Then we'll move
    around the best we can. Carl.

    The Presidency

        Q. Mr. President, you've had 30 rather stormy months here. What are
    the lessons you've learned that you didn't know before about your office
    and its power and its authority?
        The President. I think I had underestimated the importance of the
    President, even though I had read all the books and seen it all and
    experienced it in my lifetime. I think I had underestimated the
    importance of the Presidency as a bully pulpit and the importance of
    what the President says and is seen to be saying and doing as well as
    what the President does.
        And I think that I underestimated--I had overemphasized in my first
    2 years to some extent the importance of legislative battles as opposed
    to other things that the President ought to be doing. And I think now we
    have a better balance of both using the Presidency as a bully pulpit and
    the President's power of the Presidency to do things, actually
    accomplish things, and working on the process in Congress but not
    defining--permitting the Presidency to be defined only by relationships
    with the Congress.
        But I must say, they've been a stormy 30 months. It's been a stormy
    time for the country, but if you look at what has been accomplished, I
    think the record has been good for America and will be good for our
    future. The economy is in better shape. We passed the toughest crime
    bill in American history, and it's plainly playing a role in driving the
    crime rate down throughout the country. When there was no action on
    welfare reform, we gave two-thirds of the States--I think more than two-
    thirds now--the right to pursue their own reforms. And we have lowered
    the cost and increased the availability of a college education. We gave
    more kids a chance to get off to a good start in school. We've pushed
    school reforms that led to smaller classes, more computers, and higher
    standards. We've advanced the cause of the environment while growing the
    economy. And we've downsized the Government and made it more efficient,
    far more than our predecessors who talked about doing that but didn't.
    And if you look at the record in foreign policy, the world is a safer,
    more prosperous place today because of the initiatives we've taken, I
    mean, just in the last year, the efforts in the Middle East and Northern
    Ireland, in Haiti, the Japanese trade agreement, the North Korea nuclear
    initiative, the First Lady's trip to Beijing coming on the heels of the
    Cairo conference, and of course, the progress being made in Bosnia
    today. So it's a stormy time. But I think it's been a pretty productive
    time. And the American people, I think, are better off because of the
    things that we've done.

    Mood of the Country

        Q. Mr. President, I wanted to go back to the more philosophic view
    that you started out with and have been talking about recently, you've
    claimed that this is sort of a turning point, in 100-year cycles.
    Speaker Gingrich talks in those terms often also. And when we--in fact,
    was in the breakfast a couple of weeks ago--he talked a bit more in
    terms of the country has had several, seven or eight, cycles of history
    and that we're in a period now--he really compares it to the early
    1930's. A new majority is being built, and he portrays it as that he's
    on the cutting edge of the new majority and last year's election and
    that you're--I think he referred to once as perhaps the last defender of
    German socialism, but that you represent the old big Government style
    and that he's the new style. Now, why--maybe you're both right. Is that
    possible?
        The President. No. [Laughter] I mean, it's possible that there are
    elements in both our analyses that are right. But you know, as we say at
    home, that's their party line, and they have enough access and enough
    unity and enough discipline to spout the party line that they may be
    able to convince people of it. But it's blatantly untrue--I mean, to say
    that I'm the last defender of German socialism.
        It is true that I don't approve of their plans to deny more children
    access to a healthy start

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    in school or putting more old people out of nursing homes or walk away
    from all the lessons we've learned in the last 20 years, whether it's
    preserving our environment or maintaining some human standards in the
    way we run these nursing homes. It's true that I don't think that we
    ought to--I don't think a good reform for the future is making it harder
    for young people to go to college, thereby ensuring a decline in the
    college enrollment rate and continued aggravation of the income
    differentials.
        It's true that I don't believe that it's a great idea to raise taxes
    on working families making $15,000 a year to lower taxes on me, the
    people in my income group. That's true; I don't agree with that. But to
    talk about German socialism is ludicrous.
        Let me just--we had two Republican Presidents before I showed up.
    Who reduced the size of the Government more? There are 163,000 fewer
    people working for the Federal Government today than there were the day
    I became President, I might add, without one vote from a Republican in
    Congress supporting me. The Democrats did it; all the Republicans voted
    against it.
        Who reduced the number of regulations more--16,000 pages of
    regulations reduced by the Vice President's program? We supported school
    reforms, like charter schools, which allow private groups of individuals
    to get a charter from school districts to run schools. I visited one of
    them in San Diego the other day.
        Who gave more authority to States to pursue reforms in welfare and
    education--I mean, in health care? I did, more than the two previous
    Presidents combined. Who reduced regulation more in the Small Business
    Administration, the Department of Education, the EPA, you name it? We
    did. So that may be their line, but it's not the right line.
        The truth is that I still believe that we have certain obligations
    to each other--that is really the difference--and that the Federal
    Government's job, to some extent, is to try to make sure that we are
    stronger as a community and that we give people an opportunity to make
    the most of their own lives and that we give their families and their
    communities a chance to solve their own problems and that when we walk
    away from that, experience shows us we pay a very high price.
        So I think that if their view prevails, it may be more like the
    twenties than the thirties.

    Russian Nuclear Cooperation With Iran

        Q. Mr. President--[inaudible]--on to serious matters on foreign
    policy. Two things that so far you have been unable to solve, I want to
    ask you about them. Number one, the Russians are apparently sending not
    one, but four nuclear reactors to Iran. And there's a move in the
    Senate--in fact, the Senate passed an amendment last week--cutting off
    American aid to Russia if those reactors actually go to Iran. And
    second, the Russians have violated the CFE, Conventional Forces in
    Europe Treaty, although it only takes effect I think in the next couple
    of weeks. I think both parties have been honored to keep it. And you
    have said on both these issues in the past, sir, you have said we will
    not allow reactors to go to Iran and we do not think the Russians have
    any legal right to break that treaty. What is your position on those two
    issues right now, sir?
        The President. Well, first of all, on the treaty, we are working
    very hard with them and where the two sides, I believe, are getting
    somewhat closer together. And I think if you talk--even the Europeans
    believe that some accommodation can be reached, some agreement can be
    reached on the Conventional Forces in Europe Treaty that is fair to the
    Russian position and still fulfills the purposes of the treaty. So I'm
    hopeful that there will be an accord reached there, and until we fail to
    reach one, I don't think I should comment further.
        On the Iranian nuclear reactor, you know what our position is. We
    think it's wrong. The Vice President--maybe he wants to say a word about
    it--has worked very hard through the Gore-Chernomyrdin commission to try
    to work through this. You know, their position is that this contract was
    made at a previous time and that they are basically giving them the same
    kind of reactor we proposed to help the North Koreans build. And so they
    disagree with our position. Our position is the North Koreans have
    certain nuclear capacity, and we're building it down, why should we give
    the Iranians anything?
        And so we're continuing to work with them on it. And I hope that
    ultimately we will be able to work this out. I do believe that a lot of
    these threats, given the present state of play in Russia and where their
    Duma is and the way they talk, may be counterproductive. I mean, it may
    not further the objectives that

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    the Congress seeks. Do you want to add anything to that?
        The Vice President. Well, I think, you began by referencing a report
    on multiple reactors that I think was based on a news story that was
    garbled in the telling. And we can go into more detail later on that
    one. I just urge you not to give too much credence to that particular
    report.
        But as the President said, the dialog is continuing, and they've
    agreed to----
        Q. They're not sending--they're not sending the reactors----
        The Vice President. You mentioned four reactors, that was--well, the
    one negotiation is the one that is still the subject of our dealings
    with them. It antedated our time in office, but they have agreed to
    continue a dialog on possibly canceling that sale. It is, as the
    President said, not a violation of any international law or treaty.
    Notwithstanding that fact, they understand the seriousness with which we
    do it. We're pressing it very hard. We do not accept that it is a good
    thing for them to do, and we hope to be able to convince them to back
    off it.

    Wage Levels

        Q. Mr. President, if during the first 3 years of your
    administration, the economy has basically been doing well but the median
    wage has been going down, then that suggests that whatever it was that
    you were doing for the economy, especially when the Democrats were fully
    in control of Congress and the Presidency, was not enough. Now, if you
    were re-elected, what would you do to help the average working person in
    the country? And what would you be able to do, especially if the
    Congress remained in Republican hands?
        The President. Well, first of all, what I suggest is that, keep in
    mind, these trends of wage stagnation go--depending on whose numbers you
    look at--go back at least 15, and perhaps 20, years. So I think it's
    unrealistic to think that you can turn them around in 2 years. But I
    believe there are certain things that we need to do.
        First of all, I think that if we can--the expansion of trade, which
    we have pushed, has generated about 2 million new jobs. On average,
    those have been higher wage-paying jobs. I think we need to do things
    that change the job mix. That is a slow but an important remedy. So that
    a high percentage of the total number of jobs in America have a higher
    average income. In order to do that, we not only have to continue our
    trade policies, we must continue to invest in research and development
    and in new technologies.
        Now that has been something that hasn't been noticed at all in this
    budget debate. But one of the quarrels I have with the congressional
    budget is that it takes our R&D budget down by roughly six-tenths of a
    percent of GDP. And a lot of Republican high-tech executives are very
    concerned about it. They believe it will lead to a loss of America's
    position in a lot of important industries over the next 5 years. So
    changing the job mix is an important part of it.
        Continuing to get a higher and higher percentage of people in
    education is an important part of it. I have given the Congress one
    proposal, which I thought looked very much like a Republican program,
    which I expected them to embrace, the so-called ``GI bill'' for
    America's workers, in which we proposed to consolidate 70 Labor
    Department training programs and not block grant them to the States but
    give them in the form of vouchers to unemployed people and welfare
    people so that when people lose their jobs, they can immediately go back
    to a new training program.
        Thirty years ago, 80 percent of the people who were laid off from
    work were called back to their old jobs. Today, 80 percent of the people
    who are laid off are not called back to their old jobs. And it's bad for
    employers and for employees--because employers pay unemployment--bad for
    employers and employees to let people traipse around looking for jobs
    when what they really need is to immediately be in a retraining program.
        I think we should raise the minimum wage. It's going to go to a 40-
    year low if we don't. I think we should avoid gutting the earned-income
    tax credit for working families. I think that's one of the two or three
    worst things in the congressional budget. It will aggravate income
    inequality.
        And I think, frankly, the proposals that we have endorsed that the
    Congress is working on from the Jordan commission will have some impact.
    If we lower the aggregate number of legal immigrants coming into the
    country, even by a modest amount, it will free up more jobs to people
    who now don't have any, and it will tighten the labor market some.

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        I talked to the Governor of Nebraska the other day, the State with
    our lowest unemployment rate, and I said, ``Do you think when we're
    creating all these jobs, it's going to ever raise wages?'' He said,
    ``Yes.'' He said, ``I just don't think the markets are quite tight
    enough in the country.'' He said, ``In Nebraska, wages are up, and even
    at the places that used to not give benefits--fast food places--they're
    all giving health care benefits now and wages are up.'' So he said, ``I
    think if you can get the unemployment rate down maybe another half a
    point, you can get that done.''
        So those are my ideas for raising the wages levels: change the job
    mix, improve the training, continue to expand trade, raise the minimum
    wage, and have a modest reduction in the number of legal immigrants.
    We'll still be a country of immigrants, but we should lower the total.
    We raised it, after all, dramatically, in 1990 to help deal with the
    cold war. We've done a lot of that, and I think we should come back down
    now.

    Colin Powell

        Q. Mr. President, how do you explain the Colin Powell phenomenon?
        The President. That's your job, not mine. [Laughter]
        Q. We need help. [Laughter]
        The President. No, you do just fine. I'm the President. [Laughter]

    President's Popularity

        Q. Mr. President, you started off with a great laundry list of
    things that have happened in your administration so far, and yet, we had
    a Republican dominated Congress come into office last fall. And there's
    a lot of animosity toward you personally out there in the public. How do
    you account for that?
        The President. That requires political analysis, too. Look, I took
    on a lot of tough issues, and I made a lot of people mad. You know, look
    at what they said about my economic program in 1993. They tried to
    convince every American I'd raise their income taxes when I haven't.
    They said it would bring on a recession.
        You all ever ask them when they're having their press conferences
    how they won the Congress on a false premise? They said, you know, it
    was going to be the end of the world if--the end of the world if the
    Clinton economic program were passed, we'd have a terrible recession.
    Instead, we had the best economic performance we've had in two or three
    decades.
        I made a lot of people--you know, the House--I still believe if you
    analyze those races, race by race by race, the House of Representatives
    is in Republican hands today because we took on the Brady bill and the
    assault weapons ban. And everybody knew they were unpopular. People said
    to me, ``Don't do this. There's a reason no President has ever taken on
    the NRA. There is a reason for this. I don't care what the poll says,
    the people who are against this will vote against everybody who votes
    for it, and the people who are for it will find another reason to vote
    against it. They won't have any convictions. Only the antis will have
    convictions.'' But I'll tell you something, 40,000 people last year
    didn't get guns because of it, 40,000 people with criminal records.
        And if we keep a few Uzis off the streets and out of the schools and
    we keep a few more innocent kids from being shot down at bus stops, it
    was worth it. You know, I had the same argument here on the tobacco
    thing. They said, ``You've got to be crazy. There's a reason no sitting
    President has ever taken these people on. They'll scare all those good
    tobacco farmers to death. They'll vote out Democrats. They'll say you're
    trying to have the Government take over people's lives. Don't do this.
    This is a dumb thing to do. I don't care what the polls say. They'll all
    be against you, and the people that are for you will find another reason
    to vote against you.''
        Q. And----
        The President. And--let me finish. You asked this question, I want
    to--and I believe--you know, we know 3,000 kids a day start smoking. We
    know that--at least we know some of those tobacco interests have known
    for 30 years it was destructive and addictive. We know 1,000 of those
    kids are going to die early. If you want to do things, you've got to
    make people mad. And if the people you make mad have access to
    television programs, radio programs, access to channels of
    communication, they will go wacky, and they will generate animosity.
        Now, I will say this, my sense is that the level of personal
    animosity has gone down as people see who's really fighting for real
    family values and real interests of American families and real interests
    of small business and trying to give ordinary people a chance to make
    the most of their own lives. But you know, I did

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    not take this job to try to maintain high levels of popularity.
        You go back and look; I had a very specific agenda I was going to
    try to implement. And I was well aware that people would be against it.
    Look at this--look at this budget debate on the student loans. They even
    went through an accounting gimmick to try to convince people that the
    direct student loan program was more expensive than the guaranteed
    student loan program, when everybody in America knows it's not true.
    Why? Because they want to take money away from students and give it back
    to bankers.
        Well, the people that lost their money weren't happy. The people
    that were going to benefit from the student loan program--there weren't
    enough of them to know that at election time. I think the main thing
    that we all have to do is to figure out what we believe and fight for it
    and be willing to work together with people who disagree with us, if we
    can find honest common ground. And we'll let the popularity take care of
    itself. I just tried to do what I said I would do when I ran.
        Q. Just to follow up, do you wish, in retrospect, you might not have
    taken on a few of those, like gays in the military?
        The President. Well, to be fair, I didn't take that on. That was an
    issue that was visited on the Presidency. I mean, I could have said,
    ``We'll just let the courts go through that.'' But let's talk about
    that. That's become more of a slogan than a fact. The position I took,
    remember, was not that we should change the rules of conduct, which
    prohibited homosexual activity, but that we should not ask people or
    persecute people for their failure to lie about their sexual
    orientation. That position was endorsed by Barry Goldwater and by most
    of the combat veterans of the Vietnam war serving in the United States
    Congress.
        Now, the military thought it went too far, so what did we do? We
    changed the position. We studied it for a few months. We changed it. We
    wound up with a position with which we fought two World Wars, Korea, and
    Vietnam. We did not bring an end to military order in our time. All we
    did was to change the position that was put in in President Reagan's
    tenure.
        And look, the United States Government was covered up with lawsuits.
    We were losing lawsuits. I suppose the easy thing to do would say, ``Oh,
    well, let the courts go forward.'' I was trying to find a way to put an
    end to this so that the military could just put this issue behind it and
    go on being the world's best military. And you may disagree with the
    position I took or the position that we came out with, but the position
    we're in now is roughly how we won two World Wars and fought through
    Korea and Vietnam. It's hardly the end of civilization as we know it.
        And the other position would not have been either.
        Q. [Inaudible].
        The President. Well, I didn't have any choice. The people who
    brought it up were the Republican Senators. They made it their number
    one legislative--go back and read the chronology of how all this came
    up. They stirred it and swung it and made sure it was the number one
    issue of the world. Do I wish I had never taken a position on it? You
    know, I often say what I think. My position on this was basically taken
    in the campaign when someone asked me about it. And by the way, don't
    forget one other thing. There was also evidence which was being put into
    all these court cases that the military knew that they had some gay
    service members who were permitted to serve in Desert Storm because they
    were needed and they were good service members, and then they were
    kicked out, which I thought was not a very good thing. All this happened
    before I showed up.

    Civil Rights

        Q. Mr. President, your home State in 1968 voted for George Wallace,
    the State that produced Orval Faubus, Little Rock Central High School.
    Even your severest critics--[inaudible]--acknowledge your own long and
    strong commitment to civil rights. Do you think--[inaudible]--see the
    country change, that America is ready to elect a black President?
        The President. I would hope that the American people could evaluate
    any candidate without regard to their race or their gender. And I would
    hope that that would be the case. You know, that's the way I've lived my
    life. That's the way I've staffed my administration. That's the way I've
    done my work, and that's what I hope is the case in this country.

    Debt Limit Legislation

        Q. Mr. President, Speaker Gingrich has--[inaudible]--unilateral
    right to refuse to schedule a vote which would then suspend the raging

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    debt limit. Does that create problems for you--both the procedure where
    the Speaker claims a unilateral veto and the threat to raise the debt
    limit?
        The President. Well, I think it's wrong. I mean, I think it is wrong
    not to raise the debt limit. The United States in over 200 years has
    never defaulted on its debt. We have paid our debts. We have been an
    honorable citizen in that sense. And it is simply wrong.
        I would also say it would ultimately be self-defeating. If what the
    Republicans in Congress want to do is to balance the budget, rather than
    to destroy the Federal Government, then I share their goal. And I have
    given them a balanced budget plan, and my door has been open from the
    beginning to work with them on that.
        If we were to default on our debt, you have seen already in other
    countries, in events just in the last 12 months, how rapidly the
    financial markets react to such things. And what they would do is to say
    that the United States is no longer reliable. Then the cost of carrying
    our debt, the interest rates, would be raised, and that would make it
    harder to balance the budget. We'd spend more and more and more of
    taxpayers' money on interest payments on the debt and less and less on
    national defense or education or anything else. It's ultimately self-
    defeating, and it's wrong and it's irresponsible and it's not necessary.
        We can reach an accord here on balancing the budget. But there is a
    process that we have to go through to do that. We are not going to have
    a unilaterally dictated budget; we are going to have a discussion about
    it. And as I said, more than any Democrat in many years, I've shown not
    only a willingness but a desire to make the Government smaller, less
    bureaucratic, more entrepreneurial, and to target investments while
    reducing unnecessary spending. We can make this work.
        But blackmail is not they way to do it, and I'm not going to be
    blackmailed. And I'm not going to just sign a budget that I know will
    put people out of nursing homes or deprive people of the chance to go to
    college or children the chance to be in Head Start or compromise the
    environment. I'm not going to do that; I'm just not going to do that. We
    can get a balanced budget that the entire financial world thinks is a
    great thing. But it has to be done in an honorable way, and defaulting
    on our debts is not an honorable thing to do.

    NAFTA

        Q. Mr. President, just to follow up on your remarks here about the
    trade policy. The initial Commerce Department numbers indicate a modest
    dropoff--[inaudible]--NAFTA. That was expected. What wasn't expected is
    that what was a U.S. trade surplus with Mexico has become a trade
    deficit. Given the job loss and given the worsening trade numbers, has
    NAFTA turned out to be a worse deal than you expected? And politically,
    given the strength of economic nationalism in many parts of the country,
    do you have any fear that NAFTA is going to end up hurting you in a lot
    of key industrial States next year?
        The President. Well, let's analyze it. Let me answer the question on
    the merit first. What happened in the short run was that NAFTA was a
    much better deal for us in the first year than we thought it would be.
    We had a much bigger trade surplus than we thought we'd have. We
    generated far more new jobs than we thought we would, and they were
    basically high-wage jobs. And because of the financial difficulties of
    Mexico, which were unanticipated, it turned out to be a worse deal in
    the second year than we thought it would be. And because we ran a trade
    deficit, which we did anticipate once the Mexican economy went down, we
    have a slight net job loss.
        Does that mean NAFTA was a mistake? No, for two reasons. Number one,
    if the Mexican economy had gone through what it has just gone through
    without NAFTA and without the trading relationship with the United
    States, they would be in even worse shape. We would have a bigger
    illegal immigration problem. We would have a bigger period of
    instability down there. Democracy would be more at risk in Mexico. And
    we would be worse off than we are with NAFTA.
        It is unfortunate that the Mexican economy--that they tried to
    expand it too fast and in some ways it were improvident and they didn't
    cut back in an election year. And then, from my point of view, there was
    an overcorrection by the financial markets. They punished them too much.
    But still, we are better off vis-a-vis Mexico than we would have been if
    NAFTA hadn't passed. If NAFTA hadn't passed we'd have a trade deficit
    with Mexico this year be-

    [[Page 1481]]

    cause they wouldn't be able to buy anything from us.
        The second reason it was the right thing to do is, in a period like
    this where things are changing so rapidly, you cannot calculate from
    month to month or year to year. If you look at 10 years from now, 20
    years from now, 25 years from now, it is plainly the right thing to do.
    A strong, stable, healthy, democratic Mexico with a sensible economy is
    plainly in our interest. It will stabilize our borders. It will help us
    economically. And it will promote our goal of a world trading system and
    a world moving toward democracy and peace. So I think it's the right to
    do.
        On the politics of it, it was always a political risk for a Democrat
    to do what I did on NAFTA. But I believed in it. And it was one of the
    changes I thought the Democratic Party had to go for, not to give up
    fair trade, which is embodied in the Japanese trade agreement, but to go
    for free trade as well, to go for more open trade. It's just what I
    believe is the right thing to do, and I'll live with the political
    consequences.

    Capital Gains Tax

        Q. Mr. President, I'd like to ask you a question that I hear a lot
    of people around the country asking, and that is, would the cut in the
    capital gains tax that is enacted by both the Senate and the House in
    itself be reason enough for you to veto a bill that contains those
    provisions?
        The President. I probably should be a little chagrined to admit
    this, but I am not absolutely sure what the precise provisions were of
    their tax. Let me say this: I believe my obligation is to try to reach a
    balanced budget. There will be a tax cut in this balanced budget. I want
    the tax cut, as much as possible, directed toward people who are out
    there working for a living, dealing with the economic uncertainties in
    the marketplace, trying to raise their children and educate themselves
    and their children. That's what I believe.
        I also believe that we have provided quite a good environment for
    investors in this country. As I said, we have more self-made
    millionaires in the last 2 years than any comparable time period in
    American history, and the stock market is at 4,700. You know that I'm
    not philosophically opposed to all capital gains taxes because we had a
    capital gains tax in the '93 economic plan that cut the tax rate 50
    percent on people that invested in new or small businesses for 5 years.
    And I was prepared to go with the Bumpers bill, which would have taken
    it down to zero, if the investments went longer.
        So, my answer to you, sir, is it depends on what form the capital
    gains tax is in in the final bill and how it works and will it really
    fulfill our objectives. What are our objectives? We want more jobs and
    higher incomes. If it's consistent with an overall package that gives
    more jobs and higher incomes, certainly I would consider that. I would
    be obliged to consider that. I cannot tell the Republican majority that
    they have to consider compromising with me and then we not considering
    trying to reach out to them. But the test should be, does it give you
    jobs and incomes? That's really what we need to do in this country.

    Mood of the Country

        Q. I just wanted to return to the original question--[inaudible]--
    asked about the funk that the Nation appears to be in. And I wonder if
    you could explain to us what your point is there and what it is a
    President can do about a nation that's in a funk? And are we going to
    see any more appearances of the Blues Brothers? [Laughter]
        The President. If I thought it would help, I'd sure do it.
        Last year, last November, plainly the country was in kind of an
    anxious mood, a negative mood, a frustrated mood about the Government.
    And I was saying that I thought that one of the reasons that it happened
    is that I had inadequately fulfilled--to go back to the first question
    that was asked back here--I had inadequately filled the first
    responsibility of the President, in terms of the bully pulpit, in terms
    of trying to say, here's the change we're going through. Here's how I
    think it's going to come out all right. Here's my vision for it. Let's
    do this based on our fundamental values of work and family and
    responsibility.
        I think the country is sort of moving into a more positive frame of
    mind as we see more and more good economic news and as we see more and
    more evidence that some problems we thought couldn't be solved, you can
    actually make progress on them. I mean, 5 years ago, if you had asked
    people, do you think you could ever bring the crime rate down, they'd
    probably say no. Well, now the crime rate's going down

    [[Page 1482]]

    in virtually every city and State in the country, largely because people
    have figured out that these community policing strategies, among other
    things, really work.
        So what I'm saying is, what I think we have to do is to be
    optimistic about the future. But to do it, we have to understand that
    the news--we live in a good news/bad news time, like all tumultuous
    times. And we have to understand what we have to do to get more good
    news and what we have to do to attack the bad. And I think once you
    understand that, that increases your level of security and your level of
    optimism. And this country thrives on optimism. We have to maintain our
    optimism.
        These problems we have are not insoluble. But we have to just keep
    that upbeat outlook. And I sense that more and more people are looking
    at the future in that way and balancing the scales in what I would
    consider to be an accurate way. And I think it's because the American
    people are pretty smart and they are sensing all these things in their
    own lives.

    Medicare

        Q. [Inaudible]--lead editorial accusing the House Democrats of
    demagoging the Medicare issue. Are you concerned that the tactics taken
    by the House Democrats are losing the battle of public opinion? And how
    would you characterize your view on Medicare vis-a-vis the House
    Democrats?
        The President. Well, I think institutionally we have different
    responsibilities. And you can see that, I think, by the way the majority
    carried out their responsibilities when they were in the minority.
        My job, I believe, is to present a balanced budget, and I have done
    it. My job is to present an alternative plan for Medicare and Medicaid
    which will be part of a balanced budget and which will also help the
    Medicare Trust Fund to lengthen its life. That is my job.
        Historically, minority parties in the Congress have thought that
    their main job was to point out what they disagreed with with the
    majority's proposal. And that is, after all, what the people who are now
    in the majority did for the last 2 years before they became the
    majority, on every conceivable issue.
        Now, so the idea that they should fashion an alternative is--there
    are cases in which they have--they did have an alternative welfare
    reform bill, for example. But I think in the end they will be voting for
    an alternative. They think their job right now is to point out some
    facts which have been lost in this debate. For example, let's just take
    the Medicare issue. The congressional majority relies on the report of
    the trustees in Medicare coming out of the HHS process. They say
    Medicare is in trouble, and we have to help it. And we have, as you
    know, added 3 years to the life of the Trust Fund in the first 2 years
    of my administration.
        But then they say--we agree with them on that, but they're not right
    about medical inflation, and they're not right about how much it costs
    to fix it. So what the Democrats are pointing out is that basically that
    the Republican proposal cuts Medicare 3 times as much as the trustees
    say is necessary to stabilize the Trust Fund and that at least half of
    the Medicare cuts are coming from beneficiaries, out of a pot that has
    nothing to do with the Trust Fund.
        So that since a lot of these people live on $400, $500, $600 a month
    Social Security, these proposals, if you look at the Senate proposal,
    these proposals will in effect lower their income by 5 to 10 percent in
    the context of a budget which will raise the income of some of the
    wealthiest people in the country by cutting their taxes. Now, I think
    that's a very useful thing for them to be doing. As long as we know that
    in the end we've got to balance the budget and bail out the Trust Fund,
    it needs to be pointed out that the Medicare cuts are 3 times what is
    necessary to fix the Trust Fund. And it needs to be pointed out that the
    impact, therefore, is to lower the incomes of the elderly poor while
    we're going to raise other people's incomes.
        Q. Why do you suppose that the Washington Post and other normally
    sympathetic newspapers and other institutions see that as demagoguery?
        The President. Well, you'd have to ask them. But I think that part
    of it is, they see that, over the long run, this entitlements question
    is going to have to be dealt with. And so they figure that anybody
    that--they just want to see as many proposals as possible dealing with
    the entitlements question. I agree with that.
        But keep in mind--let me just say--there are two issues here in
    Medicare that shouldn't be lost, and I don't want to overcomplicate
    this. The first question is, right now, from now until the end of the
    decade and into the first few years of the next century, let's stabilize
    the Medicare trust fund so that we get back up to where

    [[Page 1483]]

    it normally has been over the last 30 years. You know, let's get--we
    ought to--excuse me--ought to always have a life of, you know, 10, 11
    years, something like that to stabilize it.
        The second issue is a very big issue, but it's totally unaddressed
    here, and that is what happens when the baby boom retires and how will
    that change things? There ought to be a long-term effort to address
    that. But that is not addressed by any of these proposals here, and so
    we shouldn't confuse them.

    Colin Powell

        Q. Mr. President, I realize this is probably our job, too, but I
    wonder if you would help us and tell us what you think is the defining
    difference between you and Colin Powell?
        The President. Near as I can tell, he's--I will tell you this. I was
    grateful for his statement--and this is no criticism of him to say this,
    I want to emphasize that--I wish that more Americans who agreed on the
    assault weapons ban and the Brady bill had been out there last November.
    It might have made a difference. But that's not a criticism of him
    because he's coming out of a period of military service when he didn't
    feel that he should be a public spokesman.
        I was grateful for what he said about abortion, that he didn't want
    to criminalize it, but that we should reduce it and emphasize adoption
    more because that's what I've worked very hard to do. And the First
    Lady's emphasized that, and we've done a lot to facilitate, for example,
    cross-racial adoptions and things of that kind.
        I was grateful for what he said about affirmative action, because I
    believe in the kind of affirmative action practiced in the United States
    Army, and I don't believe it constitutes quotas or reverse
    discrimination or giving unqualified people things they shouldn't have.
        So all I can say to you is that on those statements that he has
    made, I am profoundly appreciative. I think it's helped America to stay
    kind of in the sensible center and moving forward instead of being
    pulled too far in one direction or the other.

    Speaker of the House Newt Gingrich

        Q. Mr. President, I know you have many defining differences with
    Newt Gingrich, but what is your working relationship like with him? Do
    you find it productive? And secondly, do you think you'll be able to
    come to agreement on most of these big issues this year, whether it's
    Medicare, welfare, the budget, tort reform, maybe even regulatory
    reform?
        The President. Our personal relationship has basically been candid
    and cordial. And I've enjoyed our conversations, and they're basically--
    our private conversations are basically free of political posturing;
    they're candid, and they're straightforward. I'm sure that I do things
    that frustrate him, and sometimes he does things that frustrate me. I
    think this debt ceiling issue is wrong. And I think when he shook hands
    with me in New Hampshire on political reform and lobby reform and said
    we'd appoint a commission, we should have done it. I mean, that
    frustrates me. But we have, I think, a basically a decent working
    relationship on a personal level.
        Do I think we'll reach an agreement on most of the issues? I do. I
    believe in America. I believe in the process. I believe that it's time
    for us to adopt a balanced budget. I think it's the right thing to do.
    But it is time to adopt a balanced budget consistent with growing the
    economy and growing the middle class and shrinking the under class and
    making this country stronger, which means we can't just turn away from
    things like education and technology and research. And it's time to do
    it consistent with our obligations to our children and our parents,
    which means we can't turn away from what we should be doing on the
    environment, for example.
        So I think--but do I believe we will get an agreement? I do. This
    country's not around here after all this time because we let the trains
    run off the tracks. It's around here because people of good faith who
    have honest differences find principle compromises and common ground.
    And that's what I think will happen here; that's what I believe will
    happen. I think there's too much energy in the country saying, make this
    country work and move this country forward, for us to turn back.
        Q. So you expect to have a series of signing ceremonies----
        The President. I do. I think there will be some--there may be some
    vetoes first, but I think in the end, we'll reach accord. That's what I
    believe will happen.

    Legalized Gambling

        Q. Mr. President--[inaudible]--this morning on the spread of
    legalized gambling. More and more cities and States are relying on it as
    a

    [[Page 1484]]

    source of income. And at the same time, there's been an increase in the
    social consequences of gambling, has prompted Senators Lugar and Simon
    to call for a Government commission on the subject. One scientist
    estimated that three dollars in social costs for every dollar that the
    States and cities take in. What's your position on legalized gambling?
    Are you for a national lottery, or----
        The President. No.
        Q. ----or are you somewhere down the line?
        The President. I've always been against it, all my----
        Q. What's your feeling about this?
        The President. Well, first of all, let me just say, I mean, this is
    another one of my unpopular positions, I know, because it's very popular
    everywhere, because it looks like easy money. It's tax money that
    doesn't seem to be tax money. People give it up freely, instead of by
    paying--you know, filling out a form. But let me give you a little
    background.
        When I grew up in Hot Springs, Arkansas, until I was a teenager, my
    hometown had the largest illegal gambling establishment in America. And
    it was basically permitted to operate with a wink and a nod from the
    State and local law enforcement officials. The only good thing about it
    being illegal was that it kept all the national syndicates out of it. It
    was sort of a homegrown deal that had existed for many, many years,
    going back to the twenties. But I'm quite familiar with this. And then
    there was a move to legalize it in the late sixties, which failed a
    vote.
        And then when I was Governor, we had another vote on legalizing
    gambling in very limited ways and in just certain places. And I opposed
    it, and we defeated it again. And we did it because I believe that it
    disguised the social costs and because I believed it was not a good way
    to raise public funds. The lotteries are not so onerous; they're much
    more--they're more benign than other legalized gambling, I think. And
    States obviously have a right to do it.
        But I wouldn't favor a national lottery because all we'd do is just
    saturate the market. We would weaken the States that are already doing
    it. We'd be taking money away from them and complicating it. And I don't
    favor any other kind of national legalized gambling efforts just
    because, based on my own personal experience and what I saw and what I
    know are the side effects, I just would not be in favor of it.
        Q. Do you support the commission? The idea--[inaudible]--Federal
    commission?
        The President. I would be glad to consider it. This is the first
    I've ever heard of it so I don't have an opinion.

    Bosnia

        Q. Mr. President, if NATO air strikes have helped advance the cause
    of peace in Bosnia, in hindsight should we have done this earlier?
        The President. Well, as you know, the United States was willing to
    do it earlier. And I think we--let me--let's review the last 2\1/2\
    years. We had a pretty peaceful 1994 because of the threat of NATO air
    power. We had a pretty peaceful 1994. The death rate went way down in
    Bosnia. But there was no progress made at the negotiating table. And
    then the Bosnian Serbs determined that they could take hostages and
    avoid the threat of air power. And they wound up doing it, and it
    worked. That is, we were unable to persuade our allies to take action
    through the air until after Srebrenica and Zepa fell. Then the London
    conference occurred. There was a renewed commitment, and I was convinced
    at the time that our allies really meant it. And that air action
    combined with the diplomatic initiative of Dick Holbrooke and the
    members of his team and the gains on the ground of the Croatian and the
    Bosnian armies, all those things together contributed to the
    circumstance which we have now.
        So if there had been a stronger allied response earlier, would it
    have made a difference? I think it quite likely could have. But I--and,
    you know, we can revisit that. The main thing we need to say is that we
    have a chance now to make a decent and an honorable peace. The changes
    on the ground, the diplomatic mission, and the bombing campaign all
    contributed to it.

    Two-Party System

        Q. Mr. President, you've mentioned the frustration in the country.
    You think that one of the things you're going to be dealing with next
    year is a climate politically where people don't like either party,
    where basically it's sort of ``a plague in both your houses.'' And how
    do you really--how do you deal with that? Isn't that one of the reasons
    for the increasing popularity of people like Colin Powell?
        The President. Well, I think, first of all, if you look
    historically, that is not an atypical de-

    [[Page 1485]]

    velopment in a transition period, because the debate becomes wider and
    people become more open to different things. Some of them are quite good
    and sensible; some of them are, in my judgment, too extreme. But we had,
    I think, four parties on the ballot in the 1948 Presidential election,
    just to mention one period of transition.
        Both psychologically and substantively, things, you know, began to
    be more open. I think in this time period--I think the--you know, when
    people have 50 channels on their television station at night, if you say
    would you rather have 3 parties instead of 2, it's pretty obvious what
    the answer's going to be.
        And the third thing I would say is--and this is a challenge that I
    think, frankly, those of you who are in the print media can perhaps help
    us to meet. The information age is a mixed blessing for serious public
    policy and politics, because the pressures on people who live in
    Washington to speak in terms that aggravate the differences and simplify
    the issues so that they can get their 10 or 15 seconds over to the
    American people at night are enormous. And sometimes it benefits one
    party, sometimes it benefits another, and they win a big election
    victory over it. But the aggregate impact of it is, if it doesn't quite
    resonate with what people think is the whole truth--all the facts--is to
    make people disillusioned with the process, even as they reward people
    who may be kind of shaving it in ways that are not good.
        So, one of the things I'm looking forward to in the next election is
    to try to restore what I thought we had in 1992, that I thought was so
    good, you know, the town meetings, the debates and the different
    formats, the debates in which people were involved and could ask their
    questions. All those things, I felt, helped to restore people's faith in
    the system.
        So I do believe--one thing I agree with Speaker Gingrich on, I think
    that over time, the American people have been well served by basically
    having two stable political parties.
        But I would remind you that one reason that's worked is that both
    parties have had a rather broad tent. They have had philosophical
    convictions. There have been clear differences, but they have made room
    in their parties for people of different views so they could make
    principle compromises and keep moving the country forward.
        I think that is what has worked best for America over the long run.
    The American people will be the final judge of what will work best in
    the future.

    Campaign Finance Reform

        Q. Mr. President, we've been talking, really since--[inaudible]--
    first question about the frustration, and you've answered somewhat
    philosophically. There's one thing that hasn't really changed since 1992
    and that's the way we raise money to pay for this thing. You spent much
    of last week, some of it in semi-private forums, basically building your
    kitty so you could run next year, before the public money kicks in.
    Isn't there a better way? And isn't some of the frustration that we see
    in the country related to the cynicism that develops from the way we
    fund our politics?
        The President. I believe it is, of course. And I think some of the
    things that were done in 1974, in an attempt to promote reform after
    Watergate, in a curious way, within a period of 20 years, may have made
    the process worse because it tended to mean that a higher percentage of
    fundraising, particularly for Members of Congress, was more concentrated
    around specific issues. So that I don't think that's what the people
    meant to do in '74, but I think it had the--you know, devolving things
    to PAC's and all that gives the appearance, if not the reality, that
    more and more of the fundraising is tied to specific decisions. And I
    don't think that's good.
        And I did what I could to persuade the previous Congress, as you
    know, unsuccessfully, to pass campaign finance reform. And I thought
    that in this Congress, the only way we could do it is if we had some
    sort of commission, like the gentleman from New Hampshire suggested,
    kind of a base closing commission, which would in effect bring both the
    parties together. I still think that's a good idea.
        I have done everything I know to do. I wrote the Speaker back; I
    accepted his offer. I even named two people that I would have
    participate in the commission. I cannot force Congress to do this. But I
    believe we would be better off. I think the Presidential elections--I
    think in the general election, I think the American people--there is one
    other problem here, though, to be fair, and that is, the American people
    themselves have very ambivalent feelings about public financing. They
    can--and the people that

    [[Page 1486]]

    are against campaign finance reform can always say, ``Can't you think of
    something better to do with your money than give it to a politician?''
        So I think, to make the next steps--that's why I was hoping a
    commission would also spark a lot of public debate here. But I do
    believe that in the general election, like in 1992, when it was all
    publicly funded, everybody had a fair chance, and we devoted a lot of
    our time to these more open discussions and not just the sound bites, I
    think public confidence in the institution rose. And I think that when
    Congress is dealing with issues and, simultaneously, people see the
    fundraising going on, it sparks cynicism even if everybody is in there
    doing exactly what they believe, even if you read it in the best times.
        So I still believe campaign finance reform is important. I can't
    think of any way to get there except a commission. And I still hope the
    Speaker will accept my offer again and act on it.

    Mood of the Country

        Q. Well, Mr. President, I've come here today thinking that the
    Nation is in somewhat of a funk. You've just about convinced me
    otherwise. [Laughter] And so, in view of the way Pat Caddell hung
    ``malaise'' around Jimmy Carter's neck back in '79, an editorialist may
    be having a lot of fun with ``funk.'' I wondered if possibly that was a
    bad--not an accurate word, or would you maybe change it?
        The President. It was no doubt a poor choice of words. And it was
    more of a characterization of how people felt a year ago, maybe, than
    they do now. But I do believe--to be fair, what I think is that times--
    we all are for change in general, but we tend to oppose it in
    particular. That is, there's a limit to how much change that almost any
    of us can endure in our own lives at one time. And what I really do
    believe has happened is as people go through these kinds of sweeping
    changes in the way they live and work and the way their nation relates
    to the rest of the world and apparently contradictory events occur, you
    know, we just have to--I think that there needs to be an extra effort to
    keep the American people positive about our future, upbeat about our
    prospects, and realistic about what our opportunities as well as our
    problems are. And I think it will be difficult to convince people that I
    am advocating the politics of a national funk--[laughter]--because, you
    know, it's so inconsistent with my own outlook toward life and the way
    we try to do things around here. And so I'm hopeful.
        I hope I didn't--I hope I served a valuable purpose with that rather
    long discourse. And again, I would urge you all to read it because I was
    trying to explain to the people who were on the plane and through them
    to all the rest of you, because I figured they'd write it up in the pool
    report, kind of how I have analyzed this period, but not because I'm
    down about the prospects of the future. I'm, to the contrary, quite
    optimistic.
        Mr. Sperling. Mr. President, we are told we have to close this
    extraordinarily fine----
        Q. One followup.
        Mr. Sperling. I'd really like to--I'd like to close the session
    early. And what I want to talk about it is how grateful I am that you're
    sitting down with a bunch of us print journalists, because we see you
    again and again on television--[laughter]--and yeah, we're not that bad
    a lot. And I think it's worthwhile. [Laughter] I hope you come in again.
    And thank you so very much.
        The President. Thank you. Now, wait, wait. We're not done yet.
        Mr. Sperling. We're going to take care of Rollie?
        The President. No, we're going to take care of you. [Laughter]
        Mr. Sperling. Sorry, Rollie, I had to----
        The President. Now--but we're going to do what Rollie wanted to do
    in the beginning. Come on. Are we ready?

    [At this point, a cake was brought in, and the group sang ``Happy
    Birthday'' to Mr. Sperling.]

    Note: The interview began at 12:40 p.m. in the State Dining Room at the
    White House. In his remarks, the President referred to Gov. E. Benjamin
    Nelson of Nebraska and Assistant Secretary of State for European and
    Canadian Affairs Richard Holbrooke.