    [Public Papers of the Presidents of the United States: William J. Clinton (1996, Book I)]
    [March 11, 1996]
    [Pages 412-422]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Interview With the New Jersey Media in Hackensack
    March 11, 1996

    Corporate Downsizing

        Q. You talked briefly in your speech, and you talked more about it
    last Friday, about the new jobs that have been created while you've been
    President. Yet here in New Jersey there's a terrific amount of economic
    insecurity on middle management people--AT&T laying off thousands; two
    major drug companies have just announced a merger, more people are going
    to be laid off. What do you see as the Government's role in--or the
    Government's response to the fact that people are losing good jobs and
    they're not interested in how well you say the economy is growing?
        The President. First of all, I think we do have a responsibility to
    them. And I think to address the responsibility, you have to ask
    yourself first what is the problem and what is the answer to the
    problem. It is clear--what's happening basically is that in--this is the
    second great wave

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    of restructuring. The first one occurred in the early eighties when a
    lot of manufacturing jobs were lost, and it went on for about 10 years.
    Now, in our administration we've been able to rebuild the number of
    manufacturing jobs. They're coming back up slowly, partly because we
    targeted automobiles and related industries and partly because the
    productivity of American manufacturing is so high.
        But what's happening--there are basically, I think, two things
    driving this. The overwhelming fact is that the information and
    technology revolution, the sort of the digital chip revolution, means
    that organizations in the future probably won't have as many middle
    managers and won't have as many people passing instructions down and
    information up. And then, of course, there are--the second problem is
    there are just differences from company to company over--particularly
    really big companies--if they think they have to sell off subsidiaries
    or other things that may change. There may be facts from company to
    company that are different, but it's obviously a sweeping change.
        So what is the answer? The first answer is to keep creating jobs and
    to create a higher percentage of high-paying jobs. In the last--in each
    year of the last 3 years, we have increased the percentage of our new
    jobs in the high-wage category from--in '92, before I became President,
    only about 20 percent of a very small number of new jobs that were
    created that year were in higher wage categories. In '93 it was 35
    percent, then 45 percent, and in '95 over 55 percent. So the first thing
    we have--I know it's cold comfort if you're losing your job, but if you
    look at the economy as a whole, we have to keep trying to create higher
    wage jobs.
        For example, a lot of the middle managers from AT&T--let's just take
    AT&T--I'm going to come to the specific problem in a minute, but if you
    look at the problem all across the country, the fact that we finally
    passed telecommunications legislation that will unleash a lot of
    competition there will, it is estimated, create over 3 million jobs in
    the telecommunications area in the next few years; and a
    disproportionate share of those jobs will be higher wage-paying jobs in
    the range of those being lost by people being laid off by the big
    companies. So that's the first thing.
        Now, let's focus on the people themselves because--some of these
    people are being laid off, I think, just because of the drastic changes
    in the economy. I'm concerned that some of them feel that they're being
    laid off just because their companies want to save future--either
    earnings or health care or pension costs. We need to look at--and for
    the simple reason that a lot of these people are about my age. A lot of
    people who are losing their jobs now are about 50 years old. Their kids
    are just getting ready to go to college.
        And if you're in northern New Jersey, for example, and you just
    heard that--I'll just make this up--let's say Sprint is hiring 3,000
    people in California, and 300 of them are going to be in doing more or
    less what you were doing, some area that you were trained for. If you've
    got a child who's a senior in high school, a child who's a junior in
    high school, and a child who's a sophomore in high school, it may not be
    so easy just to up and move. You know, if everybody in your neighborhood
    is losing their job and you've got a mortgage on your home, it may not
    be so easy to sell your home at a profit or at least to even net out.
        The real fundamental problem here is not only that there may not be
    enough jobs for these folks but they may not be where they live now or
    close enough to where they live to allow them to change their
    circumstances.
        Now, I think--we're looking at--first of all, let me say, we're
    looking at a number of things that we might be able to do to facilitate
    people who have been victimized by downsizing moving to a new life. And
    I don't want to get into a lot of specifics until I have time to
    research them all, but let me just say what the general problem is. The
    general problem is that most of the social safety nets for people who
    lose their jobs were constructed for a more static economy.
        For example, if you look at the unemployment system, the
    unemployment system we have today was constructed for a time when 85
    percent of the people were called back to the same job they were laid
    off from. Today, 85 percent of the people are not called back to a job
    they were laid off from.
        If you look at the pension system, we thought as a nation that we
    had done a great thing, probably nearly 20 years ago now, whenever it
    was, when we reformed the ERISA system; you know, we passed ERISA and
    said if you worked 10 years for a company, you had pension rights that
    vested so your pension rights couldn't en-

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    tirely be taken away from you. But now we know that you still have to
    work a long time to get full benefits, and pension rights aren't as
    portable as they might be. So we're going to have to look at ways to
    make--and a lot of these people, for example, who might leave a big
    corporation and want to set up a small business--we need to look for
    ways for them to somehow always be able to have greater portability in
    the pension system.
        The same thing is true with health care. A lot of people are
    reluctant to start their own businesses or go to work for a small
    business instead of a large business because they're afraid they won't
    have access to health care.
        And if we're going to move into a new world where a higher and
    higher percentage of people work for smaller companies and where there
    is more volatility in the job market, then you have to have lifetime
    access to education and training that starts immediately with no delay.
    You have to have access to health care and pensions, and they have to be
    somewhat portable. And then there have to be special, I think, efforts
    made for people who are in these higher wage categories where the jobs
    themselves may be disappearing from all big corporations to try to help
    them either start new businesses or find others to go into business with
    within reasonable distance of where they are now living.
        And there may be--another thing we're looking at is the question of
    whether the people who are being downsized who are near high
    unemployment urban areas, whether there might be some marriage that
    could be made between what we're doing with our empowerment zones and
    our enterprise communities and trying to encourage people to invest in
    the inner cities by giving certain special incentives for people who
    lose their jobs, to give them extra help through the SBA or otherwise to
    start a new venture of some kind.
        Q. In the city?
        The President. Yes, or they hire people who come out there. Either
    they relocate there or hire people who come out of there so that--but
    we're looking at--there are seven or eight things that I've got our
    staff working on now, where we're looking at various things that we
    could do to try to facilitate people who are going to be downsized,
    moving back into the work force. Because the truth is a lot of these
    people are at their most productive years. We don't need to be without
    the benefit of their experience and their efforts. And it is devastating
    to them psychologically as well as economically to be without a job and
    without prospects of a job. So it's a terrible problem.
        And so when I talk about it, the economy is doing better. To give
    you an example, if you look at the other six big economies in the G-7,
    all of us together have created a net of 8.4 million jobs, the American
    figure. The other 6 have created a net of zero jobs. So we shouldn't
    sneeze at the fact that we're creating new jobs. That's a good thing.
    The European unemployment rate is twice ours.
        But we shouldn't be insensitive to people who are being downsized
    and people that these huge structural changes in the economy--are having
    their lives disrupted because of them. This is, after all, let me say
    again, this is a period of most profound change in the American economy
    really in 100 years, since we moved from farm to factory, from the rural
    area to cities and towns. We're now moving into an age where all
    production and services are dominated by information technology and all
    markets are global. And that is changing not only the nature of work, it
    is changing the nature of work organizations.
        And our society--no society has kept up. And that's why I've pushed
    for all the things I have, for lifetime learning and portable pensions
    and constant access to health care, because in a volatile environment
    like this, what our objective as Americans should be is to keep the job
    engine going. We should keep trying to create more jobs and, as I said,
    to make them more and more high-wage jobs. But we should also recognize
    that all the high-wage jobs in the world are cold comfort if you lose a
    good job and there's not another one anywhere near you, particularly if
    you have a lot of built-in family responsibilities. And we're going to
    have to develop a whole new set of flexible systems of family and work
    security that will allow the economy to continue to be dynamic and grow
    but will help people like those folks that are being displaced now.
        Q. If instead of President you were a CEO of a large corporation--
    and we had heard that, for instance, you had, I guess, maybe met with
    Bob Allen sometime in the recent past--and you were facing these same
    pressures from Wall Street to international competition from
    technological change, would you do anything differently with the
    corporation in mind than what

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    these corporation heads are doing in ending up on the cover of Newsweek
    as corporate killers?
        The President. Well, first of all, some corporations are doing
    different things. If I tell you that--I mean, if I answer the question
    in the way you asked it, the inference will be inescapable that they
    could have done something different. I've never looked at AT&T's books.
    I've never looked at their long-term prospects. I don't know what their
    corporate strategy is. So I make no judgment about any of this. I don't
    know enough about any of these companies' specific situations to know. I
    know AT&T got into some businesses that they couldn't make run; they had
    to get out of them. And when they got out of them and divided, they had
    more folks than they needed. But I don't have a judgment about what else
    could be done.
        I will tell you what I would do. I can tell you what I would do if I
    were running my own company that had a defined mission, where we were in
    the line of business like--whether it would be steel manufacturing or
    digital chips or whatever. I think the first thing you'd want to do is
    to set in motion--set up a relationship between the management and the
    work force so that the work force feels it's always involved in the
    corporate culture and the corporate mission and they know what the deal
    is. It's always easier to live with a tough decision if you know what
    the deal is, if you really trust it and believe it.
        Secondly, I would set up a system in which both the gains and the
    losses of the company were evenly shared. If you look at Nucor Steel,
    for example, it's a very popular steel mill, a profitable steel mill.
    They've got 15 mills, I think, in the United States. They have a no
    layoff policy. And they tell you when you go in, ``We have a no layoff
    policy, so if we lose money, you're going to get your pay cut, but at
    least you won't lose your job. And if we lose money your pay will be
    cut, but management's pay will be cut by a higher percentage than yours
    will be, if we lose money.'' And they explain to you how it works. So
    needless to say, it's easier to bear the burdens--it depends on whether
    they--if they're doing well, you do well; if they're doing poorly, you
    do poorly, but so do the people running the show.
        Then I think when you have--if you're in some--but not everybody can
    have a no layoff policy. If we had to have a layoff policy, I would
    attempt to find something for these people to do while they're being
    laid off, if they could ever be called back. For example, I was at
    Harman International in southern California a few days ago. They are
    among the most successful makers of electronic speakers in the world.
    Sometimes the orders fall off. And they depend on orders from Europe as
    well as here. So they set up something called Ole. They've got a lot of
    Hispanic--Latinos in their work force. It stands for off-line
    enterprises. And they took all the scrap materials in their main line of
    production, and they said, ``What all kind of products can we make out
    of this?''
        They made clocks out of it--like the wood that they didn't use for
    the speaker cabinets. And they gave all the people--whenever they had to
    lay them off, they gave them an opportunity to work in the off-line
    enterprises. And they even gave the manufacturing workers a chance to
    become sales people in their stores and to their distributors and all
    that. The point is all the--not that they save every job, but all the
    work force can see they were making an extra effort to save people.
        If I had to downsize a lot of middle managers, I would--and I had
    the money to do it--I would do an exhaustive study of what kind of
    options were available to find other productive endeavors for them and
    to what extent I could afford to maintain their benefits until they
    found something else to do--how could they keep the integrity of the
    retirement benefits and their health care benefits, for example--and
    whether or not in the severance between the company they could cash out
    some benefits and do something else which might help them to either go
    into business for themselves or form partnerships or do other things.
        And again, I would say, I make no judgment on any of these
    companies. I do not know enough about the facts in any of the
    operating--but I basically believe that some people think that global
    markets and technology means people aren't very important. But I believe
    that global markets and technology mean that people are more important
    than ever before, because if you look at what's going to happen--
    technology is mobile; money is mobile; management is mobile; and labor
    costs--even if you have high labor costs, labor costs will become a
    smaller and smaller and smaller element of most productive enterprises,
    even services; certainly manufacturing. And therefore, people that have
    a fanatically loyal work force that is highly pro-

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    ductive, that feels that they're involved in a common enterprise, and
    can take a punch--because times won't always be good in business; that's
    what a free enterprise system is all about--they're going to tend to do
    very well.
        But I do want to say to you, look, this is not an easy problem. And
    I'm going to do everything I can to take this issue and do what I've
    tried to do with every other issue with the American people, and that is
    come up with a very constructive solution. I don't think it's
    particularly productive for us to spend a lot of time in idle criticism.
    What we need to do is to find ways for these people who are being
    downsized to go on with their lives.
        And I want to say, too, the American people need this. This is not
    just a matter of sympathy. This is a terrible waste for the American
    people to have to see people at this level of talent and capacity, who
    can serve our country so well in so many different ways, lie idle and
    fall on serious misfortune. So we've got to find ways to do it.
        But it needs to be seen for what it is. It is something that is
    happening because of this period of transition when the instruments of
    flexible--we haven't developed a flexible safety net to deal with the
    problems these people have.
        Q. Can the Government and should the Government have a role in
    encouraging this kind of behavior in corporations in any way that you
    talked about? Should it use incentives somehow to make sure that they do
    take these kind of flexible approaches?
        The President. Perhaps. But it depends on what--let me just give you
    an example. I'll give you an example of something I've studied. Right
    now, we give corporations, right now, a deduction for the cost of health
    care and education and other fringe benefits up to a certain ceiling.
    And some companies go beyond that ceiling.
        The chairman of United Technologies, for example, gave a speech to
    the Washington Press Club the other day in which he pointed out what
    their policy was. And their policy is if you want to go back for any
    degree program, undergraduate or graduate, whether or not it's related
    to your job, they will provide half the time--you have to do half of it
    on your time; they'll give you half the time--and they will pay the
    tuition costs up to--I forget whatever it is. It's a pretty hefty chunk
    of money for them, but they're in a position to do it, of course. Maybe
    it's $11,000 a year or something. You can get a copy of the speech he
    gave, the United Technologies chairman--it was a couple of months ago--
    before the Washington Press Club.
        So he suggested--he pointed out, he said, ``I can afford to do this,
    our company can, because we're a high-tech, high-wage company, and we're
    in an area of growing opportunity.'' But he was saying that he thought
    that there, in effect, should not be caps on the deductibility for
    corporations for the education of their work force. It shouldn't be
    subject to the same constraints that you--there's a social policy
    subjecting health care to it because otherwise you'd give everybody all
    their pay raise in health care--you can argue that. But he said, ``In
    education I think the tax law should be changed to give an even bigger
    deduction, not that we need it, but other companies do.''
        Well, that's one of the things we're looking into, because we know
    that there are still many areas of economic endeavor in this country
    where there's a chronic shortage of skilled people. And most of the
    people who can make it into a successful career at the companies that
    are now downsizing could do a lot of other things. The trick is to find
    a way for them to do it that doesn't have their lives disrupted for a
    year.

    Gambling

        Q. I'd like to ask a question related to the spread of gambling
    nationally. It has been reported that you would sign a bill to create a
    national gambling study commission. The casino industry opposes the
    bill, saying its backers are all antigambling and they see the study as
    a prelude to Federal regulation or taxation or even a ban on gambling.
    Why do you support the study, and do you think the Federal Government
    should have a role in regulating or taxing gaming?
        The President. Well, the answer to the second question is no--that
    is, unless gaming becomes--we may be forced into some sort of role if it
    becomes a complete interstate activity so that there's something other
    than what's involved now. But basically I don't favor Federal taxation
    of gambling, and I don't favor any greater Federal role for gaming.
        The reason I think the study is appropriate is--and I think the
    gaming industry should think about it before opposing it--is at least
    from my point of view, I'm not trying to get into

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    the regulation, the taxation, or even the extinction of gambling. That's
    up to--I think it ought to stay the way it is; let the people decide
    from State to State. Most of our States require the vote of our people.
        I grew up in a town that had one of the most successful race tracks
    in America--still does--and when I was a boy, a young boy, until the
    early sixties, had the largest illegal casino gaming operation in the
    country. So I know quite a bit about this. And the reason I support
    Representative Wolf's legislation is that I am afraid that if you line
    up with gambling in every third corner in America without considering
    the consequences, the social consequences will be devastating and the
    economics won't be very good in the end. But there's got to be a limit
    to this.
        And I think that no one has sort of backed off and said, ``Well,
    what is the capacity of America to absorb extra gaming enterprises?''
    Whatever advantage New Jersey has would be obviously significantly
    eroded if every State in the country decided to have an Atlantic City,
    right?
        So I think that, given how explosive this has been--I'll give you
    another example. As a matter of constitutional right, now the Native
    American tribes have been held to have the right to engage in gaming.
    Well, how are they doing with it? How many of them are diversifying
    their enterprises and really using the gaming revenues to build the kind
    of independent economic system that was envisioned when this whole thing
    was started? Is there anything else we can do to encourage that?
        I mean, in other words, there are a lot of things short of Federal
    regulation, Federal prohibition, and Federal taxation that a national
    study might point up. And I have to tell you, when I was Governor of my
    own State--I'll make full disclosure here--and there was a referendum to
    legalize casino gaming in my State, I opposed it, and the voters voted
    it down. But I told them if they voted it up, I'd do my best to run it
    in a completely honest and straightforward way. It was their decision,
    and they were entitled to know my opinion.
        So that's the position I have. I have no agenda here. Maybe somebody
    who's behind this does have one. All I can tell you is I know very
    little more about this legislation than you do. It was proposed by
    someone in the Congress. I reviewed it. I asked the staff for an
    analysis of it, and I sent the sponsor a note and said if it passed I
    would sign it. But I thought that the gambling industry has grown so
    much so fast that it would be appropriate to study it. And that's it.
        But I'm not--I can tell you right now, I'm not for a national tax.
    It's an important source of State revenues. And if we subjected it to a
    national tax and thereby depressed the activities in any given State, it
    would undermine the State revenues. So that's not a part of--that's not
    where I'm going with it.

    Taiwan

        Q. Mr. President, how far is the United States prepared to go to
    defend Taiwan?
        The President. Well, first of all, I think it is not helpful for me
    to say anything that would add to the tensions which already exist in
    that region. I believe what is going on in terms of the military
    exercises that China is undertaking is related to the elections in
    Taiwan and the fact that Chinese apparently see the elections themselves
    as a step in Taiwan attempting to become more or less permanently
    independent. I'm not sure that's right, but that's, anyway, their view
    of it.
        Our view is that we have had a--we have adopted a one China policy.
    We have strictly adhered to it. But a part of the one China policy was
    the clear, indeed, the explicit understanding that China and Taiwan
    would work out their differences peacefully over time. And we think--we
    still believe that's how it should be done, and we hope that's how it
    will be done. And in terms of getting into contingent ``what if''
    questions, it's my belief that the tensions there right now are tough
    enough already. I don't think I should contribute to them.
        Q. When you were--before you shook John Kennedy's hand as a young
    man, he ran for President guaranteeing the security of two islands. Is
    there a parallel here? [Laughter]
        The President. No. I remember that----
        Q. There's no parallel?
        The President. I've had occasion to think about it since then. No.
    We're attempting to maintain constructive relationships with the
    Chinese, to work together when we can and to find ways to disagree in a
    forthright way when we have to disagree. And as I said, I don't want
    this to get out of hand, but neither do I--we would view any attempt to
    violate the understanding of the agreement that had already

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    been reached that this would be resolved in a peaceful way very
    negatively. But I don't want to get into any hypotheticals.
        Q. You wouldn't put American troops on Taiwan to show that
    commitment, would you?
        The President. I'm not going to answer any more questions about it
    right now.

    National Economy and the Legislative Agenda

        Q. In 1992, you spoke pretty eloquently about people who played by
    the rules. And then in the sense of Presidential politics you've been
    playing by the rules. You have all these jobs created, but yet the
    pollsters will tell you that because of the downsizing and other
    factors, there's a great deal of anxiety over there, and perhaps this
    administration is not being given credit. And I was wondering if that's
    a frustration for you that there's a disconnect between what's happening
    economically and what people feel about where their country's headed?
        The President. Well, I think there are--I think people see
    apparently contradictory facts because of the nature of the time we're
    living in. There really are three groups of people that are--that could
    rightly feel some anxiety. There are the people that are downsized, and
    there's a lot of them in New Jersey. So you're sensitive to that. Then
    there are the people who live in the inner cities and the isolated rural
    areas who haven't had any of the new jobs at any level. There's still
    some places like that. And then there are those who are working at the
    same jobs they've been working at for several years and, in terms of
    purchasing power, they haven't gotten a pay raise.
        All three of these groups of people are basically living in a global
    economy which is highly competitive, where there's a lot of structural
    change. And the last two groups are suffering in part because they don't
    have as much education and training as they need. The first group, the
    downsized groups, are suffering in part because of the traumatic changes
    in the nature of corporate life in America.
        And so that does not mean that the new jobs haven't helped anybody
    and that it's not a good thing to get more new jobs and to change the
    job mix. But it does mean that the old pillars that people viewed as
    completely stable, reliable sources of economic security are changing.
    And we have to learn to define our security in different ways.
        But I believe that the American people know there have been more
    jobs. And I think they know there are some people who still feel at risk
    and that it's apparently contradictory. And you can only understand it
    if you understand how the work and the workplace are changing in this
    new world and why our obligation is both to create jobs and more good
    jobs and to create a new kind of social safety net, if you will, that
    enables people to get a good new start without messing up the dynamism
    of the economy. And that's what a working on.
        I think the American people--who gets credit or not, that will take
    care of itself. I just want them to know that I understand what the
    problem is, that I've got some ideas about how to deal with it, and that
    I'm going to work as hard as I can to see us make progress on dealing
    with it.
        I'll say this: There's a bill right now before Congress that they've
    just been sitting on in the Senate for weeks and weeks. It's out of
    committee, and the Senate won't pass it, the Kassebaum-Kennedy bill,
    which says you can't lose your health insurance benefits if you change
    jobs or someone in your family gets sick. That's a classic example of a
    clearly defined, precise thing we could do that I think will make a
    difference.
        I sent a bill to the Congress over a year ago, the ``GI bill'' for
    America's workers before the Congress now, asking them to collapse all
    these 70 different Federal job-training programs into a big pool and
    just send a voucher to people who lose their jobs so they can
    immediately take it to the local community college to get new training
    and start again. That again would make a difference.
        So I want the American people to know that I understand what the
    problem is, that I'm not misleading them about how difficult it is to
    solve but that we are moving in the right direction; things are better
    now than they were in 1992 for the country as a whole in terms of
    employment, in terms of crime, in terms of poverty, in terms of our
    peace and security in the world; and that we need to build on these
    things, not try to put a wall around our country or go into denial and
    say that we have no responsibility. There are some that say, ``Well,
    there is no responsibility. You're just out there on your own.'' I don't
    believe that either.

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    Health Care Reform Legislation

        Q. Why do you think Kennedy-Kassebaum is just sitting in the Senate?
        The President. Well, let me first of all say, the manufacturers
    association is for it and all the labor unions are for it. The whole
    productive society, labor and management, is for it. Because the health
    insurance companies are against it, that's why. And it got out of
    committee. It's got almost as many Republican as Democratic sponsors.
    And the health insurance lobby has kept the leadership of the United
    States Senate from bringing it to a vote on the floor, and it's just
    wrong. It is just wrong. And I keep hoping that surely the Senate will
    bring it up now and send it out and that the House will pass it without
    undue amendment.
        Q. Is this Harry and Louise at work again?
        The President. I don't know. Maybe it's just--part of it may be the
    Presidential politics over there. I don't know. There may be--but in any
    case, I think--at one time Senator Dole endorsed these concepts, so I
    would like to just see--let's just get a vote on it, pass it to the
    House, and let me sign the bill. It is a--it's not the biggest measure
    in the world, but it's kind of like family and medical leave; it's a
    specific thing that could help millions of Americans who are being
    dislocated now in this new economy. And I'd really like to see it
    passed. It's just something that we can do that we've got business and
    labor agreed on, and the health insurance companies will make their
    adjustments. It will be fine. They'll work out. They'll do fine.

    Welfare Reform

        Q. Mr. President, you promised in 1992 to end welfare as we know it,
    and there is ample evidence that that is happening as we speak. What I
    want to know is whether you envisioned back in 1992 that States,
    particularly those led by Republican Governors with names like Whitman,
    Rowland, and Engler, would be the laboratories for the change to the
    degree they have? And philosophically, are you on the same page with
    these Governors on how to change welfare?
        The President. Well, first of all, philosophically, I did envision
    exactly what would happen. I thought the States would have a lot of room
    to experiment, and I'm glad--I've kept my word. I have granted more
    freedom to States to experiment in welfare and health care in 3 years
    than Presidents Reagan and Bush did in 12 years. That is, even though we
    have not passed a welfare reform bill, there are now, because of the 50
    experiments in 37 States that we've granted, there are now almost three-
    fourths, 73 percent of the welfare population in America is under
    welfare reform right now.
        Q. Did you have to grant waivers for that?
        The President. Yes. And I have done it because it is consistent with
    my philosophy that the States ought to be able to experiment with new
    ways to move people from welfare to work. And there are some very
    exciting things out there.
        For example, Oregon and Missouri and one or two other States are
    saying to employers that if you'll hire somebody off welfare, we will
    give you the cash value of the welfare check and the food stamp check
    for a month as a supplement. We can't afford to hire all these people in
    public service jobs, but we need to have jobs for them. We're not just
    going to put them in the street. So we'll give you the welfare check and
    the food stamp check as a cash supplement, and you've got to pay them
    more than that, obviously. You pay them more than that. You pay them for
    a few months, and if you're not going to hire them for good when the
    supplement runs out, then you have to give us some advance notice. And
    at least they will have gotten the training. They will have something on
    their resume, they will be that much closer to being a member of the job
    market. I mean, that's just one example of exciting things that are
    being done there to try to reduce the welfare rolls and increase
    independence.
        Now, I agree with a very great deal of what these Governors are
    doing. The one thing I do not think it's advisable to do is I don't
    think it's a good thing to hurt children. That is, I don't think it's a
    good idea to say you can stay on welfare 2 years, and then we're going
    to cut you off no matter how young your children are or whether you have
    a job or not. In other words, I've been for a 2-year hard cutoff as long
    as the people have a job. And if you turn down a job, we ought to cut
    you off. As a matter of fact, I'd be for cutting people off ahead of 2
    years if they turned down a job.
        I think we ought to be very tough when it comes to work. But we
    shouldn't be weak on work and tough on kids. That is, the only direction
    that I've seen some of this welfare reform take that kind of bothers me
    out in the States

    [[Page 420]]

    is that sometimes I think they're just trying to save the money, even if
    it hurts the children, you know, some of these experiments. And I think
    what we want to do is to move people from welfare to work, to make them
    independent, taxpaying citizens so they're paying taxes, not drawing
    taxes, and so that they're independent and they're successful at home
    and successful at work.
        And if that means we have to invest in child care and we have to
    invest in some training and we have to give employers some incentives to
    put them to work in the short run, I think it's worth it to get these
    welfare rolls down in the long run.
        But I don't believe the Federal Government knows how to do this very
    well. And I think that the circumstances of the welfare population, for
    example, in a State with a 2\1/2\ percent unemployment rate--or a
    community with a 2\1/2\ percent unemployment--are very different from
    the circumstances of one with an 8 percent unemployment rate. And the
    circumstances in a rural area may be very different from those in an
    urban area. So I believe that States and the community should have the
    widest possible flexibility on the welfare reform.
        Q. But I've been to Governors' conferences when you were Governor
    and as President, and my recollection when you were Governor, you were
    saying just what the Republican Governors are saying, ``Give us the
    responsibility. Give us the money. Let us do it.'' Governor Whitman says
    you're welshing on your word.
        The President. No, no, no, no. I'm not welshing on my word. Some of
    them want me to send them a check of Federal money, ``Send me a check
    with Federal money, and I want no accountability at all. Give me the
    money and go away. I want no accountability. If I want to use the money
    on welfare, fine. If I want to''--and another thing they say is, ``I
    want you to give me your money, but I want to stop putting up my money.
    And if it hurts children, fine.'' Some have said, ``I want you to give
    me your money and I want to stop putting up my money, and then when I
    get good and ready I want to cut these people off even if their children
    don't have the funds they need to be well-nourished and well-raised.''
        When I was a Governor, it never occurred to me to ask the Federal
    Government to send me a check and then be unaccountable. I believe in
    accountability for everybody--everybody. I don't believe anybody in our
    society should be unaccountable. It never occurred to me as a Governor
    to say, ``Why don't you folks send me a check and then tell me I don't
    have to come up with my match anymore. I'll spend your money, but I
    won't have to spend mine anymore.''
        Q. Why don't you put those caveats in there, that they get the
    checks, but they're accountable for----
        The President. That's what I'm trying to do. That's exactly what I'm
    trying to do. Look, I have given--you ask Governor Whitman or anybody
    else, did Bill Clinton, Ronald Reagan, or George Bush give the Governors
    more permission to experiment with welfare and health care reform. The
    answer is, Bill Clinton. Much more. In 3 years I have given the
    Governors more elbow room to do whatever they want to do in welfare and
    health care than President Bush and President Reagan did in 12 years.
        But when I was a Governor, it never occurred to me to ask the
    Federal Government to send me a blank check and let me quit putting up
    my part of the money and then just go do whatever I wanted to with the
    money. That never occurred to me.
        Q. So your answer is no to that compromise, right? The compromise by
    the Governors, you're saying no to that?
        The President. No, I didn't say no to that. I don't think that's a
    fair characterization of their compromise. I thought their compromise
    was actually pretty good.
        Q. Then why don't you sign it?
        The President. Well, because it hasn't passed into law. The bill I
    vetoed didn't bear any relationship to their compromise.
        Q. And if the compromise is----
        The President. The bill I vetoed was a rejection of the reasonably
    good bill that passed the Senate. What the Governors said in their
    compromise was that they were prepared to keep coming up with at least
    some of their match--the vast majority of it--and that they wanted more
    money for child care, which would have to be spent on child care. We're
    talking about two different things now.
        What I was referring to was some of the positions taken and some of
    the waivers--a couple of the waivers that I haven't yet granted. But
    their basic compromise, I thought, was pretty good. And we're working
    with them. And I actually think we're getting pretty close to

    [[Page 421]]

    passing a welfare reform bill. It's my impression--is that we've made
    real good progress.
        Q. One last question. It doesn't sound like a carefully thought-out
    question--[laughter].
        The President. Anyway I believe we're getting close on--and in their
    compromise--in the Governors' conference when I met with them, they did
    not ask for the right to just cut people off whether or not the kids had
    a way to be supported or not. At least that's my impression.

    Flat Tax Proposals

        Q. The flat tax issue is one issue that's been up in the Republican
    primaries. Can you see yourself or the Democrats agreeing to some kind
    of a progressive flat tax, not the one Forbes proposes, but one that has
    different levels but eliminates a lot of deductions?
        The President. Well, of course, that's what Senator Bradley and
    Congressman Gephardt tried to do in '86. Basically, Bradley-Gephardt,
    the Tax Reform Act of '86 which President Reagan signed, was supposed to
    be that kind of bill. And what the--and it did move in that direction.
        Let me answer you this way. I think it would be a mistake to
    eliminate the charitable deduction and the home mortgage deduction.
    They're both a big part of our culture. And they also have a lot to do
    with the way America works now. And we learned in '86--we got a lot of
    things out of the Tax Reform Act of '86. We also learned that there were
    even then some unintended consequences which are not salutary, even
    though on balance--I mean, there was a lot of good in that bill.
        So I wouldn't be in favor of that. Now, the problem with all the
    flat tax proposals, notwithstanding what the candidates say about them,
    that every one--that the Treasury Department and the Congressional
    Budget Office, if you study them all--and there has been no flat tax
    proposal yet made for one tier anyway that would not either explode the
    deficit on the one hand, or if it's deficit neutral, it would raise
    taxes for everybody that makes less than $100,000 a year in the country.
    That's the basic problem with a flat tax. Now, to whatever extent you
    have more than one rate and it's more progressive, you can overcome
    that. But to whatever extent you do that, you get closer to the present
    system. So that's really the problem.
        I've looked at a lot of other ways of going at this to see if we
    could make it easier on people. You should know that the last year I
    have figures for, which was '92 or '93, 57 percent of the American
    people filed the simplest 1040 form--what is it, 1040 EZ--and paid taxes
    at 15 percent and took the standard deduction. So it's obvious that a
    lot of them made the decision that at least for their incomes they'd be
    better off just having a de facto flat tax. And I've asked the Treasury
    Department to come up with some other ways to simplify. We're also
    letting more people file electronically. We're trying to work it into
    the computer so everybody who has a State income tax or a local income
    tax can file one time for both the State and the Federal.
        I've asked people to study the British system. It's interesting--
    Britain has an interesting system where two-thirds of the people never
    come into contact with the income tax system. If you decide at the
    beginning of the year that you're going to take the standard deduction,
    then you work out a deal, and they deduct it all, so you never have to
    file. You don't even have to file. You don't have to put anything in.
    Two-thirds of the workers never even touch the tax system. And they're
    by definition never audited because they didn't put it in. So they're
    not audited; they don't file; they don't do anything. They don't have to
    do anything. It's over.
        So there may be some--there may be a number of things we can do to
    simplify the system. But I have never seen a flat tax proposal that I
    thought would be both progressive and simple.
        Q. Are we going to get any kind of tax cut this year?
        The President. I think so. If we pass the budget, we will. We've got
    the money there to do it. We've got over $700 billion common to both
    these budget plans. And that is more than enough money to pass a 7-year
    balanced budget plan that every economic expert would say is credible
    and have a reasonable tax relief package that would benefit the vast
    majority of the American people. I hope it will include what I think is
    the most important thing we could do for the future growth of the
    economy. I hope it would include the deductibility of all cost of
    education after high school.
        I think it would be very big in some of the things you and I have
    been talking about here today. But I still hope and believe we can get
    an agreement on the budget. There's no reason for us not to have an
    agreement on the budget. We are very, very close if we just take what

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    we have agreed in common and we can get there. And the Governors also
    helped us, I think, on Medicaid. We're getting closer on Medicaid. Their
    position is slightly different from mine and from the Republican
    Congress position, but we're trying to get there.
        Press Secretary Mike McCurry. Let me do one thing, tell you guys
    that we had--Carol Browner and Larry Summers from the Treasury
    Department did a little briefing on Air Force One on the way up about
    the brownfields initiative the President announced today. I've got a
    copy of the transcript. I don't think you got it earlier.

    Middle East Peace Process

        Q. Mr. President, did you meet with the two families--[inaudible]--
    before you came in? I realize it was a private conversation, but could
    you sort of tell us what sort of thoughts you sent to them, especially
    on the eve of your trip to the Mideast?
        The President. Well, they--first of all, they were enormously
    impressive people, very brave, very--they were very compelling people.
    And as you know, the sister of one of the young women of the Duker
    family, she's about to go back over there. She's going, I think, at the
    end of this week. And so, she is also a very brave young woman. And her
    mother urged me to just keep working with them and not to give up on the
    quest for peace.
        And the other family, the father has spent a lot of time traveling
    around the country talking to young people about it, and he said--I also
    agreed with him--he said, ``There can't be any peace unless there's
    security, and the Israelis can only sacrifice so much. Arafat has got to
    do his part as well.'' And of course, he's right about that. And the
    United States has been very insistent that Chairman Arafat take stronger
    steps to crack down. And in recent days there's some encouraging signs
    that he has. Some important arrests have been made.
        And of course, these suicide bombers and the people that are running
    them, they're not just the enemy of Israel and the enemy of the peace
    process, they're also Arafat's enemies, too. I mean, if they get their
    way, it's hard to see what his legitimacy is as well.
        But those families are--they're pretty incredible people I would
    say.

    1996 Election

        Press Secretary McCurry. Wald [David Wald, Newark Star Ledger] wants
    to ask you if you're confident you're going to carry New Jersey in the
    fall. [Laughter]
        Q. No, I really want to ask you is--the prospect of running against
    Dole and Colin Powell. [Laughter]
        The President. I don't know, that's up to them. I'm going to let
    them handle their politics. They've got a lot to----
        Q. You've worked closely with Dole. What do you think some of his
    strengths are as a person or----
        Press Secretary McCurry. No mas. [Laughter]
        The President. Their side can run a 4-year campaign. I don't want
    to. [Laughter] There's too much of this already.

    Note: The interview began at 2:30 p.m. in Dickinson Hall at Fairleigh
    Dickinson University. The following journalists participated: Larry
    Arnold, Newark Star Ledger; Thomas Fitzgerald, Bergen Record; John
    Froonjian, Atlantic City Press; Jim Goodman, Trenton Times; Robert
    Ingle, Camden Courier Post; and David Wald, Newark Star Ledger.
    Participants referred to Robert E. Allen, chairman and chief executive
    officer, AT&T Corp.; ``Harry and Louise,'' characters in a series of
    commercials sponsored by the Health Insurance Association of America;
    Governors Christine T. Whitman of New Jersey, John G. Rowland of
    Connecticut, and John Engler of Michigan; Malcolm S. (Steve) Forbes,
    Jr., Republican Presidential candidate; and Chairman Yasser Arafat of
    the Palestinian Authority.