[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

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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

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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.