    [Public Papers of the Presidents of the United States: William J. Clinton (1997, Book I)]
    [February 27, 1997]
    [Pages 215-221]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks to the Business Council
    February 27, 1997

        Thank you, and good morning. Thank you, Larry. Thank you, Mr. Vice
    President. I want to thank the other officers and all of you who are
    here today for inviting me to come by. There are a lot of members of my
    administration here. I know Secretary Rubin spoke earlier, and Chief of
    Staff Erskine Bowles is here; Gene Sperling, the Director of the
    National Economic Council; and Maria Echaveste, who is my new Assistant
    for Public Liaison and Alexis Herman's successor--some of you may not
    know her. Maria, where are you? Stand up there. I wanted you to know
    because she'll be relating to you. I want to thank you for the support
    that so many of you have given to Alexis Herman in the job that she held
    and in the job that I'm confident she will hold as the Secretary of
    Labor.
        Over the last 4 years, I have worked with many of you in this group
    to grapple with a

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    lot of great issues facing our Nation, from reducing the deficit to
    expanding trade, to investing in new opportunities for a new century.
    The Vice President talked about the record that our people together have
    amassed in the last 4 years, and it is an impressive one and one we can
    all be proud of.
        I understand you had a panel earlier this morning speculating on
    what has now become the conversation that we all have, which is, can it
    be possible that we have repealed the business cycle? Or if it hasn't
    been repealed, has at least it been shaved a little? And I think there
    is some argument for that if you look at the better inventory control,
    the changing nature of the economy, the more service jobs, the nature of
    global competition and technology, and the greater sophistication at the
    Fed. I mean, there are a lot of reasons for it, but I think there are
    some indications that we have had some real ability to manage this. But
    I think the most important thing to remember is that the underlying
    fundamentals have been good because of the productivity of the American
    people and our willingness to compete. And I think that if we want this
    to continue, which is the real question, we have to continue to do the
    things that will make it likely that success will prevail for another 4
    years and into the next century.
        It is relatively rare for a country to have both peace and
    prosperity and the opportunity to shape its own destiny at a time when
    there are so many fundamental changes in the way we work and live and
    relate to each other and the rest of the world. You go back to the
    history of the country; that is a relatively rare opportunity. And when
    it comes along, it's easy to miss because when things are going
    generally quite well, people are either complacent or they tend to--one
    of the unfortunate aspects of human nature--they tend to either be
    complacent or to be all heated up over small things, not big things, to
    fall out over petty divisions, not larger ones.
        And so I think it is quite important that the business leadership of
    our Nation keep our country focused on the big questions: What will it
    take to ensure the long-term prosperity of America? What will it take to
    assure that America continues to be the world's leading force for peace
    and freedom and security in the new world of the 21st century? What will
    it take to guarantee a whole new generation of Americans, not a
    certainty but at least a fair opportunity, to be a part of this
    enormous, new, exciting age? What kinds of things do we have to do?
        It seems to me clear that we have to finish the job of balancing the
    budget, to keep the interest rates down and the investment up, and to
    keep the economy growing. And it seems clear that we have to do a lot
    more than we have done to dramatically improve education at every level.
        I'd like to talk about those two things and then mention one or two
    others today. I realize that whenever I talk about the skill levels of
    the work force to this group, I am preaching to the saved, but I think
    it is worth pointing out that between 1992 and 2000, 89 percent of the
    new jobs created in this economy will require post-high school levels of
    literacy and math skills. And virtually 100 percent of those jobs will
    pay what is now an above average wage. But only half the people entering
    the work force are even nominally prepared for these jobs. Our education
    system is still turning out millions of young people who simply are not
    equipped for the new world of work.
        We know that we lag behind the rest of the world in math and science
    and that this poses a severe and growing competitive disadvantage for
    our country. We know that our young people have to do a better job of
    learning basic things and of developing the capacity to learn for a
    lifetime. That's why in the State of the Union Address I challenged our
    Nation to establish national standards in every school, in every
    community, in every classroom in the country and to be willing to
    measure whether every child has met those standards in learning,
    beginning at the beginning with a test of every fourth grader in reading
    and a test of every eighth grader in math by 1999.
        Now, this may seem strange; for all of us who have had children come
    up through schools, we know that there are a lot of standardized tests
    out there. But what many people don't understand is that there are not
    tests to national standards. That's very different from a standardized
    test. If you have the right--if you have standards that every child
    should know in a subject and every child is tested, then that's a test
    everybody could pass. There's no curve grading. You either know what
    you're supposed to know or you don't. And how you rank in an average is
    utterly irrelevant unless you know what you are supposed to know.

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        And it is appalling that we have hidden behind a good idea, local
    control of our schools, to advance a very bad proposition that algebra
    is somehow different in Alaska than it is in south Florida, that
    geography is different in the northern part of Maine than it is in San
    Diego. This is not true. And no other country which seeks to do well in
    the modern economy would permit its children to keep coming up through
    an educational system that could not tell you whether our children know
    what they are supposed to know.
        This is especially important now that so many of our young people
    come from other countries. Just across the river here in Fairfax County,
    there is one of the four school districts in America where the
    schoolchildren's native tongues number more than 100. And if--there are
    40 percent of our kids in the third grade today who cannot read a book
    on their own. And we will never change this until we, first of all, say
    what the standards are and then, second, find a way to measure everyone.
        Now, today, we've made some progress in this in the last 10 or 12
    years. And some of you have helped me to work on it when I was a
    Governor. Today, through the National Assessment of Education Progress,
    for example, we can measure how States are doing or how school districts
    are doing, but still no parent can learn if a son or a daughter is
    actually meeting tough national standards. Our goal should be not to
    drive these children down but to lift them up.
        Today the Department of Education is releasing the annual assessment
    of math performance through the National Assessment of Education
    Progress. It is based on a sample in the States that participate, and
    most States do participate now. Across the country and in almost every
    State, our math performance has improved in the 4th, 8th, and 12th
    grades. Secretary Riley will release the full results today. The scores
    are getting better, but they also show you why every child should be
    tested based on these standards, for about 30 to 35 percent of the
    children tested still have not mastered basic math skills, those which
    must be known in order to continue to learn for a lifetime.
        So what I'd like to do is to just remind you of how you couldn't
    function if you couldn't measure and how things that you take for
    granted in the day-to-day operations of your business have literally
    been avoided in education under the guise of preserving local control.
    This has nothing to do with local control. Dick Riley, since he's been
    the Secretary of Education, has done more in 4 years, I believe, than
    any of his predecessors to try to relax unnecessary Federal rules and
    regulations that hamstring how local school districts spend Federal
    money. This is not what this is about. This is about whether you really
    believe if a child reads ``The Little Engine That Could,'' it's the same
    in New Orleans as it is in Minneapolis. No election to a school board or
    no State legislative action can change the fundamental elements on a
    chemistry table. And yet we have never been willing to subject ourselves
    to this sort of rigorous examination in an appropriate way.
        We should begin at the beginning with fourth grade reading tests and
    the eighth grade math tests and then build it up. I think it is highly
    unlikely that we can do this unless we have strong support from the
    business community. I know that the Business Roundtable last month
    endorsed the concept of tests. I am grateful for that. I am profoundly
    grateful for it. But what I want you to understand is, we're going to go
    and make sure that they're developed. The standards-based tests that are
    out there now, which are basically the Third International Math and
    Science Survey and the National Assessment of Education Progress, are
    very good. We just have to find a way to either take them or a variant
    of them and then fix it so all the--so a State could get them and give
    them to school districts and all the students could take them and they
    could be properly scored.
        But what I need you to know is that we still need your support.
    Right now there's a lot of enthusiasm for this. The Vice President and
    First Lady and I, we're going to go make a lot of State legislative
    trips. We're going to try to advocate this around the country. But we
    still do not have the power to require States to do this. This must be a
    voluntary thing. But the business community can create the conditions in
    which every State will have to embrace this challenge and no one can run
    away.
        And again I say, we have to create the mentality that failing is not
    bad. What is bad is hiding the truth. What is bad is not taking the
    available tools to find out what the truth is, because we know that way
    over 90 percent of the kids in this country can learn what they need to
    know, but you have to start with where you are. And we know that if we
    have high

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    expectations and then we measure them, we will eventually see people
    rise to them.
        So I thank you for the endorsement, but you've got to stay with us,
    and you've got to help us. And when we need business leadership to help
    convince this State or that State or the other State to do this, we've
    got to have you there, because it won't work unless all 50 States do it
    and everybody recognizes that this has nothing to do with local control
    and everything to do with international competitiveness and giving our
    children, every single one of them, a chance to live the life that they
    ought to have the chance to live. And we need you very much.
        Let me also say, with regard to the balanced budget--we don't have
    to have a long conversation about this today, but it now seems clear
    that the balanced budget amendment will not pass. I think that is a good
    thing, for the reasons that I have said elsewhere. But I think it must
    also be clear to the American people that we must make sure that a
    balanced budget does pass, passes this year, and passes as soon as we
    can reasonably pass it. We have to now go beyond the constitutional
    debate to get to the specifics. I am convinced that if we pass a
    balanced budget plan this year, it will moderate interest rates, spur
    more investment, and keep growth going. I believe that.
        All the indicators we see that have been shown to me by Frank Raines
    and the Office of Management and Budget, supported by Secretary Rubin,
    indicate that if we can pass a balanced budget this year, dealing with
    the fundamentals that we're talking about--trying to better manage the
    Medicare program, the Medicaid program, looking at the long-term health
    of all the other programs--that we could keep it more or less in balance
    for two decades, based on what we now know. Obviously, there will be
    differences from year to year, depending on the performance of the
    economy. But you can look at the fundamentals and the demographics of
    things over two decades and pretty well know where you are. So it is
    very important that we do this.
        Now, I believe that we've shown, this administration, that we care
    about this and that we're willing to work with the Congress. Before I
    took office the administration's budget projections had usually been an
    illusion to avoid the difficult decisions that administrations didn't
    want to make so that Congress would have to make them. Of course very
    often Congress didn't make them, either, and each side took what the
    other wanted. So if one wanted tax cuts and the other wanted spending
    programs and, oh, by the way, they wanted to control spending, the tax
    cuts and the spending programs took preference over the controlling of
    the spending, and we wound up with a $290 billion a year deficit and a
    quadruple Federal debt in 12 years. Last year the deficit was $107
    billion, proportionately the smallest of any major economy in the world,
    63 percent lower than it had been in 1992.
        So this is working. We have been working together first with the
    Democratic Congress, then with the Republican Congress, always driving
    it down. What has made it possible are conservative, realistic budget
    projections that every year have been more conservative for the deficit
    than what actually occurred. In other words, the deficit was even lower
    than we projected it to be in every year with our economic assessments.
        And sometimes when you read in the press, there's a difference
    between the Congressional Budget Office and the Office of Management and
    Budget and it looks big in one year, the truth is that we have narrowed
    these differences dramatically now. They're not breathtaking
    differences, and it's enabled us to get together and work together to
    have budgets that make sense.
        The other thing I think is important is, you hear a lot of criticism
    saying, ``Well, whenever they have one of these plans, all the savings
    are in the out years.'' That's not quite true. But if you look at the
    way Medicare or Medicaid works, particularly in the Medicare program, if
    you look at the way some of these other programs work, the savings, by
    definition, compound themselves in a way that will always make the
    savings look bigger in the out years. The trick is to pass a plan that
    legally locks in tomorrow's savings today and that places strict limits
    on the amounts of money Congress can spend each year. If you do that,
    then the framework will be created which will permit us to get to
    balance in 2002. And it will have great credibility in the market.
        I know that's true because of things we've tried to do with
    entitlements, including placing a cap, a per capita cap on Medicaid, and
    extending the life of the Medicare Trust Fund for

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    a decade by having very rigorous spending controls that will facilitate
    the movement to managed care, have elicited so much criticism. And I
    know that, therefore, they're likely to work. I mean, it's just--it's
    not easy to do this. You all face these kind of decisions all the time.
        But I do want to say, you will see a lot of our differences aired
    publicly--the executive, the Congress, the parties within the Congress.
    But this budget is well within reach. This is well within reach. And
    it's well within reach in a way that also would permit us to create a
    bipartisan process to deal with the long-term challenges of the
    entitlements in Medicare and Social Security as well.
        So you should feel positive about that. But my advice would be here
    and my appeal to you is to tell every one of us, every time you get a
    chance to say it, that you cannot celebrate Thanksgiving this year
    without a balanced budget. Get the job done this year. We need it done
    this year. If you don't, it will have a destructive impact on the
    markets. If you do, it will have a positive one.
        But you should know, when you hear all the debates, it is in the
    nature of the things for the differences to be amplified. The fact is
    that we are well within range of being able to get this done if we'll
    all just hunker down and kind of turn down the rhetoric and treat each
    other with good faith. We can get this job done in a way that I think is
    very good for the economy.
        Let me just mention two other things I'd like to ask for your help
    on. The first is to help in getting a budget out and in supporting a
    policy in both parties that fulfills our responsibilities in the world
    today as the world's indispensable nation.
        We had a bipartisan foreign policy during most of the cold war
    because we knew our neck was on the line, and politics stopped at the
    water's edge. Now it is more difficult to build a bipartisan foreign
    policy because the elements of it are more diverse. For example,
    economic policy and trade has a lot more to do with it than previously,
    or at least we're aware that it does--I think it was always a big part
    of our foreign policy--and because no one perceives that our neck is on
    the line. But the truth is that the whole world is looking to see
    whether America will fulfill its responsibilities to lead in an
    increasingly interdependent world, not only economically interdependent
    but environmentally interdependent and politically interdependent.
        Increasingly, the security threats we face are those that cross
    borders, like terrorism and narcotrafficking. And this is a very complex
    time. We are in the process of building new structures, new
    understandings, new ways of working together. And it is important that
    America lead. That begins with trade.
        We had great victories in 1993 with NAFTA and with the GATT, and in
    the last 4 years we've had 200 separate trade agreements. We had a great
    victory the other day for the cause of global trade and for the American
    economy. When Ambassador Barshefsky concluded the telecommunications
    agreement, it was a great thing. But we have been now 2 years without
    fast-track authority for the President.
        Latin America is looking at us. President Frei in Chile--they just
    had--three Asian heads of government paid visits to Chile in the last 3
    or 4 months. And the whole world in Latin America is looking to see what
    we're going to do. The same thing in Asia. So we really need to pass the
    fast-track authority. We need to do it this year, and we need to do it
    as soon as possible. And I hope that all of you will help us do this.
        I think most Members of Congress understand--let me just give you
    two examples--how China defines its greatness over the next 20 years
    will shape the next 50 years of life in America and the world. I think
    most Members of Congress understand that how we work through this
    business of trying to create a united, democratic Europe and a
    relationship between NATO and Russia, that that will have a lot to do
    with the way we live in the next 50 years.
        But we must understand that our neighbors to the south of us are
    still our greatest opportunity for the future. All but one of them are
    democracies. They are committed to free market economics. Other people
    around the world are looking to them, and we cannot pass up the chance
    to build closer trade ties with them. This will benefit America and will
    help us to deal, as I said, not just with economic matters but with
    political matters, with environmental matters, with a whole host of
    other issues. So I implore you to do what you can to help us get this
    done this year.
        Beyond that, we have to pass a balanced budget plan that still has a
    diplomatic budget

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    for the United States. We have continued to lower our spending on
    diplomacy dramatically, in a way that I think has been very
    counterproductive for our interests. Our request is simply to give us
    one penny of every Federal dollar to promote peace, to fight problems
    like drug trafficking and terrorism, nuclear proliferation, and to meet
    our obligations to the international community through the World Bank,
    the IMF, the other international financial institutions.
        My budget does reverse a downward spiral in foreign affairs spending
    that's been going on a long time. But you know, our Embassies around the
    world are working around the clock. We've had to close a lot of our
    consulates. We've had to weaken the efforts that we were making to help
    American firms win contracts and protect intellectual property rights
    and fight unfair business practices. We live in an interdependent world.
    We cannot afford to say that we just simply will see the United States
    Government quit the field. And I feel very strongly about this. I know
    that many of you do. But I ask you to help us do that. It's not a big
    deal in the budget, but it's a part that always, always gets cut, and
    it's not in our interest to cut it.
        The last thing I would like to do is to ask you, as I have before,
    to help us finish the job of welfare reform. Over the last 4 years, with
    11\1/2\ million new jobs in the economy, about 2\1/4\ million people
    moved off welfare. That's the largest reduction in the welfare rolls in
    history. There are now 4.6 percent of the population, about 10 million
    people, on public assistance. That is below the historic average since
    1972. From 1972 to 1990 the historic average was 4.8 percent of the
    population on public assistance. In 1994 we got up to 5.4 percent. So in
    a booming economy, we got down to 4.6 percent, and of that, 2.25 million
    people who have moved off welfare, approximately a million of them moved
    into jobs. Depending on whose study you read, the average welfare family
    has between 2.3 and 2.8 people. There are very few families where
    there's a single mother with a zillion kids. It's mostly one child or
    two children in the families.
        Now, in the new law, the new law says that the States can let people
    who are able-bodied stay on welfare for 5 years and no longer; that
    they're not supposed to stay on welfare more than 2 years at a pop
    without being in the work force; that the States can establish sort of a
    contingency fund of about 20 percent to take care of people who are not
    physically or mentally able to work or who live in areas of very high
    unemployment.
        It is obvious to me that if you look at all the studies--and the
    Council of Economic Advisers gave me a report on this, by the way,
    estimating that of the 2\1/4\ million people that moved off the welfare
    rolls, about half of them moved off because of the good economy, about
    30 percent of them moved off because 43 States were making extra efforts
    to move people from welfare to work, and about 20 percent of them moved
    off for--we don't know why--maybe because there was a 50 percent
    increase in child support payments, collections. And that will always
    lift some people off welfare. Maybe there are other reasons.
        But the point I'm trying to make is that to meet the requirements of
    this new law, which is graduated in the standards that it applies to
    these timetables I just mentioned, we have to move another million
    people into the work force from the welfare rolls in the next 4 years.
    And there is a law that requires it, so we have to do it whether or not
    the private economy produces 11\1/2\ million jobs.
        Now, five companies, including members of this organization,
    Monsanto, Sprint--who else--Federal Express, United Airlines, and Burger
    King, I think, agreed to head up a national coalition to get other
    companies to hire people from welfare to work. If you look at what's
    been done in Kansas City, you see that every State has the option to
    offer companies the welfare check as a cash subsidy for people who will
    pay well above the minimum wage as an employment and training subsidy.
    We're trying to get more small businesses into this. We are also trying
    to pass through Congress a 50 percent tax credit for salaries of up to
    $10,000 a year, tied much more tightly than any of these jobs tax
    credits have in the past to just people who move from public
    assistance--that is, from welfare to work, or single men who can't get
    welfare who move from food stamps to work.
        There are a lot of things which can be done which lower the marginal
    cost to companies of hiring new people. But in the end this must be
    assumed as a mission by business people. You know, we've all complained
    for years that the welfare system leaves people on it that are
    permanently dependent, and they get used to receiving a check and don't
    go to work. Well,

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    the truth is, that was never true for half the people. For half the
    people, the welfare system worked just fine. They got in a tough spot;
    they needed a little help; they got the help; and they got off welfare
    and they went on with their lives. But it is true that about half the
    people were more or less permanently dependent on it. Those are the ones
    that will be harder to place. So we've got to get another million
    people, and they're going to be harder to place. And we have got to have
    your help.
        So that's the last thing I will say. I want you to help us balance
    the budget. I want you to support the education standards movement, not
    just in the Congress but asking the States that you operate in to
    embrace these tests, not letting anybody run away. I want you to help us
    continue to lead the world with fast-track and a decent diplomatic
    budget. And I want every one of you to ask yourselves personally, what
    can we do in our company to end the cycle of welfare dependency? If we
    do this we will have done a thing of historic significance for the
    American people, because it will end the culture of poverty. There will
    always be people who are out of work, but no one will be looked at as a
    permanent dependent of the State if they're able-bodied, if you do your
    part and we do ours.
        Thank you very much.

    Note: The President spoke at 10:32 a.m. in the ballroom at the Park
    Hyatt Hotel. In his remarks, he referred to Larry Bossidy, Business
    Council chairman, and President Eduardo Frei of Chile.