[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be possible that we have repealed the business cycle?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been repealed, has at least it been shaved a little?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.