    [Public Papers of the Presidents of the United States: William J. Clinton (1998, Book I)]
    [May 4, 1998]
    [Pages 682-687]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Interview With Al Hunt for CNBC and the Wall Street
    Journal
    May 4, 1998

    National Economy

        Mr. Hunt. Mr. President, thank you for being with us. Let's talk
    about the American economy for a moment, which is really the envy of the
    world today. Federal Reserve Chairman Alan Greenspan says that it's the
    best economy in modern memory. But in your view, are there one or two
    developments that could jeopardize these good times?
        The President. Well, I think the thing that I'm most concerned about
    today is the necessity of having growth in every major region of the
    world to sustain our own. I mean, we're now in a position where about a
    third of our growth is due to exports, where a significant percentage of
    them go to Asia. And our own analyses are that the Asian financial
    crisis, within its present parameters, won't have a terribly destructive
    impact on the American economy now. But if we had slow growth everywhere
    at once, it would--which is why I think it's rather important that we
    support the IMF and have a really disciplined effort to try to help move
    the Asian countries through this financial period and get them back to
    growth again.
        And I feel the same way about what I'm trying to do in Africa as
    well. I just think that we have to understand that our welfare is more
    inextricably tied with others than ever before. So that's one of the
    things that I'm quite concerned about.

    Japanese Economy

        Mr. Hunt. In that context, the greatest threat in Asia, most experts
    think, is Japan. You and Secretary Rubin have encouraged, have cajoled,
    have pressured the Japanese to try to stimulate their economy, where it
    always seems to be too little, too late. What are the consequences if
    that persists, both in Asia and for the United States?
        The President. Well, let me say, this last stimulus package, if it's
    real--that is, if it's real money and it's implemented rapidly and
    vigorously, I think it will be a plus----
        Mr. Hunt. You think it's sufficient----
        The President. Well, I think--let me finish, if I might. I think
    that it might be enough on its own terms if, in addition to that, they
    have other reforms in the economy, you know, to open the economy to
    subject it to more genuine competition and open markets. Then I think,
    between the two of those things, you would really get growth going
    again. I think at least there is a chance that it is.
        One of the problems that the Japanese have in their political system
    is that, because the pressures against doing these kinds of things are
    so enormous, very often they can be proposed and then their impact can
    be watered down or delayed in ways that make it difficult to implement.
    But if they actually do what the Prime Minister has proposed, and they do it quickly, and they follow
    it up with other reforms with banking and competitive market reforms,
    then I think that there is a chance we can see some real movement in
    Japan. And, of course, that would lead the whole region out.
        And Prime Minister Hashimoto has got
    an enormously difficult challenge now, but he's a very able man; he's a
    strong man; and he's trying to, I think, really come to grips with this.
    And I'm hoping that he'll be able to.
        Mr. Hunt. You're going to China for almost a week this summer. Is
    there any chance you'd stop over in Tokyo to talk to the Japanese about
    this economic situation?
        The President. Well, I hope to see Prime Minister
    Hashimoto for an extended period in
    Birmingham, in England, at the G-8 meeting before I go to China. I would
    not like to wait that long. I'd like to have the chance to really sit
    down and visit with him and see what, if anything else, we can do to
    help before then. So I'm looking forward to blocking out some

    [[Page 683]]

    good time on my schedule when we're together for the G-8 meeting.
        Mr. Hunt. And no reason then to go to Tokyo on your trip to China?
        The President. Well, my instinct is to treat this as I would
    another--any other state visit, just to go and come. But I have been to
    Japan a couple of times, and I expect to go back again before I leave
    office. But I think what we need to do is to deal with this financial
    challenge they face as old friends and allies, in a very straightforward
    way. I don't think that the symbolism of a visit is nearly as important
    as the reality of a partnership, and I'm going to do my best to be a
    good partner to them.

    G-8 Summit in Birmingham, England

        Mr. Hunt. You mentioned the meeting coming up in Birmingham,
    England. What do you expect to come out of that other than a call for
    more financial disclosure from other nations and the IMF? Is there any
    more substantive----
        The President. Well, I hope so, because I think that we really--I
    hope we'll do a G-8 version of what we were doing at the Summit of the
    Americas in Santiago. I thought what we--I hope we'll be talking about
    how globalization can work to the benefit of all the peoples in our
    countries, and then how it can only work if we're benefiting other
    nations as well.
        Now, let me just give you an example. Great Britain now has a low
    unemployment rate, and the Dutch unemployment rate is down, but a number
    of the other European unemployment rates are still high, even though
    they're enjoying growth. The Canadians have had strong growth for the
    last couple of years. Their unemployment rate is only now beginning to
    yield to it. So there is a lot of interest among the G-8 about how they
    can generate more jobs without increasing inequality and without
    undermining growth.
        So I expect we'll be talking about things like the earned-income tax
    credit in the United States as a device for reducing inequality but
    still increasing employment. I know we'll spend a lot of time on the
    training of the work force and wealthy countries' significant obligation
    to upgrade the skills of their own people because of the change in the
    globalization of the economy. So I think we'll have a lot of things that
    really affect people on the street in America and in these other
    countries.

    European Economic and Monetary Union

        Mr. Hunt. Let me ask you a question about the European Monetary
    Union with, I guess, 11 countries coming together. There has been a lot
    of celebration of that; your administration has been very supportive.
    And yet, isn't there a concern that when you have countries with such
    incredibly diverse cultural and social and economic and political
    systems, that rather than lead to more unity, it could produce more
    unrest, more disunity?
        The President. It could if people feel that it's been sort of
    imposed on them. But I believe that the general tendency toward
    political and economic union in Europe is a positive one. The United
    States has supported it; I have personally supported it strongly. So I
    think that's positive. I think the efforts made by many European
    countries to get their fiscal house in order, get their deficits down so
    they can qualify for membership, has been truly impressive.
        And the European States themselves will have to decide how they want
    to unify politically and economically, but if they choose to do this
    European Monetary Union, I want to be supportive. But I think that in
    order to make it work, they'll have to do other things as well. They'll
    have to find a way, first of all, within their countries to preserve a
    sense of sovereignty and integrity in these other countries while
    they're unifying the currency. And then, in dealing with the United
    States and others, they will have to find a way to continue to make sure
    that they're sending us the right signal that they're opening their
    economy--they're unifying, but they're not closing others out, they're
    opening. And we are in negotiations and discussions with them now about
    how we might do that. So, on balance, I'm positive about this.

    National Economy

        Mr. Hunt. Let's return to the domestic economy for a second. We've
    now had six quarters where the economy has grown more rapidly than even
    your most optimistic of advisers, the latest just being in the last few
    day. But given the inevitable business cycle, do you think it's time to
    at least start to consider tapping on the brakes so you don't have to
    slam them on later?

    [[Page 684]]

        The President. Well, I think the only reason to tap on the brakes
    with high growth and low inflation is if you think it will actually
    prolong the period of growth. And there is a lot of debate out there in
    the world today about the nature of our growth and what would stop it
    and what would keep it going. So I think that the judgment ought to be
    what are the mix of policies we can adopt that are most likely to keep
    this period of economic growth going for the longest period of time.
        I don't believe we've repealed the business cycle, but I think
    perhaps we've fundamentally altered it. That is, if you look at the
    impact of the technological revolution working through the economy,
    which is, I think, giving us higher productivity levels than we can
    measure accurately; I think if you look at the globalization of commerce
    and America having still a relatively open economy, which keeps
    inflation down by having everything subject to more competition; if you
    look at the benefits we're reaping now from the painful adjustments that
    were made in the 1980's by the business community--all these things
    happening now--I think there is a chance that we now know it's more
    possible than it used to be for a government to have a prolonged period
    of growth if it's properly managed.
        Do I think that there is no business cycle and that the laws of
    supply and demand in the global context never come back to shorten the
    leash on a country? No. I think it's still out there. But I think we can
    continue to prolong this if we do the right things.
        Mr. Hunt. Just to follow up for a moment, your predecessors were
    always--several were quite critical of Chairman Greenspan whenever he
    put brakes on. Your administration, particularly Secretary Rubin, have
    had very good ties with Chairman Greenspan. Do I take it from that
    answer that, whereas you're not encouraging him to tap on the brakes,
    that you wouldn't be critical if he did?
        The President. Well, we've tried to work together while respecting
    our independence. And I have believed always that if I provided America
    with a responsible budget that was moving toward balance so that in the
    short term we were behaving in a responsible way and that had the long-
    term investments necessary to triumph in the kind of economy we live in,
    that that would permit him to do his job with
    the lowest possible interest rates. That is, I thought he would be able
    to leave interest rates than he otherwise would feel he could. I think
    on balance that's what's happened.
        I know that he couldn't possibly agree with every decision I've made
    in the last 5\1/2\ years, and he put the brakes on pretty tight in 1994,
    trying to keep this thing going. And we had a big--we had a pretty good
    slowdown, but then we were able to keep it going, keep the expansion
    going. And so it's continued right the way through until here we are,
    almost to the middle of '98. And I believe that he'll do what he thinks
    is right for the long-term interests of the American economy.
        Mr. Hunt. You were asked the other day at your news conference about
    the stock market continuing to go up, and you were an optimist. If you
    were private citizen Clinton today, would you invest in the market?
        The President. Yes, but I would also recognize that it goes down and
    it goes up and it goes down and it goes up. And what the American people
    need to know is that if you can hold your investments long enough, over
    any given 15- or 20-year period, the stock market has always
    outperformed private--I mean Government bonds in earnings.
        The insecurity is if you enter, particularly if you enter at a
    fairly high point now, and you happen to get one of those downward bumps
    and you have to liquidate your investment; then you could lose. But if
    you look at the stock market--the stock market has always tracked the
    fundamentals in the end. And I just feel that if I can work with the
    American people and keep the fundamentals good, keep productivity up and
    investment for the long run up, keep the unemployment rate down, keep
    the inflation rate down--if we keep the fundamentals in good shape, then
    the stock market, over time, will track that.
        And I know that there are a lot of people who are worried because
    it's gone quite high lately, but the market--they correct themselves;
    they always do, one way or the other. I just think over the long run,
    what--if you're President, you can't be thinking about next month in the
    market; you have to be thinking about what's the long-run economic
    scenario. And then you just have to trust the market to follow the
    market realities in the American economy over time. I think that's hat
    will happen.
        Mr. Hunt. In this booming economy, some critics have worried that
    it's been too uneven.

    [[Page 685]]

    I'll give you one example: The pay of CEO's of the largest companies
    last year rose 35 percent, rose 54 percent the year before. That's 13
    times greater than the pay of average workers. And I think the figure
    now is that the average boss earns 326 times what the average worker
    earns. Is that, A, acceptable; and, B, should Government do anything
    about it?
        The President. Well, I think that in and of itself, it's probably a
    phenomenon of companies bidding for management talent at a time when
    management talent is important in how these companies do in the market.
    So in that sense, it may not be any different than asking whether it's
    acceptable that professional athletes earn as much money as they do.
        I think the real question is, are working people earning a fair
    share of their company's prosperity and their country's prosperity? And
    are we, in the aggregate, decreasing the level of income inequality that
    developed over the last 20 years--because we had a very, as you know,
    very sharp increase in inequality among various classes of working
    people, with folks on the bottom getting the short end of the stick.
    Government policies I think had something to do with it, but I think the
    larger thing was that we were changing the dominant economic factors of
    this age. And now the dominant economic factors relate to people's level
    of education and skills, so that there became--there's a huge education
    premium now in the work force, and people that don't have it,
    particularly younger workers, tend to get punished very harshly by the
    low incomes they earn.
        So to me, what I've tried to do is to reduce income inequality, not
    necessarily by reducing upper income people's incomes, except to ask
    them to pay their fair--what I believe is a fair share of the country's
    tax burden, but instead by lowering the incomes of the lower 40 percent
    of the people and trying to create more high-wage jobs by tying more of
    them to trade, because we know trade-related jobs and technology-related
    jobs pay 17 to 20 percent more than average wages. And the evidence is
    that in the last couple of years, we have slowly, finally, begun to
    reduce income inequality, particularly when you take into account the
    impacts of the earned-income tax credit, which is worth about $1,000 a
    year to a working family of four with an income under $30,000.

    Projected Federal Budget Surplus

        Mr. Hunt. Another of the benefits of the booming economy, of course,
    has been we have something that people thought unimaginable a few years
    ago, a budget surplus. The latest CBO estimate I think, was----
        The President. Well, we hope we do. We think we will.
        Mr. Hunt. But with April receipts coming in, I gather, much stronger
    than anybody anticipated, I've now heard some people suggest you could
    have a budget surplus of as much as $50 billion this year. Is that
    right? Is that reasonable?
        The President. Could be.
        Mr. Hunt. Could be that high? Now, you have said that you're going
    to veto--that Social Security comes first with any budget surplus--if
    they try and enact a big tax cut before they do that, that you would
    veto it. But there's also a big-spending, highway pork bill coming down
    the pike right now. As things stand now, would you also veto that?
        The President. If it got into the surplus. I met with Senator
    Lott and Senator Daschle yesterday, and we discussed this. And it's very
    interesting--historically, always, highways have been the one thing that
    Congress, whether Republican or Democrat, they always want to spend more
    on than the President. And part of it is the President's desire to
    maintain some control over the budget; at least, for me that's been the
    case.
        Now, I like the--I believe we need to invest money in
    infrastructure, in highways and mass transit and bridge repair. I think
    it's good for the economy in terms of the jobs it creates, but it's even
    better for the economy in terms of giving people safer roads to travel
    on and less wear and tear on their cars, less accidents--fewer
    accidents--the whole thing. I'm all for this. And we need more mass
    transit because, among other things, it's an important part of the
    welfare reform component. If we're requiring people who are poor and on
    welfare to go take jobs and they have to travel, they've got to have
    some way to get there. So I'm for a hefty increase in investment in
    infrastructure.
        But I think that these bills that have been passed--the thing that
    bothers me is, I can't

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    see, based on what I understand to be the options, how either one of
    these bills can be funded without either getting into the surplus or
    cutting our investment in education, medical research, the environment,
    and other critical areas. So we're just going to have to try to find a
    way to fit all these things in, in a manner that doesn't spend the
    surplus.

    Social Security

        Mr. Hunt. Let me ask you just a couple more quick questions. On
    Social Security, you've said very clearly you don't want to have a
    specific proposal now. But some of your Democratic colleagues--Senator
    Moynihan and Kerrey, are talking about private accounts alongside
    traditional Social Security. No matter the specific details, is that a
    good idea to consider?
        The President. Absolutely, it should be considered. But what I want
    to say--I'd like to make two points--first is, the reason that I think
    it would be a bad thing for me to have a specific proposal now is I
    think it would shut down debate rather than increase it. And then
    everything would be, are you for or against this proposal? Right now,
    we've still--the American people, I think, on this issue--the good news
    is that everybody knows something fairly substantial is going to have to
    be done to make this system survive into the 21st century when all the
    baby boomers retire. That's good.
        Secondly, I think the younger people are, the more likely they are
    to be open to all kinds of new ideas, and that's good. But I think that
    what has not been accomplished yet in the public education process that
    we're now undertaking this year is for people to understand the
    tradeoffs involved in making a set of choices.
        That is, I could call you on the telephone and I could say, ``I am a
    reporter for the Clinton polling agency, and I'm going to ask you these
    10 questions, and do you like these ideas?'' And you might like them
    all. But if I said, ``You can only have four of them,'' and then you
    have to rank them in rank order of priority, that's a much more
    sophisticated judgment. That's what I'm trying to get done now.
        On the individual accounts, I think it's absolutely an idea that
    deserves a lot of consideration. There is some debate, as you know, in
    Congress about trying to dedicate the surplus to individual accounts now
    just starting. The problem I have with that proposal is that it doesn't
    deal with the underlying Social Security program. What are you going to
    do--I think we still need some baseline Social Security in the 21st
    century that's a baseline protection for people that may not have a lot
    of money in the market or may lose some in the market or don't have a
    chance to accumulate a lot of wealth, and we've got to know how we're
    going to fix that. And then, the people--admittedly, that's what
    Senators Moynihan and Kerrey tried to do. They tried to guarantee a baseline
    Social Security benefit and, over and above that, have an individual
    account. And that's one of the things that I think ought to be fully
    explored here.

    Corporate Mergers

        Mr. Hunt. We only have a few more minutes, but as long as we're
    talking about whether things are good or bad, there have been a rash of
    big mergers lately, particularly in the financial service banks. Do you
    think, generally, without commenting on any one, but as a general
    proposition, is that good or bad for consumers and the economy?
        The President. I don't know yet. I think, to some extent, they were
    inevitable because of both the nationalization of finance, bank finance,
    across our whole country and the globalization of commerce which puts a
    premium on bigness, partly so you can afford to get into new market
    areas, partly so you can afford to handle bad years; you have more
    money.
        So I think some of this is inevitable. I think that the test which
    ought to be applied--and I honestly have not had time to get a detailed
    analysis of it--but the test of all these mergers ought to be this: Does
    it allow them to become more globally competitive in ways that don't
    unfairly raise prices or cut the quality of service to consumers in
    America? Or does it superficially allow them to become more globally
    competitive but, in effect, undermine their competitive position because
    they're not attractive to their customers anymore because of what
    happens to prices or service?
        And I think that's the test we ought to apply, that's the test
    Government agencies ought to apply, in terms of any lawfulness--you know
    they're looking at that. But I think it's too soon to say yet. On
    balance, I think it was inevitable; I think these things were coming.
    And we have to do what we can to make sure that they're good for the
    consumers of the country.

    [[Page 687]]

    Tobacco Legislation

        Mr. Hunt. Next to the last question, on tobacco: Would you be
    willing to give up some of the initiatives that you have proposed as
    part of the tobacco deal in order to get legislation that limits any
    revenue strictly to tobacco and health related areas?
        The President. Well, let me say, first of all, most of the
    initiatives that I proposed to fund--in education, for example--were not
    coming out of tobacco revenues, except those that were being collected
    to be sent back to the States.
        Now, I wanted to say that those should be spent for the benefit of
    children, in smaller class sizes in the earlier grades and in child
    care, and not children's health, for the simple reason that in the
    Balanced Budget Act we had the biggest increase in children's health in
    35 years.
        If Congress wanted to give the States some more flexibility in
    spending that money, we could argue about that, but that wouldn't be a
    deal breaker for me. We can also have a debate about that in the
    election, whether I was right or they were right and what we should do
    with the priorities in the future.
        My sole concern, in terms of what bill I would sign or not, is the
    question of whether it will substantially reduce teenage smoking and
    thereby lift the health fortunes of all these children that are
    otherwise going to be imperiled.
        Mr. Hunt. Do you think the McCain bill does that? Is that correct?
        The President. I do. I do. There are a couple things that if I were
    writing the McCain bill I'd change, and maybe we can even get a few
    changes in it. And I'm sure there are people on the other side who would
    like to change a couple things about it. But I think that the McCain
    bill is--I think Senator McCain and the
    Democrats and Republicans who worked with him--keep in mind, 19 people
    voted for that bill--made an honest effort to, first of all, protect our
    children from the dangers of tobacco; secondly, raise enough money that
    we can invest it in an advertising campaign and medical research and to
    do the things that ought to be done from a health point of view; took
    decent care of the tobacco farmers, gave them an opportunity to buy
    their way out of what they are doing now in ways that seem to find favor
    among the farmers; and basically did the kinds of things that ought to
    be done. It's certainly a good vehicle through which we can work to try
    to get a bill out of the Senate and then hopefully get one out of the
    House.

    Independent Counsel's Investigation and Consumer Confidence

        Mr. Hunt. Last question. One of the reasons the economy has done so
    well is unsurpassed consumer confidence. Consumers really feel good
    about how things are going in general. If you and Independent Counsel
    Kenneth Starr become embroiled in a huge, high-stakes battle over
    impeachment charges and countercharges, could that threaten or
    jeopardize consumer confidence in general?
        The President. Oh, I don't think so, because, for one thing, I've
    done my best to demonstrate to the American people that I'm letting all
    this business from Mr. Starr be handled by my
    lawyers and others speaking on my behalf, that when I have to answer
    questions about it, I do, but that I'm working on their business. And
    I'm very optimistic about it. So I don't think that anything that can
    conceivably happen is likely to impact on consumer confidence, unless
    somebody tries to do something completely irresponsible and
    insupportable. By the facts at hand, we're going to be fine on that.
        Mr. Hunt. Or impact upon your stewardship of----
        The President. No. No. I think that early on in this process I was
    somewhat bewildered by it, and it was distracting. And finally, I
    decided what I owed the American people was not to be distracted, and so
    I'm doing pretty well now, and I intend to keep right on doing it.
        Mr. Hunt. Mr. President, thank you very much.
        The President. Thank you.

    Note: The interview began at 3:24 p.m. in the Roosevelt Room at the
    White House on April 30, but the transcript was embargoed for release
    until 6 p.m. on May 4. In his remarks, the President referred to Prime
    Minister Ryutaro Hashimoto of Japan and Independent Counsel Kenneth
    Starr. A tape was not available for verification of the content of this
    interview.