[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 
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 

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 
    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 
    But I think that these bills that have been passed--the thing that 
bothers me is, I can't

[[Page 686]]

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 

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 
    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 

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