[Weekly Compilation of Presidential Documents Volume 29, Number 6 (Monday, February 15, 1993)]
[Pages 185-189]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to Business Leaders

 February 11, 1993

    Thank you very much. I would like to thank all of you ladies and 
gentlemen for coming here to join me today. I would like to say a 
special word of thanks to the leaders of various organizations and 
sectors of our economy who came in a little earlier for a briefing. And 
thanks to the members of the administration who are here, who have been 
working so hard for the last 3 weeks on our economic program, and to the 
Vice President who went all the way to California last night to do a 
town meeting and came in about 5 o'clock this morning. He's the only 
person here who's had less sleep than I have. That's what Vice 
Presidents are for. [Laughter]
    I have asked you to come here today because we have to meet a 
challenge together. Many of you have been my friends for some time, and 
you have worked with me in this campaign and in others. Many of you are 
members of the other party who love your country and care very deeply 
about the health of our economy.
    It doesn't matter. If you look at the history of our country, 
whenever the chips have been down, the private sector, the business 
community has rallied to help America meet its challenges in war and in 
peace. In two World Wars, business men and women were among the leaders 
in our great national mobilizations, putting aside narrow interests for 
the national interest. When our Nation faced challenges from civil 
rights to the energy crisis, businesses have taken the lead in coping 
with change. Americans are at their best answering alarm bells in the 
night. But I think every one of you know that today we face a crisis 
which, while quieter, is every bit as profound as those we have faced in 
our past.
    We risk losing the standard of living that we have taken for granted 
for so many years as Americans. Too many middle class Americans have 
already suffered through a decade or more of declining real wages and 
rising basic costs. Now, even though it is said we are in a recovery and 
the overall economic indicators are quite impressive, the job creation 
that normally accompanies a recovery is not in evidence. Small 
businesses are having trouble creating jobs because of the lack of the 
availability of credit or because of the costs of health care. Big 
businesses are continuing to restructure, not just manufacturing 
businesses now but service organizations, too, because of the demands of 
the global economy.
    Business people have to deal with the realities they face, and they 
often make annual plans and 5-year forecasts, based on the best numbers 
they can get. Your Government for the last several years has either not 
been making annual plans or 5-year forecasts, or they've been based on 
numbers which aren't real and plans which were never intended to be 
carried out.
    Early in my campaign for President I did what I had always done when 
running for Governor: I put out a plan which, as nearly as I could, set 
forth what I thought we ought to do as a country to increase jobs and 
incomes, to reduce the national debt, to restore the health of our 
economy, and to deal with the long-term problems we face. I wanted to 
increase investment, reduce consumption, restore fairness to the Tax 
Code and growth to the incomes of America, deal with the structural 
problems of this economy like health care and the credit crunch, and to 
do it in a context that would enable us to have

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long-term health by reducing the national debt considerably.
    I did it last year based on the numbers that were then available. I 
revised the plan again in late spring. In August the Government said 
that the deficit was going to be bigger than we had anticipated. Then, 
still, I thought we could do essentially what we had outlined. But after 
the election, the Government revised the deficit figures upward again, 
this time by as much as $50 billion per year in each of the next 4 
years.
    Now I have a choice. I can do what has been done by people in both 
parties for the last several years and has certainly been done by 
administrations unwilling to give up the rhetoric of low taxes and less 
Government, even though costs were exploding: I can sort of deny the 
problem and finesse the numbers. Or I can tell you what I think is the 
truth. I think I should follow the latter course.
    I believe that given the size of this deficit, given the burden it 
will put on today and tomorrow in terms of higher interest rates, given 
the fact that we also have a plain investment deficit in the education 
and training of our people and the investment in our infrastructure and 
those things that are critical to building high-wage, high-growth jobs, 
we have to take even more dramatic action than I had previously thought 
to increase investment for jobs and incomes, restrain unnecessary 
Government spending, raise revenues in a fair way, and reduce the 
national debt so we can have long-term growth.
    I think if we do not do these things, we will pay for it. I think 
the cost of the status quo is far, far higher than facing our problems 
and moving forward. Business people have known for years that something 
had to be done about our deficit. The national debt has quadrupled since 
1980. Even more disturbing, unless present trends are altered, the debt 
on an annual basis will explode in the years ahead with 50 percent of it 
coming from increases in health care costs.
    I want to reduce this deficit, not as an end in itself but because I 
think it is a critical part of a strategy to build jobs and growth for 
America today and over the long run. In order to do that, I need your 
support and your contribution. Everyone will have to pay their fair 
share. But if you do, we will all be better off, and the business 
community will be stronger in the years ahead.
    Government has an obligation to provide the proper environment in 
which business can prosper, but the private sector drives the economy. 
If interest rates are too high, if the financial system is in disarray, 
if health care costs are crushing out discretionary income which can be 
put into new plant and equipment or hiring additional workers, the 
environment in which we operate will be crippled because the private 
sector cannot work. I want to be a better partner than that to you so 
that you can do your job.
    Productivity has gone up at an astonishing rate in many sectors of 
the American economy in the 1980's and in the early nineties. This 
recovery, indeed, that we now see underway seems to be based on three 
things: home mortgages going down enough for people to refinance their 
homes and buy new homes; consumer confidence coming up since the 
election--I hope I can keep it up; but most important, dramatic 
increases in productivity in the private sector. Those productivity 
increases are not yet manifest in more jobs for the American people or 
higher incomes, and they won't be until we do something about health 
care, about the deficit, and about doing the things it takes to make our 
country as a whole competitive over the long run. That is what I am 
trying to grapple with as your President, and what I need your support 
beginning next Wednesday in the Congress with, so that we can make 
progress on these great issues.
    If we don't reform our economic policies, I'm convinced eventually 
we will fall further and further behind. Ten years from now we won't 
even recognize the country that we all grew up in. Ten years from now, 
if we don't change present policies, the following things will happen: 
The deficit will be $653 billion in a given year. The national debt will 
be 78 percent of our gross domestic product. Health care costs will take 
up almost 20 percent of GDP. They are at 14 percent today. Only one 
other advanced nation in the entire world, Canada, is above 9, and 
they're just a little bit above 9 today. Medicare and Medicaid costs 
will triple for taxpayers and people less able to bear the burden.

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    We have got to change. The short-term pain of making changes now is 
so much less than the long-term cost of continuing to do things the way 
we're doing them. So next week I will try to propose an economic package 
that will give the American people fundamental change. A goal is an 
economy that faces the world without fear and not only meets but beats 
our rivals in economic competition around the world; an economy that is 
growing, that provides jobs to everyone willing and able to work, that 
does not rest until the great American middle class that built this 
country once again feels that people who work hard and play by the rules 
will be rewarded and not punished.
    The broad outlines of this plan are no secret, but I'd like to 
restate them. First, to ensure that we do not lose the momentum and the 
new confidence that we have seen among consumers and in the markets and 
to finally get sustainable job growth, I believe strongly that we need 
an investment-led jobs package. But all of us here know that our 
problems go beyond the business cycle. More importantly, we need a long-
term plan to increase investment in the American people and their 
future. We will put in place a program of investment in the physical 
infrastructure that is a precondition for prosperity and productivity. 
Finally, we will reduce our deficit, not as an end in itself, as I said, 
but as a means to achieve higher incomes and more jobs. This will 
require tough choices from all Americans. And before I turn to the 
middle class for help I have to turn to people who did well in the last 
decade.
    This past week we began with the Government, where we ought to 
begin, setting our own house in order. Too often in recent years our 
Government has been on automatic pilot. And believe me, it's been a very 
long time since the kind of searching reexamination of the mission of 
Government has been undertaken that you do all the time, that you do 
just to survive. And so we are beginning a process of literally trying 
to reinvent your National Government so that we can increase its 
productivity, its effectiveness, and its ability to be a partner with 
you in the great enterprise on which we now embark.
    I believe that Washington has to change before we can ask America to 
change. On Tuesday I kept my campaign pledge to cut the White House 
staff by 25 percent below the level that I found it. That was a 
significant cut, but I want to emphasize to you I did it the way most of 
you would have done it. I didn't just slash the numbers. We have 
reorganized the White House staff, and I believe this smaller group will 
increase its ability to serve the American people.
    We now have an Economic Security Council to go with our National 
Security Council and our domestic policy operation. We're going to have 
a smaller drug policy operation, but it's finally going to have 
something to do with the rest of the Government. It's not going to be 
politics and speeches and posturing; it's going to be affecting the 
policies of every Department of the National Government. We are going to 
have a smaller, but more importantly, far more productive White House.
    And on yesterday, we extended those measures to the entire 
Government, ordering a reduction in Federal bureaucracy by 100,000 
people by attrition over the next 4 years, with at least 10 percent of 
those cuts to come from senior management. And ordering Agency and 
Department costs to be reduced by between 3 and up to 5 percent over the 
next 4 years, for savings in excess of $9 billion by administrative 
actions alone. And again, not cutting for cuts' sake, but to redirect 
those monies to more productive purposes and leaving those Departments 
not only leaner but more efficient than they were before.
    This is just the beginning. We are going to reexamine whether you're 
getting your money's worth. One of the people I spoke with already this 
morning said, ``I can give you some examples of things that work and 
things that don't in the National Government.'' I'll just mention one 
publicly because we all know it doesn't work: The Superfund has been a 
disaster. All the money goes to lawyers, and none of the money goes to 
clean up the problems that it was designed to clean up. Those are the 
kinds of challenges we expect to do a better job of meeting, perhaps 
with fewer people whenever possible, but with greater productivity.
    Now I ask you to do your part. We have to replace this social 
contract that somehow

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crept into our thinking in the 1980's, that somehow we had to have 
greater inequality in this country to get prosperity. That was the idea. 
Even in the years in which we created jobs, income inequality was 
exacerbated in America.
    Now I think we need a new compact. Everybody does his or her part, 
pays their fair share, joins our national effort, and garners the 
rewards of a growing economy. The plan I will offer will give a climate 
in which you can grow, investing in people and the best trained work 
force in the world, giving us the kind of flexible employees that we all 
need. That is Government's responsibility to work with you to do and one 
that we have not done a very good job of in the past.
    We want to lower the cost of capital through long-term reductions in 
the deficit. We want to provide special incentives to new enterprises 
with long-term capital gains treatment. We want to provide some changes 
in the Tax Code that will plainly reward investment as opposed to 
consumption in the business sector. But we also have to face the fact 
that the deficit will not vanish in a flash. We will cut it, and we will 
cut it as much as we reasonably can. And if our plan is adopted, it will 
be the first time since the 1940's that the Government has succeeded in 
dramatically slashing the debt. And I might add, it was inevitable then 
at the end of World War II, when the debt was running at about 120 
percent of gross national product.
    We are going to work as hard as we can, and we desperately need your 
support to do it, to bring health care costs under control. I have to 
say this: If you want this deficit brought down, not for 4 years but for 
8 or 10 years until we can do away with it, it will never, ever be done 
until we pass a national health plan to control costs and provide a 
basic health system for all Americans and to stop shifting costs onto 
you for people who aren't insured. It will never happen unless we do 
that.
    Fifty percent--let me reiterate--fifty percent of the projected 
growth in this debt between now and the year 2000 is in health care 
costs. And we only pay 33 percent of the national health care bill. More 
than two-thirds of it is being paid by you. And the same thing will 
happen to your cost. The best thing the President and the Congress could 
do for the American economy over the next decade is to bring health 
costs in line with inflation. It would free up hundreds of billions of 
dollars to reinvest in new jobs and higher incomes and greater 
productivity and growth. And we must not delay that.
    So I implore you not only to feel that you can be involved in our 
deliberations on what should be in the national health strategy but also 
to help us pass that, along with this budget, in Congress this year.
    I want to also do something the governments of our competitors do 
without apology. I think we ought to have pragmatic partnerships with 
the private sector to strengthen our technological leadership. Research 
and development resources should shift toward technologies that will 
translate into commercial successes. And we must work together to create 
a national information infrastructure.
    One of the things I've been determined to do in all these budget 
meetings we've been having for the last 3 weeks is to make sure that 
every dollar by which we reduce research and development in the defense 
budget finds itself into an increase in the domestic research and 
development budget of this country, and more. We have got to do that. We 
also should give you more incentives to invest, as I said. I want to 
reform the corporate tax system to ensure that it rewards and encourages 
those who invest in productivity: in plant equipment, research and 
development, in people who will create jobs and the markets of tomorrow.
    And in return, we must ask your contribution to bringing the deficit 
down. Let me say something I haven't said yet. We did not just cut the 
White House staff and the executive administrative costs of this budget. 
You will see there are a lot of other very real cuts in Federal 
spending--and they will be real, definable and measurable, not 
imaginary--that will be laid on the table before the Congress and the 
American people.
    Once we do that, we must ask for greater contributions to close this 
deficit. And we should begin with those whose taxes were reduced and 
whose incomes went up in the 1980's, the wealthiest Americans and cor- 

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porations. I will ask for an increase, as I said in the campaign, on the 
income tax of the wealthiest Americans and corporations, along with the 
incentives that I have recommended to get people--lower their tax burden 
if, but only if, they make investments in this country.
    Our situation is worsened, and we may have to broaden the range of 
revenues which we seek. But we should begin by asking those who can most 
afford to pay to do so.
    I have also been persuaded by my Treasury Secretary that it is 
unwise, indeed impossible, to raise the individual income tax rate 
unless there is a corresponding increase in the corporate tax rate to 
avoid tax shifting. But the corporations should also have incentives to 
reinvest as their rates are raised. And so we have done both things in 
the plan we will recommend.
    I talked a lot in the campaign about an issue which has relatively 
small dollar impact but great significance to the American working 
people, and that is the enormously increased rate of executive 
compensation in the last 12 years as compared with the compensation of 
workers. I want to make a proposal that deals with the fact that the Tax 
Code should no longer subsidize excessive pay of chief executives and 
other high executives, excessive defined as unrelated to the 
productivity of the enterprise.
    I believe, finally, that if all of us do what we're supposed to do, 
if I can ask every American honestly to look in the mirror and say, what 
do I want this country to look like in 4 years; what do I want this 
country to look like in 10 years; what do I want this country to look 
like when my children are my age; do I really want to let yet another 
opportunity go by when we just wander through a year instead of really 
investing in our people and our future, instead of really having a 
technology policy, instead of really having an economic strategy, 
instead of really doing something about the credit crunch, instead of 
really doing something about health care, instead of really doing 
something about the deficit, just because I wish I didn't have to change 
my ways--I think almost every American will look in the mirror and say, 
no, no, this year we'll pull together and do our part.
    If the business community leads the way, Congress will follow. I 
need your help. I hope you'll be there.
    Thank you very much.

Note: The President spoke at 11:49 a.m. in the East Room at the White 
House.