[Weekly Compilation of Presidential Documents Volume 29, Number 12 (Monday, March 29, 1993)]
[Pages 475-477]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks to Democratic Governors Association Members and State and 
Business Leaders

 March 23, 1993

    Thank you very much. Governor Walters, thank you for that 
introduction. That was spoken with a fervor that could have only been 
mustered by someone who, a year and a month ago, was freezing to death 
in the Super 8 Motel in Manchester, New Hampshire. [Laughter]
    I also want to tell you that we just had a press conference at the 
other end of the hall, and I was upstairs on the telephone, and

[[Page 476]]

I didn't know you were here yet. And I was told that I had been 
introduced, so I rushed downstairs, only to find that I would be 
introduced twice or thrice. [Laughter]
    I'm delighted to see you all. I thank you for being here. I thank 
the leaders of business and labor and State and local government for 
coming along with my colleagues in the Democratic Governors group to 
endorse this program.
    Last week was a remarkable week here in this Capital. The House of 
Representatives took a strong stand for the most credible deficit 
reduction program in anybody's memory. At their request and based on the 
Congressional Budget Office estimates and based on what the Governors 
asked, we took another $60 billion-plus in deficit reduction spending 
cuts so that now we'll have $500 billion in deficit reduction over 5 
years; a significant amount of tax increases, most of them on upper 
income people whose incomes went up the most in the 1980's, but a broad-
based BTU tax that we think will both preserve the environment, promote 
energy conservation, and raise money in a fair way; big spending cuts; 
and finally, some very significant but very targeted investment 
increases.
    The debate moves to the Senate this week, and I want to tell you a 
little about that, because there is an honest philosophical debate going 
on, as well as an underlying political one that I need your help on. In 
the last 12 years I think you could argue that your Government had two 
big problems: one is that the deficit literally exploded, and the public 
debt quadrupled. We started the decade of 1980 with a $1 trillion debt; 
we in 1992 had it up to $4 trillion, with huge projected annual 
operating deficits. That is a massive problem. It led to a big gap 
between short- and long-term interest rates, and it clearly had a major 
contributing impact on our trade deficit, our ability to save and 
invest, and our long-term economic growth. We had to do something about 
it.
    The other big problem was that we were actually seeing reductions in 
investment by the National Government even as all of our competitors 
were increasing their investment. And that may seem inconsistent. I 
mean, how could we be making a relatively smaller contribution at the 
national level to the education, for example, of people who graduate 
from high school but don't go to college and need apprenticeship 
programs? How could we be retrenching in our commitment to the education 
of our young children and to dealing with the problems of poor children? 
How could we be retrenching in our commitment to develop new 
technologies and new partnerships in the public-private sector and new 
partnerships for dual-use technologies between defense and domestic 
technologies?
    Well, the answer is pretty clear. We're spending more and more money 
every year, first on defense in the first part of the 1980's. And then 
the latter half of the 1980's, while we have cut defense, we spend even 
more on interest on the debt and more money for the same health care. 
And then as all of you know, those of you who are employers in 
particular, about 100,000 Americans a month are actually losing their 
health insurance; and many of them, the lower wage working people, are 
coming onto the public rolls.
    So that's what's happened to us. So we run the deficit up. We run 
investment down at the same time. That is a huge problem. Our plan seeks 
to address both of these.
    There are those who really don't want a change. They don't want any 
tax increases, or they don't really want the cuts that I have offered. 
And they're going to maneuver this process for political paralysis.
    But underneath that or over that, if you will, there are a group of 
people who do want to reduce the deficit but just don't agree that an 
investment strategy is important. And they are the people that I urge 
you to reach out to, because it is important to reduce the deficit. But 
it's also important to increase investment. And if you do one without 
the other, you won't get the full benefits of this plan.
    I would argue to you that we have gotten a major benefit out of 
deficit reduction. Look what has happened to long-term interest rates: 
down almost a full point since the election. You have millions of 
Americans refinancing business debt, consumer debt, home mortgages, 
getting the benefit of variable interest rates on various kinds of debt 
payment. That will unleash billions of dollars, tens of billions of 
dollars into this economy this year, which in turn will be reinvested, 
which will

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create new jobs. That is very important. I don't think the marginal 
amount of deficit reduction you would get by killing this investment 
package or killing our emergency jobs program would bring interest rates 
down any more. You just can't get them down much more. But we would, if 
we killed it, forgo the chance to jumpstart the job engine of this 
economy by half a million jobs. And that is a serious thing. That's 
about a half a percent on the unemployment rate. That's a very 
substantial impact.
    Now, let me make one other comment that, again, the employers here 
as well as the employees will not find surprising. There has been a 
dramatic restructuring of our economy and of the global economy which 
has been going on for the better part of 20 years, and we've been 
clearly aware of it for a decade now, where the biggest companies in 
America have been forced to restructure their operations here, either 
because they're going global and they have to put production overseas or 
because they just have to increase productivity and do more with less 
through technology. But many of them have also provided for outsourcing 
or contracts with smaller businesses, and the American entrepreneurial 
economy for the entire decade of the 1980's was able to create more jobs 
in the small business sector and the medium-size business sector than 
big business lost.
    Two years ago, it stopped. And it started slowing down about 4 years 
ago, so that over a 4-year period we had almost no net job growth in the 
private sector. Virtually all, not quite all but almost all the net job 
growth for the previous 4 years was, believe it or not, in State, local, 
and national government.
    Job growth was canceled out by job reduction in the private sector. 
Now, why did that happen? The truth is, no one knows all of the answers. 
It's an international phenomenon. In Europe during the 1980's, where 
they didn't have the vital small business sector that we had and all the 
entrepreneurial culture, there were two major economic recoveries where 
the economy was growing like crazy and no new jobs were created. So this 
is a global phenomenon.
    But we also know that part of the problem here has been the credit 
crunch, the general recession, the cost of hiring new workers because of 
the back-breaking costs of health care as well as other attendant costs. 
So more and more people are relying on part-time workers or asking their 
existing work force to work overtime.
    I say that to make this point: We have gotten the maximum short-term 
benefits we can get now out of a very, very tough and vigorous deficit 
reduction program. We are going to get long-term benefits out of it. The 
time has come to put in the other piece to create jobs and to lay the 
foundation for an educated work force and for a high-technology future. 
And that is what the rest of this program does.
    So I ask those of you who are living out there at the grassroots, in 
the private sector or at the State and local level, to go make that 
honest policy argument in the United States Senate. We've done our work 
on deficit reduction. Let's do our work on investing in our people and 
putting them back to work, too.
    Thank you very much.

Note: The President spoke at 2:38 p.m. in the State Dining Room at the 
White House. In his remarks, he referred to Gov. David Walters of 
Oklahoma, chairman, Democratic Governors Association.