    [Weekly Compilation of Presidential Documents Volume 29, Number 31 (Monday, August 9, 1993)]
    [Pages 1514-1521]
    [Online from the Government Publishing Office, www.gpo.gov]

    <R04>
    Interview With the California Media

     July 30, 1993

        Q. I know you'd like to start out this afternoon with an opening
    remark, sir.
         The President. I would, and thank you very much for allowing me to
    join you in this way. I hope I'll get back to the Central Valley in
    person before long. I had some wonderful times there during the
    election, and I'm glad to have the chance to visit with you directly.
        As you know, in the next few days the Congress will take up a final
    vote on the economic plan, which they have been debating now since
    February. So far the Congress has moved with great speed in trying to
    deal with this plan and trying to keep its essential features intact. I
    want to just review those features today and why I think it's important
    as a first step in our long-term efforts in redeveloping the American
    economy and the California economy.
        First, the plan will reduce the deficit by very close to $500
    billion, equally divided between spending cuts and revenue increases,
    put in a trust fund so that the money cannot legally be spent on
    anything else but deficit reduction.
        Secondly, the plan will ask of the tax increases that 70 percent at
    least of those come from people with incomes above $200,000, the top 1.2
    percent of our economy, people who got most of the economic gains and a
    tax cut in the 1980's.
        Thirdly, the middle class burden will be quite modest. I wish there
    didn't have to be any middle class tax, but the deficit has gotten much
    larger just since the election, and we have to address it now. And that
    burden will be for a middle class family of four with an income of
    between $40,000 and $60,000, less than $50 a year. Next, the plan holds
    working families with incomes of under $30,000 a year harmless and gives
    the working poor, those who still live below the poverty line, actual
    tax relief so that we'll be able to say for the first time, if you work
    40 hours a week and you have children in your home, you'd be lifted
    above the poverty line. This is a profoundly important thing.
        And next, and perhaps most important for California, the plan has
    real incentives for private sector business growth: Incentives that the
    high-tech community in California wanted very badly for investments in
    new companies with $50 million a year or less in capitalization, big
    cuts for them; an increase in the expensing provision for small business
    that will give over 90 percent of the small business operations--and
    farms that qualify, too, I might add--a tax benefit, not a tax increase
    but a tax benefit when they reinvest in their businesses; next, an
    increase in the research and development tax credit; and finally, some
    incentives to invest in areas that are traditionally underdeveloped,
    both rural and urban areas, to get free enterprise in there to do that
    job.
        So for all these reasons, this economic plan is good for the
    country, and it's good for California. It is not the end-all and be-all.
    We have to move on to health care. We have to move on to a trade policy
    that enables us to sell more of our products and services abroad. We
    have to move on to welfare reform. We have a crime bill. We have an im-

    [[Page 1515]]

    migration initiative up. All these things are important.
        Secretary Babbitt is working with the farmers in your area to
    resolve some of your water problems. But all these things cannot be
    brought to fruition completely until we pass an economic plan and a
    budget and get this country moving again, keep the deficit down, and
    keep the interest rates down.
        Let me finally say that this plan has the support of an enormous
    number of Republicans and independents who are not politicians and have
    no stake in misrepresenting the facts. Earlier this week, about 67
    business leaders from around the country, including the heads of four
    energy companies, equally divided pretty much between Republicans and
    Democrats, endorsed this plan. And one of the people who endorsed it was
    Lod Cook, the chairman of ARCO, who was a cochairman of President Bush's
    campaign. So this is not a partisan effort on my part. It's just a tough
    decision to deal with problems that developed in Washington long before
    I showed up. And I hope the people of California and the Central Valley
    will support it.
        I'll be glad to answer your questions.

    Immigration

        Q. Mr. President, you mentioned just a moment ago immigration. I'd
    like to ask you about that. As you know, we in California are struggling
    with the problem of immigration, both legal and illegal. One-third of
    all new arrivals in the United States wind up in California. I know
    you've asked for additional funds to speed up asylum processing and
    hearings and also border patrol, but we're wondering if $172 million in
    new dollars is enough. Can you offer any specific additional Federal
    help for California alone to try and deal with the immigration problem?
        The President. Well, I'm glad you asked that. Let me, first of all,
    just reiterate very briefly what you said. We're trying to deal with, in
    effect, three different problems. We're trying to deal with the problem
    presented by the fact that our airports are too porous and terrorists or
    potential terrorists can get in, and we're trying to tighten up all
    those procedures in foreign airports and here. We're trying to deal with
    the problem of alien smuggling, which is something California is
    familiar with, by tightening the control procedures and also increasing
    penalties for that. And finally, we're trying to deal with illegal
    aliens coming into the country generally. We do have more border patrol
    people coming in, 600 of them. California will get a good number of
    them. And Senator Feinstein and Senator Boxer were both particularly
    active in this regard.
        The second thing that I want to mention is that before any of this
    was done, we had changed some Federal laws in this economic plan to give
    California some more money under existing laws because it has a
    disproportionate burden of immigrants. So we'll be giving you some more
    money over and above this to handle the immigrant burden that's already
    there. That will free up some of your State money for other problems
    there in California.
        I know you've had a lot of terrible budget problems. So we changed
    the formula by which the Federal Government gives money to the States to
    deal with immigration, to put more money into California because of your
    extra problems. And Leon Panetta, who, as you know, used to serve
    California in the Congress and is now my Budget Director, had a lot to
    do with that. I hope that will help. I believe it will.

    Water Management

        Q. Mr. President, I wanted to know--you mentioned a moment ago
    Secretary Babbitt coming to the Central Valley to talk about water
    issues. And one of the big water issues for us down here is the
    Endangered Species Act. What I wanted to know is, is the Act going to be
    changed at all in the next year or so to allow for economic burdens that
    are being suffered on the west side of the valley?
        The President. Well, let me say first of all, the Act as it's
    presently written has an economic impact provision, which has not been
    used very often but which plainly can be used. Secretary Babbitt asked
    me before we commit to make any changes in that to give him the chance
    to work out the problems that the farmers had. As you know, we've had a
    drought for many years and the allocations this year, given the amount
    of water that's out there since the drought went away, has not satisfied
    a number of the farm-

    [[Page 1516]]

    ers. And we know there are some other distributional issues. Some of
    them involve the Endangered Species Act, but Bruce Babbitt believes,
    anyway, that he can work out a fair treatment for the farmers without an
    amendment to the Act. And I think I ought to give him a chance to
    continue to work with the farmers before I commit to change it. So
    that's the position I'm going to take. I want to wait and see how he
    does with his negotiations with the farmers first and how they come out.

    Crime

        Q. Mr. President, we in Los Angeles, of course, have been crippled
    in terms of quality of life, and also economically, by burgeoning crime
    and not enough more police to fight it. Our new Mayor, Richard Riordan,
    was recently in Washington, as was police chief Willie Williams, both of
    them begging for assistance. Is there anything that your administration
    can do to help?
        The President. Absolutely, there is. We intend to push a crime bill
    which, along with some other legislation we're pushing, will have the
    Federal Government help local communities to put up to 100,000 more
    police officers on the street in this country over the next 4 years.
        This summer I got an emergency bill through Congress which will
    provide funds to Los Angeles and other cities to rehire police officers
    that have been laid off and otherwise staff up a little bit. It's a down
    payment on that. As soon as this budget--economic plan--is over in the
    Senate and in the House, I will be developing a crime bill which will
    provide more funds to local communities for this purpose. We have got to
    get some more police officers on the street.
        When your new chief was a police chief in Philadelphia, he had some
    real success in lowering crime rates in very tough neighborhoods by
    adopting community policing strategies that included people actually
    walking beats that previously had only been driven. I know this can
    work. I actually walked down some of those streets that the chief helped
    to change in Philadelphia, and I talked to the people who live in the
    houses there. So I know it can make a difference. I saw play yards that
    had formerly been taken over by gangs and were unsafe for children now
    open for basketball for the kids.
        We can do this. We're going to have to have more police. I hope that
    the crime bill will enjoy broad bipartisan support. We can bring it up
    if we can get this budget business done.

    Agricultural Subsidies

        Q. Mr. President, what farm policy have you and Secretary Espy
    outlined or are outlining? And would you consider any reductions or
    elimination of farm subsidies and irrigation subsidies?
        The President. Well, let me say, first of all, if you look at our
    budget this year, because there are $250 billion in spending cuts over
    the previous budget, we have reduced some of the agricultural programs
    along with everything else. We've cut just about everything, so there is
    some reduction in agriculture. But I don't think we should do any more
    until we have an agreement on world trade. That is, I am reluctant to
    have more unilateral reduction in agricultural programs because I think
    that hurts our competitive position. If we can reach agreement on a new
    trade agreement with our competitors in which those nations that
    subsidize agriculture much more than we do also reduce their subsidies,
    then I would also support doing something here at home, because I'm
    convinced that on a level playing field our farmers can compete with
    anybody in the world.
        So my answer to you, sir, would be I'm hoping we can get a new trade
    agreement by the end of the year which will permit some reduction in
    agricultural subsidies but only because our competitors will be reducing
    them even more. Otherwise, I think we'll have to wait 'til we
    reauthorize the farm bill in 1995 to look at these issues.
        I come from a farming State, and I really want to see us maintain
    our competitive position in agriculture. I had to cut agriculture some
    this year. I cut everything, but I don't want to cut it so much we are
    at a competitive disadvantage.

    1990 Deficit Reduction Program

        Q. Mr. President, I was wondering if you believe that the deficit
    reduction plan of 1990 was successful in its goal of slashing the

    [[Page 1517]]

    deficit. And if not, how can you assure America that this year's plan
    will work any better? What are the differences between the two plans?
        The President.  There are several differences. First of all, the
    1990 plan was not completely successful for a couple of reasons, and I'd
    like to point out what was wrong with it. I'd also like, in fairness, to
    tell you a couple of good things about it.
        The main thing that was wrong with it is that the administration and
    its supporters in Congress, the people who were in Washington then, made
    too many claims for it. That is, they said it would reduce the deficit
    by $480 billion, and they based that on wildly optimistic revenue growth
    forecasts. We have based our plan on very conservative revenue
    forecasts, so that when the recession continued, they didn't get the
    money they thought they were going to get out of any of the new
    revenues.
        The second problem they had was that health care costs in particular
    increased at a far more rapid rate than they had projected. We have
    attempted to deal with that by having some stricter controls on health
    care costs.
        So those are the two things that really got them in trouble. The
    third thing, of course, was the economy just stayed in a slump for a
    long time. Now, the one thing they did right that we're also doing,
    except we're doing it even tougher, is they had some pretty stiff caps
    on spending programs, domestic spending programs. So there were some
    greater controls on spending after 1990 than had been the case in the
    past. I think I ought to give them credit for that, and we're trying to
    live with those now.
        But we think we can do better. This plan you have more specific
    budget cuts, better controls on health care spending, and more realistic
    revenue estimates. And you've got all this money being put in the trust
    fund, and furthermore, another big difference is I will be under the
    obligation if we miss the deficit reduction target to come in on an
    annual basis and say, ``Hey, we missed it a little. Here's my plan to
    make sure we make it. Here's where you've got to cut more. Here's what
    else you have to do.'' We're going to do that every year.
        I think all Americans know it would be hard for any business to
    estimate for 5 years in advance exactly what will happen, but we haven't
    had to correct ourselves. Now we're going to do that.
        I will say this. Let me say this in my own behalf. A reporter for
    the Philadelphia Inquirer a couple of weeks ago went around to all the
    budget experts for big private companies like big private accounting
    firms, and asked them what they thought of this. And the consensus was
    that we had a very good chance to meet our deficit reduction targets.
    The budget analyst for Price Waterhouse, the big accounting firm, said
    that it was the most honest budget presented to the Congress in more
    than a decade and that the only thing he thought I was wrong about is he
    thought we'd actually have more deficit reduction than we're projecting.
        So let's hope he's right. We've done our best to be very tough about
    this.

    Health Care

        Q. Mr. President, you mentioned the importance of health care in the
    budget situation as we went through the nineties and into the early
    nineties we're in now. I'm wondering what specifically we can look
    forward to as regards to health care reforms within the next 6 to 8
    months.
        The President. You can look forward to a plan which will, first of
    all, protect the health care benefits that Americans enjoy now and
    enable people to move their jobs without losing their health coverage.
    One real problem we've got now is millions of Americans locked into
    their jobs because somebody in their family's been sick. So I think you
    can look forward to ending the job lock. People will be able to move
    jobs. We'll have a system that will enable people to keep having health
    care for their families if they lose their jobs through no fault of
    their own.
        If all the plan passes, we will reorganize the insurance markets so
    that farmers and self-employed people who are in nonfarm jobs will be
    able to purchase health insurance at lower rates, more generous
    insurance because they'll be able to purchase it more on terms that
    people who work for big employers purchase it today.

    [[Page 1518]]

        And we'll also have a system that, if it all goes through, will
    actually dramatically lower the rate of increase of health care. You
    know, health care costs have been going up at roughly twice the rate of
    inflation or 3 times the rate of inflation, and we've got to bring that
    within inflation plus our population growth. And that will be good for
    business, good for agriculture, and good for individual Americans. So
    those are the main things we're going to try to do. I think we'll be
    able to do it. It's very, very important.
        Let me say that if you look at the American budget now, the only
    thing that's really going up a lot in the Government's budget is health
    care costs for Medicare and Medicaid. The only way we can take this
    deficit from where it is now down to zero, which is where I want it, is
    to do something to control health care costs. This plan will lower it
    for 4 or 5 years, after which it starts to go up again, unless you
    control health care costs. That is the thing that is strangling the
    American economy long-term. And I believe we can do better. That's what
    the health care plan is designed to do. And as soon as the economic plan
    is over, we'll be able to begin a great national discussion about that.

    Jobs

        Q. Mr. President, Governor Wilson predicts that in the next 2 years
    this State is going to--rather, in the next 5 years, this State is going
    to lose 2 million jobs. Your economic plan is boasting 1.9 million jobs,
    yet we're seeing an exodus of manufacturing jobs from the Central
    Valley. What is your plan proposing to do to try to keep some of these
    companies from leaving not only the State but the country and taking
    jobs elsewhere? And what's also being done in your plan to put more
    Californians to work?
        The President. Let me talk about manufacturing specifically, if I
    might, about what we can do and what you have to do. And I'd like to
    establish my credentials. I was Governor of Arkansas for 12 years. When
    I became Governor of my State, we had an unemployment rate nearly 3
    percentage points above the national average; we were losing
    manufacturing jobs rapidly, plants closing down like crazy. And we
    devised a plan to retrain our work force and to make our State more
    attractive to manufacturing. At a time when they said we were going to
    lose manufacturing jobs, we didn't even need to try that. We were able
    to increase the percentage of our work force involved in manufacturing.
        For the last 4 or 5 years we were among the Nation's leaders in job
    growth. In 1992 we ranked first or second in every month. And now the
    State has an unemployment rate of about 5.2 percent. It took about 8
    years to do that. But we did it, and it worked. So you can increase your
    manufacturing base. Now, what does the United States have to do to help
    California do that? I think in your case, three things. Number one,
    we've got to do something to help you with all these people who have
    been laid off or lost their jobs because of defense cutbacks. We started
    defense cuts in America in 1987. I wasn't in Washington when it started,
    but it was unconscionable to start cutting all these contracts with no
    plans for conversion to help companies, to help individuals, to help
    communities to maintain a manufacturing base in nondefense areas. We
    have an aggressive defense conversion plan that, if it's done right,
    will be greatly beneficial to California. We have already begun working
    on that.
        Number two, our economic program has some significant incentives to
    promote manufacturing: incentives for bigger companies to invest in new
    plant and equipment, incentives to start and capitalize smaller
    manufacturing operations.
        The third thing we're doing is finding new markets for American
    manufacturing. When I was in Tokyo recently, the world's seven
    industrial powers agreed to lower or eliminate tariffs in a sweeping
    fashion, more than has been done in years and years. And every
    independent analysis says that if we can get all the countries of the
    world that are in our trading group, the General Agreement on Tariffs
    and Trade, to accept this by the end of the year, it will put hundreds
    of thousands of manufacturing jobs back into the American economy in the
    next few years.
        Now, if we do all that, that will help California. California also
    has to examine its situation. Why would someone close a plant down in
    California and move it to another State? What do you have to do to make
    the

    [[Page 1519]]

    State more attractive? There are some things we can do on that. Our
    apprenticeship programs, our worker training programs will help
    California. Our health care cost control programs may help you not only
    with health care but with the enormous cost of worker's comp out there.
        But a lot of these decisions need to be asked and answered in
    California. If California is losing manufacturing jobs to other States,
    you need to think through what changes can be made there to make you
    more competitive.

    Small Business

        Q. Mr. President, you said that your economic plan will provide most
    small businesses with a tax break. Won't these breaks be offset and
    surpassed by what you're going to ask small business to pay to support
    your new health care plan, and what kinds of increases can small
    business expect?
        The President. No, well, let me answer--the short answer is no.
    Seventy percent of the small businesses in this country are providing
    some health coverage for their employees. Many of them may wind up with
    lower costs because of the insurance reforms that we'll recommend. Many
    of them are paying way too much for limited coverage.
        For those who provide no coverage at all, I think there will be some
    requirement that they make a contribution to the coverage of their
    employees and that the employees provide a contribution, too. But the
    burden is likely to be far more modest than anything I've been reading
    about. I've not signed off on all the final provisions yet, but we're
    really working hard to make sure anything we do is phased in and the
    burden is kept as light as possible on small businesses to help them
    maintain their ability to generate jobs.
        But let me just point out to you that everybody in this country can
    eventually get some health care, even if they have no health insurance.
    But if they don't have any health insurance, they often get it when it's
    too late and too expensive and when it's paid for by someone else. We
    are the only advanced nation that does not have some system by which all
    people are covered for health care. Most countries require some
    contribution by employers and employees across the board. We are also
    the only advanced nation in the world that spends more than 10 percent
    of its income on health care. We spend over 14 percent of our income on
    health care. Only one other nation, Canada, is over nine. Our major
    competitor, Germany, is just over 8 percent of their income. That means
    of every dollar made by anybody in this country, we're putting 6 cents
    more into health care. That is a phenomenal amount of money that might
    be reinvested to create manufacturing jobs, to strengthen agriculture,
    to strengthen small business.
        So I believe the small business community as a whole will be
    dramatically strengthened by this, and I'm going to do everything I can
    to minimize the burden on those that presently offer nothing to their
    employees. But it is not responsible for those who offer nothing to ask
    everybody else to pay for the hospitals, the clinics, the infrastructure
    of health care that they then get to take advantage of when they need
    it.

    California Recovery

        Q. Mr President, you talk about economic growth by creating new jobs
    in California. And we're seeing, like we said earlier, we're seeing a
    lot of jobs leaving the State. But from where you stand and from some of
    the things you pointed out, do you see a turnaround at all for
    California in the next year?
        The President. I do for a couple of reasons. I think there will be a
    turnaround. I don't want to pretend that this is going to be an easy,
    quick miracle. I think there are some things that are going to have to
    be done to preserve your manufacturing base. I already said that.
        But I think the likelihood is good that California will turn around
    for a couple of reasons. First of all, you have enormous human and
    physical resources. That is, a lot of these people who have lost their
    jobs are very well-trained, very well-educated people, are highly
    productive workers, even if they don't have a lot of formal education.
    And have a huge infrastructure that can be revitalized, that was built
    up in part by defense developments in the 1980's.
        Secondly, more than any other State involving trade, California's
    tied not only south of our border but also to the Pacific, and the

    [[Page 1520]]

    Pacific is the area of the world most likely to revitalize its economy
    quickest. One of the things that's hurting you in California is that
    it's hard to make a lot of money off manufacturing and service jobs tied
    to trade when Japan's in a recession, when Europe's in a recession. For
    the last 5 years, more than half of our new jobs in America have been
    tied to trade. And if everything is flat everywhere else, it's hard for
    us to grow when they're not. It is more likely that the Pacific will
    grow more quickly and come out of this recession more quickly than the
    rest of the world. And that will disproportionately benefit California.
        So for all those reasons, I think there'll be some turnaround by
    next year. But I don't want to kid you. The California economy was built
    up over the last 20 years, with some things that will carry you right
    into the next century and other things, like the defense base, which
    have to be refigured if you're going to have those folks doing well and
    making a contribution to your economy.
        So we're going to have to make some changes. We can do it. But the
    intrinsic health of the California economy, I think, is still there.
        One last point about that. We're also going to have to make an extra
    effort to help the areas that have been really hurt by base closings.
    The Bay Area, for example, which took a big hit, I think that they'll
    wind up net economic winners because of the enormous resources there.
        But we're going to have to plan to do that. And we're going to have
    to have incentives to invest in places like the distressed areas of Los
    Angeles to bring free enterprise in there. And I've offered a dramatic
    plan to create those kinds of enterprise zones. I call them empowerment
    zones. It goes far beyond what previous administrations have
    recommended. That plan is working its way through Congress, and I think
    that will help.

    Job Creation

        Q. To go back to jobs, you're promising 8 million jobs nationwide
    and about 1.9 million in California. Smaller citywide programs like
    Build in Baltimore cost millions and failed miserably, creating low-
    paying temp jobs with no benefits. How is your plan going to succeed?
    What kind of jobs are going to be created? And do you have a timetable
    for the job creation?
        The President. Most of the jobs that we believe, based on our
    economic analysis, will be created are private sector jobs that will be
    full-time jobs. The private sector has got to be the engine of economic
    growth. If you look at this economic plan, we do invest some more money
    in partnerships for new technologies and in defense conversion and to
    help companies train their workers. But most of the new jobs are going
    to be created by the private sector. We want to invest in more jobs, in
    infrastructure building, road-building, and things of that kind.
        But the great vast bulk of these jobs will be private sector jobs.
    Let me just give you some examples of how they'll be created. First of
    all, to keep interest rates down, you'll create more jobs. Secondly,
    this plan provides economic incentives for people to invest in new plant
    and equipment, for people to invest more in their small businesses, for
    people to do more research and development. All those things are
    directly related to job development. If you have more investment in the
    private sector, you will have more job development. So I see this as a
    private sector job initiative.
        And exactly on what timetable these jobs will be created depends on
    the general recovery not only of the American economy but of the global
    economy. The one thing that could prevent us from meeting this goal is
    if the other countries of the world don't join us in a new trade
    agreement and pursue foolish economic policies and collapse their own
    economies. In order to grow the American economy, we need a growing
    world economy. But I think we're going to have some good success in
    coordinating our economic policies to generate more jobs.
        Let me just say this. In spite of all the fits and starts in the
    economy since the beginning of the year, through the first 6 months,
    we've had about 900,000 new jobs created, over 90 percent of them
    private sector jobs. And I hope that we can accelerate that pace in the
    months and years ahead. I think we can if we can get this economic plan
    passed and put the health care plan out and, to respond to one of the
    earlier questions,

    [[Page 1521]]

    to allay the fears of some of the people in the business community about
    the health care plan so they can see it will be good for business, not
    bad for business. Then I think you'll see a lot more investment coming
    out of the lower interest rates.
        But most of this job growth is going to have to come in the private
    sector. The Government can't do it.
        Q. Thank you, Mr. President. We've flat run out of time. We were
    going to try and squeeze in another couple of questions, but I guess we
    can't do it.
        The President. I'll stay if you can.
        Q. Well, hey, we'll stay. We'll stay all night. No satellite. We
    lost the satellite.
        The President. They say we're going to lose the satellite. I'm
    sorry.

    Note: The interview began at 5:20 p.m. The President spoke via satellite
    from Room 459 of the Old Executive Office Building. This item was not
    received in time for publication in the appropriate issue.