[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.