[Weekly Compilation of Presidential Documents Volume 31, Number 39 (Monday, October 2, 1995)]
[Pages 1693-1708]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
Remarks in a Question-and-Answer Session at the Godfrey Sperling 
Luncheon

September 25, 1995

    Godfrey Sperling. Well, Mr. President, what can I say, except it's 
wonderful to be over here. And as I've said before, in other times we've 
been at the White House, we'd love to have our breakfasts or lunches 
over here, maybe every week or two, maybe Mike could work it out. 
[Laughter] But having said all that, we can get started. I hate to ask 
the President to sit down, but--[laughter]----
    The President. Please, be seated, everyone.
    Mr. Sperling. --that's what we do. Our ground rules--you've been to 
our breakfast before and lunch, whatever we want to call this today, and 
you know the ground rules, everything's on the record. And you've seen 
this bunch of rascals before, at least a few of them. And they haven't 
changed, they're the same ones that you've seen in the past. So I'm 
giving you a little warning.
    So you all know, I understand there will be transcripts of this 
later in the afternoon. And beyond that, I just have to say welcome to 
you and thank you so much for coming to my 80th birthday.
    The President. I'm glad to have you here. I would like to say just 
to begin that the Vice President and I are delighted to have you and 
your family here. It's a special day. Someone told me that you had done 
2,800 of these now. And----
    Mr. Sperling. Almost.
    The President. I was trying to think of the significance of them. 
One of them is that I noticed from the breakfasts that I've been to, 
they are notoriously high cholesterol. And so you are--you're very aging 
condition is a stunning rebuke to all of those who advocate healthy 
eating. [Laughter]
    Mr. Sperling. I stay away from it.
    The President. I don't know what the consequences of all that are, 
but it's a remarkable thing.
    Let me also say, as you know, this is going to be a busy week around 
here. And you may

[[Page 1694]]

have heard already, but in case you haven't, not too long ago, this 
morning, the Bosnian Government announced that they would participate in 
the resumption of the peace talks tomorrow in New York, which is very 
good news. And we do have the best chance we've had, I think, since the 
beginning of the conflict now to have a peace agreement come out of 
this. And of course, later in the week we'll have the signing here of 
the agreement between the Palestinians and the Israelis in the next 
phase of the peace agreement there.
    So I'm very encouraged. I think both these things are examples of 
the imperative for United States leadership. And I think the world's 
better off because of what's happened in the last couple of years. And 
of course, there are a lot of things at issue there, which you might 
want to ask about. But I don't want to take up any more of your time.

Mood of the Country

    Mr. Sperling. Well, since I own the football, I usually ask the 
first question. You know, I was feeling quite perky over the weekend, 
Mr. President, with my birthday coming up and everything. And then I 
read in the papers, you know, we all were in a deep blue funk. And I 
just have to ask you, how did we get into that funk, and how are you 
going to get us out of it?
    The President. Well, first of all, before you draw that conclusion, 
I would urge you to read the entire pool report, on which the stories 
were----
    Mr. Sperling. They weren't good translations I read in the----
    The President. No, but I was basically very optimistic and upbeat 
about it. What I said was that the--there are a lot of contradictory 
things happening in American life now as a result of the fact that we're 
going through a period of profound change, and as you know from the 
stories, I believe the biggest change in the way we work, live, and 
relate to the rest of the world in 100 years, since we became an 
industrialized, more urbanized country, and since we got involved in 
World War I.
    And I believe that in this time, there are a lot of things that seem 
contradictory and that are unsettling to people. And the American people 
have basically helped me to understand that, especially in the last year 
or so, just going out and listening to people talk about their own 
lives. I'll give you just, if I might, a couple of examples. If I had 
told you 30 months ago, when I became President, that we'd have 7\1/2\ 
million new jobs, 2\1/2\ million new homeowners, 2 million new 
businesses, a stock market at 4,700, the largest number of self-made 
millionaires in history, the entrepreneurial economy flourishing, and 
the median wage would go down, that would have been counter-intuitive.
    But it has happened because of the complex forces in the global 
economy. Or if you look at the same thing happening in our society, 
we've got the crime rate down, the murder rate down, the welfare rolls 
down, the food stamp rolls down, the teenage pregnancy rate down 2 years 
in a row, even the divorce rate down, but violent crime among teenagers 
is up. Drug use among people between the ages of 18 and 34 down, but 
casual drug use among teenagers up. So there are these cross-cutting 
things. And it's perplexing to people, I think, and they feel it in 
their own lives.
    And I think that the challenge for us all is to basically keep 
working for the future. You can't get--these periods of transitions come 
along every so often, and I feel very good about it. I feel very 
optimistic about the country. I think if you were betting on which 
country is likely to be in the strongest shape 20, 30 years from now in 
the 21st century, you'd have to bet on the United States because of the 
strength and diversity of our economy and our society. But we have some 
very, very important decisions to make, many of which will be made here 
in the next 60 days.

Reelection

    Mr. Sperling. Mr. President, with the Republicans always trying to 
trip you up, and sometimes successfully, why in the world do you want 4 
more years in the White House? Why not go home, you know, and go 
fishing?
    The President. Because I believe that my vision of this country is 
the one that's best for the country. I believe that our policies best 
embody the values of the American people who want to see our country 
preserve the American dream and our country's ability

[[Page 1695]]

to lead the world and want to see families strengthened, want to see 
ordinary Americans have the chance to make the most of their own lives, 
and want to send the words of Governor Chiles from Florida, want to see 
us be a community, not a crowd, a set of people who don't just occupy 
the same space of ground and elbow each other until the strongest win 
and the weakest fall, but a group of people who believe that we're all 
better off when we recognize obligations to one another and act on those 
obligations within our families and across generational and income and 
other lines.
    So I feel very optimistic about the future of this country, but 
especially now, I think it's more important to run than it was 4 years 
ago. Four years ago I ran because I thought there was no action being 
taken to give us a new economic policy based on opportunity, a new 
social policy based on responsibility, and to try to bring this country 
together and change the way the Government works. Now, I think the 
alternative vision out there is destructive of the future we want.
    Mr. Sperling. Bob Thompson, I think, has a question. Then we'll move 
around the best we can. Carl.

The Presidency

    Q. Mr. President, you've had 30 rather stormy months here. What are 
the lessons you've learned that you didn't know before about your office 
and its power and its authority?
    The President. I think I had underestimated the importance of the 
President, even though I had read all the books and seen it all and 
experienced it in my lifetime. I think I had underestimated the 
importance of the Presidency as a bully pulpit, and the importance of 
what the President says and is seen to be saying and doing, as well as 
what the President does.
    And I think that I underestimated--I had overemphasized in my first 
2 years to some extent the importance of legislative battles as opposed 
to other things that the President ought to be doing. And I think now we 
have a better balance of both using the Presidency as a bully pulpit and 
the President's power of the Presidency to do things, actually 
accomplish things, and working on the process in Congress but not 
defining--permitting the Presidency to be defined only by relationships 
with the Congress.
    But I must say, they've been a stormy 30 months. It's been a stormy 
time for the country, but if you look at what has been accomplished, I 
think the record has been good for America and will be good for our 
future. The economy is in better shape. We passed the toughest crime 
bill in American history, and it's plainly playing a role in driving the 
crime rate down throughout the country. When there was no action on 
welfare reform, we gave two-thirds of the States--I think more than two-
thirds now--the right to pursue their own reforms. And we have lowered 
the cost and increased the availability of a college education. We gave 
more kids a chance to get off to a good start in school. We've pushed 
school reforms that led to smaller classes, more computers and higher 
standards. We've advanced the cause of the environment while growing the 
economy. And we've downsized the Government and made it more efficient, 
far more than our predecessors who talked about doing that but didn't. 
And if you look at the record in foreign policy, the world is a safer, 
more prosperous place today because of the initiatives we've taken.
    I mean, just in the last year, the efforts in the Middle East and 
Northern Ireland, in Haiti, the Japanese trade agreement, the North 
Korea nuclear initiative, the First Lady's trip to Beijing coming on the 
heels of the Cairo conference, and of course, the progress being made in 
Bosnia today. So it's a stormy time. But I think it's been a pretty 
productive time. And the American people, I think, are better off 
because of the things that we've done.

Transition Period

    Q. Mr. President, I wanted to go back to the more philosophic view 
that you started out with and have been talking about recently, you've 
claimed that this is sort of a turning point, in 100-year cycles. 
Speaker Gingrich talks in those terms often also. And when we--in fact, 
was in the breakfast a couple of weeks ago--he talked a bit more in 
terms of the country has had several, seven or eight, cycles of history 
and that we're in

[[Page 1696]]

a period now--he really compares it to the early 1930's. A new majority 
is being built and he portrays it as that he's on the cutting edge of 
the new majority and last year's election, and that you're--I think he 
referred to once as perhaps the last defender of German socialism, but 
that you represent the old big Government style and that's he's the new 
style. Now, why--maybe you're both right. Is that possible?
    The President. No. [Laughter] I mean, it's possible that there are 
elements in both our analyses that are right. But you know, as we say at 
home, that's their party line, and they have enough access and enough 
unity and enough discipline to spout the party line that they may be 
able to convince people of it. But it's blatantly untrue--I mean, to say 
that I'm the last defender of German socialism.
    It is true that I don't approve of their plans to deny more children 
access to a healthy start in school or putting more old people out of 
nursing homes or walk away from all the lessons we've learned in the 
last 20 years, whether it's preserving our environment or maintaining 
some human standards in the way we run these nursing homes. It's true 
that I don't think that we ought to--I don't think a good reform for the 
future is making it harder for young people to go to college, thereby 
ensuring a decline in the college enrollment rate and continued 
aggravation of the income differentials.
    It's true that I don't believe that it's a great idea to raise taxes 
on working families making $15,000 a year to lower taxes on me, the 
people in my income group. That's true; I don't agree with that. But to 
talk about German socialism is ludicrous. Let me just--we had two 
Republican Presidents before I showed up. Who reduced the size of the 
Government more? There are 163,000 fewer people working for the Federal 
Government today than there were the day I became President. I might 
add, without one vote from a Republican in Congress, supporting me. The 
Democrats did it; all the Republicans voted against it.
    Who reduced the number of regulations more--16,000 pages of 
regulations reduced by the Vice President's program. We supported school 
reforms, like charter schools, which allow private groups of individuals 
to get a charter from school districts to run schools. I visited one of 
them in San Diego the other day.
    Who gave more authority to States to pursue reforms in welfare and 
education--I mean, in health care? I did, more than the two previous 
Presidents combined. Who reduced regulation more in the Small Business 
Administration, the Department of Education, the EPA, you name it? We 
did. So that may be their line, but it's not the right line.
    The truth is that I still believe that we have certain obligations 
to each other. That is really the difference. And that the Federal 
Government's job, to some extent, is to try to make sure that we are 
stronger as a community and that we give people an opportunity to make 
the most of their own lives and that we give their families and their 
communities a chance to solve their own problems and that when we walk 
away from that, experience shows us we pay a very high price.
    So I think that if their view prevails, it may be more like the 
twenties than the thirties.

Russian Nuclear Cooperation With Iran

    Q. Mr. President--[inaudible]--on to serious matters on foreign 
policy. Two things that, so far, you have been unable to solve, I want 
to ask you about them. Number one, the Russians are apparently sending 
not one, but four nuclear reactors to Iran. And there's a move in the 
Senate--in fact, the Senate passed an amendment last week--cutting off 
American aid to Russia if those reactors actually go to Iran. And 
second, the Russians have violated the CFE, Conventional Forces in 
Europe Treaty, although it only takes effect I think in the next couple 
of weeks. I think both parties have been honored to keep it. And you 
have said on both these issues in the past, sir, you have said we will 
not allow reactors to go to Iran and we do not think the Russians have 
any legal right to break that treaty. What is your position on those two 
issues right now, sir?
    The President. Well, first of all, on the treaty, we are working 
very hard with them and where the two sides, I believe, are getting 
somewhat closer together. And I think if you talk--even the Europeans 
believe that

[[Page 1697]]

some accommodation can be reached, some agreement can be reached on the 
Conventional Forces in Europe Treaty that is fair to the Russian 
position and still fulfills the purposes of the treaty. So I'm hopeful 
that there will be an accord reached there, and until we fail to reach 
one, I don't think I should comment further.
    On the Iranian nuclear reactor, you know what our position is. We 
think it's wrong. The Vice President--maybe he wants to say a word about 
it--has worked very hard through the Gore-Chernomyrdin Commission to try 
to work through this. You know, their position is that this contract was 
made at a previous time and that they are basically giving them the same 
kind of reactor we proposed to help the North Koreans build. And so they 
disagree with our position. Our position is the North Koreans have 
certain nuclear capacity, and we're building it down, why should we give 
the Iranians anything?
    And so we're continuing to work with them on it. And I hope that 
ultimately we will be able to work this out. I do believe that a lot of 
these threats, given the present state of play in Russia and where their 
Duma is and the way they talk may be counterproductive. I mean, it may 
not further the objectives that the Congress seeks. Do you want to add 
anything to that?
    The Vice President. Well, I think, you began by referencing a report 
on multiple reactors that I think was based on a news story that was 
garbled in the telling. And we can go into more detail later on that 
one. I just urge you not to give too much credence to that particular 
report.
    But as the President said, the dialog is continuing, and they've 
agreed to----
    Q. They're not sending--they're not sending the reactors----
    The Vice President. You mentioned four reactors, that was--well, the 
one negotiation is the one that is still the subject of our dealings 
with them. It antedated our time in office, but they have agreed to 
continue a dialog on possibly canceling that sale. It is, as the 
President said, not a violation of any international law or treaty. 
Notwithstanding that fact, they understand the seriousness with which we 
do it. We're pressing it very hard. We do not accept that it is a good 
thing for them to do, and we hope to be able to convince them to back 
off it.

Wage Levels

    Q. Mr. President, if during the first 3 years of your 
administration, the economy has basically been doing well, but the 
median wage has been going down, then that suggests that whatever it was 
that you were doing for the economy, especially when the Democrats were 
fully in control of Congress and the Presidency, was not enough. Now, if 
you were re-elected, what would you do to help the average working 
person in the country? And what would you be able to do, especially if 
the Congress remained in Republican hands?
    The President. Well, first of all, what I suggest is that, keep in 
mind, these trends of wage stagnation go--depending on whose numbers you 
look at--go back at least 15, and perhaps 20, years. So I think it's 
unrealistic to think that you can turn them around in 2 years. But I 
believe there are certain things that we need to do.
    First of all, I think that if we can--the expansion of trade, which 
we have pushed, has generated about 2 million new jobs. On average, 
those have been higher wage-paying jobs. I think we need to do things 
that change the job mix. That is a slow but an important remedy. So that 
a high percentage of the total number of jobs in America have a higher 
average income. In order to do that, we not only have to continue our 
trade policies, we must continue to invest in research and development 
and in new technologies.
    Now that has been something that hasn't been noticed at all in this 
budget debate. But one of the quarrels I have with the congressional 
budget is that it takes our R&D budget down by roughly six-tenths of a 
percent of GDP. And a lot of Republican high-tech executives are very 
concerned about it. They believe it will lead to a loss of America's 
position in a lot of important industries over the next 5 years. So 
changing the job mix is an important part of it.
    Continuing to get a higher and higher percentage of people in 
education is an important part of it. I have given the Congress one 
proposal, which I thought looked very much like a Republican program, 
which I expected

[[Page 1698]]

them to embrace, the so-called ``GI bill'' for America's workers, in 
which we proposed to consolidate 70 Labor Department training programs 
and not block grant them to the States but give them in the form of 
vouchers to unemployed people and welfare people so that when people 
lose their jobs, they can immediately go back to a new training program.
    Thirty years ago, 80 percent of the people who were laid off from 
work were called back to their old jobs. Today, 80 percent of the people 
who are laid off are not called back to their old jobs. And it's bad for 
employers and for employees--because employers pay unemployment--bad for 
employers and employees to let people traipse around looking for jobs 
when what they really need is to immediately be in a retraining program.
    I think we should raise the minimum wage. It's going to go to a 40-
year low if we don't. I think we should avoid gutting the earned-income 
tax credit for working families. I think that's one of the two or three 
worst things in the congressional budget. It will aggravate income 
inequality.
    And I think, frankly, the proposals that we have endorsed that the 
Congress is working on from the Jordan Commission will have some impact. 
If we lower the aggregate number of legal immigrants coming into the 
country, even by a modest amount, it will free up more jobs to people 
who now don't have any, and it will tighten the labor market some.
    I talked to the Governor of Nebraska the other day, the State with 
our lowest unemployment rate, and I said, ``Do you think when we're 
creating all these jobs, it's going to ever raise wages?'' He said, 
``Yes.'' He said, ``I just don't think the markets are quite tight 
enough in the country.'' He said, ``In Nebraska, wages are up and even 
at the places that used to not give benefits--fast food places--they're 
all giving health care benefits now and wages are up.'' So he said, ``I 
think if you can get the unemployment rate down maybe another half a 
point, you can get that done.''
    So those are my ideas for raising the wages levels: Change the job 
mix, improve the training, continue to expand trade, raise the minimum 
wage and have a modest reduction in the number of legal immigrants. 
We'll still be a country of immigrants, but we should lower the total. 
We raised it, after all, dramatically, in 1990 to help deal with the 
cold war. We've done a lot of that, and I think we should come back down 
now.

Colin Powell

    Q. Mr. President, how do you explain the Colin Powell phenomenon?
    The President. That's your job, not mine. [Laughter]
    Q. We need help. [Laughter]
    The President. No, you do just fine. I'm the President. [Laughter]

Unpopular Issues

    Q. Mr. President, you started off with a great laundry list of 
things that have happened in your administration so far, and yet, we had 
a Republican dominated Congress come into office last fall. And there's 
a lot of animosity toward you personally out there in the public. How do 
you account for that?
    The President. That requires political analysis, too. Look, I took 
on a lot of tough issues, and I made a lot of people mad. You know, look 
at what they said about my economic program in 1993. They tried to 
convince every American I'd raise their income taxes when I haven't. 
They said it would bring on a recession.
    You all ever ask them when they're having their press conferences 
how they won the Congress on a false premise? They said, you know, it 
was going to be the end of the world if--the end of the world if the 
Clinton economic program were passed, we'd have a terrible recession. 
Instead, we had the best economic performance we've had in two or three 
decades.
    I made a lot of people--you know, the House--I still believe if you 
analyze those races, race by race by race, the House of Representatives 
is in Republican hands today because we took on the Brady bill and the 
assault weapons ban. And everybody knew they were unpopular. People said 
to me, ``Don't do this. There's a reason no President has ever taken on 
the NRA. There is a reason for this. I don't care what the poll says, 
the people who are against this will vote against everybody who votes 
for it, and the people

[[Page 1699]]

who are for it will find another reason to vote against it. They won't 
have any convictions. Only the antis will have convictions.'' But I'll 
tell you something, 40,000 people last year didn't get guns because of 
it, 40,000 people with criminal records.
    And if we keep a few Uzis off the streets and out of the schools, 
and we keep a few more innocent kids from being shot down at bus stops, 
it was worth it. You know, I had the same argument here on the tobacco 
thing. They said, ``You've got to be crazy. There's a reason no sitting 
President has ever taken these people on. They'll scare all those good 
tobacco farmers to death. They'll vote out Democrats. They'll say you're 
trying to have the Government take over people's lives. Don't do this. 
This is a dumb thing to do. I don't care what the polls say. They'll all 
be against you, and the people that are for you will find another reason 
to vote against you.''
    Q. And----
    The President. And--let me finish. You asked this question, I want 
to--and I believe--you know, we know 3,000 kids a day start smoking. We 
know that--at least we know some of those tobacco interests have known 
for 30 years it was destructive and addictive. We know 1,000 of those 
kids are going to die early. If you want to do things, you've got to 
make people mad. And if the people you make mad have access to 
television programs, radio programs, access to channels of 
communication, they will go wacky, and they will generate animosity.
    Now, I will say this, my sense is that the level of personal 
animosity has gone down as people see who's really fighting for real 
family values and real interests of American families and real interests 
of small business and trying to give ordinary people a chance to make 
the most of their own lives. But you know, I did not take this job to 
try to maintain high levels of popularity.
    You go back and look; I had a very specific agenda I was going to 
try to implement. And I was well aware that people would be against it. 
Look at this--look at this budget debate on the student loans. They even 
went through an accounting gimmick to try to convince people that the 
direct student loan program was more expensive than the guaranteed 
student loan program, when everybody in America knows it's not true. 
Why? Because they want to take money away from students and give it back 
to bankers.
    Well, the people that lost their money weren't happy. The people 
that were going to benefit from the student loan program--there weren't 
enough of them to know that at election time. I think the main thing 
that we all have to do is to figure out what we believe and fight for it 
and be willing to work together with people who disagree with us, if we 
can find honest, common ground. And we'll let the popularity take care 
of itself. I just tried to do what I said I would do when I ran.
    Q. Just to follow up, do you wish, in retrospect, you might not have 
taken on a few of those, like gays in the military?
    The President. Well, to be fair, I didn't take that on. That was an 
issue that was visited on the Presidency. I mean, I could have said, 
``We'll just let the courts go through that.'' But let's talk about 
that. That's become more of a slogan than a fact. The position I took, 
remember, was not that we should change the rules of conduct, which 
prohibited homosexual activity, but that we should not ask people or 
persecute people for their failure to lie about their sexual 
orientation. That position was endorsed by Barry Goldwater and by most 
of the combat veterans of the Vietnam war serving in the United States 
Congress.
    Now, the military thought it went too far, so what did we do? We 
changed the position. We studied it for a few months. We changed it. We 
wound up with a position with which we fought two World Wars, Korea, and 
Vietnam. We did not bring an end to military order in our time. All we 
did was to change the position that was put in in President Reagan's 
tenure.
    And look, the United States Government was covered up with lawsuits. 
We were losing lawsuits. I suppose the easy thing to do would say, ``Oh, 
well, let the courts go forward.'' I was trying to find a way to put an 
end to this so that the military could just put this issue behind it and 
go on being the world's best military. And you may disagree with the 
position I took or the position that we came out with, but the position 
we're in now is

[[Page 1700]]

roughly how we won two World Wars and fought through Korea and Vietnam. 
It's hardly the end of civilization as we know it.
    And the other position would not have been either.
    Q. [Inaudible].
    The President. Well, I didn't have any choice. It was brought up--
the people who brought it up were the Republican Senators. They made it 
their number one legislative--go back and read the chronology of how all 
this came up. They stirred it and swung it and made sure it was the 
number one issue of the world. Do I wish I had never taken a position on 
it? You know, I often say what I think. My position on this was 
basically taken in the campaign when someone asked me about it. And by 
the way, don't forget one other thing. There was also evidence which was 
being put into all these court cases that the military knew that they 
had some gay service members who were permitted to serve in Desert Storm 
because they were needed and they were good service members, and then 
they were kicked out, which I thought was not a very good thing. All 
this happened before I showed up.

Civil Rights

    Q. Mr. President, your home State in 1968 voted for George Wallace, 
the State that produced Orval Faubus, Little Rock Central High School. 
Even your severest critics--[inaudible]--acknowledge your own long and 
strong commitment to civil rights. Do you think--[inaudible]--see the 
country change, that America is ready to elect a black President?
    The President. I would hope that the American people could evaluate 
any candidate without regard to their race or their gender. And I would 
hope that that would be the case. You know, that's the way I've lived my 
life. That's the way I've staffed my administration. That's the way I've 
done my work, and that's what I hope is the case in this country.

Debt Limit

    Q. Mr. President, Speaker Gingrich has--[inaudible]--unilateral 
right to refuse to schedule a vote which would then suspend the raging 
debt limit. Does that create problems for you--both the procedure where 
the Speaker claims a unilateral veto and the threat to raise the debt 
limit?
    The President. Well, I think it's wrong. I mean, I think it is wrong 
not to raise the debt limit. The United States in over 200 years has 
never defaulted on its debt. We have paid our debts. We have been an 
honorable citizen in that sense. And it is simply wrong.
    I would also say it would ultimately be self-defeating. If what the 
Republicans in Congress want to do is to balance the budget, rather than 
to destroy the Federal Government, then I share their goal. And I have 
given them a balanced budget plan, and my door has been open from the 
beginning to work with them on that.
    If we were to default on our debt, you have seen already in other 
countries, in events just in the last 12 months, how rapidly the 
financial markets react to such things. And what they would do is to say 
that the United States is no longer reliable. Then the cost of carrying 
our debt, the interest rates, would be raised, and that would make it 
harder to balance the budget. We'd spend more and more and more of 
taxpayers' money on interest payments on the debt, and less and less on 
national defense or education or anything else. It's ultimately self-
defeating, and it's wrong, and it's irresponsible, and it's not 
necessary.
    We can reach an accord here on balancing the budget. But there is a 
process that we have to go through to do that. We are not going to have 
a unilaterally dictated budget; we are going to have a discussion about 
it. And as I said, more than any Democrat in many years, I've shown not 
only a willingness but a desire to make the Government smaller, less 
bureaucratic, more entrepreneurial, and to target investments while 
reducing unnecessary spending. We can make this work.
    But blackmail is not they way to do it, and I'm not going to be 
blackmailed. And I'm not going to just sign a budget that I know will 
put people out of nursing homes or deprive people of the chance to go to 
college or children the chance to be in Head Start or compromise the 
environment. I'm not going to do that; I'm just not going to do that. We 
can get a balanced budget that the

[[Page 1701]]

entire financial world thinks is a great thing. But it has to be done in 
an honorable way, and defaulting on our debts is not an honorable thing 
to do.

NAFTA

    Q. Mr. President, just to follow up on your remarks here about the 
trade policy. The initial Commerce Department numbers indicate a modest 
dropoff--[inaudible]--NAFTA. That was expected. What wasn't expected is 
that what was a U.S. trade surplus with Mexico has become a trade 
deficit. Given the job loss and given the worsening trade numbers, has 
NAFTA turned out to be a worse deal than you expected? And politically, 
given the strength of economic nationalism in many parts of the country, 
do you have any fear that NAFTA is going to end up hurting you in a lot 
of key industrial States next year?
    The President. Well, let's analyze it. Let me answer the question on 
the merit first. What happened in the short run was that NAFTA was a 
much better deal for us in the first year than we thought it would be. 
We had a much bigger trade surplus than we thought we'd have. We 
generated far more new jobs than we thought we would and they were 
basically high-wage jobs. And because of the financial difficulties of 
Mexico, which were unanticipated, it turned out to be a worse deal in 
the second year than we thought it would be. And because we ran a trade 
deficit, which we did anticipate once the Mexican economy went down, we 
have a slight net job loss.
    Does that mean NAFTA was a mistake? No, for two reasons. Number one, 
if the Mexican economy had gone through what it has just gone through 
without NAFTA and without the trading relationship with the United 
States, they would be in even worse shape; we would have a bigger 
illegal immigration problem; we would have a bigger period of 
instability down there; democracy would be more at risk in Mexico. And 
we would be worse off than we are with NAFTA.
    It is unfortunate that the Mexican economy--that they tried to 
expand it too fast and in some ways it were improvident and they didn't 
cut back in an election year. And then, from my point of view, there was 
an overcorrection by the financial markets. They punished them too much. 
But still, we are better off vis-a-vis Mexico than we would have been if 
NAFTA hadn't passed. If NAFTA hadn't passed we'd have a trade deficit 
with Mexico this year because they wouldn't be able to buy anything from 
us.
    The second reason it was the right thing to do is, in a period like 
this where things are changing so rapidly, you cannot calculate from 
month to month or year to year. If you look at 10 years from now, 20 
years from now, 25 years from now, it is plainly the right thing to do. 
A strong, stable, healthy, democratic Mexico with a sensible economy is 
plainly in our interest. It will stabilize our borders. It will help us 
economically. And it will promote our goal of a world trading system and 
a world moving toward democracy and peace. So I think it's the right to 
do.
    On the politics of it, it was always a political risk for a Democrat 
to do what I did on NAFTA. But I believed in it. And it was one of the 
changes I thought the Democratic Party had to go for, not to give up 
fair trade, which is embodied in the Japanese trade agreement, but to go 
for free trade as well, to go for more open trade. It's just what I 
believe is the right thing to do, and I'll live with the political 
consequences.

Capital Gains Tax

    Q. Mr. President, I'd like to ask you a question that I hear a lot 
of people around the country asking, and that is, would the cut in the 
capital gains tax that is enacted by both the Senate and the House, in 
itself, be reason enough for you to veto a bill that contains those 
provisions?
    The President. I probably should be a little chagrined to admit 
this, but I am not absolutely sure what the precise provisions were of 
their tax. Let me say this: I believe my obligation is to try to reach a 
balanced budget. There will be a tax cut in this balanced budget. I want 
the tax cut, as much as possible, directed toward people who are out 
there working for a living, dealing with the economic uncertainties in 
the marketplace, trying to raise their children and educate themselves 
and their children. That's what I believe.

[[Page 1702]]

    I also believe that we have provided quite a good environment for 
investors in this country. As I said, we have more self-made 
millionaires in the last 2 years than any comparable time period in 
American history and the stock market is at 4,700. You know that I'm not 
philosophically opposed to all capital gains taxes because we had a 
capital gains tax in the '93 economic plan that cut the tax rate 50 
percent on people that invested in new or small businesses for 5 years. 
And I was prepared to go with the Bumpers bill, which would have taken 
it down to zero, if the investments went longer.
    So, my answer to you, sir, is it depends on what form the capital 
gains tax is in in the final bill and how it works and will it really 
fulfill our objectives. What are our objectives? We want more jobs and 
higher incomes. If it's consistent with an overall package that gives 
more jobs and higher incomes, certainly I would consider that. I would 
be obliged to consider that. I cannot tell the Republican majority that 
they have to consider compromising with me and then we not considering 
trying to reach out to them. But the test should be: Does it give you 
jobs and incomes? That's really what we need to do in this country.

Mood of the Country

    Q. I just wanted to return to the original question--[inaudible]--
asked about the funk that the Nation appears to be in. And I wonder if 
you could explain to us what your point is there and what it is a 
President can do about a nation that's in a funk? And are we going to 
see any more appearances of the Blues Brothers? [Laughter]
    The President. If I thought it would help, I'd sure do it.
    Last year, last November, plainly the country was in kind of an 
anxious mood, a negative mood, a frustrated mood about the Government. 
And I was saying that I thought that one of the reasons that it happened 
is that I had inadequately fulfilled--to go back to the first question 
that was asked back here--I had inadequately filled the first 
responsibility of the President, in terms of the bully pulpit, in terms 
of trying to say, here's the change we're going through; here's how I 
think it's going to come out all right; here's my vision for it; let's 
do this based on our fundamental values of work and family and 
responsibility.
    I think the country is sort of moving into a more positive frame of 
mind as we see more and more good economic news, and as we see more and 
more evidence that some problems we thought couldn't be solved, you can 
actually make progress on them. I mean, 5 years ago, if you had asked 
people, do you think you could ever bring the crime rate down, they'd 
probably say no. Well, now the crime rate's going down in virtually 
every city and State in the country, largely because people have figured 
out that these community policing strategies, among other things, really 
work.
    So what I'm saying is, what I think we have to do is to be 
optimistic about the future. But to do it, we have to understand that 
the news--we live in a good news/bad news time, like all tumultuous 
times. And we have to understand what we have to do to get more good 
news and what we have to do to attack the bad. And I think once you 
understand that, that increases your level of security and your level of 
optimism. And this country thrives on optimism. We have to maintain our 
optimism.
    These problems we have are not insoluble. But we have to just keep 
that upbeat outlook. And I sense that more and more people are looking 
at the future in that way and balancing the scales in what I would 
consider to be an accurate way. And I think it's because the American 
people are pretty smart, and they are sensing all these things in their 
own lives.

Medicare

    Q. [Inaudible]--lead editorial accusing the House Democrats of 
demagoging the Medicare issue. Are you concerned that the tactics taken 
by the House Democrats are losing the battle of public opinion? And how 
would you characterize your view on Medicare vis-a-vis the House 
Democrats?
    The President. Well, I think institutionally we have different 
responsibilities. And you can see that, I think, by the way the majority 
carried out their responsibilities when they were in the minority.

[[Page 1703]]

    My job, I believe, is to present a balanced budget, and I have done 
it. My job is to present an alternative plan for Medicare and Medicaid 
which will be part of a balanced budget and which will also help the 
Medicare Trust Fund to lengthen its life. That is my job.
    Historically, minority parties in the Congress have thought that 
their main job was to point out what they disagreed with with the 
majority's proposal. And that is, after all, what the people who are now 
in the majority did for the last two years before they became the 
majority, on every conceivable issue.
    Now, so the idea that they should fashion an alternative is--there 
are cases in which they have--they did have an alternative welfare 
reform bill, for example. But I think in the end they will be voting for 
an alternative. They think their job right now is to point out some 
facts which have been lost in this debate. For example, let's just take 
the Medicare issue. The congressional majority relies on the report of 
the trustees in Medicare, coming out of the HHS process. They say 
Medicare is in trouble, and we have to help it. And we have, as you 
know, added 3 years to the life of the Trust Fund in the first 2 years 
of my administration.
    But then they say--we agree with them on that, but they're not right 
about medical inflation, and they're not right about how much it costs 
to fix it. So what the Democrats are pointing out is that basically that 
the Republican proposal cuts Medicare 3 times as much as the trustees 
say is necessary to stabilize the Trust Fund and that at least half of 
the Medicare cuts are coming from beneficiaries, out of a pot that has 
nothing to do with the Trust Fund.
    So that since a lot of these people live on $400, $500, $600 a month 
Social Security, these proposals, if you look at the Senate proposal, 
these proposals will in effect lower their income by 5 to 10 percent in 
the context of a budget which will raise the income of some of the 
wealthiest people in the country by cutting their taxes. Now, I think 
that's a very useful thing for them to be doing. As long as we know that 
in the end, we've got to balance the budget and bail out the Trust Fund, 
it needs to be pointed out that the Medicare cuts are 3 times what is 
necessary to fix the Trust Fund. And it needs to be pointed out that the 
impact, therefore, is to lower the incomes of the elderly poor while 
we're going to raise other people's incomes.
    Q. Why do you suppose that the Washington Post and other normally 
sympathetic newspapers and other institutions see that as demagoguery?
    The President. Well, you'd have to ask them. But I think that part 
of it is, they see that, over the long run, this entitlements question 
is going to have to be dealt with. And so they figure that anybody 
that--they just want to see as many proposals as possible dealing with 
the entitlements question. I agree with that.
    But keep in mind--let me just say--there are two issues here in 
Medicare that shouldn't be lost, and I don't want to overcomplicate 
this. The first question is, right now, from now until the end of the 
decade and into the first few years of the next century, let's stabilize 
the Medicare trust fund so that we get back up to where it normally has 
been over the last 30 years. You know, let's get--we ought to--excuse 
me--ought to always have a life of, you know, 10, 11 years, something 
like that to stabilize it.
    The second issue is a very big issue, but it's totally unaddressed 
here, and that is what happens when the baby boom retires and how will 
that change things? There ought to be a long-term effort to address 
that. But that is not addressed by any of these proposals here, and so 
we shouldn't confuse them.

Colin Powell

    Q. Mr. President, I realize this is probably our job, too, but I 
wonder if you would help us and tell us what you think is the defining 
difference between you and Colin Powell?
    The President. Near as I can tell, he's--I will tell you this. I was 
grateful for his statement--and this is no criticism of him to say this, 
I want to emphasize that--I wish that more Americans who agreed on the 
assault weapons ban and the Brady bill had been out there last November. 
It might have made a difference. But that's not a criticism of him 
because he's coming out of a period of military service when he didn't 
feel that he should be a public spokesman.

[[Page 1704]]

    I was grateful for what he said about abortion, that he didn't want 
to criminalize it, but that we should reduce it and emphasize adoption 
more because that's what I've worked very hard to do. And the First 
Lady's emphasized that, and we've done a lot to facilitate, for example, 
cross-racial adoptions and things of that kind.
    I was grateful for what he said about affirmative action, because I 
believe in the kind of affirmative action practiced in the United States 
Army, and I don't believe it constitutes quotas or reverse 
discrimination or giving unqualified people things they shouldn't have.
    So all I can say to you is that on those statements that he has 
made, I am profoundly appreciative. I think it's helped America to stay 
kind of in the sensible center and moving forward instead of being 
pulled too far in one direction or the other.

Speaker Newt Gingrich

    Q. Mr. President, I know you have many defining differences with 
Newt Gingrich, but what is your working relationship like with him? Do 
you find it productive? And secondly, do you think you'll be able to 
come to agreement on most of these big issues this year, whether it's 
Medicare, welfare, the budget, tort reform, maybe even regulatory 
reform?
    The President. Our personal relationship has basically been candid 
and cordial. And I've enjoyed our conversations, and they're basically--
our private conversations are basically free of political posturing; 
they're candid, and they're straightforward. I'm sure that I do things 
that frustrate him, and sometimes he does things that frustrate me. I 
think this debt ceiling issue is wrong. And I think when he shook hands 
with me in New Hampshire on political reform and lobby reform and said 
we'd appoint a commission, we should have done it. I mean, that 
frustrates me. But we have, I think, a basically a decent working 
relationship on a personal level.
    Do I think we'll reach an agreement on most of the issues? I do. I 
believe in America. I believe in the process. I believe that it's time 
for us to adopt a balanced budget. I think it's the right thing to do. 
But it is time to adopt a balanced budget consistent with growing the 
economy and growing the middle class and shrinking the under class and 
making this country stronger, which means we can't just turn away from 
things like education and technology and research. And it's time to do 
it consistent with our obligations to our children and our parents, 
which means we can't turn away from what we should be doing on the 
environment, for example.
    So I think--but do I believe we will get an agreement? I do. This 
country's not around here after all this time because we let the trains 
run off the tracks. It's around here because people of good faith who 
have honest differences find principle compromises and common ground. 
And that's what I think will happen here; that's what I believe will 
happen. I think there's too much energy in the country saying, make this 
country work and move this country forward, for us to turn back.
    Q. So you expect to have a series of signing ceremonies----
    The President. I do. I think there will be some--there may be some 
vetoes first, but I think in the end, we'll reach accord. That's what I 
believe will happen.

Legalized Gambling

    Q. Mr. President--[inaudible]--this morning on the spread of 
legalized gambling. More and more cities and States are relying on it as 
a source of income. And at the same time, there's been an increase in 
the social consequences of gambling, has prompted Senators Lugar and 
Simon to call for a Government commission on the subject. One scientist 
estimated that three dollars in social costs for every dollar that the 
States and cities take in. What's your position on legalized gambling? 
Are you for a national lottery, or----
    The President. No.
    Q. --or are you somewhere down the line?
    The President. I've always been against it, all my----
    Q. What's your feeling about this?
    The President. Well, first of all, let me just say, I mean, this is 
another one of my unpopular positions, I know, because it's very popular 
everywhere, because it looks like easy money. It's tax money that 
doesn't seem to be tax money. People give it up freely,

[[Page 1705]]

instead of by paying--you know, filling out a form. But let me give you 
a little background.
    I grew up--when I grew up in Hot Springs, Arkansas, until I was a 
teenager, my hometown had the largest illegal gambling establishment in 
America. And it was basically permitted to operate with a wink and a nod 
from the State and local law enforcement officials. The only good thing 
about it being illegal was that it kept all the national syndicates out 
of it. It was sort of a homegrown deal that had existed for many, many 
years, going back to the twenties. But I'm quite familiar with this. And 
then there was a move to legalize it in the late sixties, which failed a 
vote.
    And then when I was Governor, we had another vote on legalizing 
gambling in very limited ways and in just certain places. And I opposed 
it, and we defeated it again. And we did it because I believe that it 
disguised the social costs and because I believed it was not a good way 
to raise public funds. The lotteries are not so onerous; they're much 
more--they're more benign than other legalized gambling, I think. And 
States obviously have a right to do it.
    But I wouldn't favor a national lottery because all we'd do is just 
saturate the market. We would weaken the States that are already doing 
it. We'd be taking money away from them and complicating it. And I don't 
favor any other kind of national legalized gambling efforts just 
because, based on my own personal experience and what I saw and what I 
know are the side effects, I just would not be in favor of it.
    Q. Do you support the commission? The idea--[inaudible]--Federal 
commission?
    The President. I would be glad to consider it. This is the first 
I've ever heard of it so I don't have an opinion.

Bosnia

    Q. Mr. President, if NATO air strikes have helped advance the cause 
of peace in Bosnia, in hindsight should we have done this earlier?
    The President. Well, as you know, the United States was willing to 
do it earlier. And I think we--let me--let's review the last 2\1/2\ 
years. We had a pretty peaceful 1994 because of the threat of NATO air 
power. We had a pretty peaceful 1994. The death rate went way down in 
Bosnia. But there was no progress made at the negotiating table. And 
then the Bosnian Serbs determined that they could take hostages and 
avoid the threat of air power. And they wound up doing it, and it 
worked. That is, we were unable to persuade our allies to take action 
through the air until after Srebrenica and Zepa fell. Then the London 
Conference occurred. There was a renewed commitment, and I was convinced 
at the time that our allies really meant it. And that air action 
combined with the diplomatic initiative of Dick Holbrooke and the 
members of his team, and the gains on the ground of the Croatian and the 
Bosnian armies, all those things together contributed to the 
circumstance which we have now.
    So if there had been a stronger allied response earlier, would it 
have made a difference? I think it quite likely could have. But I--and, 
you know, we can revisit that. The main thing we need to say is that we 
have a chance now to make a decent and an honorable peace. The changes 
on the ground, the diplomatic mission, and the bombing campaign all 
contributed to it.

Two-Party System

    Q. Mr. President, you've mentioned the frustration in the country. 
You think that one of the things you're going to be dealing with next 
year is a climate politically where people don't like either party, 
where basically it's sort of ``a plague in both your houses.'' And how 
do you really--how do you deal with that? Isn't that one of the reasons 
for the increasing popularity of people like Colin Powell?
    The President. Well, I think, first of all, if you look 
historically, that is not an atypical development in a transition 
period, because the debate becomes wider and people become more open to 
different things. Some of them are quite good and sensible, some of them 
are, in my judgment, too extreme. But we had, I think, four parties on 
the ballot in the 1948 Presidential election, just to mention one period 
of transition.
    Both psychologically and substantively things, you know, began to be 
more open. I think in this time period--I think the--

[[Page 1706]]

you know, when people have 50 channels on their television station at 
night, if you say would you rather have three parties instead of two, 
it's pretty obvious what the answer's going to be.
    And the third thing I would say is--and this is a challenge that I 
think, frankly, those of you who are in the print media can perhaps help 
us to meet. The information age is a mixed blessing for serious public 
policy and politics, because the pressures on people who live in 
Washington to speak in terms that aggravate the differences and simplify 
the issues so that they can get their 10 or 15 seconds over to the 
American people at night are enormous. And sometimes it benefits one 
party, sometimes it benefits another, and they win a big election 
victory over it. But the aggregate impact of it is if it doesn't quite 
resonate with what people think is the whole truth--all the facts--is to 
make people disillusioned with the process, even as they reward people 
who may be kind of shaving it in ways that are not good.
    So, one of the things I'm looking forward to in the next election is 
to try to restore what I thought we had in 1992, that I thought was so 
good--you know, the town meetings, the debates and the different 
formats, the debates--the debates in which people were involved and 
could ask their questions. All those things, I felt, helped to restore 
people's faith in the system.
    So I do believe--one thing I agree with Speaker Gingrich on, I think 
that over time, the American people have been well served by basically 
having two stable political parties.
    But I would remind you that one reason that's worked is that both 
parties have had a rather broad tent. They have had philosophical 
convictions. There have been clear differences, but they have made room 
in their parties for people of different views so they could make 
principle compromises and keep moving the country forward.
    I think that is what has worked best for America over the long run. 
The American people will be the final judge of what will work best in 
the future.

Campaign Finance Reform

    Q. Mr. President, we've been talking, really since--[inaudible]--
first question about the frustration, and you've answered somewhat 
philosophically. There's one thing that hasn't really changed since 1992 
and that's the way we raise money to pay for this thing. You spent much 
of last week, some of it in semi-private forums, basically building your 
kitty so you could run next year, before the public money kicks in. 
Isn't there a better way? And isn't some of the frustration that we see 
in the country related to the cynicism that develops from the way we 
fund our politics?
    The President. I believe it is, of course. And I think some of the 
things that were done in 1974, in an attempt to promote reform after 
Watergate, in a curious way, within a period of 20 years, may have made 
the process worse because it tended to mean that a higher percentage of 
fundraising, particularly for Members of Congress, was more concentrated 
around specific issues. So that I don't think that's what the people 
meant to do in '74, but I think it had the--you know, devolving things 
to PAC's and all that gives the appearance, if not the reality, that 
more and more of the fundraising is tied to specific decisions. And I 
don't think that's good.
    And I did what I could to persuade the previous Congress, as you 
know, unsuccessfully, to pass campaign finance reform. And I thought 
that in this Congress, the only way we could do it is if we had some 
sort of commission, like the gentleman from New Hampshire suggested, 
kind of a base closing commission, which would in effect bring both the 
parties together. I still think that's a good idea.
    I have done everything I know to do. I wrote the Speaker back; I 
accepted his offer. I even named two people that I would have 
participate in the commission. I cannot force Congress to do this. But I 
believe we would be better off. I think the Presidential elections--I 
think in the general election, I think the American people--there is one 
other problem here, though, to be fair, and that is, the American people 
themselves have very ambivalent feelings about public financing. They 
can--and the people that are against

[[Page 1707]]

campaign finance reform can always say, can't you think of something 
better to do with your money than give it to a politician?
    So I think, to make the next steps--that's why I was hoping a 
commission would also spark a lot of public debate here. But I do 
believe that in the general election, like in 1992, when it was all 
publicly funded, everybody had a fair chance, and we devoted a lot of 
our time to these more open discussions and not just the sound bites, I 
think public confidence in the institution rose. And I think that when 
Congress is dealing with issues and simultaneously people see the 
fundraising going on, it sparks cynicism even if everybody is in there 
doing exactly what they believe, even if you read it in the best times.
    So I still believe campaign finance reform is important. I can't 
think of any way to get there except a commission. And I still hope the 
Speaker will accept my offer, again, and act on it.

Mood of the Country

    Q. Well, Mr. President, I've come here today thinking that the 
nation is in somewhat of a funk. You've just about convinced me 
otherwise. [Laughter] And so, in view of the way Pat Caddell hung 
``malaise'' around Jimmy Carter's neck back in '79, an editorialist may 
be having a lot of fun with ``funk.'' I wondered if possibly that was a 
bad--not an accurate word, or would you maybe change it?
    The President. It was no doubt a poor choice of words. And it was 
more of a characterization of how people felt a year ago, maybe, than 
they do now. But I do believe--to be fair, what I think is that times--
we all are for change in general, but we tend to oppose it in 
particular. That is, there's a limit to how much change that almost any 
of us can endure in our own lives at one time. And what I really do 
believe has happened is as people go through these kinds of sweeping 
changes in the way they live and work and the way their nation relates 
to the rest of the world and apparently contradictory events occur, you 
know, we just have to--I think that there needs to be an extra effort to 
keep the American people positive about our future, upbeat about our 
prospects, and realistic about what our opportunities as well as our 
problems are. And I think it will be difficult to convince people that I 
am advocating the politics of a national funk--[laughter]--because, you 
know, it's so inconsistent with my own outlook toward life and the way 
we try to do things around here. And so I'm hopeful.
    I hope I didn't--I hope I served a valuable purpose with that rather 
long discourse. And again, I would urge you all to read it because I was 
trying to explain to the people who were on the plane and through them 
to all the rest of you, because I figured they'd write it up in the pool 
report, kind of how I have analyzed this period, but not because I'm 
down about the prospects of the future. I'm, to the contrary, quite 
optimistic.
    Mr. Sperling. Mr. President, we are told we have to close this 
extraordinarily fine----
    Q. One followup.
    Mr. Sperling. I'd really like to--I'd like to close the session 
early. And what I want to talk about it is how grateful I am that you're 
sitting down with a bunch of us print journalists, because we see you 
again and again on television--[laughter]--and yeah, we're not that bad 
a lot. And I think it's worthwhile. [Laughter] I hope you come in again. 
And thank you so very much.
    The President. Thank you. Now, wait, wait. We're not done yet.
    Mr. Sperling. We're going to take care of Rollie?
    The President. No, we're going to take care of you. [Laughter]
    Mr. Sperling. Sorry, Rollie, I had to----
    The President. Now--but we're going to do what Rollie wanted to do 
in the beginning. Come on. Are we ready?

[At this point, a cake was brought in, and the group sang ``Happy 
Birthday'' to Mr. Sperling.]

Note: The President spoke at 12:40 p.m. in the State Dining Room at the 
White House.

[[Page 1708]]