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American Business Conference 4/9/91 [OA 6897] [1]
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Speechwriting, White House Office of
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Speech File Backup Files
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OA/ID Number:
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American Business Conference 4/9/91 [OA 6897][1]
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26
21
3
4
THE AMERICAN BUSINESS CONFERENCE
THE DEPARTMENT OF COMMERCE
TUESDAY APRIL 9, 1991
-4
2 P.M.
P
THANK YOU, BoB, FOR THAT INTRODUCTION AND FOR
LENDING US A MEETING ROOM TODAY. AND I ALSO WANT TO
SALUTE THE AMERICAN BUSINESS CONFERENCE'S LEADER, JIM
JONES. WHAT A JOB HE'S DOING! WE ALSO HAVE SOME HEAVY
HITTERS IN THE FRONT ROW: RICHARD BREEDON, BILL
EN
SEIDMAN, SEN. DOMENICI.
IT'S ALWAYS GREAT TO TALK TO THE AMERICAN BUSINESS
CONFERENCE. I'VE BEEN HERE FOUR TIMES IN RECENT YEARS,
AND I'VE LANDED AT LEAST TWO OF YOUR LEADERS -- BOB
MOSBACHER AND ARTHUR LEVITT. //
IT'S AN HONOR AND A PLEASURE TO TALK TO A GROUP
THAT STANDS FOR SUCCESS - -- A GROUP THAT ADMITS ONLY
MEDIUM SIZED COMPANIES THAT THRIVE IN THE MARKETPLACE.
BUT I'VE GOT TO TELL YOU, I FEEL A LITTLE FUNNY
BEING HERE. AFTER ALL, I'M THE CEO OF AN OUTFIT THAT
HAS LOST MONEY FOR 33 OF THE LAST 35 YEARS. //
- 2 -
BUT IN KEEPING WITH TODAY'S THEME -- CHARTING
ECONOMIC GROWTH IN THE 90'S -- I'D LIKE TO TALK ABOUT
THIS ADMINISTRATION'S PLAN FOR GENERATING MORE AMERICAN
SUCCESS STORIES LIKE YOURS./
OUR RECENT SUCCESS IN THE GULF HAS RENEWED
AMERICANS' BELIEF IN THEMSELVES. IN JUST THE PAST
COUPLE OF MONTHS, CONSUMER CONFIDENCE HAS SOARED. THE
STOCK MARKET HAS BEEN CLIMBING TOWARD THE 3,000 MARK.
MOST ECONOMISTS PREDICT THAT THE RECESSION SOON WILL
GIVE WAY TO A NEW CYCLE OF GROWTH.
BUT WE CAN'T REST ON OUR LAURELS: THERE'S AN
ENTIRE WORLD OF COMPETITION OUT THERE. THE
ADMINISTRATION'S ECONOMIC GROWTH PACKAGE IS DESIGNED TO
LET PEOPLE LIKE YOU DO WHAT YOU DO BEST -- CREATE JOBS,
CREATE NEW OPPORTUNITIES, CREATE WEALTH.
LET'S START WITH AN ISSUE WE ALL WILL HAVE TO
ADDRESS IN THE NEXT MONTH, THE ISSUE OF FREE AND FAIR
TRADE.
- 3 -
AS YOU KNOW, I HAVE ASKED CONGRESS TO EXTEND THE
"FAST-TRACK" TRADE AUTHORITY.
FAST-TRACK IS ANOTHER TERM FOR "GOOD FAITH." IT
GUARANTEES THAT CONGRESS WILL ACCEPT OR REJECT THE VERY
SAME AGREEMENTS THAT OUR NEGOTIATORS AND THEIR
COUNTERPARTS HAVE WORKED OUT. THIS DOESN'T WEAKEN
CONGRESS' POWER TO REVIEW AGREEMENTS; IT SIMPLY
PREVENTS ELEVENTH HOUR CHANGES THAT WOULD FORCE
NEGOTIATORS FROM ALL COUNTRIES TO START FROM SCRATCH.
OUR TRADING PARTNERS CONSIDER FAST TRACK A VITAL
TEST OF OUR RELIABILITY. IF WE DO NOT RETAIN THE FAST-
TRACK PROCESS, WE JEOPARDIZE THREE CRITICAL TRADE
INITIATIVES: THE URUGUAY ROUND OF TRADE TALKS, THE
NORTH AMERICAN FREE TRADE AGREEMENT, AND THE ENTERPRISE
FOR THE AMERICAS INITIATIVE.
- 4 -
AMERICANS UNDERSTAND THE BENEFITS OF FREE TRADE.
IN THE LAST FOUR YEARS, EXPORTS FROM THE U.S. HAVE
INCREASED 55 PERCENT, MORE THAN TWICE THE RATE OF
IMPORT GROWTH. AND EXPORT BUSINESS HAS GROWN MORE
RAPIDLY THAT THE REST OF OUR ECONOMY.
*
THAN
THIS TRADE BOOM HAS HELPED EVERYONE INVOLVED. A
NORTH AMERICAN FREE TRADE AGREEMENT WOULD PLACE US IN
THE LARGEST INTEGRATED MARKET ON EARTH: 360 MILLION
PEOPLE, $6 TRILLION OF ANNUAL OUTPUT. IT WOULD ALSO
GIVE OUR NEIGHBORS ACCESS TO THE TECHNOLOGIES AND
PRODUCTS THEY NEED TO IMPROVE THEIR STANDARDS OF LIVING
/ FURTHER CLEAN THEIR ENVIRONMENTS / AND CREATE A TRUE
COMMUNITY OF NATIONS ON OUR CONTINENT.
WE ALSO BELIEVE STRONGLY IN PROMOTING TRADE. I
HAVE ASKED BOB MOSBACHER TO LEAD A GOVERNMENT-WIDE
EFFORT TO HELP SMALL- AND MEDIUM-SIZED COMPANIES SELL
THEIR GOODS AND SERVICES ABROAD.
- 5 -
I KNOW YOU SUPPORT FREE TRADE, WHICH IS WHY I WANT
YOUR HELP IN PERSUADING CONGRESS TO EXTEND THE FAST-
TRACK PROCESS. WITHOUT IT, WE WILL SURRENDER OUR
CHANCE TO SHAPE THE EMERGING WORLD ECONOMY. WITHOUT
IT, WE RISK SETTING OFF THE KIND OF PROTECTIONIST
WARFARE THAT HELPED PRODUCE THE GREAT DEPRESSION. WITH
IT, AMERICAN WORKERS AND BUSINESSES WILL BE ABLE TO
DEMONSTRATE THEIR STRENGTH IN A NEW AND VIBRANT WORLD
MARKET.
THIS BRINGS ME TO A SECOND PART OF OUR GROWTH
PACKAGE: CREATING AN EDUCATED, INNOVATIVE WORKFORCE.
OUR BUDGET EMPHASIZES THE IMPORTANCE OF BUILDING AN
AMERICA THAT IS READY TO TAKE ITS PLACE IN AN EMERGING
WORLD ECONOMY.
IT STRESSES THE ABSOLUTE NECESSITY OF AN EDUCATED
NATION. WE WANT TO REINVENT THE AMERICAN SCHOOL, TO
CREATE A NATION OF STUDENTS, TO MAKE SURE THAT
EDUCATION OFFERS OPPORTUNITY TO EVERYONE.
- 6 -
OUR EDUCATION STRATEGY STARTS WITH SOME OBVIOUS
TRUTHS: THAT SCHOOLS SUCCEED WHEN TEACHERS TEACH,
WHEN PARENTS SUPPORT THE SCHOOLS / WHEN SCHOOLS
ACCEPT HELP FROM PEOPLE WITH SKILLS -- LOCAL
BUSINESSES, COMMUNITY COLLEGES, THAT HUGE POOL OF
UNTAPPED TALENT, OUR RETIREES /
WHEN COMMUNITIES FIGHT HARDER TO RIP DOWN BARRIERS
THAT PREVENT EFFECTIVE TEACHING -- BARRIERS SUCH AS
CRIME, DRUGS AND COMMUNITY INDIFFERENCE.
WE ALSO WANT TO ENCOURAGE ENTREPRENEURSHIP IN
EDUCATION. WE WILL SUPPORT RESEARCH INTO THE BEST
TEACHING METHODS AND TECHNIQUES. WE WANT TO HELP
WORKERS IMPROVE THEIR KNOWLEDGE AND SKILLS. YOUR VITAL
LINK PROGRAM OFFERS A GREAT WAY TO ACHIEVE THIS GOAL.
AND WE WANT TO ENSURE THAT THE AMERICAN PEOPLE ARE THE
BEST EDUCATED, BEST MOTIVATED IN THE WORLD. //
- 7 -
OUR ECONOMIC PROPOSALS ALSO SWEEP AWAY OBSTACLES TO
FREE ENTERPRISE. THEY TRY TO UNLEASH THE POWER OF THE
AMERICAN IMAGINATION.
YOUR ORGANIZATION UNDERSTANDS THAT RUNAWAY
GOVERNMENT SPENDING STEALS OPPORTUNITY FROM PRIVATE
CITIZENS. LAST YEAR'S BUDGET AGREEMENT PLACED REAL AND
STRINGENT CAPS ON CONGRESSIONAL SPENDING. IF CONGRESS
WANTS TO SPEND MORE MONEY ON CERTAIN PROGRAMS, IT WILL
HAVE TO MAKE HARD CHOICES. IT WILL HAVE TO RAISE TAXES
OR TAKE THE MONEY FROM OTHER PROGRAMS.
THIS YEAR, FOR THE FIRST TIME IN YEARS, FEDERAL
SPENDING WILL ACTUALLY INCREASE LESS RAPIDLY THAN
INFLATION. AND I CAN PROMISE YOU THAT IF CONGRESS
SENDS ME SPENDING BILLS THAT BREAK THIS BUDGET, I WILL
SEND THEM BACK -- WITH A VETO MESSAGE! //
- 8 -
BUT WE IN GOVERNMENT MUST DO MORE. AS VICE
PRESIDENT, I HEADED THE TASK FORCE ON REGULATORY
RELIEF. AS PRESIDENT, I REMAIN COMMITTED TO WEEDING
OUT REGULATIONS THAT PREVENT PEOPLE FROM CREATING JOBS
AND OPPORTUNITIES.
LAST YEAR REGULATIONS COST THE ECONOMY AT LEAST
$185 BILLION, OR $1,700 FOR EVERY TAXPAYER. THE
GOVERNMENT GENERATED MORE THAN 5.3 BILLION HOURS OF
PAPERWORK LAST YEAR. THAT'S ENOUGH TO KEEP 2 MILLION
PEOPLE BUSY DOING NOTHING BUT FILLING OUT FORMS.
OUR COUNCIL ON COMPETITIVENESS, CHAIRED BY THE VICE
PRESIDENT, ATTACKS THE SCOURGE OF UNNECESSARY
REGULATION. WE WANT TO LET PEOPLE TURN THEIR ATTENTION
TO THE MORE IMPORTANT AND REWARDING WORK OF BUILDING A
PROSPEROUS FUTURE.
WE HAVE FOLLOWED THE SAME APPROACH IN LOOKING AT
OUR TAX CODE. WE WANT A TAX SYSTEM THAT REWARDS
ENTERPRISE. I HAVE REPEATEDLY ASKED CONGRESS TO CUT
OUR HIGH CAPITAL GAINS TAX.
- 9 -
I CAN'T THINK OF ANY ISSUE THAT'S BEEN MORE BADLY
MISREPRESENTED THAN THIS ONE. OUR CRITICS SAY A
CAPITAL GAINS CUT HELPS ONLY THE RICH. THEY'RE DEAD
WRONG.
HERE ARE THE FACTS: MORE THAN A QUARTER OF ALL
FAMILIES WHO FILE CAPITAL GAINS HAVE ANNUAL INCOMES OF
LESS THAN TWENTY THOUSAND DOLLARS A YEAR. MORE THAN
THREE-QUARTERS OF ALL FAMILIES WHO DECLARED MAKE LESS
THAN MEMBERS OF CONGRESS. A CAPITAL GAINS CUT ISN'T A
SOP TO THE RICH. IT REWARDS PEOPLE WHO TURN GOOD IDEAS
INTO GOODS AND SERVICES THAT PEOPLE NEED.
- 10 -
WHEN TAXES ON ENTREPRENEURSHIP ARE HIGH, INVESTORS
HAVE NO INCENTIVE TO RISK MONEY ON UNTRIED BUSINESSES
AND ENTREPRENEURS. BEFORE CONGRESS CUT THE CAPITAL
GAINS RATE IN 1978, THE POOL FOR START-UP BUSINESSES
HAD VIRTUALLY DRIED UP. AFTER THE CUT, WE EXPERIENCED
AN INVESTMENT BOOM. BETWEEN 1978 AND 1986, THE NUMBER
OF INITIAL PUBLIC OFFERINGS INCREASED NEARLY 1,600
PERCENT, FROM 45 TO 719. THE AMOUNT OF INVESTMENT SEED
MONEY INCREASED A HUNDREDFOLD, FROM $250 MILLION TO
$22-AND-A-HALF BILLION. CAPITAL GAINS PAYMENTS TO THE
FEDERAL GOVERNMENT QUADRUPLED. THIS IS WHAT HAPPENS
WHEN YOU REDUCE THE COST OF CAPITAL.
WE MUST ENCOURAGE SAVINGS AND DISCOURAGE DEBT. FOR
THE PAST FOUR YEARS, WE HAVE TAXED CAPITAL GAINS LIKE
ANY OTHER FORM OF INCOME. AT THE SAME TIME, WE HAVE
ENCOURAGED PEOPLE TO TAKE ON DEBT. NOT SURPRISINGLY,
PEOPLE HAVE BORROWED MORE, INVESTED LESS. HOME EQUITY
LINES OF CREDIT OFFER A PERFECT EXAMPLE. THESE
DEVICES, WHICH LET HOMEOWNERS BORROW AGAINST THEIR
INCREASED HOME VALUES, HAVE NEARLY TRIPLED IN VOLUME
SINCE TAX REFORM.
- 11 -
NO OTHER MAJOR INDUSTRIAL POWER TAXES CAPITAL GAINS
AT NEARLY THE RATE WE DO. GERMANY AND JAPAN ENJOY MUCH
HIGHER SAVINGS AND INVESTMENT RATES IN PART BECAUSE
THEY DON'T PUNISH SUCCESSFUL INVESTMENT.
MY POINT IS SIMPLE: TAXES ON GROWTH ARE TAXES ON
THE AMERICAN DREAM. WE SHOULD CLEAR AWAY OBSTACLES TO
THE AMERICAN DREAM.
SIMILARLY, WE SHOULD FOSTER INNOVATION WHEREVER WE
CAN. OUR BUDGET ADVOCATES INCREASED FEDERAL SUPPORT FOR
RESEARCH AND DEVELOPMENT IN BASIC AND APPLIED SCIENCE.
IT ALSO ENCOURAGES PRIVATE-SECTOR INNOVATION BY
EXTENDING THE RESEARCH AND EXPERIMENTATION TAX CREDIT.
THIS ADMINISTRATION UNDERSTANDS THE POWER OF KNOWLEDGE,
AND WE WANT THE TAX CODE TO REWARD PEOPLE WHO TURN
THEIR BIG DREAMS INTO REVOLUTIONARY NEW GOODS AND
SERVICES.
FINALLY, THIS ADMINISTRATION BELIEVES IN PROTECTING
WORKERS' EARNINGS AND SAVINGS.
- 12 -
OUR BANKING REFORM PROPOSALS TRY TO MODERNIZE THE
LAWS THAT AFFECT OUR BANKING SYSTEM. LET'S FACE IT:
1930'S REGULATIONS AND RESTRICTIONS JUST DON'T CUT IT
IN THE 1990'S. TO PICK JUST ONE EXAMPLE, UNDER OUR
CURRENT LAWS, A CALIFORNIA BANK CAN OPEN A BRANCH IN
BIRMINGHAM, ENGLAND, BUT NOT IN BIRMINGHAM, ALABAMA.
THINK OF THE BANKING SYSTEM AS AN IRRIGATION
NETWORK FOR THE ECONOMY. WHEN IT WORKS PROPERLY, IT
NOURISHES THE SEEDS OF ECONOMIC GROWTH. WHEN IT
DOESN'T, COMPANIES LIKE THE ONES REPRESENTED HERE CAN
WITHER AND DIE.
OUR REFORM PACKAGE TRIES IN A COMPREHENSIVE WAY TO
MAKE OUR BANKING SYSTEM MORE COMPETITIVE, UP-TO-DATE,
SAFE, AND SOUND.
- 13 -
WE ALSO BELIEVE IN PROTECTING RETIREES FROM UNDUE
HARDSHIP. EIGHT YEARS AGO, CONGRESS ADOPTED MEASURES
TO GUARANTEE THE SHORT-TERM SOLVENCY AND LONG-TERM
STABILITY OF THE SOCIAL SECURITY SYSTEM. CONGRESS
SHOULD RESIST ANY TEMPTATION TO UNDERMINE THAT
STABILITY BY PERMITTING RAIDS ON THE TRUST FUND
BALANCES. WE NEED TO HONOR OUR PROMISES TO WORKERS AND
RETIREES.
I KNOW I HAVE COVERED A LOT OF GROUND TODAY, BUT I
WANTED TO MAKE A POINT: OUR GROWTH PACKAGE ADDRESSES
THE CHALLENGES POSED BY A NEW / EXCITING / RAPIDLY
CHANGING WORLD. OUR THEMES:
WE WANT TO PROMOTE GROWTH.
WE WANT TO CREATE JOBS FOR ALL AMERICANS.
WE WANT TO UNLEASH THE POWER OF AMERICAN
IMAGINATION.
- 14 -
WE WANT TO IGNITE PEOPLE'S AMBITIONS, RATHER THAN
INCITING THEIR FEARS.
MANY PEOPLE CALL THE 20TH CENTURY "THE AMERICAN
CENTURY." WELL, WE SHOULD NOT BE CONTENT WITH THAT.
THE STUNNING COLLAPSE OF COMMUNISM IN 1989 WAS NO
ACCIDENT. DURING THE 1980'S THE COMMUNIST WORLD LEARNED
THAT NO WALL, NO BARRIER CAN FEND OFF POWERFUL IDEAS.
IT SAW OUR PROSPERITY AND OUR VITALITY. IT SAW THAT
OUR WAY IS BETTER. THE PROSPERITY OF THE 1980'S --
WHICH BEGAN WITH TAX CUTS AND PRO-GROWTH POLICIES IN
THE UNITED STATES -- TRANSFORMED THE WORLD.
OUR CHALLENGE NOW IS TO SHAPE THE REVOLUTION WE
STARTED, TO MAKE THE 21ST CENTURY THE NEXT AMERICAN
CENTURY.
I ASK YOUR HELP IN THAT QUEST. TOGETHER, WE CANNOT
FAIL.
THANK YOU, AND GOD BLESS THIS GREAT NATION.
#
#
#
finan
Snow/Simon
ABC
Draft Five
April 8, 1991
6 p.m.
ADDRESS BY THE PRESIDENT: THE AMERICAN BUSINESS CONFERENCE
THE DEPARTMENT OF COMMERCE
TUESDAY APRIL 9, 1991
2 p.m.
[Introductory acknowledgments].
It's always great to talk to the American Business
Conference. I've been here four times in recent years, and I've
landed at least two of your leaders -- Bob Mosbacher and Arthur
Levitt. I wish I'd had that much luck fishing last week. //
It's an honor and a pleasure to talk to a group that stands
for success -- a group that admits only medium sized companies
that thrive in the marketplace.
But I've got to tell you, I feel a little funny being here.
After all, I'm the CEO of a corporation that has lost money for
33 of the last 35 years. //
But in keeping with today's theme -- Charting Economic
Growth in the 90s -- I'd like to talk about this administration's
plan for generating more American Success Stories like yours. /
Our recent success in the Gulf has renewed Americans' belief
in themselves. In just the past couple of months, consumer
confidence has soared. The stock market has been climbing toward
the 3,000 mark. Most economists predict that the recession soon
will give way to a new cycle of growth.
2
But we can't rest on our laurels: There's an entire world of
competition out there. The administration's economic growth
package is designed to let people like you do what you do best -
- create jobs, create new opportunities, create wealth.
Let's start with an issue we all will have to address in the
next month, the issue of free and fair trade.
As you know, I have asked Congress to extend my "fast-
track" trade authority.
Fast-track is another term for "good faith. " It guarantees
that Congress will accept or reject the very same agreements that
our negotiators and their counterparts have worked out. This
doesn't weaken Congress' power to review agreements; it simply
prevents eleventh hour changes that would force negotiators from
all countries to start from scratch.
Our trading partners consider fast track a vital test of our
reliability. If we do not retain the fast-track process, we
jeopardize three critical trade initiatives: The Uruguay Round of
trade talks, the North American Free Trade Agreement, and the
Enterprise for the Americas Initiative.
Americans understand the benefits of free trade. In the
55
last four years, exports from the U.S. have increased 59 percent,
more than twice the rate of import growth. And export business
has grown more rapidly that the rest of our economy.
This trade boom has helped everyone involved. A North
American Free Trade Agreement would place us in the largest
integrated market on earth: 360 million people, $6 trillion of
3
annual output. It also would give our neighbors access to the
technologies and products they need to improve their standards of
living / further clean their environments / and create a true
community of nations on our continent.
We also believe strongly in promoting trade. I have asked
Bob Mosbacher to lead a government-wide effort to help small- and
medium-sized companies sell their goods and services abroad.
I'll be in Boston soon, addressing one of these National Export
Initiative Conferences.
I know you support free trade, which is why I want your help
in persuading Congress to preserve the fast-track process.
Without it, we will surrender our chance to shape the emerging
world economy. Without it, we risk setting off the kind of
protectionist warfare that helped produce the Great Depression.
With it, American workers and businesses will be able to
demonstrate their strength in a new and vibrant world market.
This brings me to a second part of our growth package:
Creating an educated, innovative workforce.
Our budget emphasizes the importance of building an America
that is ready to take its place in an emerging world economy.
It stresses the absolute necessity of an educated nation.
We want to reinvent the American school, to create a nation of
students, to make sure that education offers opportunity to
everyone.
Our education strategy starts with some obvious truths: That
schools succeed when teachers teach,
4
When parents support the schools /
When schools accept help from people with skills -- local
businesses, community colleges, or that huge pool of untapped
talent, our retirees /
When communities fight harder to rip down barriers that
prevent effective teaching -- barriers such as crime, drugs and
community indifference.
We also want to encourage entrepreneurship in education. We
want to encourage research into the best teaching methods and
techniques. We want to help workers improve their knowledge and
skills. (Your Vital Link program offers a great way to achieve
this goal.) And we want to ensure that the American people are
the best educated, best motivated in the world. //
Our economic proposals also sweep away obstacles to free
enterprise. They try to unleash the power of the American
imagination.
Your organization understands that runaway government
spending steals opportunity from private citizens. Last year's
budget agreement placed real and stringent caps on Congressional
spending. If Congress wants to spend more money on certain
programs, it will have to make hard choices. It will have to
raise taxes or take the money from other programs.
This year, for the first time in years, federal spending
actually will increase less rapidly than inflation. And I can
promise you that if Congress sends me spending bills that break
this budget, I will send them back -- with a veto message! //
Congress can do its part by
realthering the
Paperwork Reduction
to let the
act.
5
free what
prosper
But we in government must do more As vice president, I
headed the Task Force on Regulatory Relief. As president, I
remain committed to weeding out regulations that prevent people
from creating jobs and opportunities.
Last year it cost us $106 billion to process paperwork, and
regulations
regulatory paperwork cost the economy at least $185 billion, or
$1,700 for every taxpayer. The government generated more than
5.3 billion hours of paperwork last year. That's enough to keep
2 million people busy doing nothing but filling out forms.
Our Council on Competitiveness, chaired by the vice
president, attacks the scourge of unnecessary paperwork We want
to let people turn their attention to the more important and
rewarding work of building a prosperous future.
We have followed the same approach in looking at our tax
code. We want a tax system that rewards enterprise. I
repeatedly have asked Congress to cut our high capital gains tax.
I can't think of any issue that's been more badly
misrepresented than this one. Our critics say a capital gains
cut helps only the rich. They're dead wrong.
Here are the facts: More than a quarter of all capital gains
are declared by families with annual incomes of less than twenty
thousand dollars a year. More than three-quarters are declared
by families who make less than members of Congress. A capital
gains cut isn't a sop to the rich. It rewards people who turn
good ideas into goods and services that people need.
6
When capital gains taxes are high, investors have no
incentive to risk money on untried businesses and entrepreneurs.
Before Congress cut the capital gains rate in 1978, the pool for
start-up businesses had virtually dried up. In the decade
following the cut, the amount of investment seed money increased
tenfold. Capital gains payments to the federal government
quadrupled. This is what happens when you reduce the cost of
capital.
A capital gains cut also will encourage savings and
discourage debt. For the past four years, we have taxed capital
gains like any other form of income. At the same time, we have
encouraged people to take on debt. Not surprisingly, people have
lines of credit
borrowed more, invested less. Home equity loans, a perfect
example of this trend, have tripled in volume since we raised
that capital gains rate four years ago. They let people gain
access to the increased value of their homes without having to
pay a capital gains duty.
No other major industrial power taxes capital gains at
nearly the rate we do. Germany and Japan enjoy much higher
savings and investment rates than we do in part because they
don't punish successful investment.
My point is simple: Capital gains taxes are taxes on the
American dream. If we want to build on our natural strengths as
a nation, we should cut this burdensome tax.
Similarly, we should foster innovation wherever we can. Our
budget advocates increased federal support for research and
7
development in basic and applied science. It also encourages
private-sector innovation by extending the Research and
Experimentation Tax Credit. This administration understands the
power of knowledge, and we want the tax code to reward people who
turn their big dreams into revolutionary new goods and services.
Finally, this administration believes in protecting workers'
earnings and savings.
Our banking reform proposals try to free our banking system
19305
from 1940s regulations and restrictions that just don't cut it in
the 1990s.
We want a deposit insurance system that protects that
average depositor and forces banks to take responsibility for
their behavior. We want to improve supervision, so that we
address problems before banks fail.
In short, our comprehensive reform proposals aim to make our
banking system more competitive, up-to-date, safe and sound.
We also believe in protecting retirees from undue hardship.
Eight years ago, Congress adopted measures to guarantee the
short-term solvency and long-term stability of the social
security system. Congress should resist any temptation to
undermine that stability by permitting raids on the trust fund
balances. We need to honor our promises to workers and retirees.
I know I have covered a lot of ground today, but I wanted to
make a point: Our growth package addresses the challenges posed
by a new / exciting / rapidly changing world. Our themes:
We want to promote growth.
8
We want to create jobs for all Americans.
We want to unleash the power of American imagination.
We want to ignite people's ambitions, rather than inciting
their fears.
Many people call the 20th Century "The American Century."
Well, we should not be content with that.
The stunning collapse of communism in 1989 was no accident.
During the 1980s the communist world learned that no wall, no
barrier can fend off powerful ideas. It saw our prosperity and
our vitality. It saw that our way is better. The prosperity of
the 1980s -- which began with tax cuts and pro-growth policies in
the United States -- transformed the world.
Our challenge now is to shape the revolution we started, to
make the 21st Century the Next American Century.
I ask your help in that quest. Together, we cannot fail.
Thank you, and God bless this great nation.
#
#
#
APR 08 '91 18:26
P.2/2
Treasury insert
It is time to modernize so our banks can compete efficiently, and
play their crucial role of fueling economic growth and creating
jobs. To pick just one example, under our laws a California bank
can open a branch in Birmingham, England -- but not in
Birmingham, Alabama. Our banking reform package would lift these
ancient and onerous restrictions that weaken our banks and hamper
their competitiveness at home and abroad.
Snow/Simon
ABC
Draft Four
April 8, 1991
5 p.m.
ADDRESS BY THE PRESIDENT: THE AMERICAN BUSINESS CONFERENCE
THE DEPARTMENT OF COMMERCE
TUESDAY APRIL 9, 1991
2 p.m.
[Introductory acknowledgments].
It's always great to talk to the American Business
Conference. I've been here four times in recent years, and I've
landed at least two of your leaders -- Bob Mosbacher and Arthur
Levitt. I wish I'd had that much luck fishing last week. //
It's an honor and a pleasure to talk to a group that stands
for success -- a group that admits only medium sized companies
that thrive in the marketplace.
But I've got to tell you, I feel a little funny being here.
After all, I'm the CEO of a corporation that has lost money for
33 of the last 35 years. //
But in keeping with today's theme -- Charting Economic
Growth in the 90s -- I'd like to talk about this administration's
plan for generating more American Success Stories like yours. /
Our recent success in the Gulf has renewed Americans' belief
in themselves. In just the past couple of months, consumer
confidence has soared. The stock market has been climbing toward
the 3,000 mark. Most economists predict that the recession soon
will give way to a new cycle of growth.
2
But we can't rest on our laurels: There's an entire world of
competition out there. The administration's economic growth
package is designed to let people like you do what you do best -
- create jobs, create new opportunities, create wealth.
Let's start with an issue we all will have to address in the
next month, the issue of free and fair trade.
As you know, I have asked Congress to extend my "fast-
track" trade authority.
Fast-track is another term for "good faith." It guarantees
that Congress will accept or reject the very same agreements that
our negotiators and their counterparts have worked out. This
doesn't weaken Congress' power to review agreements; it simply
prevents eleventh hour changes that would force negotiators from
all countries to start from scratch.
Our trading partners consider fast track a vital test of our
reliability. If we do not retain the fast-track process, we
jeopardize three critical trade initiatives: The Uruguay Round of
trade talks, the North American Free Trade Agreement, and the
Enterprise for the Americas Initiative.
Americans understand the benefits of free trade. In the
last four years, exports from the U.S. have increased 59 percent,
more than twice the rate of import growth. And export business
has grown more rapidly that the rest of our economy.
This trade boom has helped everyone involved. A North
American Free Trade Agreement would place us in the largest
integrated market on earth: 360 million people, $6 trillion of
3
annual output. It also would give our neighbors access to the
technologies and products they need to improve their standards of
living / further clean their environments / and create a true
community of nations on our continent.
We also believe strongly in promoting trade. I have asked
Bob Mosbacher to lead a government-wide effort to help small- and
medium-sized companies sell their goods and services abroad.
I'll be in Boston soon, addressing one of these National Export
Initiative Conferences.
I know you support free trade, which is why I want your help
in persuading Congress to preserve the fast-track process.
Without it, we will surrender our chance to shape the emerging
world economy. Without it, we risk setting off the kind of
protectionist warfare that helped produce the Great Depression.
With it, American workers and businesses will be able to
demonstrate their strength in a new and vibrant world market.
This brings me to a second part of our growth package:
Creating an educated, innovative workforce.
Our budget emphasizes the importance of building an America
that is ready to take its place in an emerging world economy.
It stresses the absolute necessity of an educated nation.
We want to reinvent the American school, to create a nation of
students, to make sure that education offers opportunity to
everyone.
Our education strategy starts with some obvious truths: That
schools succeed when teachers teach,
4
When parents support the schools /
When schools accept help from people with skills --
local businesses, community colleges, or that huge pool of
untapped talent, our retirees /
When communities fight harder to rip down barriers that
prevent effective teaching -- barriers such as crime, drugs and
community indifference.
We also want to encourage entrepreneurship in education. We
want to encourage research into the best teaching methods and
techniques. We want to help workers improve their knowledge and
skills. (Your Vital Link program offers a great way to achieve
this goal.) And we want to ensure that the American people are
the best educated, best motivated in the world. //
Our economic proposals also sweep away obstacles to free
enterprise. They try to unleash the power of the American
imagination.
Your organization understands that runaway government
spending steals opportunity from private citizens. Last year's
budget agreement placed real and stringent caps on Congressional
spending. If Congress wants to spend more money on certain
programs, it will have to make hard choices. It will have to
raise taxes or take the money from other programs.
This year, for the first time in years, federal-spending
actually will increase less rapidly than inflation. And I can
promise you that if Congress sends me spending bills that break
this budget, I will send them back -- with a veto message! //
5
But we in government must do more. As vice president, I
headed the Task Force on Regulatory Relief. As president, I
remain committed to weeding out regulations that prevent people
from creating jobs and opportunities.
Last year regulations cost our economy at least $106
billion, or $1,000 for every taxpayer. They generated more than
5.3 billion hours of paperwork each year. That's enough to keep
2 million people busy doing nothing but filling out forms.
Our Council on Competitiveness, chaired by the vice
president, attacks the scourge of unnecessary paperwork. We want
to let people turn their attention to the more important and
rewarding work of building a prosperous future.
We have followed the same approach in looking at our tax
code. We want a tax system that rewards enterprise. I
repeatedly have asked Congress to cut our high capital gains tax.
I can't think of any issue that's been more badly
misrepresented than this one. Our critics say a capital gains
cut helps only the rich. They're dead wrong.
Here are the facts: More than a quarter of all capital gains
are declared by families with annual incomes of less than twenty
thousand dollars a year. More than three-quarters are declared
by families who make less than members of Congress. A capital
gains cut isn't a sop to the rich. It rewards people who turn
good ideas into goods and services that people need.
When capital gains taxes are high, investors have no
incentive to risk money on untried businesses and entrepreneurs.
6
Before Congress cut the capital gains rate in 1978, the pool for
start-up businesses had virtually dried up. In the decade
following the cut, the amount of investment seed money increased
tenfold. Capital gains payments to the federal government
quadrupled. This is what happens when you reduce the cost of
capital.
A capital gains cut also will encourage savings and
discourage debt. For the past four years, we have taxed capital
gains like any other form of income. At the same time, we have
encouraged people to take on debt. Not surprisingly, people have
lines of credit
borrowed more, invested less. Home equity loans, a perfect
example of this trend, have tripled in volume since we raised
that capital gains rate four years ago. They let people gain
access to the increased value of their homes without having to
pay a capital gains duty.
No other major industrial power taxes capital gains at
nearly the rate we do. Germany and Japan enjoy much higher
savings and investment rates than we do in part because they
don't punish successful investment.
My point is simple: Capital gains taxes are taxes on the
American dream. If we want to build on our natural strengths as
a nation, we should cut this burdensome tax.
Similarly, we should foster innovation wherever we can. Our
budget advocates increased federal support for research and
development in basic and applied science. It also encourages
private-sector innovation by extending the Research and
7
Experimentation Tax Credit. This administration understands the
power of knowledge, and we want the tax code to reward people who
turn their big dreams into revolutionary new goods and services.
Finally, this administration believes in protecting workers'
earnings and savings.
Our banking reform proposals try to free our banking system
from 1940s regulations and restrictions that just don't cut it in
the 1990s.
We want a deposit insurance system that protects that
average depositor and forces banks to take responsibility for
their behavior. We want to improve supervision, so that we
address problems before banks fail.
In short, our comprehensive reform proposals aim to make our
banking system more competitive, up-to-date, safe and sound.
We also believe in protecting retirees from undue hardship.
Eight years ago, Congress adopted measures to guarantee the
short-term solvency and long-term stability of the social
security system. Congress should resist any temptation to
undermine that stability by permitting raids on the trust fund
balances. We need to honor our promises to workers and retirees.
I know I have covered a lot of ground today, but I wanted to
make a point: Our growth package addresses the challenges posed
by a new / exciting / rapidly changing world. Our themes:
We want to promote growth.
We want to create jobs for all Americans.
We want to unleash the power of American imagination.
8
We want to ignite people's ambitions, rather than inciting
their fears.
Many people call the 20th Century "The American Century."
Well, we should not be content with that.
The stunning collapse of communism in 1989 was no accident.
During the 1980s the communist world learned that no wall, no
barrier can fend off powerful ideas. It saw our prosperity and
our vitality. It saw that our way is better. The prosperity of
the 1980s -- which began with tax cuts and pro-growth policies in
the United States transformed the world.
Our challenge now is to shape the revolution we started, to
make the 21st Century will be the Next American Century.
I ask your help in that quest. Together, we cannot fail.
Thank you, and God bless this great nation.
#
#
#
Snow/Simon
ABC
Draft Four
April 8, 1991
5 p.m.
ADDRESS BY THE PRESIDENT: THE AMERICAN BUSINESS CONFERENCE
THE DEPARTMENT OF COMMERCE
TUESDAY APRIL 9, 1991
2 p.m.
[Introductory acknowledgments].
It's always great to talk to the American Business
Conference. I've been here four times in recent years, and I've
Arthur
hired away at least two of your leaders -- Bob Mosbacher and Alan
Levitt. I wish I'd had that much luck fishing last week. //
It's an honor and a pleasure to talk to a group that stands
for success -- a group that admits only medium sized companies
that thrive in the marketplace.
But I've got to tell you, I feel a little funny being here.
After all, I'm the CEO of a corporation that has lost money for
33 of the last 35 years. //
But in keeping with today's theme -- Charting Economic
Growth in the 90s -- I'd like to talk about this administration's
plan for generating more American Success Stories like yours./
Our recent success in the Gulf has renewed Americans' belief
in themselves. In just the past couple of months, consumer
confidence has soared. The stock market has been climbing toward
the 3,000 mark. Most economists predict that the recession soon
will give way to a new cycle of growth.
2
But we can't rest on our laurels: There's an entire world of
competition out there. The administration's economic growth
package is designed to let people like you do what you do best -
- create jobs, create new opportunities, create wealth.
Let's start with an issue we all will have to address in the
next month, the issue of free and fair trade.
As you know, I have asked Congress to extend my "fast-
track" trade authority.
Fast-track is another term for "good faith. " It guarantees
that Congress will accept or reject the very same agreements that
our negotiators and their counterparts have worked out. This
doesn't weaken Congress' power to review agreements; it simply
prevents eleventh hour changes that would force negotiators from
all countries to start from scratch.
Our trading partners consider fast track a vital test of our
reliability. If we do not retain the fast-track process, we
could lose three critical trade initiatives: The North American
Free Trade Agreement, the Enterprise for the Americas Initiative
and the Uruguay Round of trade talks.
Americans understand the benefits of free trade. In the
last four years, exports from the U.S. have increased 59 percent,
more than twice the rate of import growth. And export business
has grown more rapidly that the rest of our economy.
This trade boom has helped everyone involved. A North
American Free Trade Agreement would place us in the largest
integrated market on earth: 360 million people, $6 trillion of
3
annual output. It also would give our neighbors access to the
technologies and products they need to improve their standards of
living / further clean their environments / and create a true
community of nations on our continent.
We also believe strongly in promoting trade. I have asked
Bob Mosbacher to lead a government-wide effort to help small- and
medium-sized companies sell their goods and services abroad.
I'll be in Boston soon, addressing one of these National Export
Initiative Conferences.
I know you support free trade, which is why I want your help
in persuading Congress to preserve the fast-track process.
Without it, we will surrender our chance to shape the emerging
world economy. We also will risk setting off the kind of
protectionist warfare that helped produce the Great Depression.
With it, American workers and businesses will be able to
demonstrate their strength in a new and vibrant world market.
This brings me to a second part of our growth package:
Creating an educated, innovative workforce.
Our budget emphasizes the importance of building an America
that is ready to take its place in an emerging world economy.
It stresses the importance of an educated nation. We want
to reinvent the American school, to create a nation of students,
to make sure that education offers opportunity to everyone.
Our education strategy starts with some obvious truths: That
schools succeed when teachers teach,
When parents support the schools /
4
When schools accept help from people with skills --
businesses, academics, retirees /
When communities rip down barriers that prevent effective
teaching -- barriers such as crime, drugs and community
indifference.
We also want to encourage entrepreneurship in education. We
want to encourage research into the best teaching methods and
techniques. We want to help workers improve their knowledge and
skills. (Your Vital Link program offers a great way to achieve
this goal.) And we want to ensure that the American people are
the best educated, best motivated in the world. //
Our economic proposals also sweep away obstacles to free
enterprise. They try to unleash the power of the American
imagination.
Your organization understands that runaway government
spending steals opportunity from private citizens. Last year's
budget agreement placed real and stringent caps on Congressional
spending. If Congress wants to spend more money on certain
programs, it will have to make hard choices. It will have to
raise taxes or take the money from other programs.
This year, for the first time in years, federal spending
actually will increase less rapidly than inflation. And I can
promise you that if Congress sends me spending bills that break
this budget, I will send them back -- with a veto message! //
But we in government must do more. As vice president, I
headed the Task Force on Regulatory Relief. As president, I
5
remain committed to weeding out regulations that prevent people
from creating jobs and opportunities.
Last year regulations cost our economy at least $106
billion, or $1,000 for every taxpayer. They generated more than
5.3 billion hours of paperwork each year. That's enough to keep
2 million people busy doing nothing but filling out forms.
Our Council on Competitiveness, chaired by the vice
president, attacks the scourge of unnecessary paperwork. We want
to let people turn their attention to the more important and
rewarding work of building a prosperous future. Our banking
reform package tries to lift ancient and onerous restrictions
that crush the kind of innovation that system needs. An in
everything from the pharmaceutical industry to the auto industry,
we have tried to clear away regulatory obstacles to growth.
We have followed the same approach in looking at our tax
code. We want a tax system that rewards enterprise. I
repeatedly have asked Congress to cut our high capital gains tax.
I can't think of any issue that's been more badly
misrepresented than this one. Our critics say a capital gains
cut helps only the rich. They're dead wrong.
Here are the facts: More than a quarter of all capital gains
are declared by families with annual incomes of less than twenty
thousand dollars a year. More than three-quarters are declared
by families who make less than members of Congress. A capital
gains cut isn't a sop to the rich. It rewards people who turn
good ideas into good deeds.
THE WHITE HOUSE
WASHINGTON
When capital gains taxes are high, investors have no
incentive to risk money on untried businesses and entrepreneurs.
Before Congress cut the capital gains rate in 1978, the pool for
start-up businesses had virtually dried up. In the decade
following the cut, the amount of investment seed money increased
tenfold. Capital gains payments to the federal government
quadrupled. This is what happens when you reduce the cost of
capital.
A capital gains cut also will encourage savings and
discourage debt. For the past four years, we have taxed capital
gains like any other form of income. At the same time, we have
encouraged people to take on debt. Not surprisingly, people have
borrowed more, invested less. Home equity loans, a perfect
example of this trend, have tripled in volume since we raised
that capital gains rate four years ago. They let people gain
access to the increased value of their homes without having to
pay a capital gains duty.
No other major industrial power taxes capital gains at
nearly the rate we do. Germany and Japan enjoy much higher
savings and investment rates than we do in part because they
don't punish successful investment.
My point is simple: Capital gains taxes are taxes on the
American dream. If we want to build on our natural strengths as
a nation, we should cut this burdensome tax.
Similarly, we should foster innovation wherever we can. Our
budget advocates increased federal support for research and
THE WHITE HOUSE
WASHINGTON
development in basic and applied science. It also encourages
private-sector innovation by extending the Research and
Experimentation Tax Credit. This administration understands the
power of knowledge, and we want the tax code to reward people who
turn their big dreams into revolutionary new goods and services.
I know I have covered a lot of ground today, but I wanted to
make a point: Our growth package addresses the challenges posed
by a new / exciting / rapidly changing world. Our themes:
We want to promote growth.
We want to unleash the power of American imagination.
We want to highlight Americans' capabilities, not their
weaknesses.
Many people call the 20th Century "The American Century." "
Well, we should not be content with that.
The stunning collapse of communism in 1989 was no accident.
During the 1980s the communist world learned that no wall, no
barrier can fend off powerful ideas. It saw our prosperity and
our vitality. It saw that our way is better. The prosperity of
the 1980s -- which began with tax cuts and pro-growth policies in
the United States -- transformed the world.
Our challenge now is to shape the revolution we started, to
make the 21st Century will be the Next American Century.
I ask your help in that quest. Together, we cannot fail.
Thank you, and God bless this great nation.
#
#
#
eriods the tax penalty [of equity versus debt
New Business Creation
financing] is over 50 percent." He continues by
One of the purported favorable effects of a
underscoring the perversity of these incentives:
capital gains tax cut is to divert investment
The goals of tax reform were laudable: uniformity and equity.
funds to new business start-ups, particularly
But what possible rationale is there for imposing a 50 percent
in the high tech industry-where investments
tax penalty on investors willing to commit equity investments
in a project in anticipation of future capital gains, and to
tend to involve high risk but hold out
provide a corresponding tax benefit to the use of debt
potentially large pay-offs. This is particularly
finance The result of tax reform is not uniformity, nor a tilt
against debt, but is the tilt against capital gains and in favor
vital to the economy because studies indicate
of debt.
that small businesses (twenty employees or
less) create anywhere from 50 to 80 percent of
Economy-wide evidence suggests that this bias
all new jobs in the US.9
encouraging debt financing has already had
substantial effects on corporate investment
Although this has proven to be a scientifically
patterns. Between 1984 and 1987 corporate
difficult relationship to prove, causal evidence
equity declined by $300 billion while debt
tends to support the theory: past reductions in
increased by more than $600 billion.⁷ This
the capital gains tax rates (1978 and 1981, for
corporate shift in favor of debt and leveraged
instance) have stimulated the start-up of new
buy-outs is a by-product of the capital gains rate
businesses, while new business starts have
hike. By raising capital gains tax rates in 1986,
stalled after increases in capital gains taxes
Congress directly encouraged the very trend in
(1969 and 1986). Table 6 compares three
corporate finance that it now bemoans: increases
separate measures of new business
in corporate debt and leveraged buy-outs.⁸
generation-the number of initial publicstock
Table 6
Relationship Between Capital Gains Tax Rate and Various Measures
of New Business Formation ($ Millions)
Top Capital
Initial Public
Number of
$ Commitments To
Year
Gains Rate
Offerings
$ Raised
Venture Capitalist
1969
27%
1,026
$2,600
$506
1970
32
358
780
272
1971
39
391
1,650
252
1972
45
568
2,720
157
1973
45
100
330
133
1974
45
15
50
124
1975
45
15
270
20
1976
49
34
230
93
1977
49
40
150
68
1978
48
45
250
980
1979
28
81
510
449
1980
28
237
1,400
961
1981
24
448
3,210
1,628
1982
20
222
1,450
2,119
1983
20
884
12,620
5,098
1984
20
354
3,900
4,590
1985
20
362
8,600
3,502
1986
20
719
22,400
4,650
1987
28
541
24,200
4,900
1988
33
280
23,400
N.A.
Sources: Richard Rabo, U.S. Chamber of Commerce, Testimony before the House Committe on Small Business, on Capital Gains Taxation, Nov. 1,
1989; and Venture Economics, Venture Capital Yearbook, 1988, p. 17.
11
TheNtionalChamber
NCF
IONAL CHAMBER FOUNDATION
Foundatior
THE TAX
TREATMENT OF
CAPITAL GAINS
Recent research findings on the
Capital Gains Tax
By Stephen K. Moore
LICY
A N A LYSIS
STATISTICS
INDUSTRIAL PRODUCTION AND CONSUMER PRICES-MAJOR
INDUSTRIAL COUNTRIES
Industrial production (1987 = 100; seasonally adjusted)
Consumer prices (1982-84=100)
Period
United
United
United
United
Canada
States
Japan
France
Germany
Italy
Canada
States 1
Japan
France
Germany
Italy
Kingdom
Kingdom
81.9
76.5
82.9
97.3
90.3
91.8
86.3
96.5
94.9
98.0
91.7
97.0
87.7
95.4
1982
1983
84.9
81.5
85.5
96.5
90.9
88.8
89.5
99.6
100.4
99.9
100.3
100.3
100.8
99.8
111.5
104.8
1984
92.8
91.4
93.4
97.1
93.5
91.8
89.6
103.9
104.8
102.1
108.0
102.7
1985
94.4
96.5
96.8
97.2
97.7
92.9
94.5
107.6
108.9
104.2
114.3
104.9
121.1
111.1
95.3
95.7
96.6
98.0
99.6
96.2
96.8
109.6
113.4
104.9
117.2
104.7
128.5
114.9
1986
100.0
100.0
100.0
100.0
100.0
100.0
113.6
118.4
105.0
121.1
104.9
134.4
119.7
1987
100.0
105.4
105.0
109.3
104.7
103.9
105.9
103.6
118.3
123.2
105.7
124.4
106.3
141.1
125.6
1988
108.1
105.1
115.7
108.9
108.7
109.2
104.0
124.0
129.3
108.1
128.9
109.2
150.4
135.4
1989
1990 P
109.2
101.6
121.3
110.2
114.6
103.3
130.7
135.5
111.4
133.2
112.1
159.6
148.2
111.4
114.6
104.4
126.1
131.5
109.0
130.5
110.2
154.4
139.6
1989:
Dec
108.6
104.7
116.9
107.8
1990:
Jan
107.5
'102.6
117.2
108.5
111.9
107.3
'103.5
127.4
132.7
109.2
130.8
110.9
155.3
140.4
Feb
108.5
'102.7
116.5
107.1
111.3
111.4
'103.2
128.0
133.4
109.5
131.1
111.3
156.5
141.2
Mar
108.9
102.6
118.8
108.0
112.8
110.4
104.8
128.7
133.9
109.9
131.6
111.4
157.1
142.6
108.8
' 102.3
117.9
109.8
110.2
109.5
105.9
128.9
133.9
110.8
132.1
111.6
157.7
147.0
Apr
May
109.4
' 102.8
121.0
109.3
113.4
107.2
'104.7
129.2
134.6
111.6
132.3
111.8
158.0
148.3
June
110.1
'102.7
121.1
109.4
113.7
108.4
107.2
129.9
135.1
111.0
132.6
111.9
158.7
148.9
July
110.4
'103.1
123.2
111.6
115.2
109.7
102.9
130.4
135.8
110.9
132.9
111.9
159.3
149.0
110.5
'102.0
123.7
111.6
116.5
109.7
'102.1
131.6
135.8
111.4
133.7
112.2
160.3
150.5
Aug
110.6
'100.4
122.4
109.8
117.3
110.7
'102.1
132.7
136.3
112.4
134.4
112.6
161.2
151.9
Sept
Oct
109.9
'100.3
125.3
110.1
117.0
107.4
102.1
133.5
137.4
113.9
135.2
113.4
162.6
153.1
108.0
'116.6
106.6
100.5
133.8
138.2
113.5
135.0
113.2
163.6
152.7
Nov
108.3
'98.8
124.6
Dec
107.2
97.8
124.0
106.2
116.4
109.2
'99.8
133.8
138.1
113.2
134.9
113.3
164.2
152.6
Jan
P
'106.6
125.1
109.3
118.8
99.5
134.6
141.7
114.1
135.4
114.1
165.4
153.0
1991:
Feb P
105.7
134.8
141.7
153.8
1 Data relate to all urban consumers.
Source: National sources as reported by Department of Commerce (Bureau of Economic Analysis
and International Trade Administration, Trade Information and Analysis).
U.S. MERCHANDISE EXPORTS AND IMPORTS
[Billions of dollars; monthly data seasonally adjusted]
Merchandise exports (f.a.s. value) 1
General merchandise imports (customs value) 3
Trade balance
Principal end-use commodity category
Principal end-use commodity category
General
Auto-
Con-
Auto-
Con-
mer-
Indus-
Indus-
Cap-
motive
sumer
Cap-
motive
chandise
Exports
Exports
sumer
Foods.
trial
Foods
trial
(f.a.s) less
(f.a.s)
Period
ital
vehi-
goods
ital
vehi-
goods
imports
Total 2
feeds,
sup-
Total
feeds,
sup-
goods
cles,
(non-
and
goods
cles,
(non-
(c.i.f.
imports
less
and
plies
Other 2
plies
Other
(customs
except
parts,
food)
except
parts,
food)
value)
imports
bever-
and
bever-
and
value)
(c.i.f.)
auto-
and
materi-
except
auto-
and
materi-
except
ages
ages
motive
en-
auto-
motive
en-
auto-
als
als
gines
motive
gines
motive
1982
216.4
31.3
61.7
72.7
15.7
14.3
20.7
244.0
17.1
112.0
35.4
33.3
39.7
6.5
254.9
-27.5
-38.4
1983
205.6
30.9
56.7
67.2
16.8
13.4
20.5
258.0
18.2
107.0
40.9
40.8
44.9
6.3
269.9
-52.4
-64.2
1984
224.0
31.5
61.7
72.0
20.6
13.3
24.0
330.7
21.0
123.7
59.8
53.5
60.0
7.8
346.4
-106.7
- 122.4
218.8
24.0
58.5
73.9
22.9
12.6
27.3
336.5
21.9
113.9
65.1
66.8
68.3
9.4
352.5
-117.7
-133.6
1985
1986
5 227.2
22.3
57.3
75.8
21.7
14.2
35.9
365.4
24.4
101.3
71.8
78.2
79.4
10.4
382.3
-138.3
-155.1
1987
254.1
24.3
66.7
86.2
24.6
17.7
34.6
406.2
24.8
111.0
84.5
85.2
88.7
12.1
424.4
-152.1
-170.3
322.4
32.3
85.1
109.2
29.3
23.1
43.4
441.0
24.8
118.3
101.4
87.7
95.9
12.8
459.5
-118.5
-137.1
1988
1989
363.8
37.2
99.3
138.8
34.8
36.4
17.2
473.2
25.1
132.3
113.3
86.1
102.9
13.6
493.2
109.4
129.4
393.9
35.1
104.2
152.6
36.0
43.4
22.6
494.9
26.6
143.0
117.3
85.9
105.7
16.3
516.6
101.0
-122.7
1990
1990: Jan
31.4
3.1
8.6
12.0
2.5
3.4
1.8
41.6
2.3
12.9
9.8
6.4
8.9
1.3
43.4
-10.2
-12.1
Feb
31.6
3.1
8.0
12.8
2.8
3.4
1.6
38.7
2.3
11.1
9.1
6.7
8.3
1.2
40.4
-7.1
-8.8
Mar
33.3
3.2
8.6
12.8
3.3
3.4
1.8
41.6
2.5
11.5
9.8
7.9
8.7
1.3
43.5
-8.4
-10.2
32.1
3.0
8.4
12.4
3.0
3.5
1.7
39.4
2.3
10.5
9,8
6.9
8.7
1.3
41.1
-7.3
-9.1
Apr
May
32.8
2.9
8.4
12.7
3.5
3.6
1.8
40.5
2.3
11.3
9.5
7.5
8.7
1.3
42.4
-7.8
-9.6
8.5
-7.1
June
34.2
3.4
8.4
13.5
3.4
3.9
1.6
39.6
2.1
10.5
9.6
7.3
1.4
41.3
-5.3
July
32.1
2.8
8.1
12.8
3.0
3.7
1.8
41.2
2.1
11.0
10.1
7.5
9.1
1.3
43.1
-9.1
-11.0
Aug
32.5
3.1
8.7
12.5
3.1
3.5
1.7
42.3
2.1
12.3
9.8
7.7
9.1
1.3
44.2
-9.7
-11.6
8.6
1.6
43.1
-9.3
Sept
32.0
2.7
8.6
12.6
2.7
3.5
1.8
41.3
2.1
12.8
9.3
7.0
-11.1
Oct
35.0
2.6
10.0
13.2
3.4
3.9
1.8
46.0
2.2
14.3
10.6
8.0
9.6
1.4
47.9
-11.0
-12.9
Nov
34.2
3.0
9.6
12.3
3.1
3.8
2.4
43.1
2.1
13.3
10.2
7.0
9.1
1.5
44.9
-8.9
-10.7
9.8
6.3
8.3
1.3
41.3
-6.3
Dec
33.3
2.5
9.0
13.0
2.4
3.7
2.6
39.6
2.2
11.6
-8.0
1991: Jan
34.5
2.7
9.6
13.1
3.2
4.0
2.0
41.5
2.2
12.4
9.9
7.1
8.5
1.3
43.3
-7.0
-8.8
1
Includes Department of Defense Military Assistance Program grant-aid shipments.
month basis.
2
Includes undocumented exports to Canada through 1988.
NOTE.-Data shown include trade of the U.S. Virgin Islands.
3
Total arrivals of imported goods other than intransit shipments.
4
Total includes revisions not reflected in detail.
Source: Department of Commerce. Bureau of the Census.
5
Total exports are on a revised statistical month basis; end-use categories are on a statistical
From
CEA
35
3/91
22%
Capital Gains and Taxes Paid on Capital Gain Income
for Returns with Net Capital Gains, 1954-88
Gains in
adjusted
Taxes paid
gross
Excluded
Total
on capital
Year
income
gains 1/
gains
gain income
1954
3,732
3,425
7,157
1,010
1955
5,126
4,755
9,881
1,465
1956
4,991
4,692
9,683
1,402
1957
4,128
3,982
8,110
1,115
1958
4,879
4,561
9,440
1,309
1959
6,797
6,340
13,137
1,920
1960
6,004
5,743
11,747
1,687
1961
8,291
7,710
16,001
2,481
1962
6,821
6,630
13,451
1,954
1963
7,468
7,111
14,579
2,143
1964
8,909
8,522
17,431
2,482
1965
11,069
10,415
21,484
3,003
1966
10,960
10,388
21,348
2,905
1967
14,594
12,941
27,535
4,112
1968
18,854
16,753
35,607
5,943
1969
16,078
15,361
31,439
5,275
1970
10,656
10,192
20,848
3,161
1971
14,559
13,782
28,341
4,350
1972
18,397
17,472
35,869
5,708
1973
18,201
17,556
35,757
5,366
1974
15,378
14,839
30,217
4,253
1975
15,799
15,104
30,903
4,534
1976
20,207
19,285
39,492
6,621
1977
23,363
21,974
45,337
8,104
1978
26,232
24,294
50,526
9,104
1979
31,331
42,112
73,443
11,669
1980
32,273
41,859
74,132
12,459
1981
34,713
46,225
80,938
12,684
1982
38,514
51,639
90,153
12,900
1983
52,398
70,375
122,773
18,468
1984
58,198
81,567
139,765
21,534
400 %
1985
71,600
99,848
171,448
26,478
1986
135,043
191,291
326,334
43,696
1987
144,173
0
144,173
32,941
1988
161,871
0
161,871
38,963 2/
Department of the Treasury
July 11, 1990
Office of Tax Analysis
1/ For 1954 . 78, 50 percent of net long-term gains in excess of it short-term losses
for returns with capital gains; for 1979-86, 60 percent such net long-term gains. In
1987, the exclusion was eliminated.
2/ Preliminary, subject to revision.
FROM: USTR
EXPORT GROWTH AND THE IMPORTANCE OF FAST TRACK
EXPORT EXPANSION HAS BEEN A VITAL SOURCE OF ECONOMIC GROWTH FOR
THE U.S. ECONOMY IN RECENT YEARS
Exports have become increasingly important to U.S. economic
growth. Over the last 4 years U.S. merchandise exports have
expanded by nearly three-fourths, rising from $246 billion
in 1986 (constant 1982 dollars) to $424 billion in 1990.
This $178 billion expansion in U.S. exports accounted for
over 40 percent of the 4-year growth in U.S. GNP.
In 1990, merchandise exports expanded by 8.6 percent or $33
billion. Export expansion accounted for 88 percent of U.S.
GNP growth last year.
Export growth gives an additional boost to the economy by
spurring investment in the manufacturing and other export
sectors. While the economy expanded by only 0.9 percent
last year, investment in producers' durable equipment rose
nearly three times faster (2.4 percent), stimulated in part
by export expansion.
EXPORT EXPANSION SHOULD HELP MODERATE THE CURRENT ECONOMIC
DOWNTURN AND HASTEN THE RECOVERY
The current outlook for a relatively short, shallow
recession hinges in part on sustained U.S. export growth.
To add 1 percentage point to GNP growth, U.S. exports of
goods and services would need grow by no more than 6.6
percent this year. Last year, goods and services exports
grew by 6.2 percent.
The outlook for exports this year is good.
-- The dollar exchange rate has moderated over the last
year, increasing the price competitiveness of U.S.
goods and services in many foreign markets.
-- Demand growth generally is expected to be stronger in
our export markets than at home in the period ahead.
-- American firms and workers in the export sectors have
made significant efforts to enhance their international
contrary of
competitiveness in recent years. Manufactured exports
years
have grown extremely rapidly since 1986. Manufacturing
complan
as a share of U.S. constant-dollar GNP, at 23.1
percent, reached a post-World War II record high in
bout
the
1988 (most recent available data).
beliness
U.S. efforts in the 1980s both to resist the imposition
of new barriers against American producers and to open
- 2 -
foreign markets further to U.S. exports have created a
expansion. relatively favorable environment abroad for U.S. export
CONTINUED PROGRESS IN OPENING FOREIGN MARKETS IS NEEDED TO HELP
SUSTAIN EXPORT EXPANSION
deficit trade has
From a 1987 peak of $152 billion, the U.S. merchandise trade
straight
deficit fell to a deficit of $101 billion last year.
fallen
4
years.
As additional progress is made in reducing the federal
budget deficit and strengthening domestic saving, the trade
deficit is likely to decline further. Such macroeconomic
adjustments at home and abroad will work not only to lower
the U.S. trade deficit but also to sustain the potential for
strong U.S. export expansion.
Indeed, strong export growth will be vital if the reduction
of the U.S. trade deficit is to take place in the context of
healthy U.S. economic expansion.
To have all the tools needed to sustain the export expansion
-- trade policy as well as macroeconomic tools -- the United
States must be in a position to pursue the successful
completion of the Uruguay Round and to negotiate freer trade
for the Western Hemisphere.
On its own, a successful completion of the Uruguay Round
could bring an estimated 10 year cumulative gain to the U.S.
GNP as great as $1.1 trillion (1989 purchasing power). That
translates into an average annual income gain of $1,600 per
U.S. family of four over the next 10 years.
EXTENSION OF FAST TRACK AUTHORITY IS KEY TO THE FURTHER OPENING
OF FOREIGN MARKETS TO U.S. EXPORTS
The current economic environment is generally favorable to
U.S. export expansion. The failure to renew fast track
authority, however, would be the death knell for
Administration efforts to successfully complete the Uruguay
Round and to negotiate a North American free Trade Agreement
with Mexico and Canada. U.S. export potential would suffer
if the Administration is denied the tools required to
negotiate broad foreign market-opening agreements.
A failure of the Uruguay Round, in particular, might lead to
increased pressures to raise trade and investment barriers
around the world. Just as falling barriers over the last
four decades have stimulated growth in trade and living
standards, increasing barriers could reduce trade and
economic growth. A sufficiently sharp movement away from
open markets could contribute to a global recession.
March
1
1991
staffed
Snow/Simon
ABC
Draft One
April 5, 1991
5 p.m.
ADDRESS BY THE PRESIDENT: THE AMERICAN BUSINESS CONFERENCE
THE DEPARTMENT OF COMMERCE
TUESDAY APRIL 9, 1991
2 p.m.
[Introductory acknowledgments].
It's always great to talk to the American Business
Conference. I've been here four times in recent years, and I've
hired away at least two of your leaders -- Bob Mosbacher and Alan
Levitt. I wish I'd had that much luck fishing in Florida last
week. //
It's an honor and a pleasure to talk to a group that stands
for success -- a group that admits only small to medium sized
companies that succeed in the marketplace.
But I've got to tell you, I feel a little funny being here.
CEO of
After all, I work for a huge corporation that has lost money for
33 of the last 35 years. //
At any rate, in keeping with today's theme -- Charting
Economic Growth in the 90s -- I'd like to talk about this
administration's plan for generating more Great American Success
Stories like yours. /
Our recent success in the Gulf has renewed Americans' belief
in themselves. In just the past couple of months, consumer
2
been
confidence has soared. The stock market has begun climbing
toward the 3,000 mark. Most economists predict that the
recession soon will give way to a new cycle of growth.
ou
But we can't rest on laurels: There's an entire world of
competition out there. The administration's economic growth
package is designed to let people like you do what you do best -
- create jobs, create new opportunities, create wealth. Its four
pillars can help America take its rightful place in a new global
economy.
Let's start with a first pillar, the capital gains tax.
I can't think of any issue that's been more badly
misrepresented than this one. Our critics say a capital gains
cut helps only the rich. They're dead wrong.
Here are the facts: More than a quarter of all capital gains
are declared by people with annual incomes of less than twenty
thousand dollars a year. More than three-quarters are declared
by families who make less than members of Congress. A capital
gains cut isn't a sop to the rich. It's a lifeline to the poor
and middle class.
Consider what a capital gains cut can do:
A capital gains tax cut helps people in need.
3
When times get tough, people of modest means must sell
things to make ends meet. They move into smaller houses. Sell
off furniture, heirlooms, stocks and bonds. Yet they can't get
around to paying their bills until they've paid the taxman. And
lots of times, they are being taxed on so-called gains that only
reflect the effects of inflation. In the end, they sell precious
9-18-90
possessions, and get to keep only pennies.
I recently got a letter from a woman in Virginia whose
husband has suffered a stroke -- whose fourth child suffers Downs
letter
from
syndrome -- whose family needs to move into a less expensive home
Patricia
Gunn
because they can't pay both their mortgage and their medical
ct.
3314 House
bills.
Yet because of the capital gains tax, they can't afford to
703- 476- 8018
sell their home. Once they have paid their taxes / their
realtor's commissions / their lawyer's fees / their settlement
fees / they don't have enough left for even a modest down
payment.
She wrote: "Please tell Congress for me that a cut in the
capital gains tax will not benefit big business. It will enable
a once-middle-income family suffering two major catastrophes to
'buy down' to a lower cost of living // and enable a disabled
husband to support his wife and four children."
The capital gains tax punishes people who live paycheck to
paycheck, and suddenly run into financial trouble. A cut in the
capital gains rates gives them a chance to survive tough times.
4
Here's a second advantage of a capital gains cut: It
rewards people who turn good ideas into good deeds.
It makes the American dream accessible to people who DON'T
have lots of money, but who DO have good ideas.
Consider the effects of the cuts enacted in 1978 -- in part
because of the efforts of Jim Jones here. Jim, you helped lead a
bipartisan effort back then; we need more people like you now. //
Before that tax cut took effect our tax code actually
punished people who risked money on new businesses. The
government didn't insulate investors from risks, but it did
siphon off much of the reward.
After the capital gains cut, investors could make money on
wise risks. They suddenly had good reason to provide the seed
money for fledgling businesses and industries. The pool of money
for new businesses grew almost tenfold in ten years -- and that's
after you take inflation into account.
Most of this money went to small start-up companies, like
many of yours. These companies supplied 80 percent of the new
jobs during our recent economic boom. As those firms thrived,
investors made money. As investors made money, they paid capital
gains taxes. Federal capital gains receipts also increased
nearly tenfold during this period.
5
This is not unusual. Every time in our history that we have
cut capital gains taxes, new companies have blossomed and capital
gains receipts have increased.
Another advantage: A capital gains cut will encourage
savings and discourage debt.
For the past four years, we have taxed capital gains like
any other form of income. At the same time, we have encouraged
people to take on debt. Not surprisingly, people have borrowed
more, invested less. If you want an obvious example of this
phenomenon, think about the home equity loan. The overall volume
of home equity lines of credit doubled in the first year after
tax reform, from 40 billion dollars to 75 billion dollars. Right
now, Americans have taken out nearly 125 billion dollars in home
equity lines of credit.
These loans give people access to the increased value of
their homes without forcing them to shell out capital gains
taxes. Since we don't tax these loans and we let people deduct
the interest payments, our tax law actually encourages people to
buy debt.
Our preference for borrowing hurts lots of people. The
construction industry suffers. Potential small businesses go
wanting for help. The economy just doesn't grow as much as it
could.
6
This leads us to another point: A capital gains cut can
slash the cost of saving our financial industry.
An increasing number of studies show that a reduction in the
capital gains rate will restore hundreds of billions of dollars
in commercial and residential property values. That jump would
improve the balance sheets of lending institutions, including
troubled savings and loans -- and increase the value of
institutions up for sale. In this way, a capital gains rate cut
immediately would chop billions of dollars from the cost of
rescuing the savings and loan industry. As property values grew,
the long-term costs of recovery would shrink even more.
A capital gains cut will make us more competitive in the new
world economy.
None of our major competitors imposes a high tax on capital
gains. Japan and Germany enjoy higher savings rates than we do
in part because they tax capital gains at a much lower rate than
they tax wages and other income.
East Germany has abolished the capital gains tax entirely,
and Hungary and Czechoslovakia are thinking about doing the same.
That's because they want to promote savings and economic
enterprise.
So let's take stock:
7
If we want to compete effectively in a world marketplace, we
should cut the capital gains tax.
If we want to encourage savings and investment, rather than
debt and hoarding, we should cut the capital gains tax.
If we want to reward enterprise, not envy, we should cut the
capital gains tax.
The point is simple: Capital gains taxes are taxes on the
American dream.
They punish the people who stand to gain the most from
growth, the poor, the middle class. They encourage the well-to-
do to hoard their wealth, rather than investing it.
This is the real fairness problem.
If we want to unleash the creative power of the American
people, we should ignore those who would rather be righteous than
right./ /
We should cut the tax on the American Dream.
Now, let's turn to a second pillar of growth -- free trade.
As you know, I have asked Congress to extend my "fast-
track" trade authority.
Fast-track is another term for "good faith.' " It guarantees
that Congress will accept or reject the very same agreements that
8
our negotiators and their counterparts have adopted. This
doesn't weaken eleventh Congress' power to review agreements; it simply
prevents 11th hour changes that would force negotiators from all
countries to return to the table and start from scratch.
Our trading partners consider fast track a vital test of our
reliability. And three impending trade initiatives could stand
or fall depending on whether Congress permits the fast track
process to continue. The North American Free Trade Agreement,
the Enterprise for the Americas Initiative and the Uruguay Round
of trade talks all depend on fast track.
I know you support free trade. But we can't take full
advantage of our opportunities without fast-track. Today I ask
your help in getting Congress to join us in reaching out to this
new and vibrant world.
I also need your support in a third crucial element of our
growth package -- banking reform.
In many ways, our banking industry strains under the weight
of ancient regulations and restrictions. We want Congress to
help modernize our banking system, make it safer for consumers,
and increase its competitive strength.
Let me touch just a few of of our reform proposals:
Our package would limit the liability of insured deposits to
no more than $100,000 per person per institution, and retirement
9
savings to $100,000 per person per institution. This restriction
obviously protects small savers.
Our package would discourage wheeling and dealing by
charging insurance premiums based on risk. Good institutions
would pay lower rates than unsound ones. We also would alter the
current "too big to fail" policy. We want institutions to know
that they no longer can rely on government to bail them out when
they behave foolishly.
Our package would prevent unsound institutions from offering
"new" banking services. It would prevent unfair banking
practices. It would pay for a larger, better focused team of
regulators.
Our package would authorize nationwide banking for bank
holding companies, after a three year phase-in period.
In brief, our reforms try to strip away incentives for
irresponsible behavior. Our comprehensive package strives to
make our banking system more competitive / up to date / safe /
and sound.
Think of the banking system as an irrigation system for the
economy. When it works properly, it cultivates the seeds of
economic growth. When it doesn't, companies like the ones
represented here can wither and die.
This brings me to the fourth pillar of our growth package:
Investing in the future.
10
Our budget emphasizes the importance of looking ahead, of
building an America that is ready and eager to take its place in
an emerging world economy.
It stresses the importance of educational reform. Our new
Education Secretary, Lamar Alexander, has outlined a reform
strategy that involves common sense.
It starts with the assumptions that schools succeed when
teachers teach,
When parents support the schools/
When schools welcome help from people with skills --
businesses, industries, academics, retirees/
When communities eliminate the barriers -- crime,
corruption, inefficiency, -- to education.
Your Vital Link program offers a perfect example of the kind
of partnership Lamar seeks to build with industry, and I'm sure
he'll be seeking out your advice and help in the future.
Our invest in the future strategy also recognizes the
importance of preventive health care -- staying fit, staying
healthy.
It encourages research and development in basic and applied
science.
It seeks to improve our transportation system -- the roads,
airports, and railways that take people to and from work.
It strives to reward stewardship of our natural resources
without choking off economic growth.
11
It tries to create real competition in all areas of
government service -- education, health care, housing,
employment. It lets people choose the best way of pursuing their
dreams.
Now, I know I have covered a lot of ground here. But our
growth package incorporates some powerful, simple themes.
We want to promote growth.
We want to unleash the power of American imagination.
We want Americans to think in terms of their capabilities,
not their disabilities.
Many people call the 20th Century The American Century.
Well, we should not be content with that. Our growth package
will help make the 21st Century the Next American Century. We
can help our sons and daughters continue the American tradition
of excellence if we give them the freedom to excel.
This is a great nation because men and women like you
believed in yourselves. Believed in your ideas. And trusted the
public to choose wisely.
These same virtues can propel us to future greatness as a
nation. I ask your help in pursuing that quest. Together, we
cannot fail.
Thank you, and God bless this great nation.
Snow/Simon
ABC
Draft Two (a)
April 8, 1991
9 a.m.
ADDRESS BY THE PRESIDENT: THE AMERICAN BUSINESS CONFERENCE
Base
THE DEPARTMENT OF COMMERCE
closhere
TUESDAY APRIL 9, 1991
2 p.m.
Mosbacher intro
Breedon
seidman
[Introductory acknowledgments].
Jim Jones
speech
It's always great to talk to the American Business
4-4-89 Conference. I've been here four times in recent years, and I've
Anthur
hired away at least two of your leaders -- Bob Mosbacher and Alan
Levitt. I wish I'd had that much luck fishing last week. //
It's an honor and a pleasure to talk to a group that stands
for success -- a group that admits only medium sized companies
that succeed in the marketplace.
But I've got to tell you, I feel a little funny being here.
im CEO of
After all, I work for a huge corporation that has lost money for
33 of the last 35 years. //
But in keeping with today's theme -- Charting Economic
1
Growth in the 90s -- I'd like to talk about this administration's
plan for generating more American Success Stories like yours. /
Our recent success in the Gulf has renewed Americans' belief
VSAT in themselves. In just the past couple of months, consumer
3-27-91
been
confidence has soared. The stock market has begun climbing
WSJ
4-8-91 toward the 3,000 mark. Most economists predict that the
recession soon will give way to a new cycle of growth.
2
our
But we can't rest on laurels: There's an entire world of
competition out there. The administration's economic growth
package is designed to let people like you do what you do best -
- create jobs, create new opportunities, create wealth.
Let's start with an issue we all will have to address in the
next month, the issue of free and fair trade.
As you know, I have asked Congress to extend my "fast-
track" trade authority.
Fast-track is another term for "good faith. " It guarantees
that Congress will accept or reject the very same agreements that
our negotiators and their counterparts have worked out. This
doesn't weaken Congress' power to review agreements; it simply
eleventh
prevents 11th hour changes that would force negotiators from all
countries to start from scratch.
Our trading partners consider fast track a vital test of our
reliability. If we do not retain the fast-track process, we
could lose three critical trade initiatives: The North American
Free Trade Agreement, the Enterprise for the Americas Initiative
and the Uruguay Round of trade talks.
Americans understand the benefits of free trade.
In the
CEA
chart
last four years, exports from the U.S. have increased 50 percent,
see more than twice the rate of import growth. And export business
file
has grown more rapidly that the rest of our economy.
ITA Canada office of This trade boom has helped everyone involved. Canada wants
377-3101 to expedite completion of its free trade pact with us. Mexico
also wants a free-trade agreement. Its people know that
3
development offers the surest way to increase wages, improve
environmental quality and ensure real prosperity for all
Mexicans.
A North American Free Trade Agreement would place us in the
USTR
largest integrated market on earth: 360 million people, $6
trillion
billion of annual output.
decide
I know you support free trade Congress must vote by June 1
on whether to preserve this essential negotiating tool. Without
it, we will surrender our chance to shape the emerging world
economy. We also risk the kind of protectionist warfare that
helped produce the Great Depression.
We cannot afford to squander this opportunity. Today I ask
your help in getting Congress to join us in reaching out to this
new and vibrant world.
This brings me to a second part of our growth package:
Creating an educated, innovative workforce.
Our budget emphasizes the importance of building an America
that is ready to take its place in an emerging world economy.
It begins by stressing the importance of an educated
workforce. Our new Education Secretary, Lamar Alexander, has
outlined a reform strategy that involves common sense.
It starts with the obvious truths: That schools succeed when
teachers teach,
When parents support the schools/
When schools welcome help from people with skills --
businesses, academics, retirees/
4
When communities eliminate the barriers to education --
and
barriers such as crime, corruption, inefficiency.
Your Vital Link program offers a perfect example of the kind
of partnership Lamar seeks to build with industry, and I'm sure
he'll be seeking out your advice and help in the future.
But Lamar also wants to encourage entrepreneurship in
education. He has talked about stimulating research into the
4-5-91
best teaching methods and techniques. He has stressed the
importance of lifelong learning. And he wants to ensure that the
American workforce is the best educated, best motivated -- in
short, the best -- workforce in the world. //
Our economic proposals also sweep away obstacles to free
enterprise. They try to unleash the power of the American
imagination.
Your organization understands that runaway government
spending steals opportunity from private citizens. Last year's
budget agreement finally placed real and stringent caps on
Congressional spending. If Congress wants to spend more money on
certain programs, it has to raise taxes or to take the money from
other programs. This concentrates the mind wonderfully. It
forces Congress and the administration to make hard choices,
rather than simply to fob problems off on taxpayers.
This year, for the first time in years, federal spending
actually will increase less rapidly than inflation. I can
promise you that if Congress sends me spending bills that break
this budget, I will veto them. //
5
UP
But we in government must do more. As vice president, I
bio
headed the Task Force on Regulatory Relief. As president, I
remain committed to weeding out regulations that prevent people
from creating jobs and opportunities.
Last year regulations cost our economy at least $185
Dave
Matntosh
billion, or $1,700 for every taxpayer. Government regulations
OVP
generate more than 5 billion hours of paperwork each year.
That's enough to keep 2 million people employed, doing nothing
but filling out forms.
We want to put an end to this kind of regulatory creep, and
liberate business from unnecessary paperwork. Our banking reform
package tries to lift ancient and onerous restrictions that crush
the kind of innovation that system needs.
In everything from the pharmaceutical industry to the auto
industry, we have tried to clear away regulatory obstacles to
growth.
Similarly, we want a tax code that rewards enterprise. I
repeatedly have asked Congress our high capital gains tax.
I can't think of any issue that's been more badly
misrepresented than this one. Our critics say a capital gains
cut helps only the rich. They're dead wrong.
Here are the facts: More than a quarter of all capital gains
are declared by people with annual incomes of less than twenty
thousand dollars a year. More than three-quarters are declared
by families who make less than members of Congress. A capital
6
gains cut isn't a sop to the rich. It's a lifeline to the poor
and middle class.
Furthermore, a capital gains tax cut will reward people who
turn good ideas into good deeds.
When capital gains taxes are high, investors have no
incentive to risk money on untried businesses and entrepreneurs.
After we cut capital gains taxes in 1978 and 1981, the amount of
investment seed money increased tenfold. Capital gains payments
to the federal government quadrupled. And people of modest means
suddenly had a chance to turn their dreams into realities.
A capital gains cut also will encourage savings and
discourage debt.
For the past four years, we have taxed capital gains like
any other form of income. At the same time, we have encouraged
people to take on debt. Not surprisingly, people have borrowed
more, invested less.
Think about the home equity loan. Since high capital gains
taxes discourage people who might sell their homes, many people
turn to home equity lines of credit. These loans give people
access to the increased value of their homes while also letting
Glenn
them write off interest payments. No wonder the overall volume
Canner
Fed.
reserve
of home equity lines of credit has more than tripled since tax
452-2910
reform took effect.
Now, no other major industrial power taxes capital gains at
nearly the rate we do. If you want to understand why Germany and
Japan have higher savings rates than we do, start by looking at
7
their capital gains tax rates. They are very low, and on some
long-held assets they charge no capital gains tax at all.
The point is simple: Capital gains taxes are taxes on the
American dream. If we want to unleash the creative power of the
American people, we should cut our capital gains rate.
Similarly, we want to invest in research and development in
basic and applied science, and to encourage private-sector
Fyaz
innovation by extending the Research and Experimentation Tax
Budget
Credit. This administration understands the power of knowledge,
and we want the tax code to reward people who dare to turn their
big dreams into revolutionary new goods and services.
I know I have covered a lot of ground here. But our growth
package incorporates some powerful, simple themes.
We want to promote growth.
We want to unleash the power of American imagination.
We want to highlight Americans' capabilities, not their
disabilities.
Many people call the 20th Century The American Century.
Well, we should not be content with that.
The stunning collapse of communism in 1989 didn't happen by
accident. During the 1980s the communist world learned that no
wall, no barrier is strong enough to fend off powerful ideas.
People in that world saw our prosperity and our vitality. They
is
saw that our way was better. The prosperity of the 1980s helped
more than just Americans; it changed the entire world.
8
Our challenge now is to shape the revolution we started.
The administration's growth package wrestles with the changing
and fascinating world around us. It works to ensure that the
21st Century will be the Next American Century.
This is a great nation because men and women like you
believed in yourselves. Believed in your ideas. And trusted the
public to choose wisely.
These same virtues can propel us to future greatness as a
nation. I ask your help in pursuing that quest. Together, we
cannot fail.
Thank you, and God bless this great nation.