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Small Business Legislative Council, 3/1/89 [1]
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1
4
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
March 1, 1989
REMARKS BY THE PRESIDENT
TO THE SMALL BUSINESS LEGISLATIVE COUNCIL
The East Room
2:41 P.M. EST
THE PRESIDENT: Thank you all for that welcome and thank
you all for being here and to Secretary Mosbacher and other
dignitaries here and all of you, I am grateful for this opportunity.
Before beginning to talk a little bit about the area that
brings us together -- business climate, business community, emphasis
small business, entrepreneurship, I want to make a statement on a
matter -- comment on an issue of particular currency in Washington.
Three guesses. (Laughter.)
No, the debate over John Tower's nomination as Defense
Secretary should clearly be based on principle and on policy, and it
ought not to be based on rumor and innuendo. And no one denies that
Senator Tower is well-qualified, hard-nosed, tough, experienced. No
one denies that he knows the Pentagon well and he knows the Congress.
Those are the facts.
And Americans, whatever their policies -- and I'll bet
all of you agree with this -- and whatever their politics, are
committed to the concept of fair play and are committed to decency.
And all I am asking in the name of fair play is that the man be
judged on the facts, not on misperceptions. And this is a tough town
-- a lot of rumors out there. Public service is not made easier by
claims that cannot be substantiated. It's made tougher.
Proceedings are starting in the Senate, as they should,
and I've made my call. I've looked at the record. I've known this
man since 1959, and my support is unequivocal. And John Tower is, in
my view, the best man for this job. And so my pitch -- my appeal to
the senators has been, look, do what you've got to do, but remember,
fair play, remember decency and honor, and then remember also
historically the concept of advise and consent where reasonable doubt
is given historically to the President of the United States who,
after all, is responsible for the Executive Branch of this
government.
So that matter -- I want to just speak to you on it. I
know it's a matter that obviously concerns everyone because it's
dominating the news.
- 2 -
competitors have always enjoyed.
In a few minutes, I'm going to have a suggestion for
those who argue in favor of protectionist intervention. You know,
there are some who say that Asia could become the economic center of
the world. Some even suggest that America's power is on the wane.
And, well, for them I have news. The 21st century can well be the
next American century -- if we understand the challenges before us,
and move together to meet them.
More than ever, the world is connected, interdependent,
changing rapidly. Barbara and I lived in China 14 years ago for a
year and a half, and I've been back there -- this is the fifth time
since leaving China, and some of you have been there. But you just
-- every time you go, you feel it, you feel the movement and you feel
the change. And that's just one part of this highly complex, highly
interconnected world. More than any point in our human history,
societies and economies rely upon one another.
So competitiveness, which is on everybody's minds these
days, takes on a challenging new angle, and it means more than just
market share and earned income. And it's more than a zero-sum,
winner-take-all game.
Since 1980, the world trade volume is up nearly 40
percent, and almost a fifth of our industrial production is now in
exports. Goods and services circle the globe overnight. Nick Brady
told me just a while ago over in the Oval Office that clearing in the
world markets every night is a trillion dollars worth of securities.
A trillion dollars one single evening. Instant transfers of funds
around the world. Capital, as I say, changes hands in seconds.
In a world like that, all nations stand to benefit from
the growth of their trading partners, and as long as markets are free
and open. So I have two key priorities -- to promote economic growth
through low tax rates and to encourage the kind of free trade that
makes all nations better off. General Brent Scowcroft is here with
me and he was on this trip with me, and at every stop we made the
point to some weary interlocutors, I might add, that the need for
keeping these markets open. The goal of competitiveness is not
simply to disadvantage the competition. It's to better deploy the
advantages that we have and to create new ones.
And that's why the work that you all do is so important.
American small business has always been our most creative source of
innovation and economic growth. And you, we, have created 19 million
new jobs in this country since the recovery began, Relative to
population, that's more than twice the number of jobs created in
Japan. And in the U.S. private sector, small businesses are
responsible for two out of three jobs created. Two out of three.
Businesses like yours make America work.
By creating jobs, you create opportunity, and while I am
President, government won't interfere with that. We've got to do
more in the field where Richard Breeden spent several years of his
life trying to simplify the regulatory process. I'm going to try
hard. We will assure you that you have the freedom you need to do
what you do best. And I am still determined -- I have not changed my
- 3 -
jobs is greatest, and we will cut your federal tax rates. We will
create these enterprise zones which I think would be the best
antidote to poverty in the inner city. After all, you'll be saving
the government money by reducing the need for items like welfare and
subsidized housing. And you'll help us bring urban enterprise zones
to life in cities all across this country.
You know, decisions made -- and actions taken -- at the
local level very often better serve the interests of those involved.
What I'm talking about, here, is a fundamental Amercan freedom: the
freedom to choose, make up your own mind.
And that's the driving principle behind the proposal I've
made on child care. We want to establish a new, refundable
Children's Tax Credit for low-income parents -- and make the existing
child care tax credit refundable as well. We mean to avoid
burdensome federal standards and regulation that would limit family,
limit church, and limit community-based care. We will examine the
liability insurance barriers for businesses interested in providing
child care options. We've got to do something about this liability
menace, you might say, which has gotten out of hand. And we need
some advice from you on how to accomplish this. We've got some good
ideas on proposals that can well be made.
We would like to put solutions -- and dollars -- in the
hands of parents. We intend to promote choice. And this one is very
important with me. As I look at urban America and I look at the
complexity of society today, it's right back to the basics:
strengthen the family. Strengthen the community. Strengthen the
churches and other groups that are out there trying to help.
You know, flexibility can also promote risk-taking. It's
always been the basis for real achievements in business. And so we
need to find new ways to encourage men and women to take risks. We
need entrepreneurs who will invest their time, talents, and resources
to build the businesses. Unlock new markets. Unleash new
technologies. Create new jobs. People who bring to the marketplace
competitive products and quality services that are second to none in
the world -- they need to be encouraged.
You know what the challenges are.
Last year a large survey of CEOs suggested that while
American business leaders are inherently optimistic, they're aware
that we have new and important work to do. Ninety percent of them
said that American business is still too short-term oriented.
And, along with many here -- I better not start telling
you my war stories about business or you'll tell me yours, and we'll
be here all night. (Laughter.) But I have helped build a business
from scratch. I happen to think that's a good criterion for being
President of the United States, as a matter of fact, and I know that
it can be extraordinarily tough. And I understand the pressures, I
think, from having been there in a tiny little business many years.
ago the pressures that you face. So you don't need a lecture on the
importance of savings and long-term investment. You need government
that enables you to do what's good for business and good for America.
And often, that means kind of getting out of the way.
- 4 -
And so I call on anyone who talks about protectionism to
consider this: By taxing capital gains, we impede our own progress
-- and we turn the playing field into an uphill climb.
Restoring the capital gains differential would be a
powerful incentive for businesses to invest, to innovate, to grow,
and to create jobs. The Treasury estimates that the cut that I have
proposed will add $4.8 billion a year to the revenue side of the
ledger. So let those out there charge me of taxes that are favoring
the rich. I know that in proposing a capital gains differential, I
am favoring innovation and risk-taking. And in the process, I am
favoring jobs. And that's what it's all about. (Applause.) I'm
committed to government policies that will allow business to invest
with an eye toward the long term to assure our competitive future.
In my budget, I've proposed a 13 percent increase for
science and technology programs in 1990. And we intend to stay on
track in our effort to double the National Science Foundation budget
by 1993, to develop engineering and scientific computing research
centers -- and to build the right links between university,
government, and these industry labs.
We're recommending a permanent extension of the research
and experimentation -- that R&E -- research and experimentation tax
credit, to keep us at the forefront of technological innovation --
especially when it comes to basic research.
And we want to encourage more domestic research by
multinationals, by stabilizing the R&E expense allocation rules. The
uncertainty brought on by expiring temporary rules has gone on for
two decades. Hard to plan when you don't know what the rules of the
ballgame are. Businesses should be able to make long-term research
plans in a stable climate. And creating that climate is something
that -- because of the tremendous taxing power of the government,
creating that climate is something government can, should and will
do.
We're determined to bring down this budget deficit with
my pledge on no new taxes. And we've proposed a major budget reform
to put our fiscal policy on a sound footing once and for all. We
need to do away with this wonderland concept of "current services
budgeting" -- a land of expanding baselines, where programs are
assumed immortal, and "cuts" are actually increases. Federal policy
should not start out with the presumption that the government
spending should go up and up and up.
Senator Rudman -- I was riding with him the other day and
he described the Washington wonderland very well. He said,
Washington is the only city where I've ever seen -- for a fellow
who's making $20,000, goes to his boss, asks for a $10,000 raise.
The boss says, no, you can have a $5,000 raise. And the story says,
"Man Gets $5,000 Cut." (Laughter and applause.) And that's the way
you look at it now in terms of these programs. (Applause.) But the
most important investment that we can make, to assure this
competitive future, is in training and education.
Jobs are becoming more demanding. You all know that.
- 5 -
vanished -- not a trace of it -- one-third of our assets. And I knew
that whenever you consider an investment, you rightly tend to focus
on the risks that are involved. But technology moved forward and now
the risks are much less. Where training and education are concerned,
the biggest risk is to not get involved.
American public education needs more of our support. All
of us -- teachers, parents, administrators, local officials and, yes,
private industry. All of us have a responsibility to ensure that our
educational system is second to none. We should look to the vitality
of our system -- and work to build strength through diversity.
Successful schools happen everywhere -- from rural
communities to inner city neighborhoods. And they're shaped by
people with high expectations, from both the public and private
sector, who work within the schools to bring about the needed
improvements.
And this way of looking at it means that we are all
accountable for the quality of our schools. We need to strengthen
incentives to do better and we have a mandate to do just exactly
that. I want to expand Head Start, reward schools that improve,
recognize outstanding teachers right here in the White House. We're
going to establish a National Science Scholars Program. We're going
to work to free our schools -- we've got to, all of us -- from the
pestilence of drugs.
And we're going to be looking to you for help and
guidance because good schools are good for business. Many of you are
already involved with your own local schools, doing important work
for the future of your communities, and your country. But my pitch
-- more can be done. More must be done. And I know you'll be there
when your community, your state, your country really needs you. To
compete successfully abroad, many of you will find yourselves
competing for workers at home. I know managers who are seriously
starting to worry about shortages of talented people.
And there is a larger, untapped source of talent in this
country. Such people are to be found and fostered among the young
and the underskilled, who need training. The older and more
experienced, who need retraining. The disadvantaged, whose lives can
be turned to advantage. Disabled workers, who ask only for a chance
to prove their ability. Dual career families, who need options.
Opportunity doesn't necessarily knock on the door. It
may be leaning against the wall or standing on the streetcorner,
needing only to be seen for what it is. And in this, we need your
leadership. The very heart of our ability to compete may depend on
how well we enlist those who have, until now, been on the outskirts
of economic growth. They will be needed. Together we can build
businesses that outwit, outmaneuver, outproduce, and outperform the
competition.
We can achieve the kind of competitive advantage that
comes from collective will. And we can make sure that the words
"Made in the United States of America" simply mean "the best that
there is.' (Applause.)
GB
(Lange)
February 28, 1989
10:30 a.m.
PRESIDENTIAL REMARKS:
SMALL BUSINESS LEGISLATIVE COUNCIL
WASHINGTON, D.C.
WEDNESDAY, MARCH 1, 1989
Thank you, [Bob]. It is good to be with you this afternoon.
As you may know, I just finished a tour through several countries
in the Pacific Rim.
They say that travel teaches tolerance. And it is true --
my hosts abroad were certainly tolerant of my experiments with
their languages.
I think one of my toasts might as well have been translated
by the interpreter as: "Laugh politely at the peculiar American
humor."
This afternoon you've heard from Gregg Petersmeyer Richard
Breeden, and [Elizabeth Dole / Robert Mosbacher] --- three key
members of the team here in Washington.
And now that you have a feeling for their ideas and
priorities, let me encourage you to work with them. Tell them
what you're thinking. They know how to work with the private
1
sector -- and they are looking for ways to make this a responsive
government, a government by and for the people.
While I was in Asia, I had a chance to think seriously about
what sets our trading partners apart from us. I realized that we
may have erected a barrier to our own success -- and deprived
ourselves of vital long-term investment that our competitors have
always enjoyed.
In a few minutes, I'm going to have a suggestion for those
who argue in favor of protectionist intervention, in the name of
fair trade.
You know, there are some who say that Asia could become the
economic center of the world. Some even suggest that America's
power is on the wane. Well, for them, I have news. The 21st
century can be the next American century -- if we understand the
challenges before us, and move to meet them together.
More than ever, the world is interconnected; interdependent;
and changing rapidly. More than at any point in human history,
our societies and economies rely one upon the other.
So competitiveness -- which is on everybody's mind these
days -- takes on a challenging new angle. It means more
than just market share and earned income. And it's more than
2
a zero-sum, winner-take-all game.
Since 1980, world trade volume has nearly doubled. Almost
a fifth of our industrial production is now in exports. Goods
and services circle the globe overnight. Capital changes hands
in seconds.
In a world like that, all nations stand to benefit from the
growth of their trading partners -- as long as markets are free
and open.
This means that the goal of competitiveness is not simply
to disadvantage the competition. It is to better deploy the
advantages we have -- and to create new ones.
And that is why the work you do is so important. American
small business has always been our most creative source of
innovation and economic growth.
We've created 19 million new jobs in this country since the
recovery began. Relative to population, that's more than twice
the number of jobs created in Japan. In the U.S. private sector,
small businesses are responsible for eight out ten jobs created.
Businesses like yours make America work.
3
By creating jobs, you create opportunity. And while I'm
President, government won't interfere with that. We will assure
that you have the freedom you need, to do what you do best.
Competitiveness demands two things: flexibility in the
marketplace, and the right kind of investment at home.
So we want to give employers and employees the flexibility
to work out their own solutions, on issues like parental leave
and health insurance. And we intend to promote the kind of
investment that will allow every American to share in prosperity,
and help to create more of it.
Decisions made -- and actions taken -- at the local level
very often better serve the interests of those involved. What
I'm talking about, here, is a fundamental American freedom:
the freedom to choose.
That's the driving principle behind our proposal on child
care. We want to establish a new, refundable Children's Tax
Credit for low-income parents -- and make the existing child care
tax credit refundable as well. We mean to avoid burdensome
federal standards and regulation that would limit family, church,
and community-based care. We will examine the liability
insurance barriers for businesses interested in providing child
care options.
4
We would like to put solutions -- and dollars -- in the
hands of parents. We intend to promote choice in childcare.
Flexibility can also promote risk-taking. It's always been
the basis for real achievements in business. So we need to find
new ways to encourage men and women to take risks. We need
entrepreneurs who will invest their time, talents, and resources
to build businesses. Unlock new markets. Unleash new
technologies. And create new jobs. People who bring to the
marketplace competitive products and quality services that are
second to none in the world.
You know what the challenges are.
Last year a large survey of CEOs suggested that while
American business leaders are inherently optimistic, they're
aware that we have new and important work to do. Ninety percent
of them said that American business is still too short-term
oriented.
I've built a business. Let me tell you, I know how tough
it is. I understand the pressures you face. You don't need a
lecture on the importance of savings and long-term investment.
You need government that enables you to do what's good for
business, and good for America.
5
Competitiveness demands the right kind of investment, yes.
For a long time now I have been saying that we must have a
competitive capital gains tax rate. If we are to retain the
American edge, we must give entrepreneurs and small
businesspeople the incentive to keep dreaming, keep risking --
and keep creating good jobs for Americans.
I see a capital gains cut as an important way to free up
American businesses, without distorting world markets. The
economies of the Pacific Rim -- the "four dragons" of Hong Kong,
Singapore, Taiwan, and South Korea -- all exempt capital gains
entirely from tax. Japan also had no tax on capital gains during
its meteoric rise to economic power.
I call on anyone who talks about intervention in the name of
fair trade, to consider this:
By taxing capital gains, we impede our own progress --
and we turn the playing field into an uphill climb.
Restoring the capital gains differential would be a powerful
incentive for businesses to invest, to innovate, to grow, and to
create jobs.
6
For managers, it would ease some of the relentless pressure
of quarterly reporting -- and allow them to focus on longer-term
goals and operations, get a leg up in new markets, and apply new
techniques and technologies. For workers, it means more jobs, at
better wages. For all Americans, it means a real, competitive
difference in the world marketplace.
I am committed to government policies that will allow
business to invest with an eye toward the long term to assure our
competitive future.
We have proposed a 13 percent increase for science and
technology programs in 1990. And we intend to stay on track in
our effort to double the National Science Foundation's budget by
1993, to develop engineering and scientific computing research
centers -- and to build the right links between university,
government, and industry labs.
We are recommending a permanent extension of the R&D tax
credit, to keep us at the forefront of technological innovation
-- especially in basic research.
And we want to encourage more domestic research by
multinationals, by stabilizing the R&E expense allocation rules.
The uncertainty brought on by expiring temporary rules has gone
on for two decades. Businesses should be able to make long-term
7
research plans in a stable climate. Creating that climate is
something government can -- should -- and will do.
We are determined to bring the deficit down -- with no new
taxes. We have proposed a major budget reform to put our fiscal
policy on a sound footing once and for all. We need to do away
with the wonderland concept of "current services budgeting"
-- a land of expanding baselines, where programs are assumed
immortal, and "cuts" are actually increases. Federal policy
should not start out with the presumption that government
spending should go up and up.
But the most important investment we can make, to assure
a competitive future, is in training and education.
Jobs are becoming more demanding. The competition is
getting tougher. Labor markets are getting tighter. So we'll
need to do more to develop a highly-skilled, motivated, educated
workforce.
You know, when I was building an oil business, we invested
heavily in what was then a new technology -- off-shore drilling.
Early on, we lost a drilling rig to a storm off the coast of
Texas. I knew that whenever you consider an investment, you
rightly tend to focus on the risks involved.
8
But where training and education are concerned, the biggest
risk is to not get involved.
American public education needs more of our support. All of
us -- teachers, parents, administrators, local officials, private
industry -- all of us have a responsibility to ensure that our
educational system is second to none.
We should look to the vitality of our system -- and work to
build strength through diversity.
Successful schools happen everywhere -- from rural
communities to inner city neighborhoods. They are shaped by
people with high expectations, from both the public and private
sector, who work within the schools to bring about needed
improvements.
This way of looking at it means that we are all accountable
for the quality of our schools. We need to strengthen incentives
to do better -- and we have a mandate to do just that.
We will expand Head Start, reward schools that improve, and
recognize outstanding teachers. We will establish a National
Science Scholars Program. We will work to free our schools from
the pestilence of drugs.
9
And we will be looking to you for help and guidance --
because good schools are good for business. Many of you are
already involved with local schools, doing important work for
the future of your communities, and your country. More can be
done. And I know you'll be there when we need you.
To compete successfully abroad, many of you will find
yourselves competing for workers at home. I know managers who
are seriously starting to worry about shortages of talented
people.
There is a larger, untapped source of talent in this
country. Such people are to be found and fostered among the
young and underskilled, who need training. The older and more
experienced, who need re-training. The disadvantaged, whose
lives can be turned to advantage. Disabled workers, who ask only
for a chance to prove their ability. Dual career families, who
need options.
Opportunity doesn't necessarily knock on the door. It may
be leaning against the wall or standing on the streetcorner,
needing only to be seen for what it is.
In this, we need your leadership. The very heart of our
ability to compete may depend on how well we enlist those who
10
have, until now, been on the outskirts of economic growth. They
will be needed.
Together we can build businesses that outwit, outmaneuver,
outproduce, and outperform the competition.
We can achieve the kind of competitive advantage that comes
from collective will. And we can make sure the words "Made in
the U.S.A." simply mean "the best there is." "
Thank you. And God bless you.
11
MASTER
010588
Document No.
II
WHITE HOUSE STAFFING MEMORANDUM
2/28/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY:
PRESIDENTIAL REMARKS: SMALL BUSINESS LFGISLATIVE COUNCIL
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
ROGERS
BREEDEN
CARD
WINSTON
PINKERTON
CICCONI
DEMAREST
BOSKIN
FITZWATER
GRAY
HAGIN
REMARKS:
The attached has been forwarded to the President.
RESPONSE:
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
(Lange)
February 28, 1989
1980 FEB 28 AM 13: 10:
10:30 a.m.
PRESIDENTIAL REMARKS:
SMALL BUSINESS LEGISLATIVE COUNCIL
WASHINGTON, D.C.
WEDNESDAY, MARCH 1, 1989
Thank you, [Bob]. It is good to be with you this afternoon.
As you may know, I just finished a tour through several countries
in the Pacific Rim.
They say that travel teaches tolerance. And it is true --
my hosts abroad were certainly tolerant of my experiments with
their languages.
I think one of my toasts might as well have been translated
by the interpreter as: "Laugh politely at the peculiar American
humor. "
This afternoon you've heard from Gregg Petersmeyer, Richard
Breeden, and [Elizabeth Dole / Robert Mosbacher] -- three key
members of the team here in Washington.
And now that you have a feeling for their ideas and
priorities, let me encourage you to work with them. Tell them
what you're thinking. They know how to work with the private
1
sector -- and they are looking for ways to make this a responsive
government, a government by and for the people.
While I was in Asia, I had a chance to think seriously about
what sets our trading partners apart from us. I realized that we
may have erected a barrier to our own success -- and deprived
ourselves of vital long-term investment that our competitors have
always enjoyed.
In a few minutes, I'm going to have a suggestion for those
who argue in favor of protectionist intervention, in the name of
fair trade.
You know, there are some who say that Asia could become the
economic center of the world. Some even suggest that America's
power is on the wane. Well, for them, I have news. The 21st
century can be the next American century -- if we understand the
challenges before us, and move to meet them together.
More than ever, the world is interconnected; interdependent;
and changing rapidly. More than at any point in human history,
our societies and economies rely one upon the other.
So competitiveness -- which is on everybody's mind these
days -- takes on a challenging new angle. It means more
than just market share and earned income. And it's more than
2
a zero-sum, winner-take-all game.
Since 1980, world trade volume has nearly doubled. Almost
a fifth of our industrial production is now in exports. Goods
and services circle the globe overnight. Capital changes hands
in seconds.
In a world like that, all nations stand to benefit from the
growth of their trading partners -- as long as markets are free
and open.
This means that the goal of competitiveness is not simply
to disadvantage the competition. It is to better deploy the
advantages we have -- and to create new ones.
And that is why the work you do is so important. American
small business has always been our most creative source of
innovation and economic growth.
We've created 19 million new jobs in this country since the
recovery began. Relative to population, that's more than twice
the number of jobs created in Japan. In the U.S. private sector,
small businesses are responsible for eight out ten jobs created.
Businesses like yours make America work.
3
By creating jobs, you create opportunity. And while I'm
President, government won't interfere with that. We will assure
that you have the freedom you need, to do what you do best.
Competitiveness demands two things: flexibility in the
marketplace, and the right kind of investment at home.
So we want to give employers and employees the flexibility
to work out their own solutions, on issues like parental leave
and health insurance. And we intend to promote the kind of
investment that will allow every American to share in prosperity,
and help to create more of it.
Decisions made -- and actions taken -- at the local level
very often better serve the interests of those involved. What
I'm talking about, here, is a fundamental American freedom:
the freedom to choose.
That's the driving principle behind our proposal on child
care. We want to establish a new, refundable Children's Tax
Credit for low-income parents -- and make the existing child care
tax credit refundable as well. We mean to avoid burdensome
federal standards and regulation that would limit family, church,
and community-based care. We will examine the liability
insurance barriers for businesses interested in providing child
care options.
4
We would like to put solutions -- and dollars -- in the
hands of parents. We intend to promote choice in childcare.
Flexibility can also promote risk-taking. It's always been
the basis for real achievements in business. So we need to find
new ways to encourage men and women to take risks. We need
entrepreneurs who will invest their time, talents, and resources
to build businesses. Unlock new markets. Unleash new
technologies. And create new jobs. People who bring to the
marketplace competitive products and quality services that are
second to none in the world.
You know what the challenges are.
Last year a large survey of CEOs suggested that while
American business leaders are inherently optimistic, they're
aware that we have new and important work to do. Ninety percent
of them said that American business is still too short-term
oriented.
I've built a business. Let me tell you, I know how tough
it is. I understand the pressures you face. You don't need a
lecture on the importance of savings and long-term investment.
You need government that enables you to do what's good for
business, and good for America.
5
Competitiveness demands the right kind of investment, yes.
For a long time now I have been saying that we must have a
competitive capital gains tax rate. If we are to retain the
American edge, we must give entrepreneurs and small
businesspeople the incentive to keep dreaming, keep risking --
and keep creating good jobs for Americans.
I see a capital gains cut as an important way to free up
American businesses, without distorting world markets. The
economies of the Pacific Rim -- the "four dragons" of Hong Kong,
Singapore, Taiwan, and South Korea -- all exempt capital gains
entirely from tax. Japan also had no tax on capital gains during
its meteoric rise to economic power.
I call on anyone who talks about intervention in the name of
fair trade, to consider this:
By taxing capital gains, we impede our own progress --
and we turn the playing field into an uphill climb.
Restoring the capital gains differential would be a powerful
incentive for businesses to invest, to innovate, to grow, and to
create jobs.
6
For managers, it would ease some of the relentless pressure
of quarterly reporting -- and allow them to focus on longer-term
goals and operations, get a leg up in new markets, and apply new
techniques and technologies. For workers, it means more jobs, at
better wages. For all Americans, it means a real, competitive
difference in the world marketplace.
I am committed to government policies that will allow
business to invest with an eye toward the long term to assure our
competitive future.
We have proposed a 13 percent increase for science and
technology programs in 1990. And we intend to stay on track in
our effort to double the National Science Foundation's budget by
1993, to develop engineering and scientific computing research
centers -- and to build the right links between university,
government, and industry labs.
We are recommending a permanent extension of the R&D tax
credit, to keep us at the forefront of technological innovation
-- especially in basic research.
And we want to encourage more domestic research by
multinationals, by stabilizing the R&E expense allocation rules.
The uncertainty brought on by expiring temporary rules has gone
on for two decades. Businesses should be able to make long-term
7
research plans in a stable climate. Creating that climate is
something government can -- should -- and will do.
We are determined to bring the deficit down -- with no new
taxes. We have proposed a major budget reform to put our fiscal
policy on a sound footing once and for all. We need to do away
with the wonderland concept of "current services budgeting"
-- a land of expanding baselines, where programs are assumed
immortal, and "cuts" are actually increases. Federal policy
should not start out with the presumption that government
spending should go up and up.
But the most important investment we can make, to assure
a competitive future, is in training and education.
Jobs are becoming more demanding. The competition is
getting tougher. Labor markets are getting tighter. So we'll
need to do more to develop a highly-skilled, motivated, educated
workforce.
You know, when I was building an oil business, we invested
heavily in what was then a new technology -- off-shore drilling.
Early on, we lost a drilling rig to a storm off the coast of
Texas. I knew that whenever you consider an investment, you
rightly tend to focus on the risks involved.
8
But where training and education are concerned, the biggest
risk is to not get involved.
American public education needs more of our support. All of
us -- teachers, parents, administrators, local officials, private
industry -- all of us have a responsibility to ensure that our
educational system is second to none.
We should look to the vitality of our system -- and work to
build strength through diversity.
Successful schools happen everywhere -- from rural
communities to inner city neighborhoods. They are shaped by
people with high expectations, from both the public and private
sector, who work within the schools to bring about needed
improvements.
This way of looking at it means that we are all accountable
for the quality of our schools. We need to strengthen incentives
to do better -- and we have a mandate to do just that.
We will expand Head Start, reward schools that improve, and
recognize outstanding teachers. We will establish a National
Science Scholars Program. We will work to free our schools from
the pestilence of drugs.
9
And we will be looking to you for help and guidance --
because good schools are good for business. Many of you are
already involved with local schools, doing important work for
the future of your communities, and your country. More can be
done. And I know you'll be there when we need you.
To compete successfully abroad, many of you will find
yourselves competing for workers at home. I know managers who
are seriously starting to worry about shortages of talented
people.
There is a larger, untapped source of talent in this
country. Such people are to be found and fostered among the
young and underskilled, who need training. The older and more
experienced, who need re-training. The disadvantaged, whose
lives can be turned to advantage. Disabled workers, who ask only
for a chance to prove their ability. Dual career families, who
need options.
Opportunity doesn't necessarily knock on the door. It may
be leaning against the wall or standing on the streetcorner,
needing only to be seen for what it is.
In this, we need your leadership. The very heart of our
ability to compete may depend on how well we enlist those who
10
have, until now, been on the outskirts of economic growth. They
will be needed.
Together we can build businesses that outwit, outmaneuver,
outproduce, and outperform the competition.
We can achieve the kind of competitive advantage that comes
from collective will. And we can make sure the words "Made in
the U.S.A." simply mean "the best there is."
Thank you. And God bless you.
11
MASTERI
Document No. 010588
WHITE HOUSE STAFFING MEMORANDUM
2/23/89
3:00 PM 2/27/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY:
PRESIDENTIAL REMARKS: SMALL BUSINESS LEGISLATIVE COUNCIL
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER Roper Bill
DARMAN
STUDDERT
BATES
UNTERMEYER
BREEDEN
ROGERS
CARD
WINSTON
PINKERTON
CICCONI
BOSKIN
DEMAREST
FITZWATER
Gardner-Pinkerton
GRAY
HAGIN
REMARKS:
Please forward any comments/recommendations to Chriss Winston,
Rm. 122, x2930, by 3:00 PM, Monday, February 27, 1989, with an
info copy to my office. Thank you.
RESPONSE:
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
(Lange)
February 23, 1989
1800 FEB 24 1111:23
4:30 p.m.
PRESIDENTIAL REMARKS:
SMALL BUSINESS LEGISLATIVE COUNCIL
WASHINGTON, D.C.
WEDNESDAY, MARCH 1, 1989
(Gand.)
Thank you, [Bob]. It is good to be with you this afternoon.
know
As you may have heard, I just finished a tour through several
countries in the Pacific Rim.
They say that travel teaches tolerance. And it is true --
my hosts abroad were certainly tolerant of my experiments with
(")
their language.
I think one of my toasts might as well have been translated
by the interpreter as: "Laugh politely at the peculiar American
humor. "
Maybe I should have asked them to read my lips.
This afternoon you've heard from Gregg Petersmeyer, Richard
Breeden, and [Elizabeth Dole / Robert Mosbacher] -- three key
members of the team here in Washington.
And now that you have a feeling for their ideas and
priorities, let me encourage you to work with them. Tell them
1
experienced,men and women who know how to WORK
what you're thinking. They are civil servants in the truest
WITH the private sector
sense - and they are looking for ways to make this a responsive
government, a government by the people.
While I was in Asia, I had a chance to think seriously about
what sets our trading partners apart from us. I realized that
in subtle ways, we may have erected a barrier to our own success
-- and deprived ourselves of vital long-term investment that our
competitors have always enjoyed.
In a few minutes, I'm going to have a suggestion for those
who say that we have to "level the playing field. "
(Gard.)
Vasia mag could become the
You know, there are some who say that the sun is rising in
economic center of the world.
that amirica's power's on the wave.)
the Far East. Some even suggest that it's setting here at home.
Well, for them, I have news. The 21st century can be the next
American century -- if we understand the challenges before us,
and move to meet them together.
More than ever, the world is interconnected; interdependent;
and changing rapidly. More than at any point in human history,
our societies and economies rely one upon the other.
So competitiveness -- which seems to be on everybody's mind
these days -- takes on a challenging new angle. It means more
2
than just market share and earned income. And it's more than
a zero-sum, winner-take-all game.
Since 1980, world trade volume has nearly doubled. Almost
a fifth of our industrial production is now in exports. Goods
and services circle the globe overnight. Capital changes hands
in seconds.
In a world like that, all nations stand to benefit from the
growth of their trading partners -- as long as markets are free
and open.
This means that the goal of competitiveness is not simply
to disadvantage the competition. It is to better deploy the
advantages we have -- and to create new ones.
And that is why the work you do is so important. American
small business has always been our most creative source of
innovation and economic growth.
We've created 19 million new jobs in this country since the
recovery began. That's five times the number of jobs created in
Japan -- and small businesses are responsible for eight out of
ten of them. Operations like yours make America work.
3
By creating jobs, you create opportunity. And while I'm
President, government won't interfere with that. We will assure
that you have the freedom you need, to do what you do best.
Competitiveness demands two things: flexibility in the
marketplace, and the right kind of investment at home.
So we want to give employers and employees the flexibility
to work out their own solutions, on issues like parental leave
stucation
and health insurance. And we intend to promote the kind of
investment that will allow every American to share in prosperity,
and help to create more of it.
Americans are a diverse people. They don't want generic
solutions, when a problem is best solved at its source.
Government's creed should be to do no harm -- and to act only
when there is clear evidence that its interference will make
things better for people.
Decisions made -- and actions taken -- at the local level
very often better serve the interests of those involved. What
I'm talking about, here, is a fundamental American freedom:
the freedom to choose.
That's the driving principle behind our proposal on child
care. We want to create a system of refundable tax credits,
4
focused particularly on low-income parents. We mean to avoid
burdensome federal standards and regulation that would limit
family, church, and community-based care. We will examine the
liability insurance barriers for businesses interested in
providing child care options.
We would like to put solutions -- and dollars -- in the
hands of parents. We intend to promote choice in childcare.
Flexibility promotes creativity. It's always been the basis
for real achievements in business. So we need to find new ways
to encourage men and women to take risks. We need entrepreneurs
who will invest their time, talents, and resources to build
businesses. Unlock new markets. Unleash new technologies. And
create new jobs. People who bring to the marketplace competitive
products and quality services that are second to none in the
world.
You know what the challenges are.
Last year a large survey of CEOs suggested that while
American business leaders are inherently optimistic, they're
aware that we have new and important work to do. Ninety percent
of them said that American business is still too short-term
oriented.
5
I've built a business. Let me tell you, I know how tough
it is. I understand the pressures you face. You don't need a
lecture on the importance of savings and long-term investment.
You need government that enables you to do what you know how to
do.
Competitiveness demands the right kind of investment, yes.
That's one reason I support a differential in the capital gains
tax -- cutting it to 15 percent on investments held for a year or
more.
I see this as an important way to free up American
businesses, without distorting world markets. The economies of
the Pacific Rim -- the "four dragons" of Hong Kong, Singapore,
Taiwan, and South Korea -- along with West Germany, the most
dynamic country in Europe -- all exempt capital gains entirely
from tax. Japan also had no tax on capital gains during its
meteoric rise.
I call on anyone who talks about "leveling the playing
field" with our trading partners, to consider this:
By taxing capital gains, we impede our own progress --
and we turn the playing field into an uphill climb.
6
Restoring the capital gains differential would be a powerful
incentive for businesses to invest, to innovate, to grow, and to
create jobs.
For managers, it would ease some of the relentless pressure
of quarterly reporting -- and allow them to focus on longer-term
goals and operations, get a leg up in new markets, and apply new
techniques and technologies. For workers, it means more jobs, at
better wages. For all Americans, it means a real, competitive
difference in the world marketplace.
I am committed to a program of careful, systematic
investment to assure our competitive future. And our budget is
an important first step in that investment.
We have proposed a 13 percent increase for science and
technology programs in 1990. And we intend to double the
National Science Foundation's budget by 1993, to develop
engineering and scientific computing research centers -- and to
build the right links between university, government, and
industry labs.
We are recommending a permanent extension of the R&E tax
credit, to keep us at the forefront of technological innovation
-- especially in basic research.
7
And we want to encourage more domestic research by
multinationals, by stabilizing the R&E expense allocation rules.
The uncertainty brought on by expiring temporary rules has gone
on for two decades. Businesses should be able to make long-term
research plans in a stable climate. Creating that climate is
something government can -- should -- and will do.
We are determined to bring the deficit down -- with no new
taxes -- by following Gramm-Rudman-Hollings targets and using
actual spending as a frame of reference. You don't run your
operations in a wonderland of perpetually expanding baselines --
and neither should government.
But the most important investment we can make, to assure
a competitive future, is in training and education.
Jobs are becoming more demanding. The competition is
getting tougher. Labor markets are getting tighter. So we'll
need to do more to develop a highly-skilled, motivated, educated
workforce.
You know, when I was building an oil business, we invested
heavily in what was then a new technology -- off-shore drilling.
Early on, we lost a drilling rig to a storm off the coast of
Texas. I knew that whenever you consider an investment, you
8
rightly tend to focus on the risks involved.
But where training and education are concerned, the biggest
risk is to not get involved.
American public education needs more of our support -- and
less of our criticism. It's time to stop blaming the students --
stop blaming the schools -- stop blaming other institutions --
and start getting involved.
We should look to the vitality of our system -- and work to
build strength through diversity.
Successful schools happen everywhere -- from rural
communities to inner city neighborhoods. They are shaped by
people with high expectations, from both the public and private
sector, who work within the schools to bring about creative
change.
This way of looking at it means that we are all accountable
for the quality of our schools. We need to strengthen incentives
to do better -- and we have a program to do just that.
We will expand Head Start, reward superior schools, and
recognize outstanding teachers. We will establish a National
9
Science Scholars Program. We will work to free our schools from
the pestilence of drugs.
And we will be looking to you for help and guidance --
because good schools are good for business. Many of you are
already involved with local schools, doing important work for
the future of your communities, and your country. More can be
done. And I know you'll be there when we need you.
To compete successfully abroad, many of you will find
yourselves competing for workers at home. I know managers who
are seriously starting to worry about shortages of talented
people.
There is a larger, untapped source of talent in this
country. Such people are to be found and fostered among the
young and underskilled, who need training. The older and more
experienced, who need re-training. The disadvantaged, whose
lives can be turned to advantage. Disabled workers, who ask only
for a chance to prove their ability. Dual career families, who
need options.
Opportunity doesn't necessarily knock on the door. It may
be leaning against the wall or standing on the streetcorner,
needing only to be seen for what it is.
10
In this, we need your leadership. The very heart of our
ability to compete may depend on how well we enlist those who
have, until now, been on the outskirts of economic growth. They
will be needed.
Together we can build businesses that outwit, outmaneuver,
outproduce, and outperform the competition.
We can achieve the kind of competitive advantage that comes
from collective will. And we can make sure the words "Made in
America" simply mean "the best there is."
Thank you. And God bless you.
11
REMARKS: SMALL BUSINESS LEGISLATIVE COUNCIL
WASHINGTON, D.C.
WEDNESDAY, MARCH 1, 1989
THANK YOU, BoB. IT IS GOOD TO BE WITH YOU THIS
AFTERNOON. THIS AFTERNOON YOU'VE HEARD FROM GREGG
PETERSMEYER, RICHARD BREEDEN, AND ROBERT MOSBACHER --
THREE KEY MEMBERS OF THE TEAM HERE IN WASHINGTON.
- 2 -
AND NOW THAT YOU HAVE A FEELING FOR THEIR IDEAS AND
PRIORITIES, LET ME ENCOURAGE YOU TO WORK WITH THEM.
TELL THEM WHAT YOU'RE THINKING. THEY KNOW HOW TO WORK
WITH THE PRIVATE SECTOR -- AND THEY ARE LOOKING FOR
WAYS TO MAKE THIS A RESPONSIVE GOVERNMENT, A GOVERNMENT
BY AND FOR THE PEOPLE.
WHILE I WAS IN ASIA, I HAD A CHANCE TO THINK
SERIOUSLY ABOUT WHAT SETS OUR TRADING PARTNERS APART
FROM US.
- 3 -
I REALIZED THAT WE MAY HAVE ERECTED A BARRIER TO OUR
OWN SUCCESS -- AND DEPRIVED OURSELVES OF VITAL LONG-
TERM INVESTMENT THAT OUR COMPETITORS HAVE ALWAYS
ENJOYED.
IN A FEW MINUTES, I'M GOING TO HAVE A SUGGESTION
FOR THOSE WHO ARGUE IN FAVOR OF PROTECTIONIST
INTERVENTION.
You KNOW, THERE ARE SOME WHO SAY THAT ASIA COULD
BECOME THE ECONOMIC CENTER OF THE WORLD.
- 4 -
SOME EVEN SUGGEST THAT AMERICA'S POWER IS ON THE WANE.
WELL, FOR THEM, I HAVE NEWS. THE 21st CENTURY CAN BE
THE NEXT AMERICAN CENTURY -- IF WE UNDERSTAND THE
CHALLENGES BEFORE US, AND MOVE TO MEET THEM TOGETHER.
MORE THAN EVER, THE WORLD IS INTERCONNECTED;
INTERDEPENDENT; AND CHANGING RAPIDLY. MORE THAN AT ANY
POINT IN HUMAN HISTORY, OUR SOCIETIES AND ECONOMIES
RELY ONE UPON THE OTHER.
- 5 -
So COMPETITIVENESS -- WHICH IS ON EVERYBODY'S MIND
THESE DAYS -- TAKES ON A CHALLENGING NEW ANGLE. IT
MEANS MORE THAN JUST MARKET SHARE AND EARNED INCOME.
AND IT'S MORE THAN A ZERO-SUM, WINNER-TAKE-ALL GAME.
SINCE 1980, WORLD TRADE VOLUME IS UP NEARLY 40
PERCENT. ALMOST A FIFTH OF OUR INDUSTRIAL PRODUCTION
IS NOW IN EXPORTS. GOODS AND SERVICES CIRCLE THE GLOBE
OVERNIGHT. CAPITAL CHANGES HANDS IN SECONDS.
- 6 -
IN A WORLD LIKE THAT, ALL NATIONS STAND TO BENEFIT
FROM THE GROWTH OF THEIR TRADING PARTNERS -- AS LONG AS
MARKETS ARE FREE AND OPEN. So I HAVE TWO KEY
PRIORITIES: TO PROMOTE ECONOMIC GROWTH THROUGH LOW TAX
RATES; AND TO ENCOURAGE THE KIND OF FREE TRADE THAT
MAKES ALL NATIONS BETTER OFF.
You SEE, THE GOAL OF COMPETITIVENESS IS NOT SIMPLY
TO DISADVANTAGE THE COMPETITION.
- 7 -
IT IS TO BETTER DEPLOY THE ADVANTAGES WE HAVE -- AND TO
CREATE NEW ONES.
AND THAT IS WHY THE WORK YOU DO IS so IMPORTANT.
AMERICAN SMALL BUSINESS HAS ALWAYS BEEN OUR MOST
CREATIVE SOURCE OF INNOVATION AND ECONOMIC GROWTH.
WE'VE CREATED 19 MILLION NEW JOBS IN THIS COUNTRY
SINCE THE RECOVERY BEGAN. RELATIVE TO POPULATION,
THAT'S MORE THAN TWICE THE NUMBER OF JOBS CREATED IN
JAPAN.
- 8 -
IN THE U.S. PRIVATE SECTOR, SMALL BUSINESSES ARE
RESPONSIBLE FOR TWO OUT OF THREE JOBS CREATED.
BUSINESSES LIKE YOURS MAKE AMERICA WORK.
BY CREATING JOBS, YOU CREATE OPPORTUNITY. AND
WHILE I'M PRESIDENT, GOVERNMENT WON'T INTERFERE WITH
THAT. WE WILL ASSURE THAT YOU HAVE THE FREEDOM YOU
NEED, TO DO WHAT YOU DO BEST. WE WILL HOLD THE LINE ON
TAXES.
- 9 -
BECAUSE IF THE EXPERIENCE OF THE LAST EIGHT YEARS HAS
PROVEN ANYTHING, LOWER TAXES MEAN A STRONGER ECONOMY.
COMPETITIVENESS DEMANDS TWO THINGS: FLEXIBILITY IN
THE MARKETPLACE, AND THE RIGHT KIND OF INVESTMENT AT
HOME.
So WE WANT TO GIVE EMPLOYERS AND EMPLOYEES THE
FLEXIBILITY TO WORK OUT THEIR OWN SOLUTIONS, ON ISSUES
LIKE PARENTAL LEAVE AND HEALTH INSURANCE.
- 10 -
AND WE INTEND TO PROMOTE THE KIND OF INVESTMENT THAT
WILL ALLOW EVERY AMERICAN TO SHARE IN PROSPERITY, AND
HELP TO CREATE MORE OF IT.
THAT'S THE IDEA BEHIND A NEW PROPOSAL OF MINE. I
BELIEVE THAT, WITH THE PROPER INCENTIVES, SMALL
BUSINESS CAN LEAD AMERICA'S URBAN RENEWAL. So TO THE
ENTREPRENEUR, I SAY THIS: START YOUR BUSINESS IN THE
INNER CITY, WHERE THE NEED FOR JOBS IS GREATEST -- AND
WE WILL CUT YOUR FEDERAL TAX RATES.
- 11 -
AFTER ALL, YOU'LL BE SAVING THE GOVERNMENT MONEY BY
REDUCING THE NEED FOR ITEMS LIKE WELFARE AND SUBSIDIZED
HOUSING. AND YOU WILL HELP US BRING URBAN ENTERPRISE
ZONES TO LIFE IN CITIES ACROSS THE COUNTRY.
DECISIONS MADE -- AND ACTIONS TAKEN -- AT THE LOCAL
LEVEL VERY OFTEN BETTER SERVE THE INTERESTS OF THOSE
INVOLVED. WHAT I'M TALKING ABOUT, HERE, IS A
FUNDAMENTAL AMERICAN FREEDOM: THE FREEDOM TO CHOOSE.
- 12 -
THAT'S THE DRIVING PRINCIPLE BEHIND OUR PROPOSAL ON
CHILD CARE. WE WANT TO ESTABLISH A NEW, REFUNDABLE
CHILDREN'S TAX CREDIT FOR LOW-INCOME PARENTS -- AND
MAKE THE EXISTING CHILD CARE TAX CREDIT REFUNDABLE AS
WELL. WE MEAN TO AVOID BURDENSOME FEDERAL STANDARDS
AND REGULATION THAT WOULD LIMIT FAMILY, CHURCH, AND
COMMUNITY-BASED CARE. WE WILL EXAMINE THE LIABILITY
INSURANCE BARRIERS FOR BUSINESSES INTERESTED IN
PROVIDING CHILD CARE OPTIONS.
- 13 -
WE WOULD LIKE TO PUT SOLUTIONS -- AND DOLLARS -- IN THE
HANDS OF PARENTS. WE INTEND TO PROMOTE CHOICE IN
CHILDCARE.
FLEXIBILITY CAN ALSO PROMOTE RISK-TAKING. IT'S
ALWAYS BEEN THE BASIS FOR REAL ACHIEVEMENTS IN
BUSINESS. So WE NEED TO FIND NEW WAYS TO ENCOURAGE MEN
AND WOMEN TO TAKE RISKS. WE NEED ENTREPRENEURS WHO
WILL INVEST THEIR TIME, TALENTS, AND RESOURCES To BUILD
BUSINESSES.
- 14 -
UNLOCK NEW MARKETS. UNLEASH NEW TECHNOLOGIES. AND
CREATE NEW JOBS. PEOPLE WHO BRING TO THE MARKETPLACE
COMPETITIVE PRODUCTS AND QUALITY SERVICES THAT ARE
SECOND TO NONE IN THE WORLD.
You KNOW WHAT THE CHALLENGES ARE.
LAST YEAR A LARGE SURVEY OF CEOs SUGGESTED THAT
WHILE AMERICAN BUSINESS LEADERS ARE INHERENTLY
OPTIMISTIC, THEY'RE AWARE THAT WE HAVE NEW AND
IMPORTANT WORK TO DO.
- 15 -
NINETY PERCENT OF THEM SAID THAT AMERICAN BUSINESS IS
STILL TOO SHORT-TERM ORIENTED.
I'VE HELPED BUILD A BUSINESS FROM SCRATCH. I KNOW
HOW TOUGH IT CAN BE. I UNDERSTAND THE PRESSURES YOU
FACE. You DON'T NEED A LECTURE ON THE IMPORTANCE OF
SAVINGS AND LONG-TERM INVESTMENT. You NEED GOVERNMENT
THAT ENABLES YOU TO DO WHAT'S GOOD FOR BUSINESS, AND
GOOD FOR AMERICA.
- 16 -
COMPETITIVENESS DEMANDS THE RIGHT KIND OF
INVESTMENT, YES. FOR A LONG TIME NOW I HAVE BEEN
SAYING THAT WE MUST HAVE A COMPETITIVE CAPITAL GAINS
TAX RATE. IF WE ARE To RETAIN THE AMERICAN EDGE, WE
MUST GIVE ENTREPRENEURS AND SMALL BUSINESSPEOPLE THE
INCENTIVE TO KEEP DREAMING, KEEP RISKING -- AND KEEP
CREATING GOOD JOBS FOR AMERICANS.
- 17 -
I SEE A CAPITAL GAINS RATE CUT AS AN IMPORTANT WAY
TO FREE UP AMERICAN BUSINESSES, WITHOUT DISTORTING
WORLD MARKETS. THE ECONOMIES OF THE PACIFIC RIM -- THE
"FOUR DRAGONS" OF HONG KONG, SINGAPORE, TAIWAN, AND
SOUTH KOREA -- ALL EXEMPT LONG-TERM CAPITAL GAINS FROM
TAX. JAPAN ALSO HAD NO TAX ON CAPITAL GAINS DURING ITS
METEORIC RISE TO ECONOMIC POWER.
I CALL ON ANYONE WHO TALKS ABOUT PROTECTIONISM TO
CONSIDER THIS:
- 18 -
BY TAXING CAPITAL GAINS, WE IMPEDE OUR OWN PROGRESS
-- AND WE TURN THE PLAYING FIELD INTO AN UPHILL CLIMB.
RESTORING THE CAPITAL GAINS DIFFERENTIAL WOULD BE A
POWERFUL INCENTIVE FOR BUSINESSES TO INVEST, TO
INNOVATE, TO GROW, AND TO CREATE JOBS. THE TREASURY
ESTIMATES THAT THIS CUT WILL ADD $4.8 BILLION PER YEAR
TO THE REVENUE SIDE OF THE LEDGER THIS YEAR.
- 19 -
FOR MANAGERS, IT WOULD EASE SOME OF THE RELENTLESS
PRESSURE OF QUARTERLY REPORTING -- AND ALLOW THEM TO
FOCUS ON LONGER-TERM GOALS AND OPERATIONS, GET A LEG UP
IN NEW MARKETS, AND APPLY NEW TECHNIQUES AND
TECHNOLOGIES. FOR WORKERS, IT MEANS MORE JOBS, AT
BETTER WAGES. FOR ALL AMERICANS, IT MEANS A REAL,
COMPETITIVE DIFFERENCE IN THE WORLD MARKETPLACE.
- 20 -
I AM COMMITTED TO GOVERNMENT POLICIES THAT WILL
ALLOW BUSINESS TO INVEST WITH AN EYE TOWARD THE LONG
TERM TO ASSURE OUR COMPETITIVE FUTURE.
IN MY BUDGET, I HAVE PROPOSED A 13 PERCENT INCREASE
FOR SCIENCE AND TECHNOLOGY PROGRAMS IN 1990. AND WE
INTEND TO STAY ON TRACK IN OUR EFFORT TO DOUBLE THE
NATIONAL SCIENCE FOUNDATION'S BUDGET BY 1993, TO
DEVELOP ENGINEERING AND SCIENTIFIC COMPUTING RESEARCH
- 21 -
CENTERS -- AND TO BUILD THE RIGHT LINKS BETWEEN
UNIVERSITY, GOVERNMENT, AND INDUSTRY LABS.
WE ARE RECOMMENDING A PERMANENT EXTENSION OF THE
RESEARCH AND EXPERIMENTATION (OR R&E) TAX CREDIT, TO
KEEP US AT THE FOREFRONT OF TECHNOLOGICAL INNOVATION --
ESPECIALLY IN BASIC RESEARCH.
AND WE WANT TO ENCOURAGE MORE DOMESTIC RESEARCH BY
MULTINATIONALS, BY STABILIZING THE R&E EXPENSE
ALLOCATION RULES.
- 22 -
THE UNCERTAINTY BROUGHT ON BY EXPIRING TEMPORARY RULES
HAS GONE ON FOR TWO DECADES. BUSINESSES SHOULD BE ABLE
TO MAKE LONG-TERM RESEARCH PLANS IN A STABLE CLIMATE.
CREATING THAT CLIMATE IS SOMETHING GOVERNMENT CAN --
SHOULD -- AND WILL DO.
WE ARE DETERMINED TO BRING THE DEFICIT DOWN -- WITH
NO NEW TAXES. WE HAVE PROPOSED A MAJOR BUDGET REFORM
TO PUT OUR FISCAL POLICY ON A SOUND FOOTING ONCE AND
FOR ALL.
- 23 -
WE NEED TO DO AWAY WITH THE WONDERLAND CONCEPT OF
"CURRENT SERVICES BUDGETING" -- A LAND OF EXPANDING
BASELINES, WHERE PROGRAMS ARE ASSUMED IMMORTAL, AND
"CUTS" ARE ACTUALLY INCREASES. FEDERAL POLICY SHOULD
NOT START OUT WITH THE PRESUMPTION THAT GOVERNMENT
SPENDING SHOULD GO UP AND UP.
WARREN RUDMAN HAS DESCRIBED THE WASHINGTON
WONDERLAND VERY WELL.
- 24 -
HE'S SAID THAT "WASHINGTON IS THE ONLY CITY I'VE EVER
SEEN WHERE A FELLOW'S MAKING $20,000, GOES TO HIS BOSS
AND ASKS FOR A $10,000 RAISE -- THE BOSS SAYS NO, YOU
CAN HAVE A $5,000 RAISE, AND THE GUY SAYS HE GOT A
$5,000 CUT."
BUT THE MOST IMPORTANT INVESTMENT WE CAN MAKE, TO
ASSURE A COMPETITIVE FUTURE, IS IN TRAINING AND
EDUCATION.
JOBS ARE BECOMING MORE DEMANDING.
- 25 -
THE COMPETITION IS GETTING TOUGHER. LABOR MARKETS ARE
GETTING TIGHTER. So WE'LL NEED TO DO MORE TO DEVELOP A
HIGHLY-SKILLED, MOTIVATED, EDUCATED WORKFORCE.
You KNOW, WHEN I WAS IN THE OIL BUSINESS, WE
INVESTED HEAVILY IN WHAT WAS THEN A NEW TECHNOLOGY --
OFF-SHORE DRILLING. EARLY ON, WE LOST A DRILLING RIG
TO A STORM OFF THE COAST OF TEXAS. I KNEW THAT
WHENEVER YOU CONSIDER AN INVESTMENT, YOU
RIGHTLY TEND TO FOCUS ON THE RISKS INVOLVED.
- 26 -
BUT WHERE TRAINING AND EDUCATION ARE CONCERNED, THE
BIGGEST RISK IS TO NOT GET INVOLVED.
AMERICAN PUBLIC EDUCATION NEEDS MORE OF OUR
SUPPORT. ALL OF US -- TEACHERS, PARENTS,
ADMINISTRATORS, LOCAL OFFICIALS, PRIVATE INDUSTRY --
ALL OF US HAVE A RESPONSIBILITY TO ENSURE THAT OUR
EDUCATIONAL SYSTEM IS SECOND TO NONE.
WE SHOULD LOOK TO THE VITALITY OF OUR SYSTEM -- AND
WORK TO BUILD STRENGTH THROUGH DIVERSITY.
- 27 -
SUCCESSFUL SCHOOLS HAPPEN EVERYWHERE -- FROM RURAL
COMMUNITIES TO INNER CITY NEIGHBORHOODS. THEY ARE
SHAPED BY PEOPLE WITH HIGH EXPECTATIONS, FROM BOTH THE
PUBLIC AND PRIVATE SECTOR, WHO WORK WITHIN THE SCHOOLS
TO BRING ABOUT NEEDED IMPROVEMENTS.
THIS WAY OF LOOKING AT IT MEANS THAT WE ARE ALL
ACCOUNTABLE FOR THE QUALITY OF OUR SCHOOLS. WE NEED TO
STRENGTHEN INCENTIVES TO DO BETTER -- AND WE HAVE A
MANDATE TO DO JUST THAT.
- 28 -
WE WILL EXPAND HEAD START, REWARD SCHOOLS THAT
IMPROVE, AND RECOGNIZE OUTSTANDING TEACHERS. WE WILL
ESTABLISH A NATIONAL SCIENCE SCHOLARS PROGRAM. WE WILL
WORK TO FREE OUR SCHOOLS FROM THE PESTILENCE OF DRUGS.
AND WE WILL BE LOOKING TO YOU FOR HELP AND GUIDANCE
-- BECAUSE GOOD SCHOOLS ARE GOOD FOR BUSINESS. MANY OF
YOU ARE ALREADY INVOLVED WITH LOCAL SCHOOLS, DOING
IMPORTANT WORK FOR THE FUTURE OF YOUR COMMUNITIES, AND
YOUR COUNTRY. MORE CAN BE DONE.
- 29 -
AND I KNOW YOU'LL BE THERE WHEN WE NEED YOU.
To COMPETE SUCCESSFULLY ABROAD, MANY OF YOU WILL
FIND YOURSELVES COMPETING FOR WORKERS AT HOME. I KNOW
MANAGERS WHO ARE SERIOUSLY STARTING TO WORRY ABOUT
SHORTAGES OF TALENTED PEOPLE.
THERE IS A LARGER, UNTAPPED SOURCE OF TALENT IN
THIS COUNTRY. SUCH PEOPLE ARE TO BE FOUND AND FOSTERED
AMONG THE YOUNG AND UNDERSKILLED, WHO NEED TRAINING.
THE OLDER AND MORE EXPERIENCED, WHO NEED RE-TRAINING.
- 30 -
THE DISADVANTAGED, WHOSE LIVES CAN BE TURNED TO
ADVANTAGE. DISABLED WORKERS, WHO ASK ONLY FOR A CHANCE
TO PROVE THEIR ABILITY. DUAL CAREER FAMILIES, WHO NEED
OPTIONS.
OPPORTUNITY DOESN'T NECESSARILY KNOCK ON THE DOOR.
IT MAY BE LEANING AGAINST THE WALL OR STANDING ON THE
STREETCORNER, NEEDING ONLY TO BE SEEN FOR WHAT IT IS.
IN THIS, WE NEED YOUR LEADERSHIP.
- 31 -
THE VERY HEART OF OUR ABILITY TO COMPETE MAY DEPEND ON
HOW WELL WE ENLIST THOSE WHO HAVE, UNTIL NOW, BEEN ON
THE OUTSKIRTS OF ECONOMIC GROWTH. THEY WILL BE NEEDED.
TOGETHER WE CAN BUILD BUSINESSES THAT OUTWIT,
OUTMANEUVER, OUTPRODUCE, AND OUTPERFORM THE
COMPETITION.
WE CAN ACHIEVE THE KIND OF COMPETITIVE ADVANTAGE
THAT COMES FROM COLLECTIVE WILL.
- 32 -
AND WE CAN MAKE SURE THE WORDS "MADE IN THE U.S.A."
SIMPLY MEAN "THE BEST THERE IS."
THANK YOU. AND GOD BLESS YOU.
PROPOSED TOWER INSERT (REVISED)
ADDRESS TO THE SMALL BUSINESS LEGISLATIVE COUNCIL
MARCH 1, 1989
BEFORE I BEGIN I'D LIKE TO TAKE THIS OPPORTUNITY TO
COMMENT ON AN ISSUE OF PARTICULAR CURRENCY.
THE DEBATE OVER JOHN TOWER'S NOMINATION AS DEFENSE
SECRETARY SHOULD BE BASED UPON PRINCIPLE AND POLICY.
IT SHOULD NOT BE BASED ON RUMOR AND INNUENDO.
- 2 -
No ONE DENIES THAT JOHN TOWER IS WELL QUALIFIED, HARD-
NOSED, AND TOUGH. No ONE DENIES THAT HE KNOWS THE
PENTAGON AND HE KNOWS THE CONGRESS. THOSE ARE THE
FACTS. AMERICANS, WHATEVER THEIR POLITICS, ARE
COMMITTED TO FAIR PLAY AND DECENCY. ALL I AM ASKING,
IN THE NAME OF FAIRNESS, IS THAT THIS MAN BE JUDGED ON
THE FACTS, NOT ON MISPERCEPTION.
I'VE MADE MY DECISION. AND IT'S UNEQUIVOCAL.
JOHN TOWER IS THE BEST MAN FOR THE JOB.
PROPOSED TOWER INSERT
ADDRESS TO THE SMALL BUSINESS LEGISLATIVE COUNCIL
MARCH 1, 1989
BEFORE I BEGIN I'D LIKE TO TAKE THIS OPPORTUNITY TO
COMMENT ON AN ISSUE OF PARTICULAR CURRENCY.
THE DEBATE OVER JOHN TOWER'S NOMINATION AS DEFENSE
SECRETARY SHOULD BE BASED UPON PRINCIPLE AND POLICY,
BUT INSTEAD IT HAS BEEN BASED UPON INTRIGUE AND
INNUENDO. THIS IS WASHINGTON AT ITS WORST.
- 2 -
No ONE DENIES THAT JOHN TOWER IS UNIQUELY QUALIFIED.
No ONE DENIES THAT HE'S HARD=NOSED AND TOUGH. No ONE
DENIES THAT HE KNOWS THE PENTAGON AND HE KNOWS THE
CONGRESS. THOSE ARE THE UNDISPUTED FACTS. YET THOSE
FACTS ARE TAKING A BACKSEAT TO FICTION, AND UNPROVEN
SLURS ARE EQUATED WITH TRUTH.
As EXECUTIVES YOU KNOW THE VALUE OF HAVING
COMPETENT MEN AND WOMEN ON YOUR TEAM.
- 3 -
You LOOK FOR THOSE SPECIAL QUALITIES IN THE PEOPLE THAT
YOU BRING ON BOARD THAT WILL MAKE YOUR ORGANIZATION
EFFECTIVE. You WEIGH THEIR TALENTS, THEIR CHARACTER,
THEIR EXPERIENCE - -- THEN YOU MAKE YOUR DECISION. AND
THAT'S THAT.
WELL I'VE MADE MY DECISION. AND IT'S UNEQUIVOCAL.
JOHN TOWER IS THE BEST MAN FOR THE JOB. Now IT'S UP TO
THE MEN AND WOMEN IN THE SENATE TO GET BEYOND THE RUMOR
AND THE RUCKUS, AND LOOK AT THE FACTS.
- 4 -
I GRANT YOU, THAT MAY TAKE SOME COURAGE IN THE CURRENT
CLIMATE, BUT TO DO OTHERWISE WOULD GO AGAINST THE
TRADITIONS AND PRINCIPLES OUR GOVERNMENT HAS ALWAYS
STOOD FOR.
###
THE WHITE HOUSE
WASHINGTON
March 1, 1989
MEMORANDUM FOR THE PRESIDENT
From: David Demarest awforDD
Subject: Speech change
Director Darman's office requested an addition to the Small
Business Legislative Council speech mentioning urban enterprise
zones.
Two paragraphs have been added on cards 10 and 11 beginning with
the phrase "That's the idea behind a new proposal of mine."
The new language ends with the phrase " And you will help us
bring urban enterprise zones to life in cities across the
country."
1158
Document No. 010588
WHITE HOUSE STAFFING MEMORANDUM
2/23/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY: 3:00 PM 2/27/89
PRESIDENTIAL REMARKS: SMALL BUSINESS LEGISLATIVE COUNCIL
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
BREEDEN
ROGERS
CARD
WINSTON
PINKERTON
CICCONI
BOSKIN
DEMAREST
FITZWATER
GRAY
HAGIN
REMARKS:
Please forward any comments/recommendations to Chriss Winston,
Rm. 122, x2930, by 3:00 PM, Monday, February 27, 1989, with an
info copy to my office. Thank you.
RESPONSE: MEMORANDUM FOR CHRISS WINSTON
February 27, 1989
The NSC staff has no objection to the Presidential Remarks:
Small Business Legislative Council.
Brent Roter for Scowcroft
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
CC: James W. Cicconi
Ext. 2702
Document No. 010588
WHITE HOUSE STAFFING MEMORANDUM
2/23/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY: 3:00 PM 2/27/89
PRESIDENTIAL REMARKS: SMALL BUSINESS LEGISLATIVE COUNCIL
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
BREEDEN
ROGERS
CARD
WINSTON
PINKERTON
CICCONI
BOSKIN
DEMAREST
FITZWATER
GRAY
HAGIN
REMARKS:
Please forward any comments/recommendations to Chriss Winston,
Rm. 122, x2930, by 3:00 PM, Monday, February 27, 1989, with an
info copy to my office. Thank you.
RESPONSE:
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
No mention of: tractrade (p.3)
ent. zonls (p.4)
(Lange)
1 too long- - to they Lane about scrence stech?
February 23, 1989
R+E taxcredit ?: 11:11:20
4:30 p.m.
PRESIDENTIAL REMARKS:
SMALL BUSINESS LEGISLATIVE COUNCIL
WASHINGTON, D.C.
WEDNESDAY, MARCH 1, 1989
Thank you, [Bob]. It is good to be with you this afternoon.
As you may have heard, I just finished a tour through several
countries in the Pacific Rim.
They say that travel teaches tolerance. And it is true --
my hosts abroad were certainly tolerant of my experiments with
their language.
I think one of my toasts might as well have been translated
by the interpreter as: "Laugh politely at the peculiar American
humor. "
Maybe I should have asked them to read my lips.
This afternoon you've heard from Gregg Petersmeyer, Richard
Breeden, and [Elizabeth Dole / Robert Mosbacher] -- three key
members of the team here in Washington.
my
And now that you have a feeling for their ideas and
priorities, let me encourage you to work with them. Tell them
that they
1
be working on
what you're thinking. They are civil servants in the truest
sense -- and they are looking for ways to make this a responsive
government, a government by the people.
While I was in Asia, I had a chance to think seriously about
what sets our trading partners apart from us. I realized that,
in subtle ways, we may have erected a barrier to our own success
-- and deprived ourselves of vital long-term investment that our
competitors have always enjoyed.
am
In a few minutes, I'm going to have a suggestion for those
who say that we have to "level the playing field. =
You know, there are some who say that the sun is rising in
the Far East. Some even suggest that it's setting here at home.
Well, for them, I have news. The 21st century can be the next
American century -- if we understand the challenges before us,
and move to meet them together.
More than ever, the world is interconnected; interdependent;
and changing rapidly. More than at any point in human history,
our societies and economies rely one upon the other.
So competitiveness -- which seems to be on everybody's mind
these days -- takes on a challenging new angle. It means more
In this used,
2
than just market share and earned income. And it's more than
a zero-sum, winner-take-all game.
Since 1980, world trade volume has nearly doubled. Almost
a fifth of our industrial production is now in exports. Goods
and services circle the globe overnight. Capital changes hands
in
seconds. In this world, conpetitiveness depardson the skills 1 talents of the people--
of thus on the invest ments we make today to enhance those skills.
In a world like that, all nations stand to benefit from the
growth of their trading partners -- as long as markets are free
and open. So the kg priority for me is to promote economic gruth both here
ad abroad, throw law tax rates. And as markets grow, I will work to fight
off the protectionist, as encourage the kid of free trade that makes all nations batter off.
This means that the goal of competitiveness is not simply
You see,
to disadvantage the competition. It is to better deploy the
advantages we have -- and to create new ones.
And that is why the work you do is so important. American
small business has always been our most creative source of
innovation and economic growth.
We've created 19 million new jobs in this country since the
recovery began. That's five times the number of jobs created in
Japan -- and small businesses are responsible for eight out of
ten of them. Operations like yours make America work.
3
By creating jobs, you create opportunity. And while I'm
President, government won't interfere with that. We will assure
that you have the freedom you need, to do what you do best. We
will hold the Inil on taxes because if the experience of the last 8 year has
proven anythin, it is that lower taxes mean a stronger economy.
Competitiveness demands two things: flexibility in the
marketplace, and the right kind of investment at home.
So we want to give employers and employees the flexibility
to work out their own solutions, on issues like parental leave
and health insurance. And we intend to promote the kind of
investment that will allow every American to share in prosperity,
and more
help to create of it. proposal of mine are I'd liket- ask them; for your help with. ht
For That's the dea behind a the new to help our cities was to dunp money that destroyed in
25 as years, aresult social planner weated thought a destructive way cycle of dependeny hope. My
Americans the are a diverse people. They don't want generic idea is different
solutions, when a problem is best solved at its source. by believe that, with
Government's creed should be to do no harm and to act only
the poper business incentives
when there is clear evidence that its interference
things better for people.
intervention The will well loky an make for lend the small America ad ofwent deap wba
renewal. of as
women
them is as acean -
Decisions made -- and actions taken -- at the local level an
very often better serve the interests of those involved.
What this compting.
I'm talking about, here, is a fundamental American freedom:
whats propore
X
the freedom to choose.
this:
Start 54g So your lovsiness inher
That's the driving principle behind our proposal on child
3
there
care. We want to create a system of refundable tax credits,
need for idoc is greatest, ad yrill get you , ube
into
break 4 in the the gon't on you money sederal by hasml reduce xaxes. the Nexthy need int 4/se- that (1) of
focused particularly on low-income parents. We mean to avoid
burdensome federal standards and regulation that would limit
family, church, and community-based care. We will examine the
liability insurance barriers for businesses interested in
providing child care options.
We would like to put solutions -- and dollars -- in the
hands of parents. We intend to promote choice in childcare.
Flexibility promotes creativity. It's always been the basis
for real achievements in business. So we need to find new ways
to encourage men and women to take risks. We need entrepreneurs
who will invest their time, talents, and resources to build
businesses. Unlock new markets. Unleash new technologies. And
create new jobs. People who bring to the marketplace competitive
products and quality services that are second to none in the
world.
You know what the challenges are.
Last year a large survey of CEOs suggested that while
American business leaders are inherently optimistic, they're
aware that we have new and important work to do. Ninety percent
of them said that American business is still too short-term
oriented.
5
I've built a business. Let me tell you, I know how tough
it is. I understand the pressures you face. You don't need a
lecture on the importance of savings and long-term investment.
You need government that enables you to do what you know how to
do.
Competitiveness demands the right kind of investment, yes.
That's one reason I support a differential in the capital gains
tax -- cutting it to 15 percent on investments held for a year or
more.
I see this as an important way to free up American
Raul)
5044
businesses, without distorting world markets. The economies of should
this be
the Pacific Rim -- the "four dragons" of Hong Kong, Singapore,
"tigers"
Taiwan, and South Korea -- along with West Germany, the most
long- term
dynamic country in Europe -- all exempt capital gains entirely
from tax. Japan also had no tax on capital gains during its
meteoric rise.
I call on anyone who talks about "leveling the playing
field" with our trading partners, to consider this:
By taxing capital gains, we impede our own progress --
and we turn the playing field into an uphill climb.
6
Restoring the capital gains differential would be a powerful
incentive for businesses to invest, to innovate, to grow, and to
create jobs.
For managers, it would ease some of the relentless pressure
of quarterly reporting -- and allow them to focus on longer-term
goals and operations, get a leg up in new markets, and apply new
techniques and technologies. For workers, it means more jobs, at
better wages. For all Americans, it means a real, competitive
difference in the world marketplace.
I am committed to a program of careful, systematic
For investors it
investment to assure our competitive future. And our budget is
an important first step in that investment.
in companies
We have proposed a 13 percent increase for science and
technology programs in 1990. And we intend to double the
National Science Foundation's budget by 1993, to develop
ad that
engineering and scientific computing research centers -- and to
build the right links between university, government, and
make of
industry labs.
cost fromer pital i'ives the tons
We are recommending a permanent extension of the R&E tax
credit, to keep us at the forefront of technological innovation
especially in basic research.
reduce reductiveness of so the of lelt- balleavers b 6.7
7
And we want to encourage more domestic research by
multinationals, by stabilizing the R&E expense allocation rules.
The uncertainty brought on by expiring temporary rules has gone
on for two decades. Businesses should be able to make long-term
research plans in a stable climate. Creating that climate is
something government can -- should -- and will do.
We are determined to bring the deficit down -- with no new
taxes -- by following Gramm-Rudman-Hollings targets and using
actual spending as a frame of reference. You don't run your
operations in a wonderland of perpetually expanding baselines --
and neither should government.
But the most important investment we can make, to assure
a competitive future, is in training and education.
Jobs are becoming more demanding. The competition is
getting tougher. Labor markets are getting tighter. So we'll
need to do more to develop a highly-skilled, motivated, educated
workforce.
You know, when I was building an oil business, we invested
heavily in what was then a new technology -- off-shore drilling.
Early on, we lost a drilling rig to a storm off the coast of
Texas. I knew that whenever you consider an investment, you
8
rightly tend to focus on the risks involved.
But where training and education are concerned, the biggest
risk is to not get involved.
American public education needs more of our support -- and
less of our criticism. It's time to stop blaming the students --
stop blaming the schools -- stop blaming other institutions --
and start getting involved.
We should look to the vitality of our system -- and work to
build strength through diversity.
Successful schools happen everywhere -- from rural
communities to inner city neighborhoods. They are shaped by
people with high expectations, from both the public and private
sector, who work within the schools to bring about creative
change.
This way of looking at it means that we are all accountable
for the quality of our schools. We need to strengthen incentives
to do better -- and we have a program to do just that.
We will expand Head Start, reward superior schools, and
recognize outstanding teachers. We will establish a National
9
Science Scholars Program. We will work to free our schools from
the pestilence of drugs.
And we will be looking to you for help and guidance --
because good schools are good for business. Many of you are
already involved with local schools, doing important work for
the future of your communities, and your country. More can be
done. And I know you'll be there when we need you.
To compete successfully abroad, many of you will find
yourselves competing for workers at home. I know managers who
are seriously starting to worry about shortages of talented
people.
There is a larger, untapped source of talent in this
country. Such people are to be found and fostered among the
young and underskilled, who need training. The older and more
experienced, who need re-training. The disadvantaged, whose
lives can be turned to advantage. Disabled workers, who ask only
for a chance to prove their ability. Dual career families, who
need options.
Opportunity doesn't necessarily knock on the door. It may
be leaning against the wall or standing on the streetcorner,
needing only to be seen for what it is.
10
In this, we need your leadership. The very heart of our
ability to compete may depend on how well we enlist those who
have, until now, been on the outskirts of economic growth. They
will be needed.
Together we can build businesses that outwit, outmaneuver,
outproduce, and outperform the competition.
We can achieve the kind of competitive advantage that comes
from collective will. And we can make sure the words "Made in
America" simply mean "the best there is."
Thank you. And God bless you.
11
Document No. 010588
WHITE HOUSE STAFFING MEMORANDUM
2/23/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY: 3:00 PM 2/27/89
PRESIDENTIAL REMARKS: SMALL BUSINESS LEGISLATIVE COUNCIL
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
BREEDEN
ROGERS
WINSTON
CARD
PINKERTON
CICCONI
BOSKIN
DEMAREST
FITZWATER
GRAY
HAGIN
REMARKS:
Please forward any comments/recommendations to Chriss Winston,
Rm. 122, x2930, by 3:00 PM, Monday, February 27, 1989, with an
info copy to my office. Thank you.
David Demarest
RESPONSE:
James W. Cicconi
(Lange)
February 23, 1989
4:30 p.m.
PRESIDENTIAL REMARKS:
SMALL BUSINESS LEGISLATIVE COUNCIL
WASHINGTON, D.C.
WEDNESDAY, MARCH 1, 1989
Thank you, [Bob]. It is good to be with you this afternoon.
As you may have heard, I just finished a tour through several
countries in the Pacific Rim.
They say that travel teaches tolerance. And it is true --
my hosts abroad were certainly tolerant of my experiments with
their language.
I think one of my toasts might as well have been translated
by the interpreter as: "Laugh politely at the peculiar American
humor. "
Maybe I should have asked them to read my lips
This afternoon you've heard from Gregg Petersmeyer, Richard
Breeden, and [Elizabeth Dole / Robert Mosbacher] -- three key
members of the team here in Washington.
And now that you have a feeling for their ideas and
priorities, let me encourage you to work with them. Tell them
1
what you're thinking. They are civil servants in the truest
sense -- and they are looking for ways to make this a responsive
government, a government by the people.
While I was in Asia, I had a chance to think seriously about
what sets our trading partners apart from us. I realized that,
in subtle ways, we may have erected a barrier to our own success
-- and deprived ourselves of vital long-term investment that our
competitors have always enjoyed.
In a few minutes, I'm going to have a suggestion for those
who say that we have to "level the playing field, "
You know, there are some who say that the sun is rising in
the Far East. Some even suggest that it's setting here at home.
Well, for them, I have news. The 21st century can be the next
American century -- if we understand the challenges before us,
and move to meet them together.
More than ever, the world is interconnected; interdependent;
and changing rapidly. More than at any point in human history,
our societies and economies rely one upon the other.
So competitiveness -- which seems to be on everybody's mind
these days -- takes on a challenging new angle. It means more
2
than just market share and earned income. And it's more than
a zero-sum, winner-take-all game.
Since 1980, world trade volume has nearly doubled. Almost
a fifth of our industrial production is now in exports. Goods
and services circle the globe overnight. Capital changes hands
in seconds.
In a world like that, all nations stand to benefit from the
growth of their trading partners -- as long as markets are free
and open.
This means that the goal of competitiveness is not simply
to disadvantage the competition. It is to better deploy the
advantages we have -- and to create new ones.
And that is why the work you do is so important. American
small business has always been our most creative source of
innovation and economic growth.
We've created 19 million new jobs in this country since the
recovery began. That's five times the number of jobs created in
Japan -- and small businesses are responsible for eight out of
ten of them. Operations like yours make America work.
3
By creating jobs, you create opportunity. And while I'm
President, government won't interfere with that. We will assure
that you have the freedom you need, to do what you do best.
Competitiveness demands two things: flexibility in the
marketplace, and the right kind of investment at home.
So we want to give employers and employees the flexibility
to work out their own solutions, on issues like parental leave
and health insurance. And we intend to promote the kind of
investment that will allow every American to share in prosperity,
and help to create more of it.
Americans are a diverse people. They don't want generic
solutions, when a problem is best solved at its source.
Government's creed should be to do no harm -- and to act only
activism
when there is clear evidence that its interference will make
things better for people.
Decisions made -- and actions taken -- at the local level
very often better serve the interests of those involved. What
I'm talking about, here, is a fundamental American freedom:
the freedom to choose.
That's the driving principle behind our proposal on child
care. We want to create a system of refundable tax credits,
4
focused particularly on low-income parents. We mean to avoid
burdensome federal standards and regulation that would limit
family, church, and community-based care. We will examine the
liability insurance barriers for businesses interested in
providing child care options.
We would like to put solutions -- and dollars -- in the
hands of parents. We intend to promote choice in childcare.
Flexibility promotes creativity. It's always been the basis
for real achievements in business. So we need to find new ways
to encourage men and women to take risks. We need entrepreneurs
who will invest their time, talents, and resources to build
businesses. Unlock new markets. Unleash new technologies. And
create new jobs. People who bring to the marketplace competitive
products and quality services that are second to none in the
world.
You know what the challenges are.
Last year a large survey of CEOs suggested that while
American business leaders are inherently optimistic, they're
aware that we have new and important work to do. Ninety percent
of them said that American business is still too short-term
oriented.
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I've built a business. Let me tell you, I know how tough
it is. I understand the pressures you face. You don't need a
lecture on the importance of savings and long-term investment.
You need government that enables you to do what you know how to
do.
Competitiveness demands the right kind of investment, yes.
That's one reason I support a differential in the capital gains
tax -- cutting it to 15 percent on investments held for a year or
more.
I see this as an important way to free up American
businesses, without distorting world markets. The economies of
the Pacific Rim -- the "four dragons" of Hong Kong, Singapore,
Taiwan, and South Korea -- along with West Germany, the most
dynamic country in Europe -- all exempt capital gains entirely
from tax. Japan also had no tax on capital gains during its
meteoric rise.
I call on anyone who talks about "leveling the playing
field" with our trading partners, to consider this:
By taxing capital gains, we impede our own progress --
and we turn the playing field into an uphill climb.
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Restoring the capital gains differential would be a powerful
incentive for businesses to invest, to innovate, to grow, and to
create jobs.
For managers, it would ease some of the relentless pressure
of quarterly reporting -- and allow them to focus on longer-term
goals and operations, get a leg up in new markets, and apply new
techniques and technologies. For workers, it means more jobs, at
better wages. For all Americans, it means a real, competitive
difference in the world marketplace.
I am committed to a program of careful, systematic
investment to assure our competitive future. And our budget is
an important first step in that investment.
We have proposed a 13 percent increase for science and
technology programs in 1990. And we intend to double the
National Science Foundation's budget by 1993, to develop
engineering and scientific computing research centers -- and to
build the right links between university, government, and
industry labs.
We are recommending a permanent extension of the R&E tax
credit, to keep us at the forefront of technological innovation
-- especially in basic research.
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And we want to encourage more domestic research by
multinationals, by stabilizing the R&E expense allocation rules.
The uncertainty brought on by expiring temporary rules has gone
on for two decades. Businesses should be able to make long-term
research plans in a stable climate. Creating that climate is
something government can -- should -- and will do.
We are determined to bring the deficit down -- with no new
taxes -- by following Gramm-Rudman-Hollings targets and using
actual spending as a frame of reference. You don't run your
operations in a wonderland of perpetually expanding baselines --
and neither should government.
But the most important investment we can make, to assure
a competitive future, is in training and education.
Jobs are becoming more demanding. The competition is
getting tougher. Labor markets are getting tighter. So we'll
need to do more to develop a highly-skilled, motivated, educated
workforce.
You know, when I was building an oil business, we invested
heavily in what was then a new technology -- off-shore drilling.
Early on, we lost a drilling rig to a storm off the coast of
Texas. I knew that whenever you consider an investment, you
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rightly tend to focus on the risks involved.
But where training and education are concerned, the biggest
risk is to not get involved.
American public education needs more of our support -- and
less of our criticism. It's time to stop blaming the students --
stop blaming the schools -- stop blaming other institutions --
and start getting involved.
We should look to the vitality of our system -- and work to
build strength through diversity.
Successful schools happen everywhere -- from rural
communities to inner city neighborhoods. They are shaped by
people with high expectations, from both the public and private
sector, who work within the schools to bring about creative
change.
This way of looking at it means that we are all accountable
for the quality of our schools. We need to strengthen incentives
mandate
to do better -- and we have a program to do just that.
We will expand Head Start, reward superior schools, and
recognize outstanding teachers. We will establish a National
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Science Scholars Program. We will work to free our schools from
the pestilence of drugs.
And we will be looking to you for help and guidance --
because good schools are good for business. Many of you are
already involved with local schools, doing important work for
the future of your communities, and your country. More can be
done. And I know you'll be there when we need you.
To compete successfully abroad, many of you will find
yourselves competing for workers at home. I know managers who
are seriously starting to worry about shortages of talented
people.
There is a larger, untapped source of talent in this
country. Such people are to be found and fostered among the
young and underskilled, who need training. The older and more
experienced, who need re-training. The disadvantaged, whose
lives can be turned to advantage. Disabled workers, who ask only
for a chance to prove their ability. Dual career families, who
need options.
Opportunity doesn't necessarily knock on the door. It may
be leaning against the wall or standing on the streetcorner,
needing only to be seen for what it is.
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In this, we need your leadership. The very heart of our
ability to compete may depend on how well we enlist those who
have, until now, been on the outskirts of economic growth. They
will be needed.
Together we can build businesses that outwit, outmaneuver,
outproduce, and outperform the competition.
We can achieve the kind of competitive advantage that comes
from collective will. And we can make sure the words "Made in
America" simply mean "the best there is." "
Thank you. And God bless you.
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