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Originally Processed With FOIA(s):
FOIA Number:
S
2011-2184-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Speechwriting, White House Office of
Series:
Speech File Draft Files
Subseries:
Chron File, 1989-1993
OA/ID Number:
13485
Folder ID Number:
13485-009
Folder Title:
U.S. Chamber of Commerce, 5/1/89 [1]
Stack:
Row:
Section:
Shelf:
Position:
G
26
15
7
1
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
CONSTITUTION HALL
MONDAY, MAY 1, 1989
10:15 a.m.
I WANT TO THANK YOU BILL [KANAGA (KA-NAY-GA) ] FOR
THOSE KIND WORDS AND COMMEND YOU ON THE FINE JOB YOU
HAVE DONE AS CHAIRMAN. I ALSO WANT TO CONGRATULATE THE
CHAMBER'S INCOMING CHAIRMAN, JOHN CLENDENIN. AND, OF
COURSE, SAY "HELLO" TO THE CHAMBER'S LONG TIME
PRESIDENT AND MEDIA STAR, DICK LESHER.
I WANT TO THANK THE CHAMBER OF COMMERCE FOR
PROVIDING ME A CHANCE TO DELIVER A MAY DAY MESSAGE,
AMERICAN-STYLE. ON MAY DAY, I ALWAYS THINK ABOUT THAT
CELEBRATION IN THE SOVIET UNION. ALL THOSE RED BANNERS
...
THE BIG MILITARY PARADE
...
EVEN THE ECONOMIC
PLANNING MINISTRY HAD A UNIT IN THE PARADE -- TWO
HUNDRED ECONOMISTS MARCHING ALONG YELLING, "MAYDAY!
MAYDAY!" ((PAUSE))
- 2 -
TODAY, THAT IS BEGINNING TO CHANGE. EVEN THE
SOCIALIST WORLD IS BEGINNING TO SEE THAT SOCIALISM
ISN'T JUST ANOTHER ECONOMIC SYSTEM -- IT'S THE DEATH OF
ECONOMICS. THERE'S A NEW BREEZE BLOWING -- NATIONS THE
WORLD OVER ARE COMING TO RECOGNIZE THAT FREE ENTERPRISE
IS THE WAVE OF THE FUTURE. THAT'S A PROMISING FORECAST
FOR PROSPERITY -- AND FOR WORLD PEACE.
IN THE UNITED STATES, THE SINGLE MOST SIGNIFICANT
ECONOMIC INDICATOR OF THIS DECADE IS UP ONE, AS OF
TODAY: WE HAVE ENJOYED 77 FULL MONTHS OF THE LONGEST
PEACETIME ECONOMIC EXPANSION IN AMERICAN HISTORY.
WITHOUT A DOUBT, THIS LONG-RUNNING ECONOMIC
EXPANSION HAS BEEN GOOD FOR AMERICAN BUSINESS, AND FOR
THE AMERICAN WORKER. IN THE PAST 77 MONTHS, WE'VE
ADDED NEARLY TWENTY MILLION NEW JOBS - --AND MORE
AMERICANS HAVE MOVED UP ON THE PAY SCALE. SINCE 1982,
THE NUMBER OF JOBS PAYING LESS THAN $5 DOLLARS AN HOUR
IS DOWN 25%, WHILE JOBS PAYING $10 OR MORE AN HOUR HAVE
INCREASED BY 95%. UNEMPLOYMENT IS AT ITS LOWEST POINT
IN THE PAST 15 YEARS.
- 3 -
DURING THIS ECONOMIC EXPANSION, AMERICA'S
INDUSTRIAL OUTPUT IS UP 33% -- OVERALL GROWTH, UP 26%.
FOR THOSE WITH AN EYE ON THE INTERNATIONAL COMPETITION,
THAT'S MORE THAN DOUBLE EUROPE'S INDUSTRIAL OUTPUT
GROWTH.
AND THE EXPANSION HAS BEEN JUST AS GOOD TO THE
AVERAGE AMERICAN FAMILY. PER CAPITA PERSONAL INCOME IS
UP 19% -- AND THAT'S TAKE-HOME "AFTER TAX" PAY,
ADJUSTED FOR INFLATION. REAL MEDIAN FAMILY INCOME HAS
REACHED A NEW HIGH.
THAT'S QUITE AN ECONOMIC SUCCESS STORY. OUR
CHALLENGE NOW IS TO KEEP IT GOING. WE CAN -- AND WE
WILL.
WE'VE ALL HEARD THE NAYSAYERS. I THINK THERE ARE
A FEW OUT THERE WHOSE PREDICTIONS OF ECONOMIC DISASTER
ARE NOW IN THEIR 78TH STRAIGHT MONTH
- 4 -
THE NAYSAYERS ARE WRONG -- BUT WHY? WHAT THEY'VE
UNDERESTIMATED IS THE RESILIENCE, THE REMARKABLE
RESPONSIVENESS OF THE FREE ENTERPRISE SYSTEM. YOU CAN
FOCUS ON GOVERNMENT so LONG, THAT YOU FORGET THAT IT'S
THE PRIVATE SECTOR THAT'S HOME TO THE INNOVATION AND
ECONOMIC CREATIVITY THAT POWERS THIS EXPANSION.
I'VE BEEN A SMALL BUSINESSMAN MYSELF, STARTING OUT
WITH AN IDEA, AND BUILDING IT INTO A BUSINESS. I KNOW
THE RISKS -- AND THE REWARDS: THE PAYOFF IN PRIDE WHEN
YOU SUCCEED
ENTREPRENEURS KNOW THIS SIMPLE TRUTH:
NOTHING WAGERED, NOTHING WON. THAT'S WHY I WANT A
GOVERNMENT THAT PROMPTS ENTREPRENEURS TO TAKE RISKS --
NOT A GOVERNMENT THAT FORCES THEM TO TAKE REFUGE.
THAT DOESN'T MEAN GOVERNMENT'S ONLY JOB IS SIMPLY
TO STAND BACK AND STEP OUT OF THE WAY. THERE'S PLENTY
FOR THE GOVERNMENT TO DO, TO MAKE SURE COMMERCE IS FREE
AND FAIR, AND TO MAINTAIN A CLIMATE WHERE FREE
ENTERPRISE CAN TAKE PLACE AND PROSPER.
- 5 -
AND TODAY, THE FEDERAL GOVERNMENT'S NUMBER ONE
ECONOMIC PRIORITY IS DEALING WITH THE DEFICIT.
WE'VE MADE A GOOD START. THE BUDGET AGREEMENT
CONGRESS AND MY ADMINISTRATION CONCLUDED TWO WEEKS AGO
CAN KEEP THE FEDERAL DEFICIT BELOW THE GRAMM-RUDMAN
TARGET. AND WE HAVEN'T SACRIFICED OUR SOCIAL OR
NATIONAL SECURITY RESPONSIBILITIES IN THE PROCESS. THE
BUDGET LEVEL WE'VE AGREED ON WILL ALLOW US TO DISCHARGE
THE CRITICAL DUTIES OF GOVERNMENT. WE'LL BE ABLE TO
PROVIDE FOR OUR NATIONAL SECURITY, MEET THE NEEDS OF
THE DISADVANTAGED, AND FUND HIGH-PRIORITY PROGRAMS.
OUR AGREEMENT IS A FIRST IMPORTANT STEP. IT SENDS
A SIGNAL -- TO THE AMERICAN PEOPLE, AND TO OUR TRADING
PARTNERS: WE'RE SERIOUS ABOUT GETTING THAT DEFICIT
DOWN.
- 6 -
AND THE DEFICIT IS COMING DOWN, NOT ONLY IN
STRAIGHT DOLLAR TERMS, BUT AS A PERCENTAGE OF OUR
ANNUAL GNP. BY THE END OF THIS FISCAL YEAR, WE WILL
HAVE CUT THE DEFICIT IN HALF, FROM 6.3% OF GNP IN 1983,
TO AN ESTIMATED 3.1% IN 1989. I URGE THE TWO HOUSES OF
CONGRESS TO PASS THE BIPARTISAN BUDGET RESOLUTION -- so
WE CAN KEEP THE DEFICIT COMING DOWN.
ONE WORD MORE ABOUT THE BUDGET AGREEMENT FOR
1990. WE'VE AGREED TO $5.3 BILLION DOLLARS IN "NEW
REVENUES" AS PART OF THE DEAL. AND LET ME SAY A WORD
ABOUT THAT 5.3 BILLION. I MEAN TO LIVE BY WHAT I'VE
SAID
...
NO NEW TAXES.
- 7 -
LET ME TELL YOU WHAT MY FAVORITE SOURCE OF NEW
REVENUE IS. WE DON'T HAVE TO RAISE TAX RATES -- WE
HAVE TO RELEASE THE ENERGIES OF FREE ENTERPRISE.
IN A GROWING ECONOMY, TAX REVENUES WILL TAKE CARE
OF THEMSELVES. IN FISCAL 1990 ALONE -- THANKS TO
EXPANDING ECONOMIC ACTIVITY -- THE TREASURY WILL TAKE
IN MORE THAN $80 BILLION DOLLARS IN INCREASED REVENUES,
NOT THROUGH HIGHER TAXES, BUT UNDER THE EXISTING TAX
STRUCTURE.
SO LET'S NOT HUNT FOR WAYS TO WRING ANOTHER DOLLAR
IN TAXES OUT OF OUR ECONOMY -- LET'S CONCENTRATE ON
CREATING CONDITIONS FOR CONTINUED GROWTH.
- 8 -
THAT'S WHY I'VE CALLED ON CONGRESS TO RESTORE THE
CAPITAL GAINS DIFFERENTIAL. IN 1990 ALONE, THIS STEP
WOULD BRING AN EXTRA $4.8 BILLION DOLLARS INTO THE
FEDERAL TREASURY AND THAT DOESN'T COUNT INCREASED
ECONOMIC ACTIVITY SPURRED BY A LOWER TAX RATE. THAT
$4.8 BILLION IS THE LION'S SHARE OF THE $5.3 BILLION WE
NEED IN THE WAY OF "NEW REVENUES" UNDER OUR BUDGET
AGREEMENT.
LET'S TAKE A LOOK AT WHAT OUR COMPETITORS ARE
DOING. CANADA'S MAXIMUM CAPITAL GAINS TAX RATE IS
ABOUT HALF THE U.S. RATE. HOW ABOUT JAPAN'S RATE? FOR
ENTREPRENEURS WHO BUILT THEIR BUSINESSES FROM SCRATCH:
A SCANT 1%. WEST GERMANY EXEMPTS ALL LONG-TERM CAPITAL
GAINS ON SECURITIES FROM ANY TAX WHATEVER -- AND THE
NEWLY INDUSTRIALIZED ECONOMIES OF THE PACIFIC RIM,
SINGAPORE, HONG KONG AND SOUTH KOREA HAVE NO CAPITAL
GAINS TAX AT ALL.
- 10 -
AND I HAVE A SECOND MESSAGE FOR THE CONGRESS, AS
IT DEBATES AN INCREASE IN THE MINIMUM WAGE. I'VE
INDICATED MY SUPPORT FOR INCREASING THE MINIMUM WAGE
OVER THREE YEARS TO $4.25 AN HOUR. I ALSO WANT TO
ESTABLISH A SIX-MONTH TRAINING WAGE FOR NEW WORKERS AT
THE CURRENT $3.35 RATE, AND EXPAND THE EXEMPTION FROM
MINIMUM WAGE REQUIREMENTS FOR ALL SMALL BUSINESSES WITH
ANNUAL SALES UNDER HALF A MILLION DOLLARS.
IT'S TIME FOR THOSE WHO WANT A HIGHER WAGE TO MOVE
BEYOND THE RHETORIC, AND TAKE A LOOK AT THE
CONSEQUENCES. WE ALL KNOW THE STUDIES THAT SHOW THAT
EACH 10% INCREASE IN THE MINIMUM WAGE WILL COST AMERICA
BETWEEN ONE HUNDRED AND TWO HUNDRED THOUSAND JOBS FOR
THOSE WHO NEED THEM MOST.
WHAT HAPPENS WHEN MINIMUM-WAGE WORKERS OPEN THAT
PAY ENVELOPE EXPECTING A FATTER PAYCHECK -- AND FIND A
PINK SLIP INSTEAD? AN IRRESPONSIBLE INCREASE IN THE
MINIMUM WAGE WILL COST JOBS, AS EMPLOYERS CUT BACK TO
COMPENSATE FOR INCREASED COSTS. $4.25 IS AS FAR AS I
CAN GO -- IT'S MY FIRST AND FINAL OFFER.
- 11 -
WE MUST GUARD AGAINST CONFERRING BENEFITS BY
GOVERNMENT MANDATE, AND LEAVING EMPLOYERS TO COPE WITH
THE COSTS. I SHARE YOUR CONCERN ABOUT LEGISLATIVE
EFFORTS TO MANDATE MEDICAL AND PARENTAL LEAVE. I ALSO
BELIEVE THAT CHOICE IN CHILD CARE IS BEST MADE BY
PARENTS -- NOT GOVERNMENT -- AND I KNOW THE CHAMBER OF
COMMERCE SUPPORTS THE CONCEPT OF CHOICE.
THERE ARE SOME CHILD CARE INITIATIVES UP ON
CAPITOL HILL -- WELL-INTENIONED INITIATIVES -- THAT
WOULD INCREASE GOVERNMENT INTERVENTION AND CROWD OUT
PARENTAL CHOICE. COST IS YET ANOTHER ISSUE. WE ARE
DETERMINED TO HOLD THE LINE ON GOVERNMENT SPENDING SO
IT IS IMPORTANT THAT MONEY ALLOCATED FOR CHILD CARE
ASSISTANCE GOES FOR CHILD CARE ASSISTANCE.
- 12 -
UNDER THE ABC BILL, FOR EXAMPLE, MUCH OF THE MONEY
WOULD BE USED TO SET UP ANOTHER FEDERAL BUREAUCRACY
INSTEAD OF GETTING FINANCIAL HELP DIRECTLY TO PARENTS.
THE CHILD CARE TAX CREDIT INITIATIVES I'VE PROPOSED
PRESERVE CHOICE -- LETTING PARENTS DECIDE WHETHER TO
PLACE THEIR CHILD IN THE CARE OF A RELATIVE, IN A
CHURCH-RUN CENTER, IN A PUBLIC DAY CARE FACILITY OR IN
THEIR OWN HOME. LET'S LET PARENTS DECIDE WHAT'S RIGHT
FOR THEMSELVES.
FINALLY, I'LL CLOSE WITH A BRIEF COMMENT ON AN
ISSUE I KNOW IS VITAL TO THOSE OF YOU HERE TODAY --
VITAL, IN FACT, TO ALL AMERICANS IN OUR EVOLVING
ECONOMY: INTERNATIONAL TRADE.
THE GLOBAL ECONOMY IS A FACT OF LIFE. IT IS NO
LONGER POSSIBLE TO DRAW A SHARP LINE BETWEEN DOMESTIC
AND INTERNATIONAL MARKETS.
- 13 -
THIS ADMINISTRATION IS COMMITTED TO SECURING AN
OPEN AND FAIR WORLD TRADING SYSTEM -- BECAUSE FAIR
TRADE PROVIDES OPPORTUNITIES FOR AMERICA'S
COMPETITIVENESS TO COME TO THE FORE.
WE HAVE THE
INGENUITY TO BE PREEMINENT AND THE DRIVE TO SUCCEED.
ENTREPRENEURS LIKE YOU ARE OUR ACE IN THE HOLE.
OUR CHALLENGE IS TO MAKE THE MOST OF THIS
COMPETITIVE EDGE. THAT'S WHY WE WILL WORK VIGOROUSLY
TO BREAK DOWN BARRIERS ABROAD, WHILE KEEPING MARKETS
OPEN HERE AT HOME.
IF ANY COUNTRY -- INCLUDING THE UNITED STATES --
IS FOOLED INTO THINKING THAT A CLOSED MARKET CAN BE A
PROSPEROUS ONE, THEY'RE WRONG. CLOSED MARKETS MEAN
CLOSED DOORS TO OPPORTUNITY -- AND THAT MEANS LESS
PROSPERITY. ((PAUSE))
THE CHAMBER OF COMMERCE HAS ALWAYS STOOD FOR
ECONOMIC FREEDOM -- AND I KNOW YOU SHARE MY VIEW THAT
THERE IS NO SURER ROUTE TO PROSPERITY AND PROGRESS THAN
THE SYSTEM OF FREE ENTERPRISE.
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
CONSTITUTION HALL
MONDAY, MAY 1, 1989
10:15 A.M.
I WANT TO THANK YOU BILL [KANAGA (KA-NAY-GA)] FOR
THOSE KIND WORDS AND COMMEND YOU ON THE FINE JOB YOU
HAVE DONE AS CHAIRMAN. I ALSO WANT TO CONGRATULATE THE
CHAMBER'S INCOMING CHAIRMAN, JOHN CLENDENIN. AND, OF
COURSE, SAY "HELLO" TO THE CHAMBER'S LONG TIME
PRESIDENT AND MEDIA STAR, DICK LESHER.
I WANT TO THANK THE CHAMBER OF COMMERCE FOR
PROVIDING ME A CHANCE TO DELIVER A MAY DAY MESSAGE,
AMERICAN-STYLE. ON MAY DAY, I ALWAYS THINK ABOUT THAT
CELEBRATION IN THE SOVIET UNION. ALL THOSE RED BANNERS
THE BIG MILITARY PARADE
EVEN THE ECONOMIC
PLANNING MINISTRY HAD A UNIT IN THE PARADE -- TWO
HUNDRED ECONOMISTS MARCHING ALONG YELLING, "MAYDAY!
MAYDAY!" ((PAUSE))
- 2 -
TODAY, THAT IS BEGINNING TO CHANGE. EVEN THE
SOCIALIST WORLD IS BEGINNING TO SEE THAT SOCIALISM
ISN'T JUST ANOTHER ECONOMIC SYSTEM -- IT'S THE DEATH OF
ECONOMICS. THERE'S A NEW BREEZE BLOWING -- NATIONS THE
WORLD OVER ARE COMING TO RECOGNIZE THAT FREE ENTERPRISE
IS THE WAVE OF THE FUTURE. THAT'S A PROMISING FORECAST
FOR PROSPERITY -- AND FOR WORLD PEACE.
IN THE UNITED STATES, THE SINGLE MOST SIGNIFICANT
ECONOMIC INDICATOR OF THIS DECADE IS UP ONE, AS OF
TODAY: WE HAVE ENJOYED 77 FULL MONTHS OF THE LONGEST
PEACETIME ECONOMIC EXPANSION IN AMERICAN HISTORY.
WITHOUT A DOUBT, THIS LONG-RUNNING ECONOMIC
EXPANSION HAS BEEN GOOD FOR AMERICAN BUSINESS, AND FOR
THE AMERICAN WORKER. IN THE PAST 77 MONTHS, WE'VE
ADDED NEARLY TWENTY MILLION NEW JOBS --AND MORE
AMERICANS HAVE MOVED UP ON THE PAY SCALE. SINCE 1982,
THE NUMBER OF JOBS PAYING LESS THAN $5 DOLLARS AN HOUR
IS DOWN 25%, WHILE JOBS PAYING $10 OR MORE AN HOUR HAVE
INCREASED BY 95%. UNEMPLOYMENT IS AT ITS LOWEST POINT
IN THE PAST 15 YEARS.
- 3 -
DURING THIS ECONOMIC EXPANSION, AMERICA'S
INDUSTRIAL OUTPUT IS UP 33% -- OVERALL GROWTH, UP 26%.
FOR THOSE WITH AN EYE ON THE INTERNATIONAL COMPETITION,
THAT'S MORE THAN DOUBLE EUROPE'S INDUSTRIAL OUTPUT
GROWTH.
AND THE EXPANSION HAS BEEN JUST AS GOOD TO THE
AVERAGE AMERICAN FAMILY. PER CAPITA PERSONAL INCOME IS
UP 19% -- AND THAT'S TAKE-HOME "AFTER TAX" PAY,
ADJUSTED FOR INFLATION. REAL MEDIAN FAMILY INCOME HAS
REACHED A NEW HIGH.
THAT'S QUITE AN ECONOMIC SUCCESS STORY. OUR
CHALLENGE NOW IS TO KEEP IT GOING. WE CAN -- AND WE
WILL.
WE'VE ALL HEARD THE NAYSAYERS. I THINK THERE ARE
A FEW OUT THERE WHOSE PREDICTIONS OF ECONOMIC DISASTER
ARE NOW IN THEIR 78TH STRAIGHT MONTH
- 4 -
THE NAYSAYERS ARE WRONG -- BUT WHY? WHAT THEY'VE
UNDERESTIMATED IS THE RESILIENCE, THE REMARKABLE
RESPONSIVENESS OF THE FREE ENTERPRISE SYSTEM. YOU CAN
FOCUS ON GOVERNMENT SO LONG, THAT YOU FORGET THAT IT'S
THE PRIVATE SECTOR THAT'S HOME TO THE INNOVATION AND
ECONOMIC CREATIVITY THAT POWERS THIS EXPANSION.
I'VE BEEN A SMALL BUSINESSMAN MYSELF, STARTING OUT
WITH AN IDEA, AND BUILDING IT INTO A BUSINESS. I KNOW
THE RISKS -- AND THE REWARDS: THE PAYOFF IN PRIDE WHEN
YOU SUCCEED
ENTREPRENEURS KNOW THIS SIMPLE TRUTH:
NOTHING WAGERED, NOTHING WON. THAT'S WHY I WANT A
GOVERNMENT THAT PROMPTS ENTREPRENEURS TO TAKE RISKS --
NOT A GOVERNMENT THAT FORCES THEM TO TAKE REFUGE.
THAT DOESN'T MEAN GOVERNMENT'S ONLY JOB IS SIMPLY
TO STAND BACK AND STEP OUT OF THE WAY. THERE'S PLENTY
FOR THE GOVERNMENT TO DO, TO MAKE SURE COMMERCE IS FREE
AND FAIR, AND TO MAINTAIN A CLIMATE WHERE FREE
ENTERPRISE CAN TAKE PLACE AND PROSPER.
- 5 -
AND TODAY, THE FEDERAL GOVERNMENT'S NUMBER ONE
ECONOMIC PRIORITY IS DEALING WITH THE DEFICIT.
WE'VE MADE A GOOD START. THE BUDGET AGREEMENT
CONGRESS AND MY ADMINISTRATION CONCLUDED TWO WEEKS AGO
WILL KEEP THE FEDERAL DEFICIT BELOW THE GRAMM-RUDMAN
TARGET. AND WE HAVEN'T SACRIFICED OUR SOCIAL OR
NATIONAL SECURITY RESPONSIBILITIES IN THE PROCESS. THE
BUDGET LEVEL WE'VE AGREED ON WILL ALLOW US TO DISCHARGE
THE CRITICAL DUTIES OF GOVERNMENT. WE'LL BE ABLE TO
PROVIDE FOR OUR NATIONAL SECURITY, MEET THE NEEDS OF
THE DISADVANTAGED, AND ACCELERATE THE FUNDING OF
SEVERAL HIGH-PRIORITY PROGRAMS.
OUR AGREEMENT SENDS A SIGNAL -- TO THE AMERICAN
PEOPLE, AND TO OUR TRADING PARTNERS: WE'RE SERIOUS
ABOUT GETTING THAT DEFICIT DOWN.
AND THE DEFICIT IS COMING DOWN, NOT ONLY IN
STRAIGHT DOLLAR TERMS, BUT AS A PERCENTAGE OF OUR
ANNUAL GNP. BY THE END OF THIS FISCAL YEAR, WE WILL
HAVE CUT THE DEFICIT IN HALF, FROM 6.3% OF GNP IN 1983,
TO AN ESTIMATED 3.1% IN 1989.
- 6 -
ONE WORD MORE ABOUT THE BUDGET AGREEMENT FOR 1990.
WE'VE AGREED TO $5.3 BILLION DOLLARS IN "NEW REVENUES"
AS PART OF THE DEAL. AND LET ME SAY A WORD ABOUT THAT
5.3 BILLION. I MEAN TO LIVE BY WHAT I'VE SAID
NO
NEW TAXES.
LET ME TELL YOU WHAT MY FAVORITE SOURCE OF NEW
REVENUE IS. WE DON'T HAVE TO RAISE TAX RATES -- WE
HAVE TO RELEASE THE ENERGIES OF FREE ENTERPRISE.
IN A GROWING ECONOMY, TAX REVENUES WILL TAKE CARE
OF THEMSELVES. IN FISCAL 1990 ALONE -- THANKS TO
EXPANDING ECONOMIC ACTIVITY -- THE TREASURY WILL TAKE
IN MORE THAN $80 BILLION DOLLARS IN INCREASED REVENUES,
NOT THROUGH HIGHER TAXES, BUT UNDER THE EXISTING TAX
STRUCTURE.
so LET'S NOT HUNT FOR WAYS TO WRING ANOTHER DOLLAR
IN TAXES OUT OF OUR ECONOMY -- LET'S CONCENTRATE ON
CREATING CONDITIONS FOR CONTINUED GROWTH.
- 7 -
THAT'S WHY I'VE CALLED ON CONGRESS TO RESTORE THE
CAPITAL GAINS DIFFERENTIAL. IN 1990 ALONE, THIS STEP
WOULD BRING AN EXTRA $4.8 BILLION DOLLARS INTO THE
FEDERAL TREASURY -- AND THAT DOESN'T COUNT INCREASED
ECONOMIC ACTIVITY SPURRED BY A LOWER TAX RATE. THAT
$4.8 BILLION IS THE LION'S SHARE OF THE $5.3 BILLION WE
NEED IN THE WAY OF "NEW REVENUES" UNDER OUR BUDGET
AGREEMENT -- AND MY ESTIMATE IS ON THE CONSERVATIVE
SIDE.
LET'S TAKE A LOOK AT WHAT OUR COMPETITORS ARE
DOING. CANADA'S MAXIMUM CAPITAL GAINS TAX RATE IS
ABOUT HALF THE U.S. RATE. HOW ABOUT JAPAN'S RATE? FOR
ENTREPRENEURS WHO BUILT THEIR BUSINESSES FROM SCRATCH:
A SCANT 1%. WEST GERMANY EXEMPTS ALL LONG-TERM CAPITAL
GAINS ON SECURITIES FROM ANY TAX WHATEVER -- AND THE
NEWLY INDUSTRIALIZED ECONOMIES OF THE PACIFIC RIM,
SINGAPORE, HONG KONG AND SOUTH KOREA HAVE NO CAPITAL
GAINS TAX AT ALL.
- 8 -
AMONG OUR COMPETITORS, THOSE LOW RATES CONTRIBUTE
TO LOW CAPITAL COSTS. CUTTING OUR OWN CAPITAL GAINS
RATES WOULD ENCOURAGE PRODUCTIVE INVESTMENT -- IN
ADDITION TO GENERATING THE "NEW REVENUES" WE NEED TO
MEET OUR DEFICIT REDUCTION AGREEMENT.
I THINK
THE CASE FOR A CAPITAL GAINS CUT IS A STRONG ONE, BUT
THERE ARE SEVERAL OTHER ECONOMIC ISSUES I WANT TO
DISCUSS HERE TODAY.
FIRST, A PRESSING PROBLEM WITH IMPORTANT
CONSEQUENCES FOR OUR LONG TERM FISCAL HEALTH: THE S&L
SITUATION. THIS ADMINISTRATION RECOGNIZED THE
IMMEDIATE NEED TO TAKE ACTION TO STABILIZE THE S&L
SYSTEM. LESS THAN THREE WEEKS AFTER TAKING OFFICE, WE
PROPOSED A COMPREHENSIVE S&L REFORM PLAN -- ONE
DESIGNED TO STOP THE DOLLAR DRAIN AND DEAL WITH
INSOLVENT THRIFTS, AND RESTORE CONFIDENCE IN THE S&L
SYSTEM.
THE SENATE PASSED AN S&L PACKAGE WITH A RESOUNDING
MAJORITY: 91 TO 8. I URGE THE HOUSE TO MOVE QUICKLY
TO GIVE US THE TOOLS WE NEED TO REFORM THE S&L SYSTEM
BY PASSING MY BILL QUICKLY -- WITH ITS CENTRAL
PROVISIONS INTACT.
- 9 -
AND I HAVE A SECOND MESSAGE FOR THE CONGRESS, AS
IT DEBATES AN INCREASE IN THE MINIMUM WAGE. I'VE
INDICATED MY SUPPORT FOR INCREASING THE MINIMUM WAGE
OVER THREE YEARS TO $4.25 AN HOUR. I ALSO WANT TO
ESTABLISH A SIX-MONTH TRAINING WAGE FOR NEW WORKERS AT
THE CURRENT $3.35 RATE, AND EXPAND THE EXEMPTION FROM
MINIMUM WAGE REQUIREMENTS FOR ALL SMALL BUSINESSES WITH
ANNUAL SALES UNDER HALF A MILLION DOLLARS.
IT'S TIME FOR THOSE WHO WANT A HIGHER WAGE TO MOVE
BEYOND THE RHETORIC, AND TAKE A LOOK AT THE
CONSEQUENCES. WE ALL KNOW THE STUDIES THAT SHOW THAT
EACH 10% INCREASE IN THE MINIMUM WAGE WILL COST AMERICA
BETWEEN ONE HUNDRED AND TWO HUNDRED THOUSAND JOBS FOR
THOSE WHO NEED THEM MOST.
WHAT HAPPENS WHEN MINIMUM-WAGE WORKERS OPEN THAT
PAY ENVELOPE EXPECTING A FATTER PAYCHECK -- AND FIND A
PINK SLIP INSTEAD? AN IRRESPONSIBLE INCREASE IN THE
MINIMUM WAGE WILL COST JOBS, AS EMPLOYERS CUT BACK TO
COMPENSATE FOR INCREASED COSTS. $4.25 IS AS FAR AS I
CAN GO -- IT'S MY FIRST AND FINAL OFFER.
- 10 -
WE MUST GUARD AGAINST CONFERRING BENEFITS BY
GOVERNMENT MANDATE, AND LEAVING EMPLOYERS TO COPE WITH
THE COSTS. I SHARE YOUR CONCERN ABOUT LEGISLATIVE
EFFORTS TO MANDATE MEDICAL AND PARENTAL LEAVE. I ALSO
BELIEVE THAT CHOICE IN CHILD CARE IS BEST MADE BY
PARENTS -- NOT GOVERNMENT -- AND I KNOW THE CHAMBER OF
COMMERCE SUPPORTS THE CONCEPT OF CHOICE.
THERE ARE SOME CHILD CARE INITIATIVES UP ON
CAPITOL HILL -- WELL-INTENIONED INITIATIVES -- THAT
WOULD INCREASE GOVERNMENT INTERVENTION AND CROWD OUT
PARENTAL CHOICE. COST IS YET ANOTHER ISSUE. WE ARE
DETERMINED TO HOLD THE LINE ON GOVERNMENT SPENDING SO
IT IS IMPORTANT THAT MONEY ALLOCATED FOR CHILD CARE
ASSISTANCE GOES FOR CHILD CARE ASSISTANCE.
- 11 -
UNDER THE ABC BILL, FOR EXAMPLE, MUCH OF THE MONEY
WOULD BE USED TO SET UP ANOTHER FEDERAL BUREAUCRACY
INSTEAD OF GETTING FINANCIAL HELP DIRECTLY TO PARENTS.
THE CHILD CARE TAX CREDIT INITIATIVES I'VE PROPOSED
PRESERVE CHOICE -- LETTING PARENTS DECIDE WHETHER TO
PLACE THEIR CHILD IN THE CARE OF A RELATIVE, IN A
CHURCH-RUN CENTER, IN A PUBLIC DAY CARE FACILITY OR IN
THEIR OWN HOME. LET'S LET PARENTS DECIDE WHAT'S RIGHT
FOR THEMSELVES.
FINALLY, I'LL CLOSE WITH A BRIEF COMMENT ON AN
ISSUE I KNOW IS VITAL TO THOSE OF YOU HERE TODAY --
VITAL, IN FACT, TO ALL AMERICANS IN OUR EVOLVING
ECONOMY: INTERNATIONAL TRADE.
THE GLOBAL ECONOMY IS A FACT OF LIFE. IT IS NO
LONGER POSSIBLE TO DRAW A SHARP LINE BETWEEN DOMESTIC
AND INTERNATIONAL MARKETS.
- 12 -
THIS ADMINISTRATION IS COMMITTED TO SECURING AN
OPEN AND FAIR WORLD TRADING SYSTEM -- BECAUSE FAIR
TRADE PROVIDES OPPORTUNITIES FOR AMERICA'S
COMPETITIVENESS TO COME TO THE FORE.
WE HAVE THE
INGENUITY TO BE PREEMINENT AND THE DRIVE TO SUCCEED.
ENTREPRENEURS LIKE YOU ARE OUR ACE IN THE HOLE.
OUR CHALLENGE IS TO MAKE THE MOST OF THIS
COMPETITIVE EDGE. THAT'S WHY WE WILL WORK VIGOROUSLY
TO BREAK DOWN BARRIERS ABROAD, WHILE KEEPING MARKETS
OPEN HERE AT HOME.
IF ANY COUNTRY -- INCLUDING THE UNITED STATES --
IS FOOLED INTO THINKING THAT A CLOSED MARKET CAN BE A
PROSPEROUS ONE, THEY'RE WRONG. CLOSED MARKETS MEAN
CLOSED DOORS TO OPPORTUNITY -- AND THAT MEANS LESS
PROSPERITY. ((PAUSE))
THE CHAMBER OF COMMERCE HAS ALWAYS STOOD FOR
ECONOMIC FREEDOM -- AND I KNOW YOU SHARE MY VIEW THAT
THERE IS NO SURER ROUTE TO PROSPERITY AND PROGRESS THAN
THE SYSTEM OF FREE ENTERPRISE.
- 13 -
THE MESSAGE OF THE PAST 77 MONTHS IS CLEAR: WE
CAN KEEP THE ECONOMY STRONG, SUSTAIN THE LONGEST
PEACETIME EXPANSION IN AMERICAN HISTORY, AND ENSURE
AMERICA A PRODUCTIVE AND PROSPEROUS FUTURE -- PROVIDED
THAT GOVERNMENT POLICIES PRESERVE THE GREATEST POSSIBLE
FREEDOM FOR AMERICAN ENTERPRISE TO INNOVATE, CREATE AND
COMPETE.
THANK YOU, GOD BLESS YOU, AND GOD BLESS AMERICA.
THE WHITE HOUSE
Office of the Press Secretary
For Immediate Release
May 1, 1989
REMARKS BY THE PRESIDENT
TO THE U.S. CHAMBER OF COMMERCE
Constitution Hall
Washington, D.C.
10:20 A.M. EDT
THE PRESIDENT: Thank you, ladies and gentlemen. I want
to thank Bill Kanaga for those kind words and commend you on the fine
job that you've done as Chairman. And I also want to congratulate
the Chamber's incoming Chairman, John Clendenin, and of course say
hello to the Chamber's long-time President, media star -- (laughter)
-- household word around D.C., Dick Lesher. What a job he does for
the Chamber.
And I also want to thank the Chamber for providing me a
chance to deliver a May Day message American-style. On May Day I
always think about the celebration in the Soviet Union -- all those
red banners, the big military parade. Even the Economic Planning
Ministry had a unit in the parade -- 200 economist marching along
yelling, "May Day, May Day." (Applause.)
Today that is beginning to change. Even the socialist
world is beginning to see that socialism isn't just another economic
system -- it's the death of economics. And there is a new breeze
blowing. Nations the world over are coming to realize and recognize
that free enterprise is the wave of the future, and that's a
promising forecast for prosperity and for world peace.
In the United States -- let me just say in that regard,
though, whenever in the world there is economic reform, the United
States should be hoping that that reform succeeds. Economic reform,
with its emphasis on incentive and market economics, leads to more
freedom.
You know, I made clear to Mr. Gorbachev up there in New
York -- Governors Island, when we met -- that we wanted to see
perestroika succeed in the Soviet Union. And, likewise, we want to
see success for the economic reforms in China. Incentive, economic
reforms, market economies, private ownership are indeed replacing
socialist dogma in many countries, large and small. And that is an
exciting trend, and in my view, it will continue.
In the United States, the single most significant
economic indicator of this decade is up today. We've enjoyed 77 full
months of the longest peacetime economic expansion in American
history. Without a doubt, this long-running economic expansion has
been good for American business and for the American worker. In the
past 77 months -- and the Chamber has been very helpful getting this
message out -- we've added nearly 20 million new jobs. And more
Americans have moved up on the pay scale. Since 1982, the number of
jobs paying less than $5 an hour is down 25 percent, while jobs
paying $10 or more an hour have increased by 95 percent.
Unemployment is at its lowest point in the past 15 years.
During the economic expansion, America's industrial
output is up 33 percent, overall growth up 26 percent. For those
with an eye on the international competition, that's more than double
Europe's industrial output growth. And the expansion has been just
as good to the average American family. Per capita personal income
MORE
- 2 -
is up 19 percent. And that's take-home, after tax pay adjusted for
inflation. Real median family income has reached a new high, and
that's quite an economic success story.
Our challenge now is to keep it going. We can, and we
will. We've all heard the nay-sayers. I think there are a few out
there whose predictions of economic disaster are now in their 78th
straight month. (Applause.) And the nay-sayers are wrong. But why?
What they've underestimated is the resilience, the remarkable
responsiveness of the free enterprise system. And you can focus on
government so long that you forget that it's the private sector
that's home to the innovation and the economic creativity that powers-
this expansion.
I've been a small businessman, starting out with an idea
and then working with others and building it into a successful
business. And I know the risks and the rewards and the payoff in
pride when you succeed. Entrepreneurs know this simple truth:
Nothing wagered, nothing won. And that's why I want a government
that prompts entrepreneurs to take risks, not a government that
forces them to take refuge. (Applause.)
That doesn't mean that government's only job is simply to
stand back and step out of the way. There's plenty for the
government to do to make sure commerce is free and fair and to
maintain a climate where free enterprise can take place and prosper.
And today, the federal goverment's number one economic
priority is dealing with the deficit. We've made a good start. The
budget agreement Congress and my administration concluded two weeks
ago, can keep the federal deficit below the Gramm-Rudman target. And
we haven't sacrificed our social or national security
responsibilities in the process. The budget level we've agreed on
will allow us to discharge the critical duties of government. We'll
be able to provide for our national security, meet the needs of the
disadvantaged, and fund high-priority programs.
Our agreement is a first, important step. It sends a
signal to the American people and to our trading partners: We're
serious about getting that deficit down. And the deficit is coming
down, not only in straight dollar terms, but as a percentage of our
annual Gross National Product.
You know, by the end of this fiscal year, we will have
cut the deficit in half from 6.3 percent of Gross National Product in
1983, to an estimated 3.1 percent in 1989. I urge the two Houses of
Congress to pass the bipartisan budget resolution so we can keep the
deficit coming on down. (Applause.)
One word more about the budget agreement for 1990. We've
agreed to $5.3 billion in new revenues as part of the deal. And let
me say a word about that $5.3 billion. I mean to live by what I've
said: no new taxes. And let me tell you what my favorite source of
new revenue is -- three guesses for this crowd. We don't have to
raise taxes. We have to release the energies of free enterprise. In
a growing economy, tax revenues will take care of themselves. In
1990 -- Fiscal 1990 alone, thanks to the expanding economy economic
activity, the Treasury will take in more than $80 billion in
increased revenues, not through higher taxes, but under the existing
tax structure -- $80 billion more in one year. (Applause.)
So let's not be hunting for ways to wring another dollar
in taxes out of our economy. Let's concentrate on creating
conditions for continued growth. And that's why I've called on
Congress to restore the capital gains differential. (Applause.)
I am absolutely convinced that in 1990 alone this step
would bring an extra $4.8 billion into the Treasury, and that doesn't
count increased economic activity that is spurred by a lower tax
rate. That $4.8 billion is the lion's share of the $5.3 billion we
need in the way of new revenues under our budget agreement.
MORE
- 3 -
Let's take a look at what our competitors are doing.
Canada's maximum capital gains rate is about half of the U.S. rate.
And how about Japan's rate? For entrepreneurs who built their
businesses from scratch, a scant one percent. West Germany exempts
all long-term capital gains on securities from any tax whatever, and
the newly-industrialized economies of the Pacific Rim -- Singapore,
Hong Kong, South Korea -- have no capital gains tax at all.
Among our competitors, those low rates contribute to low
capital costs. Cutting our own capital gains rate would encourage
productive investment in addition to generating the new revenues that
we need to meet our deficit reduction agreement.
I think the case for a capital gains cut is a strong one,
but there are several other economic issues that I want to discuss
here today. First, a pressing problem with important consequences
for our long-term fiscal health, and that is the S&L situation --
savings and loan. This administration recognized the immediate need
to take action to stabilize the S&L system, and less than three weeks
after taking office, we proposed a comprehensive S&L reform plan --
one designed to stop the dollar drain and deal with the insolvent
thrifts and restore confidence in the S&L system.
The Senate passed an S&L package with a resounding
majority. I think it was 91-8. I urge the House to move quickly to
give us the tools we need to reform the savings and loan system by
passing my bill quickly with its central provisions intact.
Now I have a second message for the Congress as it
debates an increase in the minimum wage. I've indicated my support
for increasing the wage over three years to $4.25 an hour. I also
want to establish a six-month training wage for new workers at the
current $3.35 rate and expand the exemption for minimum wage
requirements for all small businesses with annual sales under a half
a million dollars. It's time for those who want a higher wage to
move out beyond the rhetoric and take a look at the consequences. We
all know the studies that show that each ten-percent increase in the
minimum wage will cost America between 100,000 and 200,000 jobs, and
they're jobs for those who need them the most. What happens when
minimum wage workers open that pay envelope expecting a fatter
paycheck and find a pink slip instead? An irresponsible increase in
the minimum wage will cost jobs as employers cut back to compensate
for increased costs -- $4.25 is as far as I can go. It is my first
and final offer. And I repeat that here today. (Applause.)
We must guard against conferring benefits by government
mandate and leaving employers to cope with the costs. I share your
concerns about legislative efforts to mandate medical and parental
leave. I also believe that choice in child care is best made by
parents and not by government. (Applause.) And I know, because I've
talked to Dick Lesher and others that the Chamber supports the
concept of choice.
There are some child care initiatives up on Capitol Hill
-- well-intentioned, I would readily concede well-intentioned
initiatives that would increase government intervention and crowd out
parental choice.
You know, as I look at government, I feel an obligation
to look at every piece of legislation to see that it strengthens
rather than weakens the family unit in this country. (Applause.)
Now, cost is yet another issue. We're determined to hold the line on
government spending, so it is important that money allocated for
child care assistance goes for child care assistance. Under the ABC
bill, for example, much of the money would be used to set up another
federal bureaucracy instead of getting financial help directly to
parents. The child care tax credit initiatives that I've proposed do
preserve choice, letting parents decide whether to place their child
in the care of a relative or in a church-run center or in a public
day care facility, or in their own home. Let's let parents decide
what's right for themselves.
MORE
- 4 -
And finally, I'll close with a brief comment on an issue
I know is vital to those of you here today -- vital, in fact, to all
Americans in our evolving economy -- and I'm talking about
international trade. The global economy is a fact of life. It is no
longer possible to draw a sharp line between domestic and
international markets. This administration is committed to securing
an open and fair world trading system, because fair trade provides
opportunities for America's competitiveness to come to the fore.
We have the ingenuity to be preeminent. We have the
drive to succeed. Entrepreneurs like you are our ace in the hole.
Our challenge, then, is to make the most of this competitive edge.
And that's why we will work vigorously to break down barriers abroad
while keeping markets open here at home.
If any country, including the United States, is fooled
into thinking that a closed market can be a prosperous one, they're
wrong. Closed markets mean closed doors to opportunity, and that
means less prosperity. The Chamber of Commerce has always stood for
economic freedom. And I know you share my view that there is no
surer route to prosperity and progress than the system of free
enterprise.
The message of the past 77 months is clear: We can keep
the economy strong, sustain the longest peacetime expansion in
American history, and ensure America a prosperous and productive
future -- provided that government policies preserve the greatest
possible freedom for American enterprise to innovate, to create, and
to compete. I am pledged to those goals.
Thank you. God bless you all. And God bless the United
States of America. (Applause.) Thank you all very much.
END
10:42 A.M. EDT
Document No.
U30Z6YSS
WHITE HOUSE STAFFING MEMORANDUM
4/28/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY:
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
BREEDEN
ROGERS
CARD
WINSTON
CICCONI
PINKERTON
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
THE WHITE HOUSE
WASHINGTON
April 26, 1989
INFORMATION
MEMORANDUM FOR THE PRESIDENT
FROM: DANIEL McGROARTY
much
THROUGH: CHRISS WINSTON
w
SUBJECT: CHAMBER OF COMMERCE SPEECH
I. SUMMARY
The attached draft has been prepared for your address to the
U.S. Chamber of Commerce annual convention, 10:15 a.m., May
1, 1989, in Constitution Hall. The audience will be
approximately 2000 business owners and executives.
II. DISCUSSION
The Chamber of Commerce provides the perfect platform for a
discussion of urgent economic concerns, and our plans for
sustaining growth. The speech highlights the budget
agreement, states the case for a cut in the capital gains
tax, and lays out your positions on the minimum wage, S&L
reform, and international trade.
McGroarty/Simon
April 26, 1989
7:45 pm
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
CONSTITUTION HALL
MAY 1, 1989
10:15 a.m.
[Introductory remarks
Acknowledgements of outgoing
Chmn. Bill Kanaga, incoming Chmn. John Clendenin, Pres. Dick
Lesher ]
I want to thank the Chamber of Commerce for providing me a
chance to deliver a May Day message, American-style. On May Day,
I always think about that celebration in the Soviet Union. All
those red banners
The big military parade
Even the
Economic Planning Ministry had a unit in the parade -- two
hundred economists marching along yelling, "Mayday! Mayday!"
Today, that is beginning to change. Even the socialist
world is beginning to see that socialism isn't just another
economic system -- it's the death of economics. There's a new
breeze blowing -- nations the world over are coming to recognize
that free enterprise is the wave of the future. That's a
promising forecast for prosperity -- and for world peace.
In the United States, the single most significant economic
indicator of this decade is up one, as of today: we have enjoyed
77 full months of the longest peacetime economic expansion in
American history.
Without a doubt, this long-running economic expansion has
been good for American business, and for the American worker. In
the past 77 months, we've added nearly twenty million new jobs --
and more Americans have moved up on the pay scale. Since 1982,
the number of jobs paying less than $5 dollars an hour is down
25%, while jobs paying $10 or more dollars an hour have increased
by 95%. Unemployment is at its lowest point in the past 15
years.
During this economic expansion, America's industrial output
is up 40% -- overall growth, up 29%. For those with an eye on
the international competition, that's more than double Europe's
industrial output, and slightly higher than Japan's.
And the expansion has been just as good to the average
American family. Per capita personal income is up 19% -- and
that's take home "after tax" pay, adjusted for inflation. Real
median family income has reached a new high.
That's quite an economic success story. Our challenge now
is to keep it going. We can -- and we will.
We've all heard the naysayers. I think there are a few out
there whose predictions of economic disaster are now in their
78th straight month
The naysayers are wrong -- but why? What they've
underestimated is the resilience, the remarkable responsiveness
of the free enterprise system. You can focus on government so
long, that you forget that it's the private sector that's home to
the innovation and economic creativity that powers this
expansion.
3
I've been a small businessman myself, starting out with an
idea, and building it into a business. I know the risks -- and
the rewards: the payoff in pride when you succeed
Actually, not that much has changed: I've still got
something in common with a lot of small businessmen in America.
I also work out of my house
Entrepreneurs know this simple truth: nothing wagered,
nothing won. That's why I want a government that prompts
entrepreneurs to take risks -- not a government that forces them
to take refuge.
That doesn't mean government's only job is simply to stand
back and step out of the way. There's plenty for the government
to do, to make sure commerce is free and fair, and to maintain a
climate where free enterprise can take place and prosper.
And today, the federal government's number one economic
priority is dealing with the deficit.
We've made a good start. The budget agreement Congress and
my Administration concluded two weeks ago will keep the federal
deficit below the Gramm-Rudman target. And we haven't sacrificed
our social or national security responsibilities in the process.
The budget level we've agreed on will allow us to discharge the
critical duties of government. We'll be able to provide for our
national security, meet the needs of the disadvantaged, and
accelerate the funding of several high-priority programs.
4
Our agreement sends a signal -- to the American people, and
to our trading partners: we're serious about getting that
deficit down.
And the deficit is coming down, not only in straight dollar
terms, but as a percentage of our annual GNP. We're cutting the
deficit by two-thirds, from a high of 6.3% of GNP in 1983, to a
projected 1.7% in 1990.
One word more about the budget agreement for 1990. We've
agreed to $5.3 billion dollars in "new revenues" as part of the
deal. You're going to hear a lot about those "new revenues" in
the months ahead -- so let me say my piece now.
First of all, let me assure you: "new revenues" isn't a
code word for new taxes. I've given my word many times, and I'll
give it again today: no new taxes means just that.
And I'll make it so clear that even the duck hunters among
us will understand: we won't raise taxes with word games. We
all know a tax when we see one -- and you won't see any in the
agreement I've signed onto.
I have news for the castor-oil club -- the gang that's
trying hard to get us to swallow new taxes. That's bad medicine
for the economy. The deficit exists because we over-spend -- not
because we're under-taxed.
I could be wrong, but I don't think there's a person in this
room ready to stand up and say they're undertaxed.
5
Let me tell you what my favorite source of new revenue is.
We don't have to raise tax rates -- we have to release the
energies of free enterprise.
In a growing economy, tax revenues will take care of
themselves. In fiscal 1990 alone -- thanks to expanding economic
activity -- the Treasury will take in more than $80 billion
dollars in increased revenues, not through higher taxes, but
under the existing tax structure.
So let's not hunt for ways to wring another dollar in taxes
out of our economy -- let's concentrate on creating conditions
for continued growth.
That's why I've called on Congress to restore the capital
gains differential. In 1990 alone, this step would bring an
extra $4.8 billion dollars into the federal treasury -- and that
doesn't count increased economic activity spurred by a lower tax
rate. That $4.8 billion is the lion's share of the $5.3 billion
we need in the way of "new revenues" under our budget agreement -
- and my estimate is on the conservative side.
Let's take a look at what our competitors are doing.
Canada's maximum capital gains tax rate is about half the U.S.
rate. The same is true for Sweden and France. Japan's rate?
A scant 5%. West Germany exempts all long-term capital gains
from any tax whatever -- and among the newly industrialized
economies of the Pacific rim, Singapore, Hong Kong and South
Korea have no capital gains tax at all.
6
Among our competitors, those low rates contribute to low
capital costs. Cutting our own capital gains rates would
encourage productive investment -- in addition to generating the
"new revenues" we need to meet our deficit reduction agreement.
I think the case for a capital gains cut is a strong one,
but there are several other economic issues I want to discuss
here today.
First, a pressing problem with important consequences for
our long term fiscal health: the S&L situation. This
Administration recognized the immediate need to take action to
stabilize the S&L system. Less than three weeks after taking
office, we sent to Congress a comprehensive S&L reform plan --
one designed to stop the dollar drain and deal with insolvent
thrifts, and restore confidence in the S&L system.
The Senate passed an S&L package with a resounding majority:
91 to 8. I urge the House to move quickly to give us the tools
we need to reform the S&L system by passing my bill quickly --
with its central provisions intact.
And I have a second message for the Congress, as it debates
an increase in the minimum wage. I've indicated my support for
increasing the minimum wage over three years to $4.25 an hour. I
also want to establish a six-month training wage for new workers
at the current $3.35 rate, and expand the exemption from minimum
wage requirements for all small businesses with annual sales
under half a million dollars.
7
It's time for those who want a higher wage to move beyond
the rhetoric, and take a look at the consequences. We all know
the studies that show a 10% increase in the minimum wage will
cost America between one hundred and two hundred thousand jobs
for those who need them most.
What happens when minimum-wage workers open that pay
envelope expecting a fatter paycheck -- and find a pink slip
instead? An irresponsible increase in the minimum wage will cost
jobs, as employers cut back to compensate for increased costs.
$4.25 is as far as I can go -- it's my first and final offer.
We must guard against conferring benefits by government
mandate, and leaving employers to cope with the costs. I share
your concern about legislative efforts to mandate medical and
parental leave. I also believe that choice in child care is best
made by parents -- not government -- and I know the Chamber of
Commerce supports the concept of choice.
There are some child care initiatives up on Capitol Hill --
well-intended initiatives -- that would increase government
intervention and crowd out parental choice. The child care tax
credit initiatives I've proposed preserve choice -- letting
parents decide whether to place their child in the care of a
relative, in a church-run center, or in a public day care
facility. Let's let parents decide what's right for themselves.
Finally, I'll close with a brief comment on an issue I know
is vital to those of you here today -- vital, in fact, to all
Americans in our evolving economy: International trade.
8
The global economy is a fact of life. It is no longer
possible to draw a sharp line between domestic and international
markets.
This Administration is committed to securing an open and
fair world trading system -- because fair trade provides
opportunities for America's competitiveness to come to the fore.
We have the ingenuity to be preeminent and the drive to
succeed. Entrepreneurs like you are our ace in the hole.
Our challenge is to make the most of this competitive edge.
That's why we will work vigorously to break down barriers abroad,
while keeping markets open here at home.
If any country -- including the United States -- is fooled
into thinking that a closed market can be a prosperous one,
they're wrong. Closed markets mean closed doors to opportunity -
- and that means less prosperity. [pause]
The Chamber of Commerce has always stood for economic
freedom -- and I know you share my view that there is no surer
route to prosperity and progress than the system of free
enterprise.
The message of the past 77 months is clear: We can keep the
economy strong, sustain the longest expansion in American
history, and ensure America a productive and prosperous future --
provided that government policies preserve the greatest possible
freedom for American enterprise to innovate, create and compete.
Thank you.
030268SS
Document No.
MASTER
WHITE HOUSE STAFFING MEMORANDUM
4/25/89
DATE:
ACTION/CONCURRENCE/COMMENT DUE BY:
4/26/89 c.o.b.
SUBJECT:
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
/
PORTER
DARMAN
/
STUDDERT
BATES
UNTERMEYER
ROGERS
BREEDEN
WINSTON
CARD
CICCONI
/
PINKERTON
DEMAREST
BOSKIN
FITZWATER
/
GRAY
HAGIN
REMARKS:
Please forward any comments directly to Chriss Winston,
Rm. 122, x2930, no later than c.o.b. Wednesday, April
26, 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
McGroarty/Simon
April 25, 1989
1933 APR 23
6:45 pm
Draft 3
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
WASHINGTON, D.C. const. tution Hall
monday, MAY 1, 1989
10:15 AM
[Introductory remarks
Acknowledgements of outgoing
Chmn. Bill Kanagka, incoming Chmn. John Clendenin, Pres. Dick
Lesher ]
I want to thank the Chamber of Commerce for providing me a
chance to deliver a May Day message, American-style. On May Day,
I always think about that celebration in the Soviet Union. All
those red banners
The big military parade
Even the
Economic Planning Ministry had a unit in the parade -- two
hundred economists marching along yelling, "Mayday! Mayday! ((PAUSE))
Today, that is beginning to change. Even the socialist
world is beginning to see that socialism isn't just another
economic system -- it's the death of economics. Nations the
world over are coming to recognize that free enterprise is the
wave of the future. That's a promising forecast for prosperity -
- and for world peace.
In the United States, the single most significant economic
we have en joyed
indicator of this decade is up one, as of today: today begins
full
the longest peaceture
expansion
the 77th months of uninterrupted economic growth in the American
economy
history
Without a doubt, this long-running economic expansion has
been good for American business, and for the American worker. In
2
the past
mealy
those 77 months, we've added over twenty million new jobs -- and
more Americans have moved up on the pay scale. Since 1982, the
25
number of jobs paying less than $5 dollars an hour is down 30%,
while jobs paying $10 or more dollars an hour have increased by
95
80%. Unemployment is at its lowest point in the past 15 years.
During thiseconome expension,
40
?
In those 77 months America's industrial output is up 33% --
29
overall growth, up 26%. For those with an eye on the Europes
output.
and digtely higher 4ham
international competition, that's a more rapid rate of growth stat
than Japangreports for that same period, and it's double that of
Europe
And the expansion has been just as good to the average
American family. Rat Per capita personal income is up 17% -- and
19
that's take home "after tax" pay, adjusted for inflation. A
1987, median family income his reached a new high and it's
real
continued to climb since then.
That's quite an economic success story. Our challenge now
is to keep it going. We can -- and we will.
We've all heard the naysayers. I think there are a few out
there whose predictions of economic disaster are now in their
78 76th straight month
The naysayers are wrong -- but why? What they've
underestimated is the resilience, the remarkable responsiveness
of the free enterprise system. You can focus on government so
long, that you forget that it's the private sector that's home to
the innovation and economic creativity that powers this
expansion.
3
I've been a small businessman myself, starting out with an
idea, and building it into a business. I know the risks -- and
the rewards: the payoff in pride when you succeed
(Actually, not that much has changed: I've still got
something in common with a lot of small businessmen in America.
I also work out of my house
1)
Entrepreneurs know this simple truth: nothing wagered,
nothing won. That's why I want a government that prompts
entrepreneurs to take risks - - not a government that forces them
to take refuge.
That doesn't mean government's only job is simply to stand
back and step out of the way. There's plenty for the government
to do, to make sure commerce is free and fair, and to maintain a
climate where free enterprise can take place and prosper.
And today, the federal government's number one economic
priority is dealing with the deficit.
We've made a good start. The budget agreement Congress and
the
my Administration concluded two weeks ago will keep federal
spending deficit below the Gramm-Rudman target. And we haven't
sacrificed our social or national security responsibilities in
the process. The budget level we've agreed on will allow us to
discharge the critical duties of government. We'll be able to
provide for our national security, meet the needs of the
disadvantaged, and accelerate the funding of several high-
priority programs.
4
Our agreement sends a signal -- to the American people, and
to our trading partners: we're serious about getting that
deficit down.
And the deficit is coming down, not only in straight dollar
By
the
year,
terms, but as a percentage of our annual GNP. We ve cut the
63
3
deficit in half, from a high of 5.7% of GNP in 1986, to a
projected 3.1 2.9% in 1990. 89
One word more about the budget agreement for 1990. We've
agreed to $5.3 billion dollars in "new revenues" as part of the
deal. You're going to hear a lot about those "new revenues" in
the months ahead -- so let me say my piece now.
First of all, let me assure you: "new revenues" isn't a
code word for new taxes. I've given my word many times, and I'll
give it again today: no new taxes means just that.
And I'll make it so clear that even the duck hunters among
us will understand: we won't raise taxes with word games. We
all know a tax when we see one -- and you won't see any in the
agreement I've signed onto.
I have news for the castor-oil club -- the gang that's
trying hard to get us to swallow new taxes. That's bad medicine
for the economy. The deficit exists because we over-spend -- not
because we're under-taxed.
Let me tell you what my favorite source of new revenue is.
We don't have to raise tax rates -- we have to release the
energies of free enterprise.
5
In a growing economy, tax revenues will take care of
FY
themselves. In 1990 alone -- thanks to expanding economic
more
then
activity -- the Treasury will take in $80 billion dollars in
increased revenues, not through higher taxes, but under the
existing tax structure.
That's why I've called on Congress to cut the capital gains
SPE comments
and
tax. In 1990 alone, increased economic activity spurred by a cut
in capital gains would bring an extra $4.8 billion dollars into
and that doesn't Count merased economic activity spurred by lower a
the federal treasury That's the lion's share of the $5.3
tax rate.
billion dollars we need in the way of "new revenues" under our
budget agreement -- and my estimate is on the conservative side.
So let's not hunt for ways to wring another dollar in taxes
out of our economy -- let's concentrate on creating conditions
for continued growth.
Let's take a look at what our competitors are doing. Canada
fox rateis
O.S.
The IS
maxi mun taxes capital gains at about half the rate that we do. So do true
How about
For entrepreneurs who built their businesses from serater!
for Sweden and France. Japan's rate? A scant 5%. West Germany
on securities
1%
exempts all long-term capital gains from any tax whatever -- and
among the $ newly industrialized economies of the Pacific rim, five
out of six have no capital gains tax at all.
Among our competitors, those low rates contribute to low
capital costs. Cutting our own capital gains rates would
encourage productive investment -- in addition to generating the
"new revenues" we need to meet our deficit reduction agreement.
I think the case for a capital gains cut is a strong one,
6
but there are several other economic issues I want to discuss
here today.
First, a pressing problem with important to our long term
/
fiscal health: the S&L situation. This Administration
recognized the immediate need to take action to stabilize the S&L
proposed
system. Less than three weeks after taking office, we sent to
Congress a comprehensive S&L reform plan -- one designed to stop
the dollar drain and deal with insolvent thrifts, and restore
confidence in the S&L system.
an S+L
The Senate passed my package with a resounding majority: 91
to 8. I urge the House to move quickly to give us the tools we
reform
need to repair the S&L system by passing my bill quickly -- with
its central provisions intact.
And I have a second message for the Congress, as it debates an
increase in the minimum wage. I've indicated my support for
increasing the minimum wage over three years to $4.25 an hour. I
also want to establish a six-month training wage for new workers
current
at the old $3.35 rate, and expand the exemption from minimum
wage requirements for all small businesses with annual sales
under half a million dollars.
It's time for those who want a higher wage to move beyond
the rhetoric, and take a look at the consequences. We all know
that each
the studies that show 10% increase in the minimum wage will
cost Currica between and
result in a loss of one hundred to two hundred thousand jobsx for those
who need
What happens when minimum-wage workers open that pay
theme most.
envelope expecting a fatter paycheck -- and find a pink slip
7
instead? An irresponsible increase in the minimum wage will cost
jobs, as employers cut back to compensate for increased costs.
$4.25 is as far as I can go -- it's my first and final offer.
Finally, I'll close with a brief comment on an issue I know
is vital to those of you here today -- vital, in fact, to all
Americans in our evolving economy: International trade.
The global economy is a fundamental fact of economic life.
It is no longer possible to draw a sharp line between domestic
and international markets.
This Administration is committed to securing a truly free
world trading system -- and we can't have free trade without fair
trade.
Usrp/
This is no time to wall off the American economy, in hopes
of securing U.S. companies against foreign competition. It is
high time to work with our trade partners to lower the barriers
to free and fair trade, for the benefit of all alike.
You have my word that the United States government will seek
with added energy to open up foreign markets now closed to U.S.
exports. Protectionism runs dead against a global trend towards
more open and extensive commerce between nations -- and I'm dead
set against protectionism. [pause]
The Chamber of Commerce has always stood for economic
freedom -- and I know you share my view that there is no surer
route to prosperity and progress than the system of free
enterprise.
8
The message of the past 77 months is clear: We can keep the
peacetine
economy strong, sustain the longest expansion in American
history, and ensure America a productive and prosperous future --
provided that government policies preserve the greatest possible
freedom for American enterprise to innovate, create and compete.
Thank you.