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U.S. Chamber of Commerce, 5/1/89 [2]
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26
15
7
1
THE WHITE HOUSE
WASHINGTON
April 26, 1989
INFORMATION
MEMORANDUM FOR THE PRESIDENT
FROM: DANIEL McGROARTY Much
THE PRESIDENT HAS SEEN
THROUGH: CHRISS WINSTON
w
4/30/89
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.
Have page
Our agreement SE
4 reviewed
an people, and
to our trading partne
ing that
deficit down.
by Sununu
And the deficit
and Dannen
traight dollar
terms, but as a perce
too restrical re cutting
the
deficit by two-thirds
in 1983, to a
projected 1.7% in 199
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.
J.S.
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
--
n
nink
slip
instead? An irresponsible increase in
jobs, as employers cut back to compensa
also cite
$4.25 is as far as I can go -- it's my
determination
We must guard against conferring 1
to hold line
mandate, and leaving employers to cope
your concern about legislative efforts
on costs
parental leave. I also believe that cl
ABC too
made by parents -- not government -- ai
expensive
Commerce supports the concept of choice.
There are some child care initiatives up on Capitol Hill --
well-intended initiatives -- that would increase government
cuat Jeapardiseau efforts to cut the
intervention and crowd out parental choice. The child care tax
federal
credit initiatives I've proposed preserve choice -- letting
clificats
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.
We are determined to hold the line onspending and the
ABC the symply put is too expensive not only misqueded
hut too expensive
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.
THE WHITE HOUSE
WASHINGTON
April 26, 1989
MEMORANDUM TO CHRISS WINSTON
FROM:
ROGER PORTER
BILL ROPER
JIM PINKERTON
SUBJECT:
U.S. Chamber of Commerce Draft Speech
We think this is a very strong statement of the President's
economic principles. There are some good lines, such as "castor
oil club."
1,3,3
We suggest adding one of the President's trademark
lines to this sentence: "Nations the world over are coming to
recognize that free enterprise is the wave of the future -- part
of what I call the New Breeze that is sweeping the world.
[emphasis added]
2,2,1
The first quarter GNP figures which came out today
might be worth mentioning here.
Document No.
030268SS
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
BREEDEN
ROGERS
CARD
WINSTON
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
23
6:45 pm
Draft 3
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
WASHINGTON, D.C.
MAY 1, 1989
[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!"
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
Part r what I call The New Bruge that is sweeping The world.
wave of the future. 1 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: today begins
the 77th month of uninterrupted economic growth in the American
economy.
Without a doubt, this long-running economic expansion has
been good for American business, and for the American worker. In
those 77 months, we've added over 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 30%,
while jobs paying $10 or more dollars an hour have increased by
80%. Unemployment is at its lowest point in the past 15 years.
In those 77 months, America's industrial output is up 33% --
this year was
overall growth, up 26%. For those with an eye on the
international competition, that's a more rapid rate of growth
than Japan reports for that same period, and it's double that of
Europe.
And the expansion has been just as good to the average
American family. Per capita personal income is up 17% -- and
that's take home "after tax" pay, adjusted for inflation. In
1987, median family income reached a new high -- and it's
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
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
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 federal
spending 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've cut the
deficit in half, from a high of 5.7% of GNP in 1986, to a
projected 2.9% 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.
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
themselves. In 1990 alone -- thanks to expanding economic
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
tax. In 1990 alone, increased economic activity spurred by a cut
in capital gains would bring an extra $4.8 billion dollars into
the federal treasury. That's the lion's share of the $5.3
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
taxes capital gains at about half the rate that we do. So do
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, 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
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 my package with a resounding majority: 91
to 8. I urge the House to move quickly to give us the tools we
need to repair the S&L system by passing my bill quickly -- with
its central provisions intact.
And I have a second message for 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 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
the studies that show a 10% increase in the minimum wage will
result in a loss of one hundred to two hundred thousand jobs.
What happens when minimum-wage workers open that pay
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.
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
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.
THE WHITE HOUSE
WASHINGTON
April 28, 1989
TO:
Chriss Winston
FROM: Richard C. Breeden
Attached is a proposed
replacement for the S&L
language contained in the
Chamber of Commerce speech.
Insert, p. 6 of Chamber of Commerce Speech
Another important economic issue is the stability of our
financial system. Not since Franklin Roosevelt has a new
President had to face the possibility of serious instability in
the financial system. The difficulties of this industry, which
holds over $1.3 trillion in assets, have been building for at
least two decades, and the scale of losses that were incurred is
enormous.
As Vice President, I led a Task Group that looked at how to
strengthen the overall financial system. In 1984 that group
unanimously recommended that thrift institutions should be
subjected to the same capital and accounting standards that are
applied to banks, along with dozens of additional recommendations
to overhaul and strengthen the supervisory system.
Less than three weeks after taking office, I sent Congress a
comprehensive plan for a sweeping overhaul of the regulatory
structure. This legislation requires a return to higher capital
standards, serious accounting practices and tough enforcement
provisions to prevent fraud, mismanagement and insider abuse.
The Senate has passed my legislation, largely intact, by an
overwhelming 91-8 margin. Action in the House has also been
progressing. Just last Thursday, the House Banking Committee
significantly strengthened the capital standards that will be
required for the future, reversing irresponsible action that had
occurred in subcommittee. This issue is important. I will not
accept legislation that invites a future repetition of this
crisis by failing to impose adequate capital and accounting
discipline, consistent with that imposed on our national banks.
I also cannot agree that taxpayers should be forced to back any
new growth incurred by firms that cannot or will not put their
own money at risk in front of the taxpayers.
We intend to honor the national commitment to insured
depositors. Their funds will be backed by the full faith and
credit of the U.S. government. However, the shareholders and
management of insolvent firms should not expect they will be
allowed to pick the taxpayers pocket and escape to repeat their
old ways. We intend to carry out the necessary reforms to clean
up the market, and to make it safe and sound for the future. I
also intend to see to it that those thrift executives who have
violated the law and looted insured institutions will be
investigated, prosecuted and put behind bars where they belong.
The enactment of this major legislation should proceed as a
high priority of the Congress. Continuing losses are
significant, and the financing provided in the bill is essential
to any permanent resolution of the insolvent firms so that they
cannot threaten the stability of the entire system. Enactment of
this legislation will represent an historic reform of financial
regulation, and I urge Congress to end the abusive practices of
the past once and for all.
Bob Smon's changes
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!" ((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. 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
4
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
8716th
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. 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.
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
I
- 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.
Larry
How about
Lindsey
rate. The same is true for Sweden and France. Japan's rate?
seariting
OPD
For program entreprenours who builtheir businesses from scratch:
A scant 5%. West Germany exempts all long-term capital gains
he
X6402
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 proposed 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
that each
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.
###
April 26, 1989
MEMORANDUM FOR MICHAEL BOSKIN
FROM:
CHRISS WINSTON
w
SUBJECT:
Statistics for U.S. Chamber of Commerce Speech
As we discussed, the statistics for the President's remarks to
the U.S. Chamber of Commerce need to be reconciled between your
office, OMB, and the "Building a Better America" fact sheet we
released on April 24.
Here are the disputed figures on page 2:
Allen
Kroseila
Fact Sheet
CEA
5622
OMB
82/88
82/68
"America's industrial
output"
33%
33%
40%
"overall growth"
26%
26%
82/88
29% 21V/811
"per capital personal
income" after taxes and
inflation
178RIV
19%
"nearly 20%"
1/24
82/V
Please provide us with the correct figures as well as the sources
used and appropriate back-up material.
Siayson
Jim781
I,
In general
OMB does quarter /guarter
CEA does year / you for interal'l comp. on pct sheet
IND PRODUCTION
1982: 103,1
1982:1V 100.6
1988: 137.2
33,1%
1989
141.0
140.2%
CBA
OMB
GNP (82 $)
1982
3166.0
1982:1V
3159.3
1988
3996.1
126.22
1989
4088.2
T29.470
COA
OMP
PerCepibel Personal INCOME
82:1V 9749
88:1V
11445
17.4%
(Fact shot, out dated)
89:1 11633
19,3% (CEA)
OMB did net have up to date data & approximated
PRODUCTION AND BUSINESS ACTIVITY
INDUSTRIAL PRODUCTION AND CAPACITY UTILIZATION
Industrial production was unchanged in February, following a 0.4 percent increase in January. The index for
February was 5.0 percent above its year-earlier level.
INDEX, 1977=100* (RATIO SCALE)
INDEX, 1977 = 100 (RATIO SCALE)
160
TOTAL INDUSTRIAL PRODUCTION
240
FINAL PRODUCTS
220
DEFENSE AND
8
140
SPACE
200
EQUIPMENT
.2
3
120
180
0
8
BUSINESS
160
8
100
EQUIPMENT
.5
160
3
MANUFACTURING PRODUCTION
140
4
140
DURABLE
13
120
CONSUMER
0
NONDURABLE
GOODS
5
120
100
7
0
PERCENT*
100
0
100
5
140
CAPACITY UTILIZATION RATE
UTILITIES AND MINING PRODUCTION
(TOTAL INDUSTRY)
9
90
9
120
10
UTILITIES
80
2
100
2
MINING
70
0
6
1985
1986
1987
1988
1989
1985
1986
1987
1988
1989
*SEASONALLY ADJUSTED
SOURCE: BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
COUNCIL OF ECONOMIC ADVISERS
7
7
3
5
[Monthly data seasonally adjusted]
0
Total
Industry production indexes, 1977=100
Capacity utilization
1)
industrial
rate, percent 1
4
production
Manufacturing
Period
Percent
3
Index.
change
Mining
Utilities
Total
Manufac-
1977=100
from year
Total
Durable
Nondurable
industry
turing
earlier
1
;
1977 proportion
100.0
84.21
49.10
35.11
9.83
5.96
1980
108.6
-1.9
108.2
109.1
107.0
112.4
107.3
80.9
1
1981
79.3
111.0
2.2
110.5
111.1
109.7
117.5
107.1
79.9
1982
78.2
103.1
-7.1
102.2
99.9
105.5
109.3
104.8
72.1
1983
70.3
109.2
5.9
110.2
107.7
113.7
102.9
105.2
1984
74.6
73.9
121.4
11.2
123.4
124.2
122.3
111.1
110.7
1985
81.0
80.5
123.7
1.9
126.4
127.6
124.6
108.9
3
111.1
80.4
1986
80.1
125.1
1.1
129.1
128.4
130.1
100.4
108.5
1987
79.4
79.7
129.8
3.8
134.7
133.1
136.8
100.7
110.3
1988
80.7
81.1
137.2
5.7
142.7
141.9
143.9
103.5
3
114.3
83.3
83.6
1988: Feb
134.4
5.8
139.5
138.4
141.1
101.5
115.6
82.4
Mar
82.6
134.7
5.7
140.0
138.8
141.7
102.7
113.3
82.4
Apr
82.7
135.4
6.3
1
140.8
139.7
142.3
104.7
111.0
82.7
May
82.9
136.1
6.2
141.8
141.5
142.1
102.6
111.6
82.9
June
83.3
136.5
5.7
142.1
141.7
142.6
103.0
113.2
July
83.0
83.3
138.0
5.7
143.6
142.9
144.6
104.3
114.4
83.7
Aug
84.0
138.5
5.5
144.0
143.2
145.1
103.8
117.8
Sept
83.8
84.0
138.6
5.7
144.4
143.8
145.3
103.7
113.0
Oct
83.7
84.0
139.4
5.2
145.3
144.6
146.3
103.1
113.9
Nov
84.0
84.3
139.9
5.1
145.8
145.2
146.7
104.7
113.7
Dec
84.1
84.4
140.5
5.0
146.4
145.7
147.3
105.4
115.4
84.3
84.5
1989: Jan ,
141.1
5.0
147.4
146.7
148.6
103.4
Feb P
114.8
84.5
84.8
141.1
5.0
147.4
146.9
148.2
101.5
116.9
84.3
84.6
1 Output as percent of capacity.
Source: Board of Governors of the Federal Reserve System.
17
Industrial Prod good thru 1984
rica La easona
A.5 Total, 1919-85
Indexes, seasonally adjusted, 1977 = 100
(Publ 12/86)
ANN.
YR
JAN
FEB
MAR
APR
MAY
JUNE
JULY
AUG
SEPT
OCT
NOV
DEC
01
02
or
04
AVG.
TOTAL
INDEX
19
10.2
9.7
9.5
9.6
9.7
10.3
10.9
11.1
10.9
10.8
10.6
10.8
9.8
,,,
11.0
10.7
10.3
20
11.8
11.8
11.5
10.9
11.2
11.3
11.0
11.1
10.7
10.3
9.4
8.8
11.7
11.2
10.9
9.5
10.8
21
8.3
8.2
7.9
7.9
8.2
8.1
8.1
8.3
8.4
8.9
8.8
8.7
8.1
8.1
8.3
8.8
8.3
22
9.1
9.5
10.0
9.6
10.1
10.6
10.6
10.4
11.0
11.6
12.1
12.4
9.5
10.1
10.7
12.1
10.6
23
12.2
12.3
12.7
13.0
13.2
13.1
13.0
12.7
12.4
12.4
12.4
12.1
12.4
13.1
12.7
12.3
12.6
24
12.4
12.6
12.4
12.0
11.5
11.0
10.8
11.2
11.6
11.9
12.1
12.4
12.5
11.5
11.2
12.1
11.8
25
12.8
12.8
12.8
13.0
12.9
12.8
13.1
12.9
12.7
13.2
13.5
13.7
12.8
12.9
12.9
13.5
13.0
26
13.5
13.5
13.6
13.6
13.5
13.7
13.7
13.9
14.1
14.1
14.1
14.0
13.5
13.6
13.9
14.1
13.8
27
14.0
14.1
14.3
13.9
14.0
14.0
13.8
13.8
13.6
13.3
13.3
13.3
14.1
14.0
13.7
13.3
13.8
28
13.6
13.7
13.9
13.8
14.0
14.1
14.3
14.5
14.6
14.9
15.2
15.5
13.7
14.0
14.5
15.2
14.3
29
15.7
15.7
15.7
16.0
16.3
16.4
16.6
16.4
16.3
16.1
15.3
14.6
15.7
16.2
16.5
15.3
15.9
30
14.6
14.5
14.3
14.2
14.0
13.6
13.0
12.7
12.4
12.1
11.8
11.5
14.5
13.9
12.7
11.8
13.2
31
11.5
11.5
11.8
11.8
11.7
11.4
11.2
10.8
10.5
9.9
9.8
9.7
11.6
11.6
10.8
9.8
11.0
32
9.5
9.2
9.1
8.5
8.2
7.9
7.7
7.9
8.4
8.7
8.7
8.6
9.5
8.2
8.0
8.7
8.6
33
8.4
8.4
7.9
8.5
,,
11.4
12.5
12.0
11.3
10.8
10.1
10.2
8.3
10.0
11.9
10.4
10.1
34
10.5
11.0
11.5
11.5
11.8
11.5
10.8
10.6
10.0
10.5
10.6
11.3
11.0
11.6
10.5
10.8
11.0
35
12.2
12.4
12.3
12.1
12.1
12.3
12.3
12.7
13.1
13.5
13.7
13.9
12.3
12.2
12.7
13.7
12.7
36
13.7
13.3
13.5
14.4
14.6
14.9
15.2
15.4
15.7
15.9
16.4
16.9
13.5
14.6
15.5
16.4
15.0
37
16.8
17.1
17.5
17.5
17.5
17.3
17.4
17.3
16.7
15.5
14.0
12.7
17.1
17.4
17.1
14.1
16.4
38
12.4
12.3
12.3
12.1
11.8
11.9
12.6
13.3
13.7
14.0
14.6
14.8
12.4
12.0
13.2
14.5
13.0
39
14.8
14.9
14.9
14.9
14.8
15.2
15.6
15.8
16.8
17.6
18.1
18.1
14.9
14.9
16.1
17.9
16.0
40
17.9
17.3
16.9
17.2
17.7
18.3
18.5
18.6
19.0
19.3
19.8
20.4
17.3
17.8
18.7
19.3
18.4
41
21.0
21.6
22.2
22.3
23.3
23.5
23.8
24.1
24.1
24.3
24.4
24.8
21.6
23.0
24.0
24.5
42
25.3
23.3
25.7
26.0
25.3
25.3
25.4
26.0
26.8
27.4
28.3
29.0
29.7
25.7
25.3
26.8
29.0
26.7
43
30.0
30.8
31.0
31.4
31.6
31.4
32.4
33.1
33.9
34.4
34.9
34.4
30.6
31.5
33.1
34.6
32.4
44
34.8
35.1
35.0
35.0
34.8
34.7
34.6
35.1
34.9
35.0
34.7
34.6
35.0
34.8
34.9
34.8
34.2
34.9
45
34.1
33.9
33.5
32.4
31.7
30.9
27.7
25.2
24.2
25.1
25.2
34.1
32.4
28.0
24.9
29.9
"
23.8
22.6
25.0
24.6
23.7
25.1
26.0
26.9
27.4
27.9
28.1
28.3
23.8
24.4
26.8
28.1
47
28.6
28.8
25.8
29.0
28.7
28.8
28.8
28.7
28.8
29.1
29.3
29.7
29.9
28.8
28.8
28.9
48
29.6
30.0
30.1
29.0
29.7
29.8
30.3
30.7
30.7
30.6
30.4
30.6
30.2
29.9
29.9
30.3
30.5
30.2
49
30.2
29.6
29.3
28.8
28.6
28.2
28.2
28.1
28.4
28.7
27.6
28.3
28.8
29.3
28.3
28.4
28.3
50
29.3
29.5
28.6
30.4
31.4
32.2
33.1
34.2
35.3
35.0
35.3
35.2
35.8
29.7
32.2
34.8
35.4
33.1
51
35.9
36.2
36.3
36.4
36.3
36.1
35.5
35.2
35.4
35.4
35.7
35.9
36.1
36.3
35.4
35.6
35.9
52
36.3
36.5
36.6
36.3
35.9
35.6
35.0
37.3
38.6
39.0
39.8
40.0
36.5
35.9
37.0
53
40.2
40.4
39.6
40.7
37.2
40.9
41.1
40.9
41.5
41.2
40.4
40.0
39.1
38.1
40.4
41.0
41.0
39.1
54
37.9
38.0
40.4
37.7
37.5
37.7
37.9
37.9
37.9
37.9
38.4
39.0
39.5
37.9
37.7
37.9
38.9
55
40.4
38.2
40.9
41.9
42.4
43.0
43.1
43.4
43.4
43.7
44.4
44.5
44.7
41.0
42.8
43.5
44.5
43.0
56
44.9
44.6
44.6
44.9
44.5
44.1
42.8
44.5
45.5
45.9
45.5
46.2
44.7
44.5
44.3
46.0
45.9
57
46.5
46.4
44.9
45.8
45.6
45.7
46.0
46.0
45.6
44.9
43.9
43.0
46.3
45.7
45.9
44.0
58
42.2
41.3
40.8
45.5
40.2
40.6
41.6
42.2
43.1
43.5
44.0
45.3
45.3
41.5
40.8
42.9
59
46.0
44.9
46.9
47.6
42.6
48.6
69.3
49.4
48.2
46.6
46.5
46.2
46.5
49.3
46.8
49.1
47.1
50.6
47.3
60
50.2
47.7
49.7
49.3
49.3
48.7
48.5
48.4
47.9
47.9
47.2
46.3
50.2
49.1
48.3
47.1
48.8
61
46.4
46.3
46.6
47.5
48.3
48.9
49.5
50.0
49.9
50.9
51.7
52.1
46.4
48.3
49.8
62
51.7
52.5
51.5
52.8
49.1
52.9
52.8
52.7
53.2
53.3
53.6
53.7
53.9
53.9
52.3
52.8
53.4
63
54.3
54.9
53.8
55.3
53.2
55.8
56.4
56.6
56.4
56.5
57.1
57.5
57.7
57.6
54.8
56.3
"
58.1
56.6
58.5
57.6
58.5
56.3
59.5
59.8
60.0
60.4
60.8
61.0
60.2
62.0
62.7
58.4
59.8
60.7
65
63.4
63.8
61.6
64.7
60.1
64.9
65.5
66.0
66.6
66.9
67.0
67.7
68.0
68.8
64.0
65.5
66.8
68.2
66.1
"
69.5
70.0
70.9
71.0
71.7
72.0
72.4
72.5
73.2
73.7
73.2
73.3
70.1
71.6
67
73.7
72.7
72.8
73.4
72.4
72.0
73.1
72.5
72.5
72.3
73.7
73.6
74.2
75.2
76.0
73.0
72.7
68
76.0
73.2
76.2
75.1
76.5
73.5
76.6
77.4
77.7
77.6
77.8
78.1
78.3
79.3
79.5
76.2
77.2
77.8
"
80.0
80.5
81.2
79.0
77.6
80.9
80.6
81.3
81.8
82.0
81.9
82.0
81.2
81.0
80.6
80.9
70
79.5
81.9
81.4
79.4
79.3
81.2
79.1
79.0
78.8
79.0
78.8
78.3
76.7
76.2
78.0
79.4
79.0
78.7
77.0
78.5
71
78.6
78.4
78.4
78.8
79.2
79.5
79.3
78.8
80.1
80.7
81.1
82.0
78.5
72
79.2
83.8
84.4
79.4
81.3
85.1
79.6
86.5
86.3
86.5
86.4
87.6
88.5
89.8
90.9
91.8
84.4
86.4
73
91.8
93.1
87.5
93.1
90.8
87.3
93.4
93.8
94.5
95.1
95.1
95.8
96.1
96.2
94.7
92.7
93.9
74
93.3
95.3
93.0
95.7
94.4
93.4
93.2
94.3
94.6
94.2
93.9
94.2
93.6
90.9
87.1
93.2
94.1
75
84.8
94.1
83.5
90.5
95.0
82.0
82.7
82.5
83.6
84.1
85.6
86.4
86.9
87.7
88.4
83.4
82.9
85.3
87.6
84.8
76
89.3
90.9
90.7
91.1
92.1
92.2
92.7
93.2
93.5
93.9
95.4
96.2
90.3
91.8
77
96.5
97.2
93.2
95.2
92.6
98.0
99.0
99.6
100.4
100.7
101.0
101.4
101.8
102.1
102.1
97.3
78
101.6
99.7
101.6
103.0
101.0
102.0
100.0
105.5
105.8
106.9
107.5
107.7
108.3
109.2
109.9
110.8
102.1
106.1
79
110.3
110.9
107.9
110.0
111.2
106.5
109.9
110.9
110.9
110.5
110.2
110.4
111.0
111.0
111.0
110.8
80
111.3
110.6
111.4
111.4
110.4
111.0
110.7
109.1
106.2
105.0
104.8
106.3
107.7
108.5
110.7
111.0
111.4
106.8
106.3
110.1
108.6
81
111.0
111.2
111.6
110.6
111.2
112.0
113.4
112.8
111.5
110.4
109.0
107.4
111.2
111.3
82
105.4
112.5
108.9
107.0
105.8
111.0
104.5
103.6
103.0
102.5
102.0
101.3
100.5
100.6
100.5
106.1
83
103.7
102.5
103.3
104.2
102.0
100.6
105.6
103.1
106.9
107.8
109.8
111.6
113.7
114.4
114.8
115.5
103.3
84
106.8
118.5
119.3
119.9
111.7
120.5
114.9
121.0
109.2
121.9
122.8
123.0
122.4
122.1
122.7
122.7
119.3
or
122.7
121.1
121.3
122.7
123.4
121.6
122.5
121.4
123.6
121.4
124.4
124.1
123.6
124.8
125.6
125.1
103.5
124.0
126.7
123.8
Seasonally adjusted at
annual rates
Seasonally adjusted at
amual rates
1987
1988
I 88
III 88
IV 88
I 89
1987
1988
I 88
III 88
IV 88
1
89
Billions of current dollars
Billions of 1982 dollars
Gross national product
4526.7 4864.3 4724.5
4909.0 4999.7 5116.8
3847.0
3996.1
3956.1
4009.4
4033.4
4088.2
Personal consumption expenditures
3012.1 3227.5 3128.1
3261.2 3326.4 3380.4
2521.0 2592.2 2559.8
2603.8 2626.2 2634.8
Durable goods
421.9
451.1
437.8
452.9
Motor vehicles and parts
464.0
461.5
390.9
409.7
195.8 208.6 202.2
401.1
210.2
213.2
410.4 416.5 413.1
208.2
170.4
Other Furniture and household equipment
177.7
148.3
173.5
159.0
154.7
178.7
159.5
179.6
173.5
162.3
167.8
151.0
160.8
77.8
157.3
83.6
81.0
161.0
163.0
83.2
168.9
88.5
85.5
69.6
71.2
70.3
70.7
73.9
70.7
Nondurable goods.
997.9
1046.9
1016.2
Food.
1060.8 1073.9 1093.7
890.5
899.6
892.7
526.4 551.5 535.9
904.5
907.4
558.9
911.8
Clothing and shoes
564.9
579.4
450.4
453.3
451.4
178.2
186.4
180.5
453.8 454.8 460.4
Gasoline and oil
188.4
193.6
193.3
160.5
161.1
159.6
77.0
164.2
78.8
76.3
164.1
80.5
163.9
Other nondurable goods.
79.5
78.3
98.3
99.6
98.8
216.3
230.2
223.5
99.5
100.3
233.0
98.7
235.9
242.7
181.3
185.6
183.0
187.0
188.2
188.8
Services
1592.3
1729.6
1674.1
Housing
1747.5
1788.5
1825.3
1239.5
1283.0
1265.9
467.7
501.6
1288.9
490.1
1302.2
506.0
1309.9
Household operation.
514.0
521.2
358.3
366.5
186.3
363.6
196.7
190.9
199.7
367.7 369.0 370.6
Electricity and gas
202.7
200.7
157.0
163.5
88.8
160.4
93.1
90.2
165.9
166.4
Other
94.6
96.7
163.6
93.2
79.0
97.5
82.3
80.5
103.6
100.7
83.8
Transportation.
105.1
84.2
106.0
80.8
107.4
78.0
106.2 117.2 111.3
81.2
80.0
Medical care
118.5
122.5
82.1 82.2 82.7
126.8
89.3
360.3 404.1 384.9
93.7
91.7
410.4
424.7
94.2 96.0 95.9
Other
439.3
268.2
471.8
282.0
510.0
276.9
497.0
283.4
512.9
288.2
524.8
292.9
537.4
366.6
377.3
373.2
377.7 382.6 387.0
Gross private domestic investment
712.9
766.5
763.4
772.5
772.0
815.9
674.8
721.8
728.9
726.1
717.1
751.4
Fixed investment
673.7
718.1
698.1
Nonresidential
722.8
737.2
754.2
640.4
679.3
446.8 488.4 471.5
662.9
493.7
500.6
686.6 688.0 697.6
Structures.
516.5
445.1
139.5
487.5
473.4
142.8
140.1
143.8
145.0
495.0 491.4 502.8
Nonresidential buildings,
149.4
125.5
125.1
124.0
125.8
125.5
127.9
excluding farm.
92.6
94.2
93.3
93.5
Public utilities
94.4
98.7
77.1
76.4
28.4
76.1
30.3
27.7
75.7
75.8
32.1
32.5
78.4
Mining exploration, shafts, and
32.9
25.7
26.6
24.6
28.1
28.2
28.3
wells.
13.9
14.5
15.1
Other
14.6
14.0
14.2
18.8
18.9
4.5
19.8
3.8
4.0
19.0
18.1
3.6
18.1
4.1
3.7
3.9
3.2
3.4
3.0
3.4
3.0
Producers' durable equipment
307.3
345.6
331.3
349.9
355.6
Information processing and related
367.0
319.6
362.4
349.4
369.2
365.9
374.9
equipment.
101.2
111.0
107.0
112.9
Industrial equipment.
112.4
114.0
139.4
162.7
70.6
155.9
82.9
77.2
167.4
162.4
Transportation and related
83.8
89.3
165.3
97.1
61.4
69.0
65.2
69.9
73.0
78.3
equipment
67.8
77.5
74.2
Other
79.0
78.1
77.3
59.1
66.7
67.6
74.2
64.9
73.0
68.0
74.1
65.7
75.8
64.9
78.7
59.7
64.0
63.4
63.9
64.8
66.4
Residential
226.9
229.7
226.6
Single family structures
229.1
236.6
237.7
195.2
191.8
114.5
117.1
189.5
116.5
191.6
115.4
196.6
120.4
194.8
Multifamily structures.
121.6
97.5
25.5
96.7
21.3
96.2
22.1
21.2
95.5
21.0
98.9
98.5
Other
22.5
21.7
17.6
87.0
18.2
91.3
87.9
17.5
17.3
92.6
18.2
95.2
93.6
76.0
77.6
75.2
78.6
80.4
78.2
Change in business inventories
39.2
48.4
Nonfarm
65.3
49.7
34.7
61.8
34.4
42.5
40.7
66.0
42.2
39.5
49.4
29.1
Manufacturing
41.9
53.8
44.6
43.3
36.9
40.0
6.1
51.9
10.6
15.4
40.4
37.6
41.1
Durable goods
6.9
13.8
7.0
5.2
9.6
4.6
15.8
9.7
5.7
9.6
11.2
Nondurable goods
8.5
13.8
6.2
13.0
4.1
8.8
1.5
8.7
1.0
8.0
5.8
12.3
11.3
Wholesale trade
-1.6
0.0
-6.0
1.1
0.8
7.4
7.1
10.0
24.6
-2.3
-1.1
-5.1
Durable goods,
11.1
4.9
6.6
5.8
9.5
5.3
24.9
8.2
21.2
11.2
3.2
16.8
7.4
Nondurable goods
2.9
10.3
4.9
7.3
2.1
18.2
1.8
3.4
-5.7
15.1
2.9
8.8
Retail trade.
2.0
-3.7
0.9
21.3
2.2
6.7
11.3
1.2
-3.9
13.3
0.3
15.0
-1.4
Automotive
19.5
19.2
9.9
10.6
1.5
4.9
-11.6
11.7
12.9
10.1
16.7
Other durable goods
8.7
13.6
9.3
4.3
4.0
3.6
-10.1
8.7
4.6
4.4
7.5
3.5
11.5
Nondurable goods
0.4
3.7
6.7
3.2
4.2
2.7
8.2
4.0
Other
-1.1
2.8
3.0
0.3
5.6
6.1
5.9
2.4
7.4
Farm
10.3
8.2
10.7
-1.0
10.8
2.4
4.8
10.2
6.7
-1.5
10.9
9.7
6.1
15.9
11.8
7.8
10.3
-9.8
10.9
18.5
-2.5
2.5
14.1
-0.8
-8.5
12.6
GROSS NATIONAL PRODUCT IN 1982 DOLLARS
[Billions of 1982 dollars: quarterly data at seasonally adjusted annual rates]
Gross private
Exports and imports of
Government purchases of
domestic investment
goods and services
goods and services
Personal
Gross
TO'
Gross
con-
Change
Federal
domes-
Period
national
sumption
in
Final
Nonre-
Resi-
tic
product
expendi-
busi-
sidential
dential
Net
Ex-
State
sales
tures
Imports
Total
Nation-
and
pur-
fixed
fixed
ness
exports
ports
Non-
chases
inven-
Total
al
local
defense
tories
defense
1980
3,187.1
2,000.4
379.2
137.0
-6.9
57.0
388.9
332.0
620.5
246.9
171.2
75.7
373.6
3,194.0
3,130.
1981
3,248.8
2,024.2
395.2
126.5
23.9
49.4
392.7
343.4
629.7
259.6
180.3
79.3
370.1
3,225.0
3,199.
1982
3,166.0
2,050.7
366.7
105.1
-24.5
26.3
361.9
335.6
641.7
272.7
193.8
78.9
369.0
3,190.5
3,139.
1983
3,279.1
2,146.0
361.2
149.3
-6.4
-19.9
348.1
368.1
649.0
275.1
206.9
68.2
373.9
3,285.5
3,299.1
1984
3,501.4
2,249.3
425.2
170.9
62.3
-84.0
371.8
455.8
677,7
290.8
218.5
72.3
387.0
3,439.1
3,585.4
1985
3,618.7
2,354.8
453.5
174.4
9.1
-104.3
367.2
471.4
731.2
326.0
237.2
88.8
405.2
3,609.6
3,723.0
1986
3,721.7
2,455.2
433.1
195.0
15.4
-137.5
378.4
515.9
760.5
333.4
251.4
82.0
427.1
3,706.3
3,859.3
1987
3,847.0
2,521.0
445.1
195.2
34.4
-128.9
427.8
556.7
780.2
339.0
264.9
74.1
441.2
3,812.6
3,975.5
1988
3,996.1
2,592.2
487.5
191.8
42.5
-100.2
504.8
605.0
782.3
328.7
261.8
66.9
453.6
3,953.6
4,096.3
EM
1982:
IV
3,159.3
2,078.7
352.3
115.8
-59.3
11.7
336.0
324.3
660.1
289.5
201.4
88.2
370.6
3,218.6
3,147.
1983: IV
3,365.1
2,191.9
390.4
159.9
27.0
-46.2
355.5
401.6
642.2
266.0
211.6
54.4
376.2
3,338.1
3,411.:
1984: IV
3,535.2
2,281.1
444.4
169.6
41.7
-94.8
376.6
471.4
693.2
300.5
225.3
75.2
392.7
3,493.5
1985: IV
3,630.0
3,662.4
2,386.9
460.9
179.4
7.7
-125.3
367.4
492.6
752.7
340.6
241.4
99.2
412.1
3,654.7
3,787.6
1986: IV
3,734.7
2,486.2
427.3
199.7
-10.5
-142.4
387.8
530.2
774.5
340.5
253.1
87.4
434.0
3,745.2
3,877.2
1987:
I
3,776.7
2,490.2
418.2
198.4
29.8
-132.8
394.9
527.7
772.9
334.0
257.0
77.0
438.9
II
3,746.9
3,909.7
3,823.0
2,516.6
434.8
197.6
27.8
-126.0
416.4
542.3
772.2
332.1
264.8
67.3
440.1
Ш
3,795.2
3,949.
3,865.3
2,545.2
462.8
192.1
13.0
-130.7
440.9
571.6
782.9
342.1
269.5
72.6
440.8
3,852.2
3,996.
IV
3,923.0
2,531.7
464.8
192.7
67.1
-126.0
459.2
585.2
792.6
347.7
268.2
79.5
444.9
3,855.9
4,049.
PR
1988: I
3,956.1
2,559.8
473.4
189.5
66.0
-109.0
486.2
595.1
776.4
327.8
264.6
63.2
448.7
3,890.1
4,065.:
II
3,985.2
2,579.0
490.2
189.6
35.3
-92.6
496.9
589.5
783.8
331.6
263.6
67.9
452.2
III
3,949.9
4,077.5
4,009.4
2,603.8
495.0
191.6
39.5
-93.9
514.0
607.9
773.5
320.1
256.4
63.7
453.4
3,969.9
IV
4,103.4
4,033.4
2,626.2
491.4
196.6
29.1
-105.4
522.1
627.4
795.5
335.5
262.5
72.9
460.0
4,004.4
4,138.-
1 GNP less exports of goods and services plus imports of goods and services.
Source: Department of Commerce, Bureau of Economic Analysis.
IMPLICIT PRICE DEFLATORS FOR GROSS NATIONAL PRODUCT
PRI
[1982=100; quarterly data are seasonally adjusted]
Personal consumption
Gross private
Exports and imports of
Government purchases of goods and
expenditures
domestic investment
goods and services
services
Gross
Period
national
MO
product
Total
Durable
Nondura-
Nonresi-
Federal
Services
goods
ble goods
dential
Residen-
Exports
State
tial fixed
Imports
fixed
National
Total
Non-
and local
defense
defense
1980
85.7
86.6
89.2
89.4
83.9
85.1
89.4
90.2
96.0
84.3
1981
83.4
86.4
86.2
94.0
94.6
95.7
96.9
92.6
93.4
96.6
97.5
101.6
93.3
92.9
1982
94.3
93.4
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
1983
100.0
100.0
100.0
100.0
103.9
104.1
102.1
102.1
106.2
98.8
102.2
101.3
97.4
1984
103.1
103.6
101.4
104.7
107.7
108.1
103.8
105.0
111.6
97.9
106.0
103.2
97.1
1985
106.8
107.2
105.5
109.9
110.9
111.6
104.8
107.5
116.8
97.7
108.3
101.0
95.2
1986
109.0
109.2
108.2
114.9
113.9
114.3
105.6
107.3
122.4
100.2
111.1
100.0
1987
93.6
109.8
110.4
108.2
FEI
118.2
117.7
119.5
107.9
112.1
128.5
100.4
116.2
100.0
99.0
1988
112.7
111.5
117.0
123.0
121.7
124.5
110.1
116.4
134.8
100.2
119.7
102.9
101.5
115.9
114.0
123.4
128.7
1982:
IV
101.7
101.8
100.7
101.0
102.7
100.7
99.1
100.0
99.3
1983: IV
101.3
102.0
99.5
102.2
105.4
105.7
103.1
103.1
108.3
98.3
103.1
102.6
97.2
1984: IV
103.8
104.7
100.3
106.3
109.0
109.3
104.1
105.8
113.5
97.9
107.2
1985: IV
102.4
96.2
108.5
108.3
108.9
111.7
INT
112.2
113.1
104.7
108.7
119.0
97.9
109.0
100.5
95.9
1986: IV
110.6
111.3
108.8
116.5
115.3
115.7
106.2
107.8
124.6
101.6
112.4
99.3
94.2
107.7
109.9
101.5
119.7
1987: I
116.3
117.3
106.7
109.8
126.1
101.1
113.4
100.1
II
97.5
111.6
111.8
110.9
121.0
117.3
118.9
107.5
111.9
127.6
100.8
115.2
100.1
III
99.4
113.7
111.3
122.9
122.3
118.2
120.2
108.6
112.9
129.1
99.9
117.7
99.9
IV
98.9
112.9
111.3
119.0
123.9
118.9
121.5
108.9
113.7
131.0
99.8
118.7
100.1
100.0
112.6
111.6
116.0
124.9
1988: I
119.4
122.2
109.1
113.8
132.2
99.6
119.5
100.3
II
100.8
115.2
112.8
125.5
126.5
121.0
123.9
109.6
116.0
134.0
99.5
119.5
102.1
III
101.4
115.3
113.4
122.7
128.1
122.4
125.2
110.4
117.3
135.6
99.7
119.6
104.3
IV
101.3
114.9
114.8
115.2
129.6
124.0
126.7
111.4
118.3
137.3
101.9
120.4
105.0
102.6
118.1
115.0
129.3
130.7
Source: Department of Commerce, Burean of Economic Analysis.
38
2
CEA
Indicators
DISPOSITION OF PERSONAL INCOME
Real per capita disposable personal income rose in the fourth quarter of 1988.
BILLIONS OF DOLLARS (RATIO SCALE)
BILLIONS OF DOLLARS (RATIO SCALE)
4,000
4,000
3,800
3,800
3,400
3,400
3,000
DISPOSABLE PERSONAL INCOME
3,000
2,600
2,600
2,200
SAVING
PERSONAL OUTLAYS
2,200
1,800
1,800
1,400
1,400
DOLLARS * (RATIO SCALE)
DOLLARS (RATIO SCALE)
16,000
16,000
PER CAPITA DISPOSABLE PERSONAL INCOME
14,000
14,000
12,000
CURRENT DOLLARS
12,000
10,000
10,000
1982 DOLLARS
8,000
8,000
6,000
6,000
1980
1981
1982
1983
1984
1985
1986
1987
1988
SEASONALLY ADJUSTED ANNUAL RATES
COUNCIL OF ECONOMIC ADVISERS
SOURCE: DEPARTMENT OF COMMERCE
Dispos-
Per capita
Per capita personal
Percent
Less:
Population,
Equals:
able
disposable personal
consumption
Personal
Personal
change in
Saving as
including
Period
Disposable
Less:
Equals:
personal
income
expenditures
income
tax and
real per
percent of
Armed
Personal
Personal
personal
income in
capital
disposable
Forces
nontax
income
outlays 1
saving
1982
payments
dollars
Current
1982
Current
1982
disposable
personal
abroad
(billions)
dollars
dollars
dollars
dollars
personal
income
(thou-
income
sands)
1
Billions of dollars
Dollars
Percent
1980
2,258.4
340.5
1,917.9
1,781.1
136.8
2,214.3
8,421
9,722
7,607
8,783
-1.1
7.1
227,754
1981
2,520.9
393.3
2,127.6
1,968.1
159.4
2,248.6
9,243
9,769
8,320
8,794
.5
7.5
230,182
1982
2,670.8
409.3
2,261.4
2,107.5
153.9
2,261.5
9,724
9,724
8,818
8,818
-.5
6.8
232,549
1983
2,838.6
410.5
2,428.1
2,297.4
130.6
2,331.9
10,340
9,930
9,515
9,139
2.1
5.4
234,329
1984
3,108.7
440.2
2,668.6
2,504.5
164.1
2,469.8
11,257
10,419
10,253
9,489
4.9
6.1
237,051
1985
3,325.3
486.6
2,838.7
2,713.3
125.4
2,542.8
11,861
10,625
10,985
9,839
2.0
4.4
1986
239,322
3,531.1
511.4
3,019.6
2,898.0
121.7
2,640.9
12.496
10,929
11,618
10,160
2.9
4.0
1987
241,650
3,780.0
570.3
3,209.7
3,105.5
104.2
2,686.3
13,157
11,012
12,348
10,334
.8
3.2
1988
243,944
4,062.1
590.3
3,471.S
3,327.5
144.3
2,788.3
14.103
11,326
13,110
10.530
2.9
4.2
246,179
Seasonally adjusted annual rates
1982: IV
2,729.2
411.1
2,318.1
2,174.9
143.1
2,276.1
9,929
9,749
9,068
1983: IV
8,904
1.2
6.2
233.466
2,041.8
413.9
2,527.9
2,382.5
145.4
2,392.7
10,725
10,151
9,825
9,299
9.1
5.3
1984: IV
235,707
3,188.3
459.7
2,728.6
2,571.3
157.3
2,496.3
11.467
10.491
1985: IV
10,479
9,587
1.7
5.8
237,946
3,399.1
499.6
2,899.5
2,787.7
111.7
2,562.8
12,068
10,667
11,240
9,935
3.3
3.9
1986: IV
240,257
3,599.6
534.9
3,064.7
2,967.9
96.8
2,649.4
12,635
10,923
11,857
10,250
-.2
3.2
242,557
1987: I
3.676.1
532.2
3,143.9
3,013.1
130.8
2,679.6
12.934
11,024
12,020
10.245
II
3.8
4.2
243,077
3,736.1
582.0
3,154.1
3,084.7
69.5
2,652.8
12,947
10,889
12,282
10,330
-4.8
2.2
III
243,618
3,801.0
576.2
3,224.9
3,152.3
72.6
2,683.9
13,204
10,989
12,521
10,421
3.7
IV
2.3
244,236
3,906.8
591.0
3,315.8
3,171.8
144.0
2,728.9
13,543
11,145
12,564
10,340
5.8
4.3
2'4,845
1988: I
3,951.4
575.8
3,375.6
3,225.7
149.9
2,762.3
13,760
11.260
12,751
10,435
4.2
II
4.4
245.318
4,022.4
601.0
3,421.5
3,293.6
127.8
2,762.2
13.919
11,237
12,996
10,492
-.8
III
3.7
245,806
4,094.0
586.5
3,507.5
3,361.8
145.7
2,800.4
14,231
11,362
13,232
10,564
4.5
IV
4.2
246,469
4,180.5
598.0
3,582.5
3,428.7
153.8
2,828.4
14,497
11.445
13,461
10,627
3.0
4.3
247,123
1 Includes personal consumption expenditures, interest paid by consumers to business. and person-
al transier payments to foreigners (net).
1 Annual data are averages of quarterly data. which are averages for the period.
Source: Department of Commerce (Bureau of Economic Analysis and Burrau of the Census).
1989:IN
616.0
3,696.4
3,484.5
14,925/11,633
13649
10,639
6.7
5.7
247,663
6
04/26/89
16:14
EXEC SEC
P.01
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 -- reducing the maximum tax rate to 15 percent. In 1990
alone, this step would bring in an extra 4.8 billion dollars, according
to Treasury estimates. That's the lion's share of the 5.3 billion
dollars we need in the way of "new revenues" under our budget
agreement -- and that 4.8 billion dollars is on the conservative
side since it leaves out the additional revenues due to the increased
economic activity spurred by the cut.
NOTE: Changes submitted for page 5, paragraph 2.
Commerce Dept.
The Chamber has been very active on parental leave, and it would
be nice to recognize their efforts and bring child care to their
attention through language along the following lines after the
text on minimum wage.
"Federal intervention to mandate benefits also any will drive up
employer costs, and I share the concern that you have expressed
so actively and effectively on legislation to mandate medical and
parental leave. I also believe strongly that new funds for child
care should go directly to parents to enhance their choice of
child care arrangements. Grants to States which involve
federally-mandated standards, prohibitions against religiously-
affiliated care, and biases against care by relatives, friends
and neighbors will only drive up costs and reduce the supply of
child care, making it more difficult for your employees to
balance the competing demands of work and family life."
030268SS
Document No.
WHITE HOUSE STAFFING MEMORANDUM
89 DATE: 9 4/25/89
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
1
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:
see changes
James W. Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
McGroarty/Simon
April 25, 1989
1833 APR 25
6:45 pm
Draft 3
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
WASHINGTON, D.C.
MAY 1, 1989
[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!"
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
Weisher
we have enjoyd
indicator of this decade is up one, as of today: today begins
the 78th months of uninterrupted economic growth in the American
78 full the Lorgest peacetime expansion
economy
history
Without a doubt, this long-running economic expansion has
been good for American business, and for the American worker. In
the past
Kearly
those 77 months, we've added -over twenty million new jobs -- and
more Americans have moved up on the pay scale. Since 1982, the
weichers.
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
80%. Unemployment is at its lowest point in the past 15 years.
40%
In those 77 months / America's industrial output is up 33%
29%
overall growth, up 26%. For those with an eye on the
industrial output
international competition, that's a more rapid rate of growth
than Japan reports for that same period, and it's double that of
Europe.
And the expansion has been just as good to the average
my
American family. Real Per capita personal disposable income is up* 17% -- and
nearly 2090
that's take home "after tax" pay, adjusted for inflation. In
we
1987, median family income reached a new high -- and it's
expert it to continue
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
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
Byerel Ilhave
terms, but as a percentage of our annual GNP. We ve cut the
6.3
3
deficit in half, from a high of 5.7% of GNP in 1986, to an
estimated
projected 2.9% in 1990.
3.1 89 (or a projected 1.890 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.
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
themselves. In 1990 alone -- thanks to expanding economic
more than
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 Dale
capital gains realization
3080
tax. In 1990 alone, increased economic activity spurred by a cut
wricher 5873
in capital gains would bring an extra $4.8 billion dollars into
And that doesn't count increased Economic activity
the federal
treasury. That's the lion's share of the $5.3 the spurred lig
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
taxes capital gains at about half the rate that we do. So do
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, 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,
Dale
3080
The estimate of increased revenues of $4.8 billion
is correct, but it is not from increased economic
activity.
6
but there are several other economic issues I want to discuss
here today.
First, a pressing problem with important consequents for to our long term
alale
3080
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 the
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 my package with a resounding majority: 91
to 8. I urge the House to move quickly to give us the tools we
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
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
the studies that show a 10% increase in the minimum wage will
result in a loss of one hundred to two hundred thousand jobs.
What happens when minimum-wage workers open that pay
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.
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
placetime
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.
action Peter
CCMJB
WHITE HOUSE STAFFING MEMORANDUM
TGM
JBT
4/25/89
DATE:
ACTION/CONCURRENCE/COMMENT due BY:
4/26/89 c.o.b.
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
SUBJECT:
ACTION FYI
ACTION FYI
VICE PRESIDENT
MCCLURE
SUNUNU
NEWMAN
SCOWCROFT
PORTER
DARMAN
STUDDERT
BATES
UNTERMEYER
ROGERS
BREEDEN
WINSTON
CARD
CICCONI
PINKERTON
BOSKIN
DEMAREST
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:
OK, with suggested changes.
James W, Cicconi
Assistant to the President
and Deputy to the Chief of Staff
Ext. 2702
McGroarty/Simon
April 25, 1989
27
7:2
6:45 pm
Draft 3
PRESIDENTIAL REMARKS: U.S. CHAMBER OF COMMERCE
WASHINGTON, D.C.
MAY 1, 1989
[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!"
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
real for one quarter
GNP fell
indicator of this decade is up one, as of today: today begins
8
in 1986
the current economic expansion
the 77th month of uninterrupted economic growth in the American
economy.
Without a doubt, this long-running economic expansion has
been good for American business, and for the American worker.
III
From the through March
(we should surpass that
mile stone when we get the
nearly.
data for April this Friday)
those M months, we've added ever 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.
In those 77 months, America's industrial output is up 33% --
Durway this expansion
international competition, wore thandoubleghe that s/a more rate rapid of growth rate of of growth Europe
overall growth, up 26%. For those with an eye on the
and about the some as Japan during The same period.
than Japan reports for that same period, and it's double that of
Europe.
And the expansion has been just as good to the average
19
American family. Per capita personal income is up 17% -- and
that's take home "after tax" pay, adjusted for inflation. In
unable to
1987, median family income reached a new high and
it's
nox
continued to climb since then.
data for 1988
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
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
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 federal
spending 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've cut the
by two-thinds
6.3
3
deficit in half, from a high of 5.7% of GNP in 1986, to a
1,7%
projected 2.9% 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.
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
themselves. In 1990 alone -- thanks to expanding economic
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
tax. In 1990 alone, increased economic activity spurred by a cut
in capital gains would bring an extra $4.8 billion dollars into
the federal treasury. That's the lion's share of the $5.3
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
taxes capital gains at about half the rate that we do. So do
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, 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
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 my package with a resounding majority: 91
to 8. I urge the House to move quickly to give us the tools we
need to repair the S&L system by passing my bill quickly -- with
its central provisions intact.
And I have a second message for 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 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
the studies that show a 10% increase in the minimum wage will
result in a loss of one hundred to two hundred thousand jobs.
What happens when minimum-wage workers open that pay
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.
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
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.
BUILDING A BETTER AMERICA
APRIL 24, 1989
SUMMARY
Since President Bush took office, he has addressed a series
of tough issues, meeting both urgent short-term priorities and
working toward solutions to the long-term challenges facing the
nation. Relying on basic American principles -- traditional
family values, choice, accountability, fairness, excellence,
peace through strength -- the President is building a better
America by:
1. Keeping the economy strong -- with no new taxes
2. Seizing international opportunities for peace
3. Investing in our future
4. Working for a kinder, gentler America
Keeping the Economy Strong -- With No New Taxes
Record economic growth -- 76 months of economic expansion.
Nearly 20 million new jobs have been created, and the
unemployment rate is now at its lowest since December, 1973.
Real median family income set a new record in 1987 and
continues to grow.
A comprehensive budget proposal sent to the Congress and an
unprecedented bipartisan agreement with the Congress reached
on the budget reducing the Federal budget deficit, meeting
Gramm-Rudman-Hollings deficit reduction targets with no new
taxes
A comprehensive plan to rescue the Savings and Loan industry
which has cleared the Senate
An initiative for cutting the capital gains tax rate sent to
the Congress to encourage investment and create jobs and
opportunity
In the Uruguay Round of GATT trade negotiations, substantial
progress has been made by the Administration toward reducing
trade barriers to U.S. exports
A plan for raising the minimum wage to $4.25 coupled with a
six month training wage
Seizing International Opportunities for Peace
The signing of a bipartisan accord with the Congress on
Central America
The initiation of a dialogue with the Soviet Union.
Secretary Baker met with Foreign Minister Shevardnadze in
March, and these talks will continue when the two meet next
in Moscow
An eight-step program to support Polish political and
economic reforms
Intensive Presidential consultations with the leaders of 34
nations, including 18 bilateral meetings held during the
Asia trip
A plan to strengthen the international response to Third
World debt
Comprehensive foreign policy and defense strategy reviews
initiated
Investing in Our Future
Improving Education
A comprehensive legislative package for educational
excellence sent to the Congress
Protecting our Environment
A multi-agency commitment to oversee the Alaskan oil spill
cleanup effort
The development of Clean Air Act revisions, with provisions
for control of acid rain and other problems
An announcement of an effort to seek legislative authority
to ban hazardous waste exports, where agreements do not
exist for their safe disposal
A call for the worldwide phaseout of CFCs by the year 2000
A plan of action to identify and prioritize clean up of
defense and civilian radioactive waste
A legislative proposal, already enacted by the House, to
deregulate natural gas by January 1, 1993
Fighting Drugs and Crime
A major $6 billion anti-drug abuse initiative focusing on
education, rehabilitation, interdiction and enforcement
Action in response to the drug emergency in the District of
Columbia, including enforcement support, more prison space,
and stepped-up efforts in prevention and rehabilitation
A temporary suspension of imports of certain types of semi-
automatic weapons
Action to modify lease and grievance procedures to
facilitate eviction of those involved in drug related
criminal activity from public housing
New aviation security initiatives announced by the Secretary
of Transportation, to counteract terrorism in the skies
Working for a Kinder, Gentler America
Child Care
A child care initiative to give low and moderate income
working families greater choice and flexibility in meeting
their child care needs
Legislation to increase the FY 1990 authorization for Head
Start by $250 million to help up to 95,000 more 4-year olds
National Service
The creation of the Office of National Service in the White
House, and leadership in the Administration's initiative on
volunteerism
Welfare Reform and Medicaid
Quick action to implement major welfare reform legislation
that will help reduce long-term welfare dependency
Expansion of the Medicaid program to serve more pregnant
women, infants, and children
Homelessness
An initiative to provide over $1 billion in federal
resources to help end homelessness and pave the way to jobs,
permanent housing and health care
Ethics and Civil Rights
A comprehensive ethics proposal to make uniform the
standards among all three branches of government
Whistleblower protection legislation, now law, to strengthen
the rights of those who report misdeeds and mismanagement
Enforcement of the new Fair Housing Laws, to fully prosecute
those discriminating in housing opportunities on the basis
of religion, race, age, ethnicity, handicap or family status
Support by the Department of Justice for the objectives of
the Hate Crimes Bill, which provides for the collection of
data about crimes motivated by race, religion, ethnicity or
sexual orientation
President Bush has set an agenda for the country. He is
orienting us as a nation toward the future -- building a better
America -- keeping America strong and at peace. Leadership is
the ability to see the shape of things to come, to address
tomorrow's challenges today. George Bush is preparing the nation
for the 21st Century.
BUILDING A BETTER AMERICA
APRIL 24, 1989
KEEPING THE ECONOMY STRONG -- WITH NO NEW TAXES
Keeping our nation's economy strong is the key to managing
change successfully. The news is good:
O
Record expansion: We are now in the 76th month of the
current economic expansion.
Job creation: Nearly 20 million new jobs have been created,
and the unemployment rate has declined to 4.9 percent, a 15
year low. During this decade, America has created more new
jobs than Japan and the nations of Western Europe combined.
Record income: Per capita personal income, after taxes and
inflation, has risen 17 percent during the expansion; real
income of the median family -- the family exactly in the
middle of the income distribution -- set a new record in
1987 and continues to grow.
Industrial output: During this expansion, American
industrial output has grown 33 percent compared with overall
economic growth of 26 percent. This is double Europe's
growth rate in industrial output and even slightly more than
Japan's rate of increase during the same period.
O
Inflation under control: We have had seven straight years
of consumer price inflation under 5 percent. The
Administration supports the Federal Reserve's efforts to
restrain inflation while maintaining real economic growth.
The Administration and the Fed share the goal of ultimately
achieving price stability -- zero inflation.
ACTION BY THE ADMINISTRATION:
Presenting a budget: The President put forth a budget which
addresses our fundamental obligations for protection of
national security and support of the needy, while providing
sufficient funds to advance high-priority initiatives. The
President's budget restrains overall growth of spending and
meets the Gramm-Rudman-Hollings targets -- with no new
taxes.
O
Reaching a budget agreement with Congress: The President
and Congress announced on April 14 a budget plan to reduce
the estimated FY 1990 deficit by about $64 billion below FY
1989. The deficit will be reduced to $99.4 billion, as
required by the Gramm-Rudman-Hollings l'aw. This is the
2
first budget agreement reached before the start of the
budget year and not framed in the context of crisis.
Savings and Loan reform: The Administration has transmitted
the "Financial Institutions Reform, Recovery and Enforcement
Act of 1989". to Congress, which has already cleared the
Senate. The proposal includes provisions to:
--
Assure financial integrity of deposit insurance by
raising the annual premium rate for both commercial
banks and S&Ls.
-- Resolve the status of existing insolvent banks in an
orderly fashion.
--
Improve supervisory control by bringing S&Ls up to the
same standards applied to commercial banks.
-- Enhance enforcement of bank fraud provisions.
Capital gains tax rate cut: The re-establishment of a
capital gains differential will encourage capital formation,
and investment and stimulate job creation. The President
has sent to the Congress a proposal which includes:
--
A 45 percent capital gains exclusion for qualified
capital gains, making the maximum capital gains tax
rate 15 percent.
--
A phased-in increase in the qualifying holding period
from one year to three years.
--
Families earning under $20,000 would be exempted from
the tax.
Minimum wage proposal: The President is seeking to minimize
the adverse economic impact of an across-the-board increase
in the minimum wage, and to keep job opportunities available
for youth and those seeking to enter the economic
mainstream. His proposal is:
--
A 27 percent increase in the minimum wage over three
years to $4.25 for most workers.
--
Maintaining the current $3.35 minimum for all new
employees of a firm on the job for less than six
months, regardless of age or previous employment.
--
An increase in the small business exemption to include
all firms, not just retail and service establishments,
with gross sales under $500,000.
--
An increase in the tip credit from 40 percent to 50
percent.
The President's pledge to veto an excessive increase in the
minimum wage has gained strong support in both Houses of
Congress.
International Trade: The Administration broke a logjam in
international trade talks which had existed since late 1988.
In breaking the stalemate, the United States advanced its
proposal to correct and prevent trade distortions in
agriculture. This clears the way for negotiations that -- if
3
successful over the next 20 months -- will greatly expand
rules governing free and open trade.
Agricultural initiatives:
--
The announcement of additional advance deficiency
payments of 10 percent available to producers of wheat,
feed grains, rice and upland cotton.
--
The establishment of a top-level Working Group on Rural
Development to focus on an action-oriented agenda.
4
SEIZING INTERNATIONAL OPPORTUNITIES FOR PEACE
The Administration's policy of peace through strength is
working. As he prepares for both the 40th Anniversary of NATO in
Brussels and the economic summit in Paris, President Bush has
undertaken a number of foreign policy initiatives to maintain
America's position of world leadership.
ACTION BY THE ADMINISTRATION:
Bipartisan accord: On March 24, the President signed the
Bipartisan Accord on Central America with top leaders of the
Congress. The agreement sets out the broad outlines of a
strong and effective U.S. policy in the region:
Humanitarian aid: Congress has agreed to support the
Administration's request for continued humanitarian
assistance for the Nicaraguan Democratic Resistance at
current levels through the elections in Nicaragua
scheduled for February, 1990.
Democracy and Regional Peace: The burden of proof is on
the Sandinista government to do something it has
steadfastly refused to do from 1979 to 1989: keep its
promises to its people and its neighbors. If those
pledges of democracy and peace continue to be violated,
we hope and expect that other nations will find ways to
join us to condemn those actions. But if those
promises are kept, we have an opportunity to start a
new day in Central America.
Support for reform in Poland: The Polish people are now
taking concrete steps which deserve our active support.
Those reforms include the legalization of Poland's heroic
trade union movement, Solidarity, and were recognized by
President Bush's initiative, which contained eight steps to
support Polish political and economic reforms:
--
The President is asking the Congress to join him in
providing Poland access to our Generalized System of
Preferences, which offers selective tariff relief to
beneficiary countries.
We are working with our allies and friends in the Paris
Club to develop sustainable new schedules for Poland to
repay its debt, easing a heavy burden so that a free
market can grow.
The President is also asking Congress to join him in
authorizing the Overseas Private Investment Corporation
to operate in Poland.
The President is proposing negotiations for a private
business agreement with Poland to encourage cooperation
between U.S. firms and Poland's private businesses.
The U.S. will continue to consider supporting, on their
merits, viable loans to the private sector by the
International Finance Corporation.
5
The President supports the Roundtable agreements that
clear the way for Poland to be able to work with the
International Monetary Fund on programs that encourage
sound, new, market-oriented economic policies.
The Administration is also encouraging business and
non-profit groups to develop innovative programs to
swap Polish debt for equity in Polish enterprises; and
for charitable, humanitarian and environmental
projects.
The President will support imaginative educational,
cultural and training programs to help liberate the
creative energies of the Polish people.
Bilateral meetings: The President has met with a total of 34
foreign leaders while in office, including a series of 18
bilateral meetings during the trip to Emperor Hirohito's
funeral. President Bush has met with leaders from the
Middle East, including Prime Minister Shamir of Israel,
President Mubarak of Egypt and King Hussein of Jordan.
A dialogue has begun with the Soviet Union. Secretary Baker
met with Foreign Minister Shevardnadze in March, and these
talks will continue when the two meet next in Moscow
Inter-American Development Bank: The Bush Administration
successfully concluded negotiations which will lead to a
substantial increase in the Bank's resources. The resulting
$22.5 billion in lending over the 1990-93 period will
support development efforts in major Latin American debtor
countries as well as the smaller countries of Central
America and the Caribbean.
Initiative on Third World Debt: The President's initiative
to strengthen the international strategy on Third World debt
has already received broad international support from both
industrialized and developing countries. The approach is
designed to promote sustained growth in developing countries
by:
Emphasizing sound market-oriented economic policies in
debtor countries, particularly measures to promote
investment and repatriation of flight capital;
Increasing the focus on debt and debt service reduction
to complement new lending by commercial banks;
Using resources from the World Bank and International
Monetary Fund to catalyze voluntary debt and debt
service reduction by the commercial banks.
GATT: In the Uruguay Round of GATT trade negotiations, the
Administration has made substantial progress toward reducing
trade barriers to U.S. exports.
Policy reviews: President Bush has ordered a comprehensive
review of foreign policy and defense strategies, soon to be
completed.
6
INVESTING IN OUR FUTURE
EDUCATION
The President's actions to improve education are guided by
four key principles: that excellence and success in education
should be recognized and rewarded; that federal funding should be
targeted to those who need it most; that choice and flexibility -
- for educators, parents and students -- are important to
educational reform and to achieving excellence; and finally, that
greater accountability is needed in the education system to
assure that students are actually receiving the highest quality
education.
ACTION BY THE ADMINISTRATION:
The President proposed and sent to the Congress a
comprehensive education package, "The Educational Excellence
Act of 1989" which includes seven initiatives:
-- The Presidential Merit Schools program -- to reward
schools that have made substantial progress in raising
students' educational achievement, creating a safe and
drug-free school environment, and reducing the drop-out
rate.
--
A new Magnet Schools of Excellence program -- to
support the establishment, expansion or enhancement of
magnet schools, increasing parental choice and
improving quality education.
:
The Alternative Certification of Teachers and
Principals program -- to assist States interested in
broadening the pool of talent from which to recruit
teachers and principals.
:
President's Awards for Excellence in Education -- to be
awarded to public and private school teachers in every
state who meet the highest standards of excellence.
--
Drug-free Schools Urban Emergency Grants -- to provide
special assistance to selected urban school districts
that are disproportionately affected by drug
trafficking and abuse.
:
A National Science Scholars program -- to provide
college scholarships to high school seniors who have
excelled in the sciences and mathematics.
--
Additional Funding Authorization for Endowment Matching
Grants at Historically Black Colleges and Universities
to strengthen HBCUs by building endowments, an
especially effective way to create financial strength
and long-term security.
THE ENVIRONMENT
President Bush, a long-time environmentalist, has taken
strong action to protect the environment. He is working
shoulder-to-shoulder with Interior Secretary Lujan, Energy
Secretary Watkins, and EPA Administrator Reilly on a number of
fronts.
7
ACTION BY THE ADMINISTRATION:
Alaskan oil spill:
A Cabinet-level team was sent to assess the Alaskan oil
spill situation, and a joint federal-state resource
recovery team was convened, with Secretary of
Transportation Skinner now coordinating all efforts.
Coast Guard Commandant Yost has returned to Alaska to
assume personal oversight of developments, and the
National Transportation Safety Board is investigating
the accident itself. Exxon has accepted responsibility
for paying for the cleanup, and for employing local
civilian personnel necessary to control further damage.
In addition to the considerable federal personnel and
equipment already in place, on April 7, the President
announced that Defense Secretary Cheney will make
available U.S. Armed Forces personnel and equipment to
assist in the cleanup. EPA Administrator Reilly will
coordinate the long-range planning to restore the
environment of Prince William Sound, and the President
has ordered a review of existing contingency plans for
accidents such as this. The Departments of Interior,
Commerce and Agriculture, with the State of Alaska,
have begun a scientific assessment of damages to
natural resources. Exxon has provided $15 million in
up-front funding for this effort.
The President has set up a special task force to
address environmental concerns about oil and gas
drilling off the coasts of California and Florida.
Cleaning up hazardous wastes: The President announced he
will be seeking new legislation to give the United States
Government authority to ban all exports of hazardous waste
except where an agreement exists with the receiving country
providing for the safe handling and management of those
wastes.
Also, Secretary of Energy Watkins has put forth a plan of
action to identify and prioritize clean up of defense and
civilian radioactive waste.
Superfund: The President is reinvigorating the Superfund
hazardous waste clean-up program by directing EPA to take a
number of actions, including more aggressive action to force
private parties to clean up sites, stepped-up cost recovery,
and better use of existing emergency cleanup authorities.
EPA is also now finishing a priority review of Superfund to
improve its operation.
Ozone depletion: The President has called for a total
worldwide phaseout of CFCs by the year 2000, provided safe
substitutes are available, in order to prevent further
damage to the earth's protective ozone layer.
8
Clean Air and Acid Rain: The President committed his
Administration to submitting a new Clean Air Act, including
provisions for control of acid rain, ozone, and toxic air
pollutants. Top Administration officials have begun
drafting a bill, in consultation with leaders of Congress.
Clean water and coastlines: The EPA has started a tracking
system for medical wastes and the Justice Department has
started a task force to prosecute these abuses -- the first
step in a comprehensive program to help keep our beaches
clean. The President is committed to end ocean dumping of
sewage sludge by 1991.
Wetlands: The President is committed to "no net loss of
wetlands" and is directing his agencies to work toward that
goal. He has also proposed $206 million in his budget to
expand our parks and wildlife refuges.
FIGHTING DRUGS AND CRIME
With the confirmation of Bill Bennett as Director of
National Drug Control Policy, and the trip by Attorney General
Thornburgh to South America to meet with local leaders with
regard to joint eradication and interdiction efforts, we have
begun a new war on drugs in this country. The President believes
a four-pronged approach is key: education, rehabilitation,
interdiction and enforcement. The policy of this Administration
is "zero tolerance." No amount of illegal drug use is
acceptable. This means dealing with both supply and demand.
ACTION BY THE ADMINISTRATION:
Budget: The Administration is requesting $6 billion in
funding for FY 1990 to fight the drug war, increasing
outlays by nearly $1 billion for drug education, treatment
and enforcement.
Education: The Administration is requesting nearly $1.1
billion for education and prevention efforts. This is a 16
percent increase over 1989, and includes funding for ongoing
programs and new initiatives.
Rehabilitation: Funding for drug abuse treatment will be
increased 18 percent. The Administration is proposing over
$700 million to expand the nation's capacity to provide
treatment, particularly to the indigent, disadvantaged,
youth, and expectant mothers.
Interdiction and enforcement: The Administration is
proposing over $4.1 billion for law enforcement programs in
1990, a 10 percent increase over 1989. This constitutes
about 70 percent of President Bush's proposed drug budget.
Substantial increases are requested in funding to strengthen
inspection, interdiction, intelligence efforts and crop
9
eradication programs, such as Operation Polar Cap, a
federally led effort which broke up a $1.2 billion drug
money-laundering operation. The President strongly supports
the death penalty for drug kingpins who commit drug-related
murders, and will appoint judges who will strongly enforce
the drug penalty laws.
The Administration imposed a temporary suspension of imports
of certain types of semi-automatic weapons, and has
undertaken an emergency study to identify the best means of
reducing drug-related killings and other violent crime.
Public housing: The Bush Administration is working to make
public housing drug free, to protect the rights of the vast
majority of decent, law-abiding public housing residents.
The Department of Housing and Urban Development has acted:
--
To modify its lease and grievance procedures to
facilitate eviction of those involved in drug related
criminal activity;
--
To make drug use and trafficking a lease violation
subject to eviction proceedings;
--
To target federal assistance to anti-drug security
measures;
--
To revoke federal housing subsidies from those dealing
in drugs;
--
To involve the private and voluntary sectors in efforts
to rid public housing of drugs and give residents,
especially young people, a stake in their communities
and their futures.
In addition, the Office of National Drug Control Policy has
responded to the drug emergency in the District of Columbia:
--
A Metropolitan Area Task Force will be expanded, with
57 additional representatives from federal agencies,
and state and local police from D.C., Maryland and
Virginia.
:
More prisons: The federal Bureau of Prisons will take
custody of 250 inmates from the D.C. jail, and work to
locate land for construction of a new prison.
--
Enforcement: The FBI will provide support to D.C.
police in investigations of drug-related murders.
Rehabilitation: The National Institute on Drug Abuse
will provide assistance in local treatment efforts and
will be authorized to establish three new outpatient
clinics by 1990.
--
Prevention: The Department of Education will provide
the District with 50 percent more funds for drug
prevention programs in city schools. The Department of
Labor will work with the business community to increase
job training for youth, and will provide a $100,000
grant to establish employee assistance programs for
drug abuse.
10
WORKING FOR A KINDER, GENTLER AMERICA
CHILD CARE
The changing nature of American society heightens the need
for quality, affordable, accessible child care. President Bush
wants to put choice in the hands of parents so that they -- not
government -- have the power to select the best and safest
environment for their children.
ACTION BY THE ADMINISTRATION:
o
Child care: The President has proposed a child care package,
the "Working Family Child Care Assistance Act of 1989"
which:
--
Provides a new refundable child care tax credit of up
to $1000 per child under four, for low and moderate
income working families.
:
Makes the existing Child and Dependent Care Tax Credit
refundable.
--
Does not discriminate against religious- and family-
based child care.
The President has directed Secretary of Labor Dole to study
the market for liability insurance to determine if liability
issues impair child care.
Head Start: The President has also transmitted legislation
to the Congress which would increase the FY 1990
authorization for Head Start by $250 million; this will pay
for enrollment of up to 95,000 more four-year-olds in the
program.
NATIONAL SERVICE
President Bush has said that "From now on in America, any
definition of a successful life must include serving others."
ACTION BY THE ADMINISTRATION:
Office of National Service: The President established in the
White House the Office of National Service to lead the
Administration's national service movement. This Office
will identify effective community service models and
encourage others to duplicate them across the country. It
will challenge individuals, schools, businesses, civic and
service groups, religious institutions and other entities to
expand existing community service programs and to create new
ones. The goal of this Office is to make service to others
a central part of every American's life, and in so doing, to
help to ameliorate the urgent ills which fray the fabric of
American society. The Office will recommend changes in
national social and economic policy to promote and encourage
11
service, including tort law reform, welfare law reform and
housing, to name a few.
Presidential Proclamation: In signing the proclamation
commemorating National Volunteer Week, April 9-15, the
President challenged every American who cares about the
future of this country to engage in some meaningful form of
community service. He awarded 18 Presidential Awards to
those chosen from nearly 2000 applications -- to winners who
embody the ideals of goodness, compassion and concern for
others.
WELFARE REFORM
The Administration has developed a major new education and
job training program to help recipients of Aid to Families with
Dependent Children move off welfare and become economically self-
sufficient.
ACTION BY THE ADMINISTRATION:
Welfare reform: The Administration issued proposed rules on
April 18 to implement the major provisions of the Family
Support Act of 1988. The proposed rules are designed to:
:
Target job training assistance to those who are most
likely to benefit and who are most at risk for long-
term welfare dependency.
:
Provide maximum level of flexibility to AFDC parents in
obtaining the type of child care that best suits their
needs, consistent with the Administration's legislative
proposals on child care.
JOBS Program: The Administration is proposing to spend $3.3
billion over the next five years implementing the JOBS
program. The changes will pay benefits in the future by
reducing the number of individuals on welfare. It is
estimated that 138,000 families will be able to leave
welfare rolls over the next five years as a result of this
program.
EXPANSION OF MEDICAID
The Administration is committed to health care for the
disadvantaged, calling for full funding of Medicaid, $37.6
billion for FY 1990, an increase of $3.3 billion, or 9.6 percent
over the FY 1989 level.
ACTION BY THE ADMINISTRATION:
o
Expanding Medicaid: On April 18, the Administration
forwarded to Congress proposed legislation to make federal
programs better serve pregnant women, infants and children.
The legislation would expand significantly the population
12
Medicaid serves, making Medicaid available to 1.9 million
more women when they became pregnant. The legislation
would:
Increase by 374,000 the number of pregnant women and
children eligible for Medicaid.
Foster greater participation in Medicaid by eligible
pregnant women by providing services to pregnant women
who are presumed eligible for Medicaid before a formal
eligibility determination is made; and by requiring
States to operate outreach programs in areas of high
infant mortality.
--
Entitle all children under age 6 who are receiving Food
Stamps to Medicaid coverage for immunizations.
:
Make the Federal match rate for State administration
expenses a uniform 50 percent by gradually reducing
special administrative match rates ranging from 75 to
100 percent. The savings that would result would allow
the legislative eligibility changes proposed by the
President to be implemented within the current
program's spending level.
HOUSING/HOMELESSNESS
President Bush has taken a number of steps to create an
"opportunity society" of jobs, growth, housing and hope for
Americans in need of a helping hand.
ACTION BY THE ADMINISTRATION:
Homelessness: A proposal to provide over $1 billion in
federal resources to help end homelessness and pave the way
to jobs, permanent housing, health care and human dignity.
President Bush's proposal calls for fully funding the
McKinney Homeless Assistance Act and for a new $50 million
matching grant program to promote public/private
partnerships to assist homeless families and the mentally
ill.
Enterprise zones: A call for enactment of enterprise zone
legislation, to give urban and rural areas the opportunity
for jobs and hope for the future. President Bush asked
Congress to enact labor and capital-based incentives to
create jobs and entrepreneurial activity in our most
distressed communities.
Affordable housing: A commitment to making housing more
affordable for low-income families, and to provide
homeownership opportunities to the poor and young families
just starting out. President Bush proposes to assist
109,000 new families in need of low-income housing, and has
pledged to maintain assistance to those families already
being helped. President Bush has also signalled his
commitment to empowering poor residents of public housing to
become homeowners through resident management and ownership
of public housing.
13
ETHICS AND CIVIL RIGHTS
High ethical standards and civil rights for all Americans
are central to this Administration, and we will enforce them --
strictly, comprehensively, fairly, and to the letter and spirit
of the law.
ACTION BY THE ADMINISTRATION:
O
Ethics: The President issued an Executive Order creating
the President's Commission on Federal Ethics Law Reform. On
March 9, the Commission filed its report and its
recommendations to the President. Legislation was sent
April 12th to the Congress, and the President issued an
Executive Order announcing ethical principles for the
conduct of executive branch employees. The President's
proposals include:
-- A ban on outside earned income for non-career
Presidential appointees in the executive branch,
including all employees in the immediate White House
Office.
-- Expanded financial disclosure for all three branches of
government.
--
Prohibition of the conversion of political
contributions for personal or office use.
--
A comprehensive review of federal campaign finance
laws, including an assessment of the impact of PACs on
parties, competition and political debate. The
President believes that PAC contributions to candidates
should be eliminated, and he will be consulting with
the Congress on this issue. President Bush is also
opposed to federal funding of congressional campaigns.
Deferral of tax liability when an individual is
required by his or her agency to divest assets in order
to avoid conflicts of interest.
--
Strengthened rules against abusing the revolving door
for private gain at the expense of the public trust.
These rules also apply to the legislative branch.
--
A 25 percent pay raise for federal judges was proposed
in separate legislation submitted April 12, while the
ethics reform legislation restricts their acceptance of
honoraria. President Bush believes that honoraria for
Members of Congress should be banned; however, the
President will not formalize that proposal until after
he consults with Congress on that issue and their pay
raise. He will include in that discussion the question
of a pay increase for certain executive branch
positions.
--
The extension of the Independent Counsel statute to
cover the Congress.
--
The extension of the federal statute that prohibits
employees from taking actions that enhance their own
financial interest to cover legislative and judicial
branch employees.
14
--
The establishment of an independent ethics office for
the Congress, to be headed by a clearly nonpartisan
official, confirmed by both houses.
--
The application of the existing one-year post-
employment "cooling-off" period for senior executive-
branch employees to the legislative and judicial
branches.
Whistleblower protection: The President supports public
servants who revere the trust placed in them by the American
people. On April 10, the President signed S. 20, the
"Whistleblower Protection Act of 1989." " This law will
strengthen the protections and procedural rights available
to those federal employees who report misdeeds and
mismanagement.
:
This new law will enhance the authority of the Office
of Special Counsel, and whistleblowers will also now be
allowed to take their cases to the Merit Systems
Protection Board.
--
The statute alters the legal burdens of proof, making
it easier for employees to be vindicated when they are
wrongfully penalized by their supervisors for
whistleblowing activities.
Civil rights: The Administration has taken a number of
actions to protect the civil rights of all Americans,
including several court actions in key civil rights cases.
--
On March 8, the Department of Justice endorsed the
objectives of the Hate Crimes Bill and voiced no
opposition to the bill's enactment. The Hate Crimes
Bill provides for the collection of data about crimes
motivated by race, religion, ethnicity or sexual
orientation.
--
On March 13, Attorney General Thornburgh announced the
filing of Federal housing discrimination lawsuits
seeking monetary damages and civil penalties under the
expanded enforcement authority of the Fair Housing
Amendments Act of 1988.
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