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Tony Snow Subject Files
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foia Number:
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Record Group/Collection:
George H.W. Bush Presidential Records
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Speechwriting, White House Office of
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Snow, Tony, Files
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Subject File, 1988-1993
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13894-007
Folder Title:
[Economic Memoranda, 11/91-3/92]
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2
THE WHITE HOUSE
WASHINGTON
NOVEMBER 27, 1991
MEMORANDUM TO SPEECHWRITERS AND RESEARCHERS
FROM
TONY SNOW
AS
REGARDING
ECONOMIC SPEECHES NEXT WEEK
I know many of you have been wondering just how we ought to
handle upcoming speeches on the economy. We generally have three
goals: First, to reassure people that the President knows what's
happening; Second, that he cares; third, that he has a plan for
getting changes enacted; and fourth, in the interim he will do
whatever he can unilaterally to prod the economy.
David has put together a couple of pages of talking points
to cover these themes. I'm enclosing them. Feel free to augment
them in whatever ways you can. I'm also enclosing a paragraph
from a statement the President will deliver tomorrow. This
statement MUST remain close-hold. No one outside should get wind
of it. This is especially true of any member of Congress or any
member of the press.
The paragraph, which may be subject to revision, goes like
this: "Now, I know we're about to enter an election year. And I
know that both parties will spend a lot of time taking tough
shots at one another. In our system of government, the
opposition will attack the President aggressively. There is
nothing new about this. But when people are hurting, a President
must find ways to get the job done.
"Congress has just left town, after a particularly bitter
session. While many people -- including me -- would have liked
to see Congress take constructive action on the economy, we now
have a few weeks in which elected officials can cool off, hear
from their constituents, and frame an effective plan of action.
This time can help us build a foundation for greater prosperity.
When I give the State of the Union Address in January, I will ask
Congress to lay aside election-year politics at least long enough
to enact a common-sense set of economic reforms. I will ask
politicians to set aside their personal ambitions at least long
enough to do their jobs. Afterward, as the election season
unfolds, partisan poltics will flare up again
2
The point is that POTUS is issuing a kinder, gentler
challenge to get the job done, and will offer an implicit appeal
for members of Congress to grow up.
Use these notions as a guideline for next week's speeches,
and keep in mind our goals: To enable the President to reassert
leadership over the domestic agenda, and especially the economy.
Talking Points on the economy -- draft 1
PRESIDENT BUSH CARES AND UNDERSTANDS
The President cares about Americans who are hurting, and
understands the problems a sluggish economy causes for America's
families.
In just the past few weeks he has listened to the concerns
and ideas of America's workers, small business owners, bankers,
hispanic Americans, large corporation CEOs, Congressmen,
Senators, state legislators, the media, mayors, the Cabinet, and
just plain everyday Americans.
Over the past three years, he has stayed in touch with the
American people more than any other President in American
history. He has listened to people in forty-eight states over
the past three years, from construction workers in Los Angeles to
factory workers in Dallas, Texas.
No other President has been more engaged with the American
people -- either face-to-face in meetings or events, or through
his commitment to full and open access by the media.
PRESIDENT BUSH IS COMMITTED TO ACTION ON THE ECONOMY,
CONGRESS IS NOT
The President is leaving no stone unturned in considering
further possible options to stimulate economic growth.
But the facts are,
The President has taken action already, and is prepared to
take further action to spur economic growth.
Standing before the Congress, and in speeches before
hundreds of communities and organizations all over the country,
the President has called on the Congress to enact specific
measures to stimulate economic growth.
Congress has not acted upon the President's agenda, nor has
it sent him an alternative.
PRESIDENT BUSH IS COMMITTED TO PRUDENT ACTION,
NOT QUICK-FIX COUNTERPRODUCTIVE POLITICS
As opposed to some in the Congress, the President is
determined that any actions taken must not undermine some of the
positive fundamentals that are in place in the economy such as:
low inflation, low interest rates, productivity gains, and solid
job-creating export growth.
The President has spelled out a long-term strategy for
economic growth early in his Presidency that holds up well. It
is founded upon several important principles:
get the deficit down and abide by the budget agreement
keep inflation under control
*
keep interest rates down
*
keep America's businesses competitive by:
- keeping regulatory red tape to a minimum
- enacting real tort reform
- improving eduction and training
*
opening foreign markets to American goods and services
In the short-term, the President has repeatedly called on
the Congress to act on:
*
a capital gains tax cut to stimulate job-creating
investment
*
a permanent research and development tax credit to create
new job-creating technologies
IRAs for first-time home buyers to stimulate the housing
market
a responsible transportation bill to create jobs and
rebuild our infrastructure
banking reform legislation to make our banks more
competitive
Many Americans want to know what we are doing right now -- while
people are going through some tough times.
Here in Washington D.C., there are two kinds of steps that can be
taken -- steps that the Congress and the President can take
together, and steps the President can take on his own -- without
the Congress.
I sent to the Congress on [date] on [date] and on [date]
proposals to stimulate economic growth. That is a fact.
Congress has adjourned without sending to me an economic growth
package. That is also a fact.
When Congress returns I will send to them again proposals for
economic growth.
In the meantime, the American people shouldn't have to wait for
the Congress to return to see that their government is serious
about the nation's problems. And while the most comprehensive
actions occur when Congress and the President work in concert, I
will not wait for Congress to return either.
Yes, we have an agenda for growth and I'm certainly prepared to
take further steps to get this economy on the move again.
There are certain steps that I will take unilaterally to ensure
that we leave no stone unturned in our efforts to stimulate
economic growth.
DOT - I will sign the just passed transportation bill as soon as
it physically reaches my desk. I will direct Secretary Sam
Skinner to expedite approvals for job-intensive transportation
projects and get the money for those projects moving out to the
states immediately.
DOL - I am directing Secretary of Labor Martin to sit down with
the leaders of organized labor, as well as our nation's business
leaders to streamline the more than XX billion that we are
spending on our unemployment and extended benefits programs.
These checks are important
HHS - safety net programs
SBA - loans for small businesses
AG - supplemental
FEMA - disaster money into the pipeline quicker
February 27, 1992
MEMORANDUM FOR DAVE DEMAREST
FROM:
JENNIFER GROSSMAN
SUBJECT:
TOP TEN EXCUSES WHY CONGRESS CAN'T PASS THE
PRESIDENT'S PACKAGE BY MARCH 20
Number Ten:
"Don't want to overwork the interns."
Number Nine:
"Still balancing my checkbook." "
Number Eight:
"I've fallen on my new marble floor, and I can't
get up. "
Number Seven:
"Still waiting for my White House cufflinks."
Number Six:
"It might help President Bush."
Number Five:
"Someone hid the gavel. "
Number Four:
"Let's give sanctions more time.' "
Number Three:
"Don't want to ruin our reputation."
Number Two:
"still sore over Lawrence Welk Museum."
Number One:
"Oh, we didn't know you meant this year. If
OTHER ENTRIES:
Bob Simon:
"Had to take time out for Groundhog Day Recess."
"Urgent fact-finding mission to Stockholm to visit Swedish
Bikini Team."
"Forgot to drink our prune juice."
"Had too many big words in it."
THE WHITE HOUSE
WASHINGTON
March 2, 1992
MEMORANDUM FOR DAVID DEMAREST
SPEECHWRITERS
RESEARCHERS
FROM:
MICHELE NIX
SUBJECT:
NEW NUMBERS FOR STATE EXPORTS/EMPLOYMENT
Early last week I received information from Commerce re
state export/employment figures for Georgia. Research had
earlier received likewise data from USTR. The numbers didn't
match.
I put in a call to David Walters, chief economist at USTR,
about this problem -- which all too often occurs. He apologized,
saying that the President shouldn't be receiving two different
sets of info. Commerce, Walters explained, wields data from 1987
figures -- the latest data we have in most cases. USTR believes
that the President should not have to quote figures from when he
wasn't even President and that are often not the best numbers
available -- so USTR prefers to make reasoned estimates.
Walters arranged a meeting last week with two big wheels at
Commerce: Tony Villamil, their chief economist; and Mark Plant,
the Under Secretary for Economic Affairs. A policy decision was
made: to have the President use up-to-date estimated figures --
with the understanding that we would be sure to use the word
"estimated" in these cases.
Walters is one of the few departmental "number" people who
seem to understand what these numbers are used for -- the impact
they can have, and how they can be called into question if
inaccurate. Walters did a terrific job at pulling this all
together for us at the last minute and helping us rework the new
and improved numbers for Georgia.
His staff is working with Commerce to do the same for the
remaining states -- which should be ready early this week.
Researchers: Any questions you may have about your speeches for
this week, give David Walter's a call.
I've attached a copy of a memo I received from Walters,
which outlines the new policy.
FEB 27 92 16:33 FROM US TRADE REP
PAGE. 001
Instructions to Sender: Please be certain all shaded areas are completed and no staples.
FACSIMILE COVER SHEET
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C. 20506
Clearance (to Geneva)
Time Sent
Date
2127
C.D. Log Number
Number of Pages Excluding Cover
2
TO: NAME:
AGENCY:
PHONE #:
FAX #:
Steve Farrar White House
( ) 456-23151
)
456-7739
Michele Mix Whiteltouse
( 1456-77501 ) 456-6218
Tony Villamil Commerce
( )377-8181 ( ) 377-3726
Mark Plant Commerce
{ ) 371-3727 ( )377 0432
( )
( )
( )
( )
FROM: David Walters
PHONE:
(202) 395-3026
FAX #:
(202)395 Visa 3583
CONTACT:
If There are any problems please call: (202)395- 3.026
SUBJECT:
FEB 27 '92 16:34
FROM US TRADE REP
PAGE.002
OFFICE OF THE UNITED STATES
TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT
WASHINGTON
20506
February 27, 1992
Memorandum To: Michele Nix, White House Speech Writing
From:
David Walters, Chief Economist, USTR
Subject:
Data on State Exports and Related Employment
This memorandum describes an understanding I have reached with
Tony Villamil, the Chief Economist at Commerce and with the
concurrence of Commerce's Acting Under Secretary for Economic
Affairs, Mark Plant.
In order for the President to have reasonable, up-to-date
estimates of state exports and related employment, USTR and
Commerce have agreed to the development of estimates for 1991,
based on data for 1987, the most recent year available from the
Bureau of the Census.
At your request, USTR has made such estimates for Georgia. They
are provided, along with a description of the method of
estimation, at the end of this memorandum. USTR is currently
developing similar estimates for all 50 states. These estimates
should supersede estimates for 1990 circulated earlier.
Because the 1991 figures are based on 4-year extrapolations of
available data, both USTR and Commerce agree that they should be
carefully and accurately characterized as "estimates" when used.
In addition, the Commerce Department has a strong preference that
they be referred to as "estimates based on national trends."
Any technical questions about estimates should be addressed to:
David Walters
or
Tony Villamil
Chief Economist
Chief Economist
USTR
U.S. Department of Commerce
(202) 395-3583
(202) 377-8181
In regard to the President's use of state export numbers, Dr.
Villamil has suggested that someone check with local Chambers of
Commerce as they sometimes produce estimates of state exports and
related employment already in significant circulation in the
state.
writer
FYI
THE WHITE HOUSE
WASHINGTON
March 2, 1992
MEMORANDUM TO: DAVE DEMAREST
FROM:
CLAYTON YEUTTER
C
Dave, attached are some comments by James Morgan, CEO of a high
tech firm in Santa Clara, California, that might be of value to
your speechwriting corps. In four succinct pages, he does a
great job of laying out the case for American exports and
American industrial productivity.
Morgan is also the author of a book, "Cracking the Japanese
Market -- Strategies for Success in the New Global Economy,"
which has had considerable attention this past year.
CY:lfl
Attachment
James C. Morgan
Chairman & CEO
Applied Materials, Inc.
Remarks to the Congressional Competitiveness Caucus
Hyatt Hotel, San Jose, CA
January 23, 1992
On behalf of the American Electronics Association, I would like to welcome the Congressional
Competitiveness Caucus to Silicon Valley. I am delighted to be here because this is the first time in
my recollection when so many parts of our governmental and business communities have gathered
together in one place to focus on what I believe is the most important issue of this decade - America's
competitive capability.
Many of us in this room have contributed, individually and collectively, to improving America's
competitive position. But what we have done to date is not enough and we clearly have an
opportunity to do more.
I say we have an opportunity to do more, because the next couple of decades could offer one of the
greatest periods of economic advancement in the history of the world. As I have traveled this past
year in Asia, Europe and the former East Block, and from what we see happening in Latin America,
Africa and elsewhere, it is obvious we are entering a new era of opportunity. Today in the San Jose
Mercury News I noticed an article about capitalism developing in Chile. Unimaginable even five
years ago, democratic capitalism seems to be breaking out everywhere. As a result, we are now
seeing the confluence of peace, democracy, capitalism and global trade all contributing to great
expansion of the global economy.
If we consider the international market opportunity for just electronics products and services, an
industry many of us are in, there are estimates that show the growth of the world market from over
$750 billion today to over $2 trillion by the year 2000. This is a sunrise industry and already an
industry providing us the most jobs. If America can maintain its share of these world markets, we
could see a tripling of the number of jobs during this 10-year period. Just think of the revenue
available from the taxes that this economic growth would provide.
Page 2
The question we have to ask ourselves is, can America participate in this historic opportunity?
According to the nightly news, we've already lost the game. Every day the news media highlights
what's wrong with America; sending the message that we can't compete, that we are in a state of
decline, that the American Century is over. If we let ourselves believe only the doom and gloom, we
lose sight of our great potential.
Despite all the changes which have taken place in the world, the United States still has the largest
market in the world and is the most potent economic engine on earth. Unlike other nations, we are a
pluralistic, inclusive society, comprised of many cultures and nationalities. Often overlooked, this
quality enables us to interact effectively with our neighbors around the world - more effectively than
any other country.
You need look no further than this room for proof that Silicon Valley represents one of the largest
and best commercial and research centers in the world, with an entrepreneurial culture that our
competitors envy. Silicon Valley can use its great strengths and provide part of the leadership that
will be required to improve America's worldwide competitive position. This will only be possible,
however, if there is leadership at the state and national level to focus on expanding world trade - to
grow the global economy for all.
If we are to participate in the coming golden age of global commerce, the bottom line is America
must get serious about manufacturing and trade.
We must understand how the ground rules for economic competition have changed. No longer are
the endowments of natural resources and a large home market the major influence. Changes in
information technology and transportation coupled with the mobility of capital and knowledge means
any region in the world can build the capability to participate in the opportunity provided by world
trade.
Those of us who have visited the remnants of the East Block know how important it is to actively
compete in the global economy. Only by competing do we understand the global standard for each
activity. We will earn no measure of comfort by isolating ourselves and our markets from the test of
lively competition. Replacing the Iron Curtain with a Silicon Curtain will result only in sick,
atrophied companies. Instead, we must resolve that each of our industries must compete effectively
against the best in the world.
Page 3
In order to actively participate in the giant economic opportunity that lies ahead, it is obvious we
must marshal and refocus America's resources and develop a clear-cut direction. But most important
we must develop a collective will.
Let me suggest a few ways we can do that:
First, American companies must learn to effectively cooperate and compete at the same time. That
will require some relaxation of anti-trust laws and some legal reforms. And the debate about whether
small companies or large companies can contribute most to an American economic renaissance is, to
put it plainly, stupid. Instead of beating that dead horse, we should focus on how the best U.S.
companies can compete effectively by making a unique and significant contribution, whether they are
large established firms or small start-ups. Each company must see its place as part of an effective
ecosystem. Each company then must address its own opportunities and challenges in the
international market place. And through some of the techniques used by our better competitors, both
in the United States and around the world, we need to keep our focus on quality, customer service,
cycle time reduction, and learning how to empower and effectively employ the work force.
Secondly, government and industry must work together to expand markets inside the United States,
while aggressively working to pry open foreign markets. For instance, we can stimulate the entire
U.S. silicon food chain by stimulating high volume electronics manufacturing. End markets for
electronic products create end markets for semiconductors, which creates end markets for
semiconductor production equipment, and materials. By encouraging the rapid adaptation of new
technologies in the fields of telecommunication, information, automotive and education, we could
provide both an opportunity to improve our productivity and competitive position in the world and
greatly expand our own markets, up- and downstream.
The third step would be to significantly accelerate the development of technology in the emerging
fields of electronics, automation, biotechnology, materials, transportation and the environment. It is
in these and other sunrise industries where the greatest net gains can be made in jobs and tax
revenues. If we have learned anything in recent years, it must be that it does matter what we make.
(When is the last time you saw someone pay $100 or even $1 for a potato chip?)
Page 4
Fourth, government and industry must work more closely together to establish an environment
which encourages long term investment and the development of our industrial base. We need a
U.S. business environment that is conducive and supportive of our key industries. We need a legal
and regulatory climate that lowers, not raises, the risks of doing business in the U.S. We need to cut
the federal deficit and lower the cost of capital to U.S. companies. We need steps to stimulate
investment in R&D, equipment and worker retraining.
And finally, we should test every action by both government and industry against a single powerful
question: Does that action - policy, regulation, trade position - help or hurt our long term global
competitive posture. If each of us can return to our respective offices and begin to examine all we do
against that question, I believe the results will be miraculous. It is the only litmus test that matters.
Now, by making these recommendations, it may sound as if industry is coming, hat in hand, to ask
for government's help. I don't see these issues that way. As businessmen and women engaged in a
fierce global competitive battle, shouldn't we expect our government to provide us with a work force
that can read and write the world's business language - English? Shouldn't we expect our
government to provide quality services and make cycle time reductions to improve efficiency in areas
that impact on our organizations? As a right, shouldn't we expect a cost of capital that is competitive
in the world market places? And shouldn't we expect cooperation instead of confrontation from our
government? As a nation, we can no longer abuse the goose that lays the golden eggs and expect to
feed ourselves in the future.
I challenge the media to test the actions of our industry and government against the criteria does it
help or hurt our long term global competitive posture.
Yes there is the very real potential for exceptional economic opportunity in the decade ahead. But it
will not be easy for America. Clearly, we have global competitors who have taken the time to
understand the new global economy, who have focused on developing an educated work force, who
have focused on expanding markets in their own economy, who have provided their sunrise
industries with reduced capital costs, and who have learned to simultaneously cooperate and compete
effectively, in order to ensure a successful future for their children. Clearly, with the world's largest
economy with a diversified work force and highly capable leadership we should demand no less of
ourselves in the pursuit of America's future.
THE WHITE HOUSE
WASHINGTON
March 2, 1992
MEMORANDUM TO WRITERS/RESEARCHERS
FROM:
DAN MC GROARTY Muh
SUBJECT:
SHORT NOTES ON TRIP SPEECHES
A few short notes on the trip speeches, written well after
the fact:
S.F. Fundraiser -- 12 applause lines. POTUS came, he ate, he
spoke: all momentum was gone with the second course. The same
speech, delivered that evening at the L.A. event, pulled a 24 on
the applause-O-meter.
A.G.C. -- Good solid speech with plenty to say to the A.G.C.
crowd. Best crowd reaction: term limits, veto threat -- lawyers
section throughout. This group actually applauded a fact: the
number of lawsuits filed annually. //
Spurs event -- An 11-card speech for a 6 card event. A hot gym,
filled with kids who'd just stopped playing basketball and
couldn't take their eyes off David Robinson. All the points of
light stuff was lost on them. We could have scored better by
scripting a POTUS-to-kids anti-drug challenge or pledge,
generated a little interaction with the kids, etc.
Georgia G.O.P. -- A good, active crowd. Elapsed time from
motorcade to podium: about 5 minutes. 26 applause lines -- many
borrowed from the S.Carolina Southern Republican speech. They
worked just as well in Georgia!
Savannah Riverfront -- we reworked this one to fit the rally
format, with the President's instructions to pattern it after the
Georgia G.O.P. Once again -- a pattern forming? -- the elapsed
time from motorcade to podium was probably less than 10 minutes.
*Next-day speeches kept me from the Drug Summit Toast, the
L.A. fundraiser and Houston Livestock Show event.
General notes:
1) The President, Mrs. Bush and senior staff continue to measure
the success of a speech by the number of applause lines. The
President interprets long stretches of silence as a failure on
his part to connect. From the podium, nodding heads may be
nodding off. Let's face it, applause lines are a kind of
currency. In the California speeches, the defense-technology
sections were essentially narrative. In spite of the fact these
sections conveyed the most specific California-targeted message,
the President thought they "dragged."
2) POTUS' performs better when the next speech picks up the best
lines from the last speech. If we keep feeding him New!
Improved! language -- we only out-smart ourselves. When he knows
his way around a speech, he begins to vary the rhythm, work the
good lines -- all the things we want to see him do. Remember:
the wheel's still round after all these years.
# # #
THE WHITE HOUSE
WASHINGTON
March 2, 1992
MEMORANDUM TO WRITERS/RESEARCHERS
FROM:
DAN MC GROARTY Much
SUBJECT: SHORT NOTES ON TRIP SPEECHES
A few short notes on the trip speeches, written well after
the fact:
S.F. Fundraiser -- 12 applause lines. POTUS came, he ate, he
spoke: all momentum was gone with the second course. The same
speech, delivered that evening at the L.A. event, pulled a 24 on
the applause-O-meter.
A.G.C. -- Good solid speech with plenty to say to the A.G.C.
crowd. Best crowd reaction: term limits, veto threat -- lawyers
section throughout. This group actually applauded a fact: the
number of lawsuits filed annually. //
Spurs event -- An 11-card speech for a 6 card event. A hot gym,
filled with kids who'd just stopped playing basketball and
couldn't take their eyes off David Robinson. All the points of
light stuff was lost on them. We could have scored better by
scripting a POTUS-to-kids anti-drug challenge or pledge,
generated a little interaction with the kids, etc.
Georgia G.O.P. -- A good, active crowd. Elapsed time from
motorcade to podium: about 5 minutes. 26 applause lines -- many
borrowed from the .Carolina Southern Republican speech. They
worked just as well in Georgia!
Savannah Riverfront -- we reworked this one to fit the rally
format, with the President's instructions to pattern it after the
Georgia G.O.P. Once again -- a pattern forming? -- the elapsed
time from motorcade to podium was probably less than 10 minutes.
*Next-day speeches kept me from the Drug Summit Toast, the
L.A. fundraiser and Houston Livestock Show event.
General notes:
1) The President, Mrs. Bush and senior staff continue to measure
the success of a speech by the number of applause lines. The
President interprets long stretches of silence as a failure on
his part to connect. From the podium, nodding heads may be
nodding off. Let's face it, applause lines are a kind of
currency. In the California speeches, the defense-technology
sections were essentially narrative. In spite of the fact these
sections conveyed the most specific California-targeted message,
the President thought they "dragged."
2) POTUS' performs better when the next speech picks up the best
lines from the last speech. If we keep feeding him New!
Improved! language -- we only out-smart ourselves. When he knows
his way around a speech, he begins to vary the rhythm, work the
good lines -- all the things we want to see him do. Remember:
the wheel's still round after all these years.
# # #
THE WHITE HOUSE
WASHINGTON
March 2, 1992
MEMORANDUM TO WRITERS/RESEARCHERS
FROM:
DAN MC GROARTY Muh
SUBJECT: SHORT NOTES ON TRIP SPEECHES
A few short notes on the trip speeches, written well after
the fact:
S.F. Fundraiser -- 12 applause lines. POTUS came, he ate, he
spoke: all momentum was gone with the second course. The same
speech, delivered that evening at the L.A. event, pulled a 24 on
the applause-O-meter.
A.G.C. -- Good solid speech with plenty to say to the A.G.C.
crowd. Best crowd reaction: term limits, veto threat -- lawyers
section throughout. This group actually applauded a fact: the
number of lawsuits filed annually. //
Spurs event -- An 11-card speech for a 6 card event. A hot gym,
filled with kids who'd just stopped playing basketball and
couldn't take their eyes off David Robinson. All the points of
light stuff was lost on them. We could have scored better by
scripting a POTUS-to-kids anti-drug challenge or pledge,
generated a little interaction with the kids, etc.
Georgia G.O.P. -- A good, active crowd. Elapsed time from
motorcade to podium: about 5 minutes. 26 applause lines -- many
borrowed from the S.Carolina Southern Republican speech. They
worked just as well in Georgia!
Savannah Riverfront -- we reworked this one to fit the rally
format, with the President's instructions to pattern it after the
Georgia G.O.P. Once again -- a pattern forming? -- the elapsed
time from motorcade to podium was probably less than 10 minutes.
*Next-day speeches kept me from the Drug Summit Toast, the
L.A. fundraiser and Houston Livestock Show event.
General notes:
1) The President, Mrs. Bush and senior staff continue to measure
the success of a speech by the number of applause lines. The
President interprets long stretches of silence as a failure on
his part to connect. From the podium, nodding heads may be
nodding off. Let's face it, applause lines are a kind of
currency. In the California speeches, the defense-technology
sections were essentially narrative. In spite of the fact these
sections conveyed the most specific California-targeted message,
the President thought they "dragged."
2) POTUS' performs better when the next speech picks up the best
lines from the last speech. If we keep feeding him New!
Improved! language -- we only out-smart ourselves. When he knows
his way around a speech, he begins to vary the rhythm, work the
good lines -- all the things we want to see him do. Remember:
the wheel's still round after all these years.
# # #
THE WHITE HOUSE
WASHINGTON
March 2, 1992
MEMORANDUM TO WRITERS/RESEARCHERS
FROM:
DAN MC GROARTY muh
SUBJECT:
SHORT NOTES ON TRIP SPEECHES
A few short notes on the trip speeches, written well after
the fact:
S.F. Fundraiser -- 12 applause lines. POTUS came, he ate, he
spoke: all momentum was gone with the second course. The same
speech, delivered that evening at the L.A. event, pulled a 24 on
the applause-O-meter.
A.G.C. -- Good solid speech with plenty to say to the A.G.C.
crowd. Best crowd reaction: term limits, veto threat -- lawyers
section throughout. This group actually applauded a fact: the
number of lawsuits filed annually. //
Spurs event -- An 11-card speech for a 6 card event. A hot gym,
filled with kids who'd just stopped playing basketball and
couldn't take their eyes off David Robinson. All the points of
light stuff was lost on them. We could have scored better by
scripting a POTUS-to-kids anti-drug challenge or pledge,
generated a little interaction with the kids, etc.
Georgia G.O.P. -- A good, active crowd. Elapsed time from
motorcade to podium: about 5 minutes. 26 applause lines -- many
borrowed from the .Carolina Southern Republican speech. They
worked just as well in Georgia!
Savannah Riverfront -- we reworked this one to fit the rally
format, with the President's instructions to pattern it after the
Georgia G.O.P. Once again -- a pattern forming? -- the elapsed
time from motorcade to podium was probably less than 10 minutes.
*Next-day speeches kept me from the Drug Summit Toast, the
L.A. fundraiser and Houston Livestock Show event.
General notes:
1) The President, Mrs. Bush and senior staff continue to measure
the success of a speech by the number of applause lines. The
President interprets long stretches of silence as a failure on
his part to connect. From the podium, nodding heads may be
nodding off. Let's face it, applause lines are a kind of
currency. In the California speeches, the defense-technology
sections were essentially narrative. In spite of the fact these
sections conveyed the most specific California-targeted message,
the President thought they "dragged."
2) POTUS' performs better when the next speech picks up the best
lines from the last speech. If we keep feeding him New!
Improved! language -- we only out-smart ourselves. When he knows
his way around a speech, he begins to vary the rhythm, work the
good lines -- all the things we want to see him do. Remember:
the wheel's still round after all these years.
# # #
THE WHITE HOUSE
WASHINGTON
March 2, 1992
MEMORANDUM TO WRITERS/RESEARCHERS
FROM:
DAN MC GROARTY much
SUBJECT: SHORT NOTES ON TRIP SPEECHES
A few short notes on the trip speeches, written well after
the fact:
S.F. Fundraiser -- 12 applause lines. POTUS came, he ate, he
spoke: all momentum was gone with the second course. The same
speech, delivered that evening at the L.A. event, pulled a 24 on
the applause-O-meter.
A.G.C. -- Good solid speech with plenty to say to the A.G.C.
crowd. Best crowd reaction: term limits, veto threat -- lawyers
section throughout. This group actually applauded a fact: the
number of lawsuits filed annually. //
Spurs event -- An 11-card speech for a 6 card event. A hot gym,
filled with kids who'd just stopped playing basketball and
couldn't take their eyes off David Robinson. All the points of
light stuff was lost on them. We could have scored better by
scripting a POTUS-to-kids anti-drug challenge or pledge,
generated a little interaction with the kids, etc.
Georgia G.O.P. -- A good, active crowd. Elapsed time from
motorcade to podium: about 5 minutes. 26 applause lines -- many
borrowed from the S.Carolina Southern Republican speech. They
worked just as well in Georgia!
Savannah Riverfront -- we reworked this one to fit the rally
format, with the President's instructions to pattern it after the
Georgia G.O.P. Once again -- a pattern forming? -- the elapsed
time from motorcade to podium was probably less than 10 minutes.
*Next-day speeches kept me from the Drug Summit Toast, the
L.A. fundraiser and Houston Livestock Show event.
General notes:
1) The President, Mrs. Bush and senior staff continue to measure
the success of a speech by the number of applause lines. The
President interprets long stretches of silence as a failure on
his part to connect. From the podium, nodding heads may be
nodding off. Let's face it, applause lines are a kind of
currency. In the California speeches, the defense-technology
sections were essentially narrative. In spite of the fact these
sections conveyed the most specific California-targeted message,
the President thought they "dragged."
2) POTUS' performs better when the next speech picks up the best
lines from the last speech. If we keep feeding him New!
Improved! language -- we only out-smart ourselves. When he knows
his way around a speech, he begins to vary the rhythm, work the
good lines -- all the things we want to see him do. Remember:
the wheel's still round after all these years.
# # #
copy writers
This speech
REMARKS BY
has a nice
SECRETARY JACK KEMP
easy flow to
it, sounds
natural
AX
AND URBAN DEPARTMENT U.S. URBAN * DEVELOPMENT OF HOUSING
at the
HARVARD UNIVERSITY
JOHN F. KENNEDY SCHOOL OF GOVERNMENT
CAMBRIDGE, MASSACHUSETTS
MARCH 18, 1992
Thank you very much, AI Carnesale, for that very kind introduction and thanks
for that warm welcome to Harvard's John F. Kennedy School of Government.
It's an honor to return once again to this world-famous forum. And it's a
pleasure to return to a state whose Governor says he's a "supply-sider." Bill Weld is
turning conventional wisdom on its head. He's responding to Massachusetts' fiscal crisis
not by raising taxes but by cutting them; not by redistributing wealth, but by
encouraging the creation of new wealth. He wants to turn this entire state into a "free
enterprise zone" by phasing out the capital gains tax and helping low-income men and
women recapture the American Dream of jobs, homes, equal opportunity,
entrepreneurship, and ownership. And thanks to Joe Malone and his new program for
homeownership, Massachusetts is on the move.
In other states, governors are dealing with fiscal crises of their own creation with
policies that punish poor people. In New Jersey, the Governor is proposing to deny very
low-income welfare mothers additional benefits to support newborn children. What a
different vision of how to help low-income Americans. Instead of jobs, education,
opportunity, and incentives, some on the Left and on the Far Right are advocating -
albeit unwittingly -- 18th Century Social Darwinism "survival of the fittest."
When I last spoke here, I explained the Bush Administration's ideas for fighting
poverty. Since then, we've extracted from Congress some modest funding to begin a
radical redirection of American welfare policy. In the meantime, all across America, a
new debate has emerged over welfare policy -- but the debate is not between Republicans
and Democrats, or between the President and Congress.
1
It wasn't just conservatives who rescued funding for President Bush's HOPE
initiative to help low-income people become homeowners - it never could have happened
without Representative Mike Espy, a black, liberal Democratic Congressman from the
Mississippi Delta. He said he learned from his mother that whoever controls your home
controls your very life.
The Bush Administration's favored Enterprise Zone bill in the House wasn't
authored by a conservative Republican, but by liberal Congressman Charlie Rangel of
Harlem, New York.
Today, the fault line and fundamental choice is not between Republican and
Democratic proposals but between the old bureaucratic, statist, and elitist welfare model
of spending and consumption and the new entrepreneurial and incentive-based model of
economic empowerment and access to private property ownership. It's not Left or Right,
it's forward or backward.
I want to help define that choice here tonight.
For years, liberals complained that we spent too much on guns and not enough
on butter. Soon we'll be spending about the same relative amount on each. But many
Americans are beginning to notice a strange paradox.
On the one hand, President Bush has told the American people that by 1996 -
with about three and a half percent of GNP - the Pentagon will be able to adequately
defend America's far-flung interests from the Persian Gulf to the Gulf of Mexico.
Thanks to President Bush, Dick Cheney, and Colin Powell, we'll be able to keep Gaddafi
in his cage, keep Saddam away from the oil fields and Israel, keep Kim Il Sung above
2
the 38th parallel, and then some.
On the other hand, today - with about the same share of our national wealth -
we can't keep joblessness and despair, or even gunfire, off our streets. We can make the
Third World safe for democracy, but we can't keep Third World conditions from showing
up in East Harlem or East L.A.
The reason? Well, spending more money is not the solution. Indeed, the way we
spend money is the core of the problem.
Since 1965, we've spent more than $2.5 trillion -- an amount almost equal to our
entire national debt - fighting poverty. Yet there are more people living in poverty now
than before, a poverty that is more intractable and durable.
One thing is clear: We haven't failed for lack of trying. We tried UDAG, CETA,
and Model Cities Urban Renewal, Community Action Agencies, and other Great
Society programs. Yet even as new programs were enacted in the late 1960s and early
1970s, the long decline in poverty rates since World War II ended, and was replaced by a
more resistent strain of poverty and despair. Instead of a middle class renaissance, we
discovered an underclass stuck in poverty. Instead of a welfare system providing
temporary assistance, we found perpetual dependence.
The poverty rate began to exhibit a chilling independence from the ebb and flow
of the American economy. The economy boomed, and poverty stayed the same. The
economy stagnated, and poverty stayed the same.
The tragic fact is this: Today, America has two economies. One is the
mainstream economy, which is entrepreneurial-based and democratic capitalist, driven
3
by incentives for productive work, saving, investment, risk-taking, education, and
ownership. A child born into this economy knows that if he or she goes to school, does
homework, and follows the rules, he or she can go to college, get a job, start a family, or
pursue the vast, boundless. universe of American opportunity and upward mobility.
Then there is the second economy which all too often exists in American inner
cities. It resembles the "socialist" economies of the Third World and Eastern Europe
more than the capitalist economies of the West. In East Harlem, New York, one of
America's most notorious ghettos, more than 60 percent of the land is owned by the
government. Nearly two-thirds of the community lives in public housing, and, as a
consequence, almost a third of the people are dependent upon government support.
In the second economy, all the usual incentives are reversed. For welfare mothers
and unemployed fathers, work doesn't pay and saving is prohibited. In many states, an
AFDC recipient who manages to save for a child's college education or a new home risks
ending up in jail. In this upside-down world of perverse incentives, welfare recipients
aren't allowed to save more than $1,000, on penalty of criminal prosecution.
Last time I was here I think I told the story of Grace Capetillo. She's the young
chicano welfare mother in Milwaukee who managed to scrounge together a $3,000 nest
egg for her daughter's college education, before welfare bureaucrats took her to court. A
judge initially fined her $15,000, but relented and settled for the whole $3,000. Grace
Capetillo got the message: Don't save a penny, spend every cent you get.
When President Bush and our Administration first tried to expand
homeownership opportunities for the poor, letting residents of public housing own their
4
own homes, the old-line welfare establishment couldn't believe it. Our critics said the
poor didn't want to own private property. One member of Congress even protested that
if we let public housing residents own their own homes they might turn around and sell
them for a profit or worse yet, they might someday leave their homes to their
children! Can you imagine how dangerous it would be if poor people actually made a
profit selling their homes? Imagine wanting to leave a home to your children. In the
first economy, sure. But in the second economy, never!
The first war on poverty failed because its architects forgot the power of
incentives, rewards, and values. They forgot the nature and causes of the wealth of
nations - taught to us by Adam Smith - and the wealth of families. People don't spend
their way out of poverty. They escape poverty by working, saving, acquiring property,
owning a home, starting a business. That's the classic formula for achieving the
American Dream, or, as President Bush called it at the U.N. Pax Universalis.
It is also the common-sense principle behind Abraham Lincoln's Homestead Act
of 1862, the most successful anti-poverty measure in American history. Lincoln gave
government land to any family which pledged to settle the land and make a home. A
year later, tens of thousands of homesteaders had claimed a million-and-a-half acres of
land. They came from as far away as Europe to stake their claim. People everywhere
want the chance to own something, contribute their labor to it, and make it a foundation
on which to build a better life. Policies which defy this timeless wisdom are bound to
fail.
It's time we Americans returned to our first principles. It's time we remembered
5
the secrets of our own success.
Some people on the Left and on the Far Right think the poor won't respond to
incentives and rewards. Nonsense! They say that the poor don't share our values, that
they are mired in a "culture of poverty." I say: It's the welfare bureaucracy whose
culture needs to change. To use its own jargon, I say: The real thing that's
"dysfunctional" is a welfare policy which sets its sights too low, demeans the poor, and
robs America of a vast potential resource.
When the Iron Curtain came down in Eastern Europe, the skeptics said people
raised with a "cradle-to-grave" socialist mentality would never embrace free enterprise,
private property, and equality of opportunity.
But the opposite has happened. From Berlin to Belarus, they are seizing the
chance to own property, start new businesses, and risk capital in pursuit of capital gains.
The leader of Czechoslovakia's privatization program -- Dusan Triska - said recently:
"Two months ago, people didn't know or care what it meant to be a shareholder. Now
all everyone talks about is investment, shares, and capital gains."
George Mitchell and the liberal Democratic leadership of Congress don't know
what to make of that. After all, everyone knows the people of Czechoslovakia aren't rich.
They don't own blue chip stocks and bonds. They don't have brokers in Zurich or
bankers on Wall Street. Until recently, they couldn't even own private property. Yet
today they're discovering the power of investment, entrepreneurship, wealth creation, and
capital gains -- the foundations of entrepreneurial capitalism.
There's no place in the old liberal worldview for poor people talking about capital
6
gains. I still can't get over how confused the editors of the liberal St. Louis Post-
Dispatch were when President Bush visited a public housing community in St. Louis last
year. When the President called for a capital gains tax cut in his speech, the residents
cheered. In their editorial the next day, the editors just couldn't fathom it. But the real
surprise would have come if those low-income residents hadn't cheered for removing the
barriers to their opportunity to get a piece of the American Dream.
You see, the President wants to cut the capital gains tax to about 15% and
eliminate it in the inner city not to help the rich, but to help the poor get rich; not to
help the wealthy, but to create new wealth and new capital formation.
I've met with thousands of low-income people and public housing residents all
across America. And let me tell you, I have never met a single one who said, "Mr.
Kemp, I don't believe in the American Dream. Or, I just want to be a ward of the State,
and I want the same thing for my children and my children's children."
It sounds silly, I know. And yet the liberal welfare establishment treats the poor
as though that is exactly how poor people think. It is this elitist attitude towards the
poor that is hurting the poor and impoverishing America's inner cities.
Low-income Americans are not afraid to throw in their lot with the rest of us and
try their hand at competing in the mainstream economy. To a remarkable extent, they
still believe that this is a land of opportunity. They have not lost faith in the American
Dream, they are being denied access to the American Dream.
And the truth is, America is still the closest thing to a classless society the world
has ever known. A few weeks back the New York Times ran a story about how the "top
7
1%" of Americans got most of the new wealth between 1977 and 1989. What the New
York Times neglects to tell us is that the composition of that top 1% bracket is
constantly changing.
According to IRS data, between 1985 and 1986, 40% of those in the top 1% fell
into a lower income bracket. Over the same period, Census Bureau data show that fully
one-third of all Americans moved from one income quintile to another. And income
mobility was generally higher during the 1980s than the 1970s, reflecting the new
dynamism of the American economy after we cut capital gains taxes in 1978 and 1981.
When capital gains taxes are high, wealth becomes locked up as people refrain from
investing or risking their wealth. America's class structure becomes more fixed. But
when capital gains taxes are low, as they were during the Reagan-Bush recovery, assets
are unlocked, income mobility increases, and wealth expands.
But the poorest Americans are still locked out of wealth and opportunity by
government-imposed barriers to opportunity. The time has come to lift those barriers.
The time has come to empower people, not bureaucracies; to combat poverty, not
perpetuate it; and to build a ladder of opportunity, not fill up the safety net. We must
discard the old top-down model of government paternalism and rechannel the power of
government toward clearing away the mistakes of a welfare policy that perpetuates
poverty and dependency.
Some people - some partisans -- claim the Bush Administration is using welfare
reform as a cover for beating up on the poor, or worse, as Governor Cuomo charged, as
an excuse for pandering to racists. But we're not attacking the poor, we're attacking the
8
system which has so misserved them. And incidentally, I don't think class warfare
makes good politics, whether it scapegoats the rich or the poor. The American people
don't want blame, they want answers.
In his fiscal 1993 budget, President Bush is seeking $1 billion to help public
housing residents become homeowners, through his radical HOPE initiative --
Homeownership and Opportunity for People Everywhere. Once again, the President is
also asking Congress to authorize 50 Federal Enterprise Zones, in which the capital
gains tax would be eliminated to help give low-income entrepreneurs access to capital.
The President's budget would further permit AFDC recipients to save up to
$10,000, and it would strengthen incentives for long-term AFDC recipients to find
employment. Existing rules generally reduce benefits for recipients who join the work
force. The Administration proposal would set aside in an escrow account the amount by
which a family's benefits are reduced, then pay it out in a lump sum if the family
succeeds in working its way off welfare.
Whenever possible, we in the Bush Administration are striving to place real
economic power in the hands of individuals, not bureaucracies. Philosophically
speaking, for a society which believes -- as Thomas Jefferson did -- that all men and
women are created equal, there is no other way. Pragmatically speaking, we've already
tried the alternative, and it doesn't work.
In his first inaugural address, Jefferson condemned those nations which "feel
power and forget right." Half a century later, Abraham Lincoln expressed a more
modern concern. In a speech at Peoria, Illinois, he called slavery "a sad evidence that,
9
feeling prosperity we forget right."
We are by far the wealthiest nation the world has ever known. But feeling
prosperity, we must not forget right. We must not forget the moral obligation -- of
which Lincoln often reminded us -- to welcome all Americans of every background and
color into what he called "the race of life."
It is not just a moral issue. Our inner cities are overflowing with human capital,
an untapped reservoir of human creativity. Bringing millions of low-income Americans
back into the mainstream economy will create new wealth for all Americans - rich and
poor, black and white. With the right policies and the right incentives, the 34 million
Americans living in poverty will become not a hindrance - not a drain - but a source of
vast promise and unimagined potential. America can once again be the "city on a hill" --
an example to the "new world" waiting to be created, shaped, and inspired.
Thank you very much, and God Bless America and the cause of freedom.
##
10
writer
THE WHITE HOUSE
WASHINGTON
March 26, 1992
MEMORANDUM FOR DAVE DEMAREST
FROM:
RON KAUFMAN
Rd
SUBJECT:
ATTACHED FROM GOVERNOR TOMMY THOMPSON
FYI. Good fodder for speeches.
03/19/1992
13:02
WASHINGTON D.C. OFFICE
202 624 5871 6508228
P.02
TOMMY G. THOMPSON
Governor
State of Wisconsin
March 19, 1992
The President
The White House
Washington D.C. 20500
Dear Mr. President:
Your visit to Wisconsin this week was extremely sucessful. I thoroughly
enjoyed your visit and appreciated the opportunity to speak with you over lunch.
As I mentioned during lunch, I sponsored a resolution calling for a presidential
line item veto at the National Governors' Association winter meeting. This
resolution was adopted by a unanimous voice vote.
My line item veto authority has been a powerful tool in keeping Wisconsin's
budget balanced and taxes under control. I have used my authority to eliminate
more than $140 million in wasteful spending and save Wisconsin taxpayers more
than $600 million in added taxes.
Presidential line item veto authority would allow you to eliminate wasteful
government spending and pork barrel projects. Clearly, the nation's governors
agree.
I have included a copy of the resolution for your review.
Sincerely,
TOMMY January G THOMPSON
Governor
TGT/sis
enclosure
as It mas great burry you
in w excesses Batwrole
10 mrs Bush!
Room 115 East. State Capitol. P.O. Box 7863, Madison. Wisconsin 53707 (608)266-1212 FAX (608)267-8983
03/19/1992 13:03 WASHINGTON D.C. OFFICE
202 624 5871 6508228 P.03
TOMMY G. THOMPSON
Governor
State of Wisconsin
PRESIDENTIAL LINE-ITEM VETO AUTHORITY
THE NATION'S GOVERNORS EXPRESS THEIR STRONG SUPPORT OF NGA POLICY
A-9.3.1 CALLING FOR A LINE-ITEM VETO AUTHORITY FOR THE PRESIDENT OF THE
UNITED STATES. FORTY-THREE OF THE NATION'S GOVERNORS HAVE THIS AUTHORITY
AND HAVE FOUND IT TO BE A VALUABLE AND EFFECTIVE TOOL FOR CONTROLLING
STATE SPENDING AND BALANCING STATE BUDGETS.
THE FEDERAL GOVERNMENT'S INABILITY TO CONTROL SPENDING HAS LED TO A
MASSIVE FEDERAL DEFICIT THAT THREATENS THE NATION'S ECONOMIC RECOVERY,
AND ADDS ADDITIONAL BURDENS ON THE STATES.
THE GOVERNORS BELIEVE THAT GIVING THE PRESIDENT THE LINE-ITEM VETO
AUTHORITY WILL HELP RESTRAIN FEDERAL SPENDING, BALANCE THE FEDERAL BUDGET
AND ASSIST IN ELIMINATING UNFUNDED FEDERAL MANDATES ON THE STATES.
THEREFORE, THE NATION'S GOVERNORS URGE THE CONGRESS TO PASS A
CONSTITUTIONAL AMENDMENT TO EMPOWER THE PRESIDENT WITH A LINE-ITEM VETO
AUTHORITY WITH RESPECT TO APPROPRIATIONS LEGISLATION.
Room 113 East. State Capitol. PO Box 7863. Mudison. Wisconsin 53707 (608) 266-1212 FAX (608) 267-8983
03/19/1992 13:03 WASHINGTON D.C. OFFICE
202 624 5871 6508228 P.04
TOMMY G. THOMPSON
Governor
State of Wisconsin
February 6, 1992
The President
The White House
Washington
Dear Mr. President:
You will be happy to know that the nation's governors unanimously support
presidential line-item veto authority.
Enclosed, please find a copy of the resolution I successfully put forth
at the Annual Winter Meeting of the National Governors' Association
urging Congress to pass a constitutional amendment empowering you with
the line-item veto authority.
We believe you should have the power to say NO, just as forty-three of
the nation's governors do. The line-item veto authority will allow you
to restrain spending. balance the federal budget and eliminated unfunded
mandates on the states. These are things the Congress has been unable to
do on their own.
I look forward to my continued work as part of the Bush Team!
Warm regards,
TOMMY G. THOMPSON
Governor
copy research will
THE WHITE HOUSE
WASHINGTON
4/6/92
DATE:
TO: SEE BELOW
FROM: CLAYTON YEUTTER
Counsellor to the President for
Domestic Policy
Some good background material
from David Walters of USTR.
DISTRIBUTION:
OPD Sr. Staff
S. Rollins
D. Darman
E. Holiday
N. Brady
M. Boskin
D. Demarest
L. Martin
Question:
What basic industries are stronger today than they were 10 years
ago?
Answer:
Summary:
Over the 10 most recent years for which data are
available (1979-1989), most U.S. basic industries
(manufacturing) have expanded.
Overall, the output growth of the U.S. manufacturing
sector has slightly outstripped the growth of the
overall economy.
Within the manufacturing sector, production in some
industries has surged -- particularly those in which
high-technology products are found -- while production
in others has declined.
In many regards, the data reflect the type
restructuring of the manufacturing sector that one
might expect in the case of an advanced industrial
economy like that of the United States. Many
industries characterized by high-tech products have
expanded their share of U.S. manufacturing output while
other manufacturing industries have seen their share
decline.
Despite the strong rate of growth of output,
manufacturing employment fell 7.6 percent over the ten-
year period, due to rapid improvements in manufacturing
productivity.
Employment growth outside the manufacturing sector has
more than taken up the slack with the increases in non-
manufacturing jobs 15 times greater than the loss of
jobs in manufacturing.
Rapid growth of U.S. exports was a principal
contributor to the strong growth of U.S. manufacturing
output.
2
Trends in Manufacturing Output (1979-1989)
Manufacturing output has grown faster in the United States than
in the rest of the world: As Chart 1 shows, according to World
Bank data, I U.S. output of manufactures grew at an average
compound rate of 3.8 percent between 1980 and 1989, while world
manufacturing production grew at the somewhat slower rate of 3.5
percent. (For the sake of comparison, the World Bank reports
that in the earlier period 1965 to 1980, U.S. manufacturing
output grew a slower 2.5 percent average annual rate. The World
Bank does not report comparable figures for world manufacturing
output growth for the 1965-80 period.)
U.S. manufacturing output grew somewhat more rapidly than the
average growth for non-manufacturing sectors of the U.S. economy:
Between 1979 and 19892, the real (constant dollar) output of U.S.
manufacturing increased by 30.4 percent (average rate of 2.7
percent per year.) (See Chart 2.) This rate slightly exceeded
the growth rate for non-manufacturing sectors of the U.S. gross
national product (GNP) which rose 28.6 percent (average annual
rate of 2.5 percent) over this period. As a result, the share of
manufacturing in U.S. constant-dollar GNP rose from 22.3 percent
in 1979 to 22.6 percent in 1989.
Restructuring within the U.S. Manufacturing Sector
While U.S. manufacturing overall has experienced substantial
growth, changes in output for individual industries in the
manufacturing sector have varied widely: Machinery has been the
fastest growing U.S. manufacturing industry with production more
than doubling in 10 years (Chart 3 and Table 1). Exceptionally
strong growth was also recorded for petroleum and coal products,
up 80.3 percent, transportation equipment other than motor
vehicles (air craft inter alia), up 79.2 percent, rubber and
plastic products, up 56.3 percent and electric and electronic
equipment, up 50.8 percent.
At the other end of the spectrum, manufactures of tobacco
declined by slightly more than two-thirds, of leather and
products by 31.0 percent, and of primary metals by 30.0 percent.
Although production of motor vehicles and equipment dropped by
8.3 percent, production for the transportation sector as a whole
grew at a rate (26.1 percent), almost in line with manufacturing
overall. As a result, transportation equipment other than motor
vehicles has grown to exceed the size of the motor vehicle
transportation sector: other transportation rose from roughly 70
percent of the motor vehicle sector in 1979 to 135 percent in
1989.
3
Changes in industry shares of total U.S. manufacturing output:
Table 2 shows the share of total manufacturing output accounted
for by each manufacturing industry in 1979 and 1989 (as well as
their rank order in each year). The largest single change has
been the rise in share of machinery from 12 percent of U.S.
manufacturing in 1979 to 18.8 percent in 1989. The largest
single decline in share was for primary metals, down from 7.4
percent of output in 1979 to 4.0 percent in 1989.
Chart 4 shows the change in share of U.S. manufacturing output
between 1979 and 1989 for each of the 21 manufacturing
industries. It is striking that U.S. manufacturing sectors
gaining share tend to be those where one would expect the
production of higher technology products are located: machinery,
electric and electronic equipment, non-automotive transport
equipment (aircraft in particular) and chemicals and allied
products. These four sectors, in fact, increased their
collective share of U.S. manufacturing output from 33.6 percent
of total in 1979 to 43.7 percent in 1989.
In contrast, in many, but not all, cases, the U.S. manufacturing
industries losing share were more traditional in nature and/or
those reflecting the U.S. natural resource endowment. For
example, leather and products, tobacco manufactures, lumber and
wood products, stone, glass and clay products, and primary metals
have seen their collective share of U.S. manufacturing decline
from 15.7 percent in 1979 to 9.9 percent in 1989.
Trends in Manufacturing and Overall Employment
Between 1979 and 1989, employment in the United States increased
by 23.4 million (Charts 5 and 6) or an average annual rate of 2.1
percent. The composition of employment, however, changed. Jobs
in manufacturing industries fell 1.6 million to a total of 19.4
million in 1989. Jobs outside of manufacturing increased by 25.0
million to a total of 104.4 million in 1989.
On a composition basis, manufacturing jobs fell from 21.0 percent
of U.S. total employment in 1979 to 15.7 percent in 1989. The
drop in the manufacturing share of U.S. employment stands in
sharp contrast to manufacturing production which grew slightly
faster than total GNP between 1979 and 1989, increasing its share
of GNP, as stated earlier, from 22.3 percent of GNP to 22.6
percent of GNP.
The explanation for declining share of U.S. employment in
manufacturing in face of manufacturing's rising share of U.S.
production is found in the strong labor productivity growth in
the manufacturing sector. Manufacturing labor productivity rose
some three times faster between 1979 and 1989 than the rate of
labor productivity growth for the overall U.S. economy.
4
Successful industrialized countries have, like the United States,
generally experienced stronger productivity growth in the
manufacturing than in other sectors and declining shares of
manufacturing in total employment. This pattern has supported
the growth in real U.S. output on a per worker basis (average
annual rate of 1.0 percent, 1979 to 1989) as well as a per capita
basis (annual average rate of 1.7 percent³).
Trends in Exports
Export expansion has aided the growth of U.S. manufacturing
output: Between 1979 and 1989, U.S. real non-agricultural
exports (90 percent of which are manufactures) rose at an average
annual compound rate of 4.6 percent (Chart 7) compared to a 2.5
percent growth rate in real gross domestic product (GDP) 4 As a
result, non-agricultural exports rose of from 5.1 percent of
constant-dollar GNP in 1979 to 6.4 percent in 1989.
Although data for 1990 and 1991 are not currently available for
real manufacturing output, they are available for real exports.
In the last two years non-agricultural exports have increased by
another 17 percent. The ratio of real non-agricultural exports
to GDP ratio from 6.4 percent in 1989 to 7.5 percent in 1991. As
for this year and beyond, practically all major forecasts of the
U.S. economy expect that strong export growth to be a significant
contributor to the U.S. manufacturing growth, as well as to
overall U.S. GDP growth.
1. Data drawn from the World Bank's World Development Report of
1991
2. The most recently available data in the U.S. National Income
and Product Accounts (NIPA) on constant dollar gross U.S. product
by manufacturing industry appeared in the January and April 1991
issues of the Survey of Current Business. The data are reported
on the basis of constant 1982 dollars through 1989, the most
recent year for which these data are available. The Bureau of
Economic Analysis (BEA) at the Commerce Department is in the
process of revising and rebasing all NIPA tables to constant 1987
dollars. This has been done for many GNP/GDP components. The
latest series for gross product by manufacturing industry,
however, remains on the constant 1982 dollar base. A BEA
spokesperson reports that gross product by manufacturing industry
series, based on constant 1987 dollars and extended to calender
year 1990 will be available in September or October of this year.
The selection of the years 1979 and 1989 as the basis of U.S.
5
domestic comparisons reflects the ten-year period indicated in
the Member's question, as well as the absence of data
availability beyond 1989. It should be noted, however, that 1979
and 1989, being years at or close to similar points in different
business cycles (peaks in economic activity), are particularly
manufacturing output reported in the World Bank comparison of
appropriate points of comparison. The much stronger growth in
1980 to 1989 reflects in part the cyclical downturn for economic
activity from 1979 to 1980.
3. Data on per worker and per capita U.S. output have been drawn
are from the Office of Productivity and Technology, Bureau of
Labor Statistics, U.S. Department of Labor.
4. Because of significant changes to the NIPA-based export data
when moving from a 1982 to a 1987 constant-dollar series, the
dollars basis. When gross product for manufacturing industry in
export and GDP series reported here are on the new constant 1987
1987 constant dollars is released in October of this year, it
will be possible to do a closer analyses of exports and the
growth of manufacturing output than current data allow.
USTR/3/31/91
Annual Average Growth Rate
for Manufacturing Output: 1980 to 1989
Source: World Bank (See Text)
Chart 1
3.8
4
3.5
3.5
3
2.5
Percent
2
1.5
1
0.5
0
U.S.
World
Growth of Real U.S. GNP
1979 to 1989
Source: See Text
Chart 2
35
30.4
28.6
30
25
20
Percent
15
10
5
0
Non-Manufacturing
Manufacturing
Growth of U.S. Manufactu
by SIC Category: 1979 to 1989
Source: See Text
21Tobacco
31
Leather
33
Pri. Metal
371
Motor Vehicles
22
Textiles
32
Stone, Clay, Glass
23
Apparel
25
Furniture
26
Paper
SIC Category
34
Fab. Metal
24
Lumber & Wood
20
Food
38
Instruments
27
Printing
28
Chemicals
Miscellaneous
39
Electronic/Electric
36
Rubber/Plastics
30
#Other Transportatic
37
Petroleum Produc
29
Machinery
35
-40
-20
0
20
40
60
80
100
120
140
-100
-80
-60
Percent
Change in Share of U.S. Manufactu
Output 1979 to 1989: 21 SIC Categories
Source: See Text
33.
Pri. Metal
371
Motor Vehicles
obacco
32
Stone, Clay, Glass
34
Fab. Metal
20
Food
Textiles
23
Apparel
SIC Category
26
Paper
Printing
Leather
38
Instruments
24
Lumber & Wood
Furniture
S:
39
Miscellaneous
28
Chemicals Rubber/Plastic Products
30
29
Petroleum Products
36
Electronic and Electric
Other Transportation
37
Machinery
35
-6
-4
-2
0
2
4
6
8
Percentage Point Change
U.S. Employment
Chart 5
Source: See Text
123.9
140
100.4
104.4
120
100
79.4
Employment
(Millions)
80
60
40
210
19.4
20
Total
Non-Manufacturing
0
Manufacturing
1979
1989
Year
Change in Employment
1979 to 1989
Source: See Text
Chart 6
Manufacturing
1.6
Non-Manufacturing
25
Total Employment
23.5
-5
0
5
10
15
20
25
Millions
Table 1
1989
1979
Percent Change
($Billions
1979 to 1989
Constant 1982)
Gross National Product
29.0%
4,117.7 3,192.4
Non-Manufacturing
28.6
3,188.7 2,480.2
30.4
929.0
712.2
Manufacturing
Durable Manufactured Goods
34.8
583.7
433.1
Lumber and Wood Products
18.0
25.6
21.7
Furniture and Fixtures
11.9
12.2
10.9
Stone, Clay and Glass
0.4
23.6
23.5
Products
Primary Metal Industries
- 30.0
36.9
52.7
Fabricated Metal Products
17.5
65.8
56.0
Machinery, except Electrical
104.3
174.9
85.6
Electric and Electronic
Equipment
50.8
90.8
60.2
Motor Vehicles and Equipment
- 8.3
47.3
51.6
Other Transportation Equipment
79.2
63.8
36.5
Instruments and Related
Products
18.8
26.6
22.4
Miscellaneous Manufacturing
35.0
16.2
12.0
Industries
Nondurable Manufactured Goods
23.4
345.4
279.0
Food and Kindred Products
18.2
70.3
59.5
- 68.7
3.1
9.9
Tobacco Manufactures
Textile Mill Products
- 1.8
16.7
17.0
Apparel and other Textile
5.2
22.4
21.3
Products
Paper and Allied Products
15.0
33.0
28.7
Printing and Publishing
21.6
45.1
37.1
Chemicals and Allied
34.2
76.1
56.7
Products
Petroleum and Coal Products
80.3
44.9
24.9
Rubber and Miscellaneous
Plastic Products
56.3
30.8
19.7
Leather and Leather Products
- 31.0
2.9
4.2
Annual Average Change in GDP Components
Constant Dollar Basis: 1979-1989
Source: See Text
Chart 7
5
4.6
4.3
4
3
2.5
Percent
2
1
0
Gross Domestic
Merchandise
Non-Agricultural
Product
Exports
Merchandise Exports
Table 2
Industry Rank
Industry Rank
in 1989 (and
in 1979 (and
Share of Total
Share of Total
Production of
Production of
Manufactures
Manufactures
(100.0%)
ALL MANUFACTURING INDUSTRIES
(100.0%)
1. (18.8%)
Machinery, except Electrical
1. (12.0%)
2.
( 9.8%)
Electric and Electronic Equipment
2. ( 8.5%)
3.
( 8.2%)
Chemicals and Allied Products
4. ( 8.0%)
4.
( 7.6%)
Food and Kindred Products
3. ( 8.4%)
5.
( 7.1%)
Fabricated Metal Products
5. ( 7.9%)
6. ( 6.9%)
Transportation Equipment, except
9. ( 5.8%)
Motor Vehicles
7.
( 5.1%)
Motor Vehicles and Equipment
7. ( 7.2%)
8. ( 4.9%)
Printing and Publishing
8.(5.2%)
9.
( 4.8%)
Petroleum and Coal Products
11. ( 3.5%)
10.
( 4.0%)
Primary Metal Industries
6.(7.4%)
11.
( 3.6%)
Paper and Allied Products
10. ( 4.0%)
12.
( 3.3%)
Rubber and Misc. Plastic Products
16. ( 2.8%)
13. ( 2.9%)
Instruments and Related Products
13. ( 3.1%)
14.
( 2.8%)
Lumber and Wood Products
14. ( 3.0%)
15.
( 2.5%)
Stone, Glass and Clay Products
12. ( 3.3%)
16.
( 2.4%)
Apparel and Other Textile Products
15. ( 3.0%)
17.
( 1.8%)
Textile Mill Products
17. ( 2.4%)
18.
( 1.7%)
Misc. Manufacturing Industries
18. ( 1.7%)
19.
( 1.3%)
Furniture and Fixtures
19. ( 1.5%)
20.
( 0.3%)
Tobacco Manufactures
20. ( 1.4%)
21.
( 0.3%)
Leather and Products
21. ( 0.6%)